Document:

EXHIBIT
10.1

 

FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

THIS
FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Agreement”) is made and
entered into as of the 8th day of October, 2004, among FCC, LLC,
d/b/a First Capital, a Florida limited liability company (“Lender”),
PAWNMART, INC., a Nevada corporation (“Borrower”),
and XPONENTIAL, INC., a Delaware
corporation (“Parent”; Borrower and Parent are sometimes referred to
herein individually as an “Obligor” and collectively as the “Obligors”).

 

W
I  T  N  E  S  S  E  T  H:

 

WHEREAS, Obligors and Lender are parties to that
certain Loan and Security Agreement dated as of June 17, 2004 (as amended,
restated, modified or supplemented from time to time, the “Loan Agreement”);
and

 

WHEREAS, Obligors have requested that Lender eliminate
the $1,000,000 reserve against the Borrowing Base in exchange for a security
interest from Parent in favor of Lender in all rights, title and interest of
Parent in and to the Securities Account (as defined below); and

 

WHEREAS,
Lender has agreed to do so on the terms and conditions set forth herein.

 

NOW,
THEREFORE, in consideration of the foregoing premises, and other good and
valuable consideration, the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

 

1.                                       All capitalized terms used herein and not
otherwise expressly defined herein shall have the respective meanings given to
such terms in the Loan Agreement.

 

2.                                       (a)                                  To
induce Lender to eliminate the $1,000,000 reserve against the Borrowing Base
and to continue to make Loans to Borrower from time to time pursuant to the
Loan Agreement, Parent hereby grants to Lender, for itself and as agent for any
Affiliate of Lender, a security interest in, and assigns, mortgages and pledges
to Lender, for itself and as agent for any Affiliate of Lender, all of Parent’s
right, title and interest in and to that
certain securities or brokerage account number                           
maintained by Parent with Wachovia Securities (the “Securities Account”),
together with all cash, stocks, bonds, mutual fund shares and other assets now
or hereafter held therein, all interest and dividends paid or payable in
connection therewith, and all other products and proceeds thereof
(collectively, together with the Securities Account, the “Parent Collateral”).  The Parent Collateral shall secure all of the
Obligations.

 

(b)                                 Parent
represents and warrants to Lender that (i) Parent has established the
Securities Account, (ii) the Securities
Account consists of the assets listed on Appendix 1 attached hereto,
(iii) the risk ratings (if available) and market values for the assets in the
Securities Account set forth on Appendix 1 are true and correct as of
the date hereof, (iv) the

 

 

Parent Collateral is not subject to any Lien, other than the security
interest in favor of Lender created hereby, (v) Parent is a Delaware
corporation, (vi) Parent’s chief executive office is located at 6400 Atlantic
Blvd., Norcross GA  30071, (vii) the
execution, delivery, and performance of this Agreement are within Parent’s
corporate powers, have been duly authorized, do not violate Parent’s
constituent documents, any law or regulation applicable to Parent, or any
indenture, agreement, or undertaking to which Parent is a party or by which
Parent or any of Parent’s property is bound; and (viii) this Agreement constitutes the valid,
binding and enforceable obligation of Parent in accordance with the terms
hereof, except as enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, moratorium or other similar laws applicable to creditors’
rights generally or by generally applicable equitable principles affecting the
enforcement of creditors’ rights.

 

(c)                                  Parent
covenants and agrees in favor of Lender that (i) Parent shall not suffer or
permit any of the Parent Collateral to be subject to any Lien, other than the
security interest in favor of Lender created hereby; (ii) Parent shall promptly notify Lender in the
event that the market value of the assets in the Securities Account decreases
below $1,000,000 or the risk rating of any of the assets therein is downgraded;
(iii) Parent shall continue to maintain the Securities Account and, in the
event that the aggregate market value of the assets contained in the Securities
Account falls below $1,000,000 at any time, then Parent shall, within five
Business Days, deposit cash or additional securities into the Securities
Account of a value equal to or greater than such shortfall, and such additional
securities shall be of a type and risk rating reasonably satisfactory to Lender
in its discretion (it being understood that any such additional securities
which are traded on a national securities exchange and which do not cause the
risk of the portfolio of assets held in the Securities Account, on a
weighted-average basis, to be greater than such risk as of the date hereof
shall be deemed to be satisfactory to Lender); (iv) Parent shall promptly
provide Lender with copies of all statements and other information received by
Parent with respect to the Securities Account and such other information with
respect thereto as Lender may reasonably request from time to time, and (v)
Parent shall provide Lender with all passwords and similar information in order
to enable Lender to obtain information regarding the Securities Account via the
internet.

 

(d)                                 Lender acknowledges and agrees that Parent
may (i) trade the securities contained in the Securities Account, and (ii)
withdraw assets from the Securities Account, in each case so long as, after giving
effect to any such trade or withdrawal, (x) no Default exists, (y) the
aggregate market value of the assets contained in the Securities Account is at
least $1,000,000, and (z) the overall risk of the portfolio of assets held in
the Securities Account, on a weighted average basis, is not greater than such
risk as of the date hereof.  Lender
agrees that it shall promptly, and in any event within two Business Days after
Lender’s receipt of a written request from Parent, provide Lender’s written
consent to Wachovia Securities with respect to a withdrawal of assets from the
Securities Account to the extent that such withdrawal is permitted by this
Agreement and the other Loan Documents.

 

(e)                                  Parent acknowledges that, while a Default
exists, Lender shall have the sole authority to give instructions to the
securities intermediary with respect to the Securities Account, and Lender may
(but shall not be obligated to) cause the Parent Collateral to be

 

2

 

liquidated and have the net proceeds of such liquidation applied to the
Obligations, and/or (ii) instruct the securities intermediary to trade any of
the assets in the Securities Account for such other assets as Lender may select
in its sole discretion.

 

(f)                                    Borrower is a direct, wholly-owned subsidiary
of Parent, and Parent hereby confirms to Lender that (i) the elimination of the
$1,000,000 reserve against the Borrowing Base will, by increasing the borrowing
availability of Borrower under the Loan Agreement, be of significant value to
Parent, and (ii) the elimination of such reserve constitutes reasonably
equivalent value for the grant of the security interest by Parent contemplated
hereby.  Parent represents and warrants
to Lender that, both before and after giving effect to the transactions
contemplated by this Agreement, Parent has assets of a fair salable
value which exceeds the amount required to pay its debts as they become
absolute and matured (including contingent, subordinated, unmatured and
unliquidated liabilities), and Parent is able to and anticipates that it will
be able to meet its debts as they mature, and Parent has adequate capital to
conduct the business in which it is or proposes to be engaged.

 

3.                                       The Loan Agreement is amended by deleting Item 1 of the Schedule to the Loan
Agreement and inserting the following in lieu thereof:

 

1.                                      Borrowing Base

 

“Borrowing Base” means, at any time, an amount
equal to:

 

(a)                                  the
lesser of:

 

(i)                                     $4,500,000,
and

 

(ii)                                  the
sum of:

 

(A)                              75%
of the dollar amount of Eligible Accounts; plus

 

(B)                                the
lesser of:

 

(1)                                  $1,000,000,
and

 

(2)                                  30%
of the dollar value (determined at the lower of Borrower’s Cost or
market value) of Eligible Inventory;

 

provided, however,
that the amount advanced pursuant to the foregoing clause (a)(ii)(B) shall not
exceed 35% of the total principal amount of loans outstanding hereunder at any
time;

 

minus

 

3

 

(b)                                 the sum of:

 

(i)                                     a reserve in
an amount to be determined by Lender in the event that, for any calendar
quarter, Borrower’s Cost for all goods sold during such period divided by
Borrower’s gross sales (excluding all pawn service charges, finance charges and
similar items) during such period is greater than 0.80; plus

 

(iii)                               a reserve in
an amount to be determined by Lender in the event that, for any consecutive
three-month period, the dollar amount of Pawn Loans that result in a forfeiture
by the Customer of the Pawned Item exceeds 70% of the aggregate dollar amount
of all Pawn Loans advanced during such period; plus

 

(iv)                              a reserve in
an amount to be determined by Lender in the event that the dollar amount of
Pawn Loans for which the underlying Pawned Items consisting of a single product
category (such as motor vehicles, jewelry, or general merchandise) exceeds 40%
of the total amount of Pawn Loans at any time; plus

 

(v)                                 such other
reserves as Lender may establish from time to time in its discretion, plus

 

(vi)                              the amount
available to be drawn under, plus the amount of any unreimbursed draws with respect
to, any letters of credit or acceptances which have been issued, created or
guaranteed by Lender or any Affiliate of Lender for Borrower’s account.

 

4.                                       Obligors acknowledge that they have not yet
delivered to Lender landlord’s waivers with respect to various premises leased
by Borrower.  Obligors acknowledge that
Lender may, in its discretion (a) establish reserves against the Borrowing Base
for rental payments for such premises, and/or (b) exclude any Inventory located
at such premises from the Borrowing Base.

 

5.                                       The effectiveness of this Agreement is
conditioned upon the satisfaction of the following conditions precedent, in
each case in a manner acceptable to Lender:

 

(a)                                  Lender shall have received a securities
account control agreement in form and substance satisfactory to Lender, duly
executed by Wachovia Securities and Parent; and

 

4

 

(b)                                 Lender shall have received such lien search
results and other information necessary to confirm Lender’s perfected,
first-priority security interest in the Parent Collateral, subject to no other
Lien.

 

6.                                       Each Obligor hereby restates, ratifies, and
reaffirms each and every term, condition representation and warranty heretofore
made by it under or in connection with the execution and delivery of the Loan
Agreement, as amended hereby, and the other Loan Documents, as fully as though
such representations and warranties had been made on the date hereof and with
specific reference to this Agreement and the Loan Documents.

 

7.                                       Except as set forth herein, the Loan
Agreement shall be and remain in full force and effect as originally written,
and shall constitute the legal, valid, binding and enforceable obligation of
Obligors to Lender.

 

8.                                       In consideration of the accommodations made
by Lender hereunder, Borrower agrees to pay to Lender on demand all costs and
expenses of Lender in connection with the preparation, execution, delivery and
enforcement of this Agreement and the other Loan Documents and any other
transactions contemplated hereby and thereby, including, without limitation,
the reasonable fees and out-of-pocket expenses of legal counsel to Lender.

 

9.                                       To induce Lender to enter into this
Agreement, each Obligor hereby represents and warrants that, as of the date
hereof, and after giving effect to the terms hereof, there exists no Event of
Default under the Loan Agreement or any of the other Loan Documents.

 

10.                                 This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which, when so executed and delivered, shall be deemed to be an original and
all of which counterparts, taken together, shall constitute but one and the
same instrument.

 

11.                                 This Agreement shall be binding upon and
inure to the benefit of the successors and permitted assigns of the parties
hereto.

 

12.                                 This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Georgia, other than its
laws respecting choice of law.

 

[SIGNATURES ON NEXT PAGE]

 

5

 

IN WITNESS WHEREOF, Borrower, Parent and Lender have caused this
Agreement to be duly executed as of the date first above written.

 

 

	
   

  	
  PAWNMART,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Robert W. Schleizer

  	
   

  
	
   

  	
  Name:
  Robert W. Schleizer

  
	
   

  	
  Title:
   Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  XPONENTIAL,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Robert W. Schleizer

  	
   

  
	
   

  	
  Name: 
  Robert W. Schleizer

  
	
   

  	
  Title:
   Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FCC,
  LLC, d/b/a First Capital

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Evan G. Jones

  	
   

  
	
   

  	
  Name: 
  Evan G. Jones

  
	
   

  	
  Title:
   Senior Vice President

  

 

Each
of the undersigned acknowledges the foregoing and agrees that his respective
Validity and Support Agreement in favor of Lender dated as of June 17, 2004
remains in full force and effect, subject to no right of offset, claim or
counterclaim.

 

	
  /s/
  Robert W. Schleizer

  	
   

  
	
  ROBERT
  W. SCHLEIZER

  
	
   

  
	
   

  
	
  /s/
  Dwayne A. Moyers

  	
   

  
	
  DWAYNE
  A. MOYERS

  

 

 

APPENDIX 1

 

	
  350,000

  	
   

  	
  LEVEL 3 9.125% 5/01/08
  52729N-AC-4

  	
   

  	
  75.75

  	
   

  	
  265,125

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  120,000

  	
   

  	
  LEVEL 3 COMM 11% 3/15/08
  52729N-AK-6

  	
   

  	
  78.25

  	
   

  	
  93,900

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  100,000

  	
   

  	
  SHOLODGE 9.55% 9/1/07
  825034-AC-5

  	
   

  	
  92.00

  	
   

  	
  92,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  200,000

  	
   

  	
  SIX FLAGS 8.875% 2/1/10
  83001P-AD-l

  	
   

  	
  94.625

  	
   

  	
  189,250

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  103,000

  	
   

  	
  SIX FLAGS 9.75% 4/15/13
  83001P-AF-6

  	
   

  	
  96.00

  	
   

  	
  98,880

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  131,000

  	
   

  	
  TRUMP 12.625% 3/15/10 89816R-AE-7

  	
   

  	
  104.75

  	
   

  	
  137,223

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  313,000

  	
   

  	
  TRUMP ATL 11.25% 5/01/06
  897907-AA-9

  	
   

  	
  85.75

  	
   

  	
  268,397

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  112,000

  	
   

  	
  PACWEST TELECOM 13.5 2009

  	
   

  	
  98.00

  	
   

  	
  109,760

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  100,000

  	
   

  	
  MAGNA ENT 7.25% 2/15/09

  	
   

  	
  109.881

  	
   

  	
  109,881

  	
   

  

 

 

3520 Northwest 58th Street

Oklahoma City, OK 73112

Phone: 405-917-9600

Fax:405-917-9660

Website:
www.firststcapital.com

 

October 5, 2004

 

VIA
UPS

 

Mr. Robert W. Schleizer

Pawn Mart, Inc.

Xponential, Inc.

6400 Atlantic Boulevard, Suite 190

Norcross, Georgia  30071

 

RE:                              Amendment to Section 2(f) of the Loan and
Security Agreement dated June 17, 2004 (the “Loan Agreement”) between
FCC, LLC (“First Capital”), PawnMart, Inc., and Xponential, Inc.

 

Dear Mr. Schleizer,

 

To ensure that the Loan Agreement remains in
conformance with First Capital guidelines, effective as of the date hereof the
Loan Agreement shall be amended to add the new following sentence to Section
2(f) thereof:

 

“The
Borrower shall make each payment required hereunder, and/or under any
Instrument delivered hereunder, without setoff, deduction or counterclaim.”

 

Please acknowledge your acceptance of the
forgoing change to the Loan Agreement by signing where indicated below and
returning two original, executed copies of this Letter Amendment to me in the
enclosed UPS envelope.  Please retain one
copy of this Letter Amendment for your records.

 

Should you have any questions, please contact
me at (405) 917-1105.

 

	
  Sincerely,

  
	
   

  
	
  /s/ Rebecca Thompson

  	
   

  
	
   

  
	
  Rebecca Thompson

  
	
  Vice President and
  Corporate Counsel

  
	
   

  
	
  ACKNOWLEDGED AND AGREED:

  
	
   

  
	
  PawnMart, Inc.

  
	
   

  
	
  /s/ Robert W. Schleizer

  	
   

  
	
  Robert W. Schleizer,
  Executive Vice President

  
	
   

  
	
  Xponential, Inc.

  
	
   

  
	
  /s/ Robert W. Schleizer

  	
   

  
	
  Robert W. Schleizer, Chief
  Financial Officer

  
			

 

 

ACCOUNT CONTROL AGREEMENT

 

Date:  October 14, 2004

 

Client name and address:

Xponential, Inc.

6400 Atlantic Blvd., Suite 190

Norcross, Georgia  30071

(Hereinafter referred to as “Debtor”)

 

Lender name and address:

FCC, LLC, d/b/a First Capital

125 TownPark Lane, Suite 190

Kennesaw, Georgia  30144

(Hereinafter referred to as “Lender”)

 

Wachovia Securities

10700 Wheat First Drive

Glen Allen, VA  23060

Attn:  Credit/Margin Dept.

(Hereinafter referred to as “Broker”)

 

Debtor has granted Lender a security interest in a securities account
maintained by Broker for Debtor.  The
parties are entering into this agreement to perfect Lender’s security interest
in that account.

 

THE ACCOUNT.  Broker represents
and warrants to Lender that (I) Broker maintains custody of securities account
number 1192-1233 (the “Account”) for Debtor; (II) the account is not a
margin account; (III) Exhibit A is a
statement produced by the Broker in the ordinary course of its business
regarding the property credited to the Account at the statement’s date and
Broker does not know of any inaccuracy in the statement; and (IV) Broker does
not know of any claim to or interest in the Account, except for claims and
interests of the parties referred to in this agreement.

 

CONTROL BY DEBTOR.  Until Broker
receives a notice from Lender that Lender will exercise exclusive control over
the Account (a “Notice of Exclusive Control”), Broker will promptly comply with
all notifications it receives from Debtor directing it to take any action with
respect to the property in the Account (each an “Entitlement Order”) without
further consent from Lender; provided, however, that, without the
written consent of Lender, Broker shall not permit Debtor to withdraw any
property from the Account.  Lender hereby
designates the following officers as officers who are authorized to consent to
withdrawals from the Account:

 

	
  Name

  	
   

  	
  Title

  
	
  Evan Jones

  	
   

  	
  Senior Vice President

  
	
  Ron Warnock

  	
   

  	
  Senior Vice President

  
	
  Brian Cuttic

  	
   

  	
  Senior Vice President

  

 

 

or any other officers from time to time designated by Lender in writing
to Broker.  Broker shall be entitled to
rely on any written instructions which it reasonably believes are initiated by
any such designated officers of Lender.

 

DEBTOR’S RIGHTS IN ACCOUNT.  If
Lender notifies Broker that Lender will exercise exclusive control over the
Account (a “Notice of Exclusive Control”), Broker will promptly cease complying
with Entitlement Orders or other directions concerning the Account originated
by Debtor and promptly commence to comply with all Entitlement Orders it
receives from Lender.

 

PRIORITY OF LENDER’S SECURITY INTEREST. 
Broker subordinates in favor of Lender any security interest, lien or
right of setoff it may have, now or in the future, against the Account or
property in the Account, except that Broker will retain its prior lien on property
in the Account to secure payment for property purchased for the Account and
normal commissions and fees for the Account.

 

Broker will not agree with any third party that Broker will comply with
Entitlement Orders originated by the third party.

 

STATEMENTS, CONFIRMATIONS AND NOTICES OF ADVERSE CLAIMS.  Broker will send copies of all statements and
confirmations for the Account simultaneously to Debtor and Lender.  Broker will use reasonable efforts to
promptly notify Lender and Debtor if any other person claims that it has a
proprietary interest in property in the Account.

 

BROKER’S RESPONSIBILITIES. 
Except for permitting a withdrawal, delivery or payment in violation of
section entitled “Debtor’s Rights in Account,” Broker will not be liable to
Lender for complying with Entitlement Orders from Debtor that are received by
Broker before Broker receives and has a reasonable opportunity to act on a
Notice of Exclusive Control.  Broker will
not be liable to Debtor for complying with a Notice of Exclusive Control or
with Entitlement Orders originated by Lender, even if Debtor notifies Broker
that Lender is not legally entitled to issue the Entitlement Order or Notice of
Exclusive Control, unless Broker takes the action after it is served with an
injunction, restraining order or other legal process enjoining it from doing
so, issued by a court of competent jurisdiction, and had a reasonable
opportunity to act on the injunction, restraining order or other legal process,
or Broker acts in collusion with Lender in violating Debtor’s rights.

 

This agreement does not create any obligation of Broker except for
those expressly set forth in this agreement. 
In particular, Broker need not investigate whether Lender is entitled
under Lender’s agreements with Debtor to give an Entitlement Order or a Notice
of Exclusive Control.  Broker may rely on
notices and communications which it believes have been given by the appropriate
party.

 

INDEMNITY.  Lender and Debtor
will indemnify Broker, its officers, directors, employees and agents against
claims, liabilities and expenses arising out of this agreement (including
reasonable attorneys’ fees and disbursements), except to the extent the claims,
liabilities or expenses are caused by Broker’s gross negligence or

 

2

 

willful misconduct.  Lender’s and
Debtor’s liability under this section is joint and several.

 

LIABILITY.  Broker will not be
liable to Debtor or Lender for any expense, claim, loss, damage, or cost (“Damages”)
arising out of or relating to its performance under this agreement other than
Damages which result directly from its acts or omissions constituting gross
negligence or willful misconduct, and subject to the limits of the next
sentence.  Broker’s liability is limited
to direct money Damages actually incurred. 
In no event will Broker be liable for any punitive, special, indirect,
or consequential damages, including but not limited to lost profits, even if
advised of the possibility or likelihood of such damages.

 

TERMINATION; SURVIVAL.  Lender
may terminate this agreement by notice to Broker and Debtor.  Broker may terminate this agreement on thirty
(30) days’ notice to Lender and Debtor. 
If Lender notifies Broker that Lender’s security interest in the Account
has terminated, this agreement will immediately terminate.  Sections entitled “Broker’s Responsibilities”
and “Indemnity” will survive termination of this agreement.

 

MISCELLANEOUS PROVISIONS. 
Governing Law.  This agreement and
the Account will be governed by the laws of the Commonwealth of Virginia.  Broker and Debtor may not change the law
governing the Account without Lender’s express written agreement.  Entire Agreement.  This agreement is the entire agreement and
supersedes any prior agreements and contemporaneous oral agreements, of the
parties concerning its subject matter. 
Amendments.  No amendment of, or
waiver of a right under, this agreement will be binding unless it is in writing
and signed by the party to be charged. 
Severability.  To the extent a provision
of this agreement is unenforceable, this agreement will be construed as if the
unenforceable provision were omitted. 
Financial Assets.  All property
credited to the Account will be treated as financial assets under
Article 8 of the Commonwealth of Virginia Uniform Commercial Code.  Successors and Assigns.  A successor to or  assignee of Lender’s right and obligations
under the security  agreement between
Lender and Debtor will succeed to Lender’s right and obligations under this
agreement.  Notices.  A notice or other communication to a party
under this agreement will be in writing (except that Entitlement Orders may be
given orally), will be sent to the party’s address set forth above or to such
other address as the party may notify the other parties and will be effective
on receipt.

 

REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK

 

3

 

IN WITNESS WHEREOF, Debtor, Lender and Broker
have caused this Agreement to be duly executed as of the date first above written.

 

	
  DEBTOR: XPONENTIAL, INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
    /s/ Robert W. Schleizer

  	
   

  
	
  Name:  Robert
  W. Schleizer

  	
   

  
	
  Title:  Chief
  Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  BROKER:    Wachovia Securities

  	
   

  
	
   

  	
   

  
	
  By:

  	
    /s/ D. Scott Anderson

  	
   

  
	
  Name:  D.
  Scott Anderson

  	
   

  
	
  Title:  Vice
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  LENDER: FCC, LLC, d/b/a First Capital

  
	
   

  	
   

  
	
  By:

  	
    /s/ Evan G. Jones

  	
   

  
	
  Name:  Evan G.
  Jones

  	
   

  
	
  Title:  Senior
  Vice President

  	
   

  

 

4Exhibit 4.6(i)

 

LOAN AND SECURITY AGREEMENT

 

Dated as of August 17, 2004

 

$300,000,000

 

by and among

 

NES Rentals Holdings, Inc. and 

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

on the Signature Pages Hereto, 

as Borrowers

 

The Financial Institutions From Time to Time
Party Hereto, 

as Lenders

 

Wachovia Bank, National Association,

as Syndication Agent

 

General Electric Capital Corporation and

Merrill Lynch Capital, 

A Division of Merrill Lynch Business Financial Services, Inc., 
 as Co-Documentation agents

 

and

 

Bank of America, N.A.,

as Administrative Agent

 

 

Banc of America Securities LLC and Wachovia
Capital Markets, LLC,

as Co-Lead Arrangers and Joint Book Runners

 

 

TABLE OF CONTENTS

 

	
  SECTION 1.   CREDIT
  FACILITY

  	
   

  
	
  1.1

  	
  Loans

  	
   

  
	
  1.2

  	
  Letters of Credit

  	
   

  
	
  1.3

  	
  Term
  Loan

  	
   

  
	
  SECTION 2.   INTEREST, FEES AND CHARGES

  	
   

  
	
  2.1

  	
  Interest

  	
   

  
	
  2.2

  	
  Computation of Interest and Fees

  	
   

  
	
  2.3

  	
  Fee
  Letter

  	
   

  
	
  2.4

  	
  Letter of Credit Fees

  	
   

  
	
  2.5

  	
  Unused
  Line Fee

  	
   

  
	
  2.6

  	
  Audit
  Fees

  	
   

  
	
  2.7

  	
  Reimbursement of Expenses

  	
   

  
	
  2.8

  	
  Bank
  Charges

  	
   

  
	
  2.9

  	
  Collateral Protection Expenses; Appraisals

  	
   

  
	
  2.10

  	
  Payment of Charges

  	
   

  
	
  2.11

  	
  No
  Deductions

  	
   

  
	
  SECTION 3.   LOAN
  ADMINISTRATION

  	
   

  
	
  3.1

  	
  Manner of Borrowing Revolving Credit
  Loans/LIBOR Option

  	
   

  
	
  3.2

  	
  Payments

  	
   

  
	
  3.3

  	
  Mandatory and Optional Prepayments

  	
   

  
	
  3.4

  	
  Application of Payments and Collections

  	
   

  
	
  3.5

  	
  All Loans and Letters of Credit to
  Constitute One Obligation

  	
   

  
	
  3.6

  	
  Loan
  Account

  	
   

  
	
  3.7

  	
  Statements of Account

  	
   

  
	
  3.8

  	
  Increased Costs

  	
   

  
	
  3.9

  	
  Basis for Determining Interest Rate
  Inadequate

  	
   

  
	
  3.10

  	
  Sharing
  of Payments, Etc.

  	
   

  
	
  SECTION 4.   TERM AND
  TERMINATION

  	
   

  
	
  4.1

  	
  Term of Agreement

  	
   

  
	
  4.2

  	
  Termination

  	
   

  

 

i

 

	
  SECTION 5.   SECURITY
  INTERESTS

  	
   

  
	
  5.1

  	
  Security Interest in Collateral

  	
   

  
	
  5.2

  	
  Other Collateral

  	
   

  
	
  5.3

  	
  Lien Perfection; Further Assurances

  	
   

  
	
  5.4

  	
  Lien on Realty

  	
   

  
	
  SECTION 6.   COLLATERAL
  ADMINISTRATION

  	
   

  
	
  6.1

  	
  General

  	
   

  
	
  6.2

  	
  Administration of Accounts

  	
   

  
	
  6.3

  	
  Administration of Inventory

  	
   

  
	
  6.4

  	
  Payment of Charges

  	
   

  
	
  SECTION 7.   REPRESENTATIONS
  AND WARRANTIES

  	
   

  
	
  7.1

  	
  General Representations and Warranties

  	
   

  
	
  7.2

  	
  Continuous Nature of Representations and
  Warranties

  	
   

  
	
  7.3

  	
  Survival of Representations and Warranties

  	
   

  
	
  SECTION 8.   COVENANTS
  AND CONTINUING AGREEMENTS

  	
   

  
	
  8.1

  	
  Affirmative Covenants

  	
   

  
	
  8.2

  	
  Negative Covenants

  	
   

  
	
  8.3

  	
  Specific Financial Covenants

  	
   

  
	
  SECTION 9.   CONDITIONS
  PRECEDENT

  	
   

  
	
  9.1

  	
  Conditions to Initial Loans and Initial
  Letters of Credit

  	
   

  
	
  9.2

  	
  Conditions to all Loans and Letters of
  Credit

  	
   

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

  	
   

  
	
  10.1

  	
  Events of Default

  	
   

  
	
  10.2

  	
  Acceleration of the Obligations

  	
   

  
	
  10.3

  	
  Other Remedies

  	
   

  
	
  10.4

  	
  Setoff and Sharing of Payments

  	
   

  
	
  10.5

  	
  Remedies Cumulative; No Waiver

  	
   

  
	
  SECTION 11.   ADMINISTRATIVE
  AGENT

  	
   

  
	
  11.1

  	
  Authorization and Action

  	
   

  
	
  11.2

  	
  Administrative Agent’s and Syndication
  Agent’s Reliance, Etc.

  	
   

  
	
  11.3

  	
  BofA and Affiliates

  	
   

  
	
  11.4

  	
  Lender Credit Decision

  	
   

  
	
  11.5

  	
  Indemnification

  	
   

  

 

 

	
  11.6

  	
  Rights and Remedies to Be Exercised by
  Administrative Agent Only

  	
   

  
	
  11.7

  	
  Agency Provisions Relating to Collateral

  	
   

  
	
  11.8

  	
  Right to Purchase Commitments

  	
   

  
	
  11.9

  	
  Right of Sale, Assignment, Participations

  	
   

  
	
  11.10

  	
  Amendment

  	
   

  
	
  11.11

  	
  Resignation of Administrative Agent;
  Appointment of Successor

  	
   

  
	
  11.12

  	
  Audit and Examination Reports; Disclaimer
  by Lenders

  	
   

  
	
  11.13

  	
  Syndication Agent; Co-Documentation Agents

  	
   

  
	
  11.14

  	
  No Reliance on Administrative Agent’s
  Customer Identification Program

  	
   

  
	
  11.15

  	
  USA Patriot Act

  	
   

  
	
  11.16

  	
  Withholding

  	
   

  
	
  SECTION 12.   MISCELLANEOUS

  	
   

  
	
  12.1

  	
  Power of Attorney

  	
   

  
	
  12.2

  	
  Indemnity

  	
   

  
	
  12.3

  	
  Severability

  	
   

  
	
  12.4

  	
  Successors and Assigns

  	
   

  
	
  12.5

  	
  Cumulative Effect; Conflict of Terms

  	
   

  
	
  12.6

  	
  Execution in Counterparts

  	
   

  
	
  12.7

  	
  Notice

  	
   

  
	
  12.8

  	
  Consent

  	
   

  
	
  12.9

  	
  Credit Inquiries

  	
   

  
	
  12.10

  	
  Time of Essence

  	
   

  
	
  12.11

  	
  Entire Agreement

  	
   

  
	
  12.12

  	
  Interpretation

  	
   

  
	
  12.13

  	
  Confidentiality

  	
   

  
	
  12.14

  	
  GOVERNING LAW; CONSENT TO FORUM

  	
   

  
	
  12.15

  	
  WAIVERS BY BORROWERS

  	
   

  
	
  12.16

  	
  Advertisement

  	
   

  
	
  12.17

  	
  Reimbursement

  	
   

  
	
  12.18

  	
  Holdings as Agent for Borrowers

  	
   

  
	
  12.19

  	
  Recovery

  	
   

  
	
  12.20

  	
  References to Intercreditor Agreement

  	
   

  

 

 

 

LOAN AND SECURITY AGREEMENT

 

THIS
LOAN AND SECURITY AGREEMENT is made as of this 17th
day of August, 2004 by and among BANK OF
AMERICA, N.A. (“BofA”),
a national banking association, individually as a Lender and as administrative
agent (“Administrative Agent”) for
itself and any other financial institution which is or becomes a party hereto
(each such financial institution, including BofA, is referred to hereinafter
individually as a “Lender” and
collectively as the “Lenders”),
the LENDERS, NES RENTALS HOLDINGS, INC., a
Delaware corporation (“Holdings”)
and each subsidiary of Holdings listed as a “Borrower”
on the signature pages hereto (together with Holdings each individually a “Borrower” and collectively “Borrowers”), WACHOVIA BANK, NATIONAL ASSOCIATION, as Syndication Agent, and
MERRILL LYNCH CAPITAL, A DIVISION OF MERRILL
LYNCH BUSINESS FINANCIAL SERVICES, INC. and GENERAL ELECTRIC CAPITAL CORPORATION, as
Co-Documentation Agents.  Capitalized
terms used in this Agreement have the 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 construed in accordance with GAAP consistently applied.

 

SECTION 1.  CREDIT FACILITY

 

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

 

1.1                                 Loans.

 

1.1.1                                                Revolving Credit Loans. 
Each Lender agrees, severally and not jointly, for so long as no Default
or Event of Default has occurred and is continuing, to make Revolving Credit
Loans to Borrowers from time to time during the period from the date hereof to
but not including the last day of the Term, as requested by Borrower
Representative, on its own behalf and on behalf of all other Borrowers in the
manner set forth in subsection 3.1.1 hereof, up to a maximum
principal amount at any time outstanding equal to the lesser of (i) such
Lender’s Revolving Loan Commitment minus (x) the product of such Lender’s
Revolving Loan Percentage multiplied  by the sum of the
Outstanding LC Obligations and the LC Amount and (y) the product of such Lender’s
Revolving Loan Percentage multiplied  by the reserves (other than
the Availability Reserve but including the Equipment Acquisition Reserve), and
(ii) the product of such Lender’s Revolving Loan Percentage multiplied
by the Borrowing Base at such time minus the product of such
Lender’s Revolving Loan Percentage multiplied  by the sum of the
LC Amount and the Outstanding LC Obligations. 
Administrative Agent shall have the right to establish reserves in such
amounts, and with respect to such matters, in Administrative Agent’s Permitted
Discretion, against the amount of Revolving Credit Loans which Borrowers may
otherwise request under this subsection 1.1.1, including without
limitation, with respect to,
without duplication, (i) price adjustments, damages, unearned discounts,
returned products or other matters for which credit memoranda are

 

 

issued in the
ordinary course of any Borrowing Base Party’s business; (ii) potential
dilution related to Accounts; (iii) obsolescence of any Borrowing Base
Party’s Inventory; (iv) slow moving Inventory; (v) other sums due and
payable and chargeable against Borrowers’ Loan Account as Revolving Credit
Loans under any section of this Agreement; (vi) amounts owing by any
Borrowing Base Party to any Person to the extent secured by a Lien on, or trust
over, any Property of any Borrowing Base Party; (vii) amounts owing by any
Borrowing Base Party in connection with Product Obligations; (viii) amounts
owing by any Account Debtors of the traffic safety business unit of Borrowers
to any Borrowing Base Party, the Accounts of which Account Debtor are supported
by surety and/or performance bonds; and (ix) such
other specific events, conditions or contingencies as to which Administrative
Agent, in its Permitted Discretion, determines reserves should be established
from time to time hereunder.  The
Revolving Credit Loans shall be repayable in accordance with the terms hereof
and of the Revolving Notes and shall be secured by all of the Collateral.

 

1.1.2                                                Overadvances. 
Insofar as Borrowers may request and Administrative Agent may be willing
in its sole discretion to make (or, as provided below, as Majority Lenders may
be willing to consent to in their sole discretion) Revolving Credit Loans to
Borrowers at a time when the unpaid balance of Revolving Credit Loans plus the
sum of the LC Amount plus the amount of Outstanding LC Obligations, plus
reserves, exceeds, or would exceed with the making of any such Revolving Credit
Loan, the Borrowing Base (and such Loan or Loans being herein referred to
individually as an “Overadvance”
and collectively, as “Overadvances”),
Administrative Agent shall enter such Overadvances as debits in the Loan
Account.  All Overadvances shall be
repaid on demand, shall be secured by the Collateral and shall bear interest as
provided in this Agreement for Revolving Credit Loans generally.  Any Overadvance made pursuant to the terms
hereof shall be made by all Lenders ratably in accordance with their respective
Revolving Loan Percentages.  Overadvances
in the aggregate amount of $3,000,000 or less may, unless a Default or Event of
Default (other than any Default or Event of Default resulting solely from the
funding of such Overadvance) has occurred and is continuing, be made in the
sole discretion of Administrative Agent. 
Overadvances in an aggregate amount of more than $3,000,000 but less
than $5,000,000 may, unless a Default or an Event of Default (other than any
Default or Event of Default resulting solely from the funding of such
Overadvance) has occurred and is continuing, be made with the consent of the
Majority Lenders.  Overadvances in an
aggregate amount of $5,000,000 or more and Overadvances to be made after the
occurrence and during the continuation of a Default or an Event of Default
(other than any Default or Event of Default resulting solely from the funding
of such Overadvance) shall require the consent of all Lenders.  The foregoing notwithstanding, in no event,
unless otherwise consented to by all Lenders, (w) shall any Overadvances
be outstanding for more than sixty (60) consecutive days, (x) after all
outstanding Overadvances have been repaid, shall Administrative Agent make any
additional Overadvances unless sixty (60) days or more have expired since the
last date on which any Overadvances were outstanding, (y) shall
Overadvances be outstanding on more than ninety (90) days within any three
hundred sixty day (360) period or (z) shall Administrative Agent make
Revolving Credit Loans on behalf of Lenders under this subsection 1.1.2
to the extent such Revolving Credit Loans would cause a Lender’s share

 

 

of the Revolving
Credit Loans to exceed such Lender’s Revolving Loan Commitment minus the
product of such Lender’s Revolving Loan Percentage multiplied  by
the sum of the LC Amount and the Outstanding LC Obligations.

 

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

 

1.1.4                                                Swingline Loans. 
In order to reduce the frequency of transfers of funds from Lenders to
Administrative Agent for making Revolving Credit Loans and for so long as no
Default or Event of Default exists, Administrative Agent shall be permitted
(but not required) to make Revolving Credit Loans to Borrowers upon request by
Borrowers (such Revolving Credit Loans to be designated as “Swingline Loans”); provided that
the aggregate amount of Swingline Loans outstanding at any time will not
(i) exceed $10,000,000; (ii) when added to the principal amount of
Administrative Agent’s other Revolving Credit Loans then outstanding plus
the product of Administrative Agent’s Revolving Loan Percentage multiplied
by the sum of the LC Amount and the Outstanding LC Obligations, exceed
Administrative Agent’s Revolving Loan Commitment; or (iii) when added to
the principal amount of all other Revolving Credit Loans then outstanding plus
the LC Amount plus the Outstanding LC Obligations, exceed the Borrowing
Base.  Within the foregoing limits,
Borrowers may borrow, repay and reborrow Swingline Loans.  All Swingline Loans shall be treated as
Revolving Credit Loans for purposes of this Agreement and accordingly each
Lender shall be deemed to have an undivided interest and participation therein
to the extent of such Lender’s Revolving Loan Percentage thereof, except that
(a) all Swingline Loans shall be Base Rate Revolving Portions and
(b) notwithstanding anything herein to the contrary (other than as set
forth in the next succeeding sentence), all principal and interest paid with
respect to Swingline Loans shall be for the sole account of Administrative
Agent in its capacity as the lender of Swingline Loans.  Notwithstanding the foregoing, not more than
2 Business Days after (1) Lenders receive notice from Administrative Agent
that a Swingline Loan has been advanced in respect of a drawing under a Letter
of Credit or (2) in any other circumstance, demand is made by
Administrative Agent (which demand shall be made on a bi-weekly or more
frequent basis in the discretion of Administrative Agent), each Lender shall
irrevocably and unconditionally fund, without recourse or warranty from
Administrative Agent, its undivided interest and participation in each
Swingline Loan to the extent of such Lender’s Revolving Loan Percentage
thereof, by paying to Administrative Agent, in same day funds, an amount equal
to the product of such Lender’s Revolving Loan Percentage multiplied  by
the principal amount of such Swingline Loan.

 

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

 

 

that such Revolving
Credit Loans are necessary or desirable (i) to protect all or any portion
of the Collateral, (ii) to enhance the likelihood, or maximize the amount
of, repayment of the Loans and the other Obligations, or (iii) to pay any
other amount chargeable to Borrowers pursuant to this Agreement, including
without limitation costs, fees and expenses as described in subsections 2.7
and 2.8 (hereinafter, “Administrative
Agent Loans”); provided, that in no event shall the maximum
principal amount of the Revolving Credit Loans exceed the aggregate Revolving
Loan Commitments. Each Lender shall be obligated to advance its Revolving Loan
Percentage of each Administrative Agent Loan. 
If Administrative Agent Loans are made pursuant to the preceding
sentence, then all Lenders that have committed to make Revolving Credit Loans
shall be bound to make, or permit to remain outstanding, such Administrative
Agent Loans based upon their Revolving Loan Percentages in accordance with the
terms of this Agreement, provided that Majority Lenders may at any time
revoke Administrative Agent’s authorization to make additional Administrative
Agent Loans by delivering written notice of such revocation to Administrative
Agent, which revocation shall become effective prospectively upon
Administrative Agent’s receipt thereof.

 

1.2                                 Letters
of Credit.  On the
Closing Date, each Existing Letter of Credit shall be deemed for all purposes
of this Agreement to be a Letter of Credit issued hereunder and Wachovia Bank,
as issuer of each such Existing Letter of Credit shall be deemed to have sold
to each Lender, and each Lender shall be deemed, without further action by any
party hereto, to have purchased from Wachovia Bank, an undivided interest and
participation therein equal to the principal amount of the Existing Letter of
Credit and the related LC Obligations multiplied by such Lender’s Revolving
Loan Percentage; provided  however, that each Existing Letter of
Credit shall expire upon its stated expiration date as in effect on the Closing
Date and shall not be renewed notwithstanding any automatic renewal provision
contained therein or any other provisions thereof to the contrary.  From and after the Closing Date,
Administrative Agent agrees, for so long as no Default or Event of Default
exists and if requested by Borrower Representative, on its own behalf and on
behalf of all other Borrowers, to issue its, or cause to be issued by Bank or
another Affiliate of Administrative Agent, on the date requested by Borrower
Representative, on its own behalf and on behalf of all other Borrowers, Letters
of Credit for the account of Borrowers, provided that the LC Amount
(including Existing Letters of Credit) shall not exceed $35,000,000 at any
time.  No Letter of Credit may have an
expiration date after the last day of the Term. 
Notwithstanding anything to the contrary contained herein, Borrowers,
Administrative Agent and Lenders hereby agree that all LC Obligations and all
obligations of Borrowers relating thereto shall be satisfied by the prompt
issuance of one or more Revolving Credit Loans that are Base Rate Portions,
which Borrowers hereby acknowledge are requested and Lenders hereby agree to
fund without the requirement to satisfy any conditions set forth in Section 9.  In the event that Revolving Credit Loans are
not, for any reason, promptly made to satisfy all then Outstanding LC
Obligations, each Lender hereby agrees to pay to Administrative Agent, on
demand, an amount equal to such LC Obligations multiplied  by such
Lender’s Revolving Loan Percentage, and until so paid, such amount shall bear interest
and be payable at the same rate and in the same manner as Base Rate
Portions.  The obligation of the
Borrowers to pay all LC Obligations shall be absolute and unconditional
irrespective of any claim, setoff, defense or other right that Borrowers may
have against the

 

 

Administrative Agent or any
other Person; provided that nothing contained herein shall limit
Borrower’s rights that arise under the applicable letter of credit application
and related documents executed by and between the relevant Borrower and the
applicable letter of credit issuer, and hereunder.  Immediately upon the issuance of a Letter of
Credit under this Agreement, each Lender shall be deemed to have irrevocably
and unconditionally purchased and received from Administrative Agent, without
recourse or warranty, an undivided interest and participation therein equal to
such LC Obligations multiplied  by such Lender’s Revolving Loan
Percentage.

 

1.3                                 Term Loan.

 

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

 

SECTION 2.  INTEREST, FEES
AND CHARGES

 

2.1                                 Interest.

 

2.1.1                                                Rates of Interest. 
Interest shall accrue on the principal amount of the Base Rate Revolving
Portions and the Base Rate Term Portions outstanding at the end of each day at
a fluctuating rate per annum equal to the Applicable Margin then in effect plus
the Base Rate.  Said rate of interest
shall increase or decrease 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 the Base Rate occurs.  If Borrower
Representative, on its own behalf and on behalf of all other Borrowers,
exercises the LIBOR Option as provided in subsection 3.1, interest
shall accrue on the principal amount of the LIBOR Revolving Portions and the
LIBOR Term Portions outstanding at the end of each day at a rate per annum equal
to the Applicable Margin then in effect plus the LIBOR applicable to
each LIBOR Portion for the corresponding Interest Period.

 

2.1.2                                                Default Rate of Interest. 
At the option of Administrative Agent or the Majority Lenders, upon and
after the occurrence of an Event of Default, and during the continuation
thereof upon notice to Borrower Representative, all of the Obligations shall
bear interest at a rate per annum equal to 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 Obligations automatically without notice to Borrower
Representative or any other Person and without further action by any Person
upon the occurrence of an Event of Default as described in subsection 10.1.6
and (ii) in the event no applicable interest rate is otherwise expressly stated
herein with respect to any such Obligation, the Default Rate in respect thereof
shall be the sum of the Base Rate, plus the Applicable Margin then in effect
for Base Rate Portions, plus 2.0%.

 

 

2.1.3                                                Maximum Interest. 
In no event whatsoever shall the aggregate of all amounts deemed
interest hereunder or under the Notes and charged or collected pursuant to the
terms of this Agreement or pursuant to the Notes exceed the highest rate
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 the Notes are in contravention of any such law,
such provisions shall be deemed amended to conform thereto.  If at any time, the amount of interest paid
hereunder is limited by the Maximum Rate, and the amount at which interest
accrues hereunder is subsequently below the Maximum Rate, the rate at which
interest accrues hereunder shall remain at the Maximum Rate, until such time as
the aggregate interest paid hereunder equals the amount of interest that would
have been paid had the Maximum Rate not applied.

 

2.2                                 Computation
of Interest and Fees. 
Interest, Letter of Credit fees and Unused Line Fees hereunder shall be
calculated daily and shall be computed on the actual number of days elapsed
over a year of 360 days, provided that interest on Base Rate Revolving
Portions and Base Rate Term Portions bearing interest based on the Prime Rate
shall be computed on the actual number of days elapsed over a year of 365 or
366 days, as applicable.

 

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

 

2.4                                 Letter
of Credit Fees. 
Borrowers shall pay to Administrative Agent:

 

(i)                                     for all Letters of Credit, for the
ratable benefit of Lenders a per annum fee equal to (x) the Applicable Margin
then in effect for LIBOR Revolving Portions multiplied by the aggregate undrawn
face amount of such Letters of Credit outstanding from time to time during the
term of this Agreement or (y) at any time the Default Rate is applicable to the
Obligations, the Default Rate multiplied by the aggregate undrawn face amount
of such Letters of Credit outstanding from time to time during the term of this
Agreement, plus all normal and customary charges associated with the
issuance, processing and administration thereof, which fees and charges shall
be deemed fully earned upon issuance of each such Letter of Credit, shall be
due and payable on the first Business Day of each month and shall not be
subject to rebate or proration upon the termination of this Agreement for any
reason;

 

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

 

 

(iii)                               for all Letters of Credit, for the
account of the issuer of any Letter of Credit, the reasonable and customary
issuance, presentation, amendment, renewal and other processing fees, and other
standard costs and charges of such issuer relating to letters of credit as from
time to time in effect.  Such customary
fees and standard costs and charges are due and payable on demand and are
nonrefundable.

 

2.5                                 Unused
Line Fee. 
Borrowers shall pay to Administrative Agent, for the ratable benefit of
Lenders, a fee (the “Unused Line Fee”)
equal to the Applicable Margin for the Unused Line Fee multiplied by the
average daily amount by which the Revolving Credit Maximum Amount exceeds the sum of (i) the
outstanding principal balance of the Revolving Credit Loans plus (ii) the
LC Amount plus (iii) the Outstanding LC Obligations; provided, that for purposes of
allocating the Unused Line Fee among Lenders, outstanding Swingline Loans shall
not be included as part of the outstanding balance of the Loans for purposes of
calculating such fees owed to Lenders other than Administrative Agent.  The Unused Line Fee shall be payable monthly
in arrears on the first day of each month commencing on September 1, 2004
and on the last day of the Term.

 

2.6                                 Audit Fees.  Borrowers shall pay to Administrative Agent
audit fees in accordance with Administrative Agent’s current schedule of
fees in effect from time to time in connection with Audits and such other
matters as Administrative Agent shall deem appropriate in its reasonable
judgment, plus all reasonable out-of-pocket expenses incurred by Administrative
Agent in connection with such Audits (including, without limitation, a $850 per
day per field examiner charge); provided, that so long as no Event of
Default has occurred and is continuing and Availability is equal to or greater
than the Required Minimum Availability, Borrowers shall not be liable for such
Audit fees incurred in connection with more than two (2) such Audits during any
fiscal year, whether such Audits are conducted by employees of Administrative
Agent or by third parties hired by Administrative Agent (it being understood
and agreed that Borrowers shall bear all fees, costs and expenses of Audits
conducted when an Event of Default has occurred and is continuing or at any
time after Availability fails to equal at least the Required Minimum
Availability until Availability has subsequently exceeded $42,500,000 for each
day during a period of 30 consecutive days). 
Such Audit fees and out-of-pocket expenses shall be payable within 10
days after Borrower Representative’s receipt from Administrative Agent of an
invoice therefor.  Administrative Agent
may, in its sole discretion, provide for the payment of such amounts by making
appropriate Revolving Credit Loans to Borrowers and charging Borrowers’ Loan
Account therefor.

 

2.7                                 Reimbursement
of Expenses.  If,
at any time or times regardless of whether or not an Event of Default then
exists, (i) Administrative Agent or the Co-Lead Arrangers incur reasonable
legal or accounting expenses or any other reasonable costs or out-of-pocket
expenses in connection with the negotiation and preparation of this Agreement
or any of the other Loan Documents, or any syndication or attempted syndication
of the Obligations (including, without limitation, printing and distribution of
materials 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 any other reasonable costs or
out-of-pocket expenses in connection with any (1) amendment of or modification
of this Agreement or any of the other Loan Documents, the administration of
this Agreement or any of the other Loan Documents and the transactions
contemplated hereby and thereby; or (2) any attempt to inspect or verify the
Collateral; or (iii) Administrative Agent incurs legal or accounting expenses
or other costs or out-of-pocket expenses in connection with (1) any litigation,
contest, dispute, suit, proceeding or action (whether instituted by
Administrative Agent, any Lender, any Borrower or any other Person) relating to
the Collateral, this Agreement or any of the other Loan Documents or any
Borrower’s or any of its Subsidiaries’ affairs; (2) any attempt to enforce any
rights of Administrative Agent or any Lender against any Borrower or any other
Person which may be obligated to Administrative Agent or any Lender by virtue
of this Agreement or any of the other Loan Documents, including, without
limitation, 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-pocket expenses of Administrative Agent or the Co-Lead Arrangers (as
applicable) shall be charged to Borrowers; provided, that Borrowers
shall not be responsible for any such legal and accounting and other costs and
out-of-pocket expenses (x) to the extent incurred because of the gross
negligence or willful misconduct of Administrative Agent or such Co-Lead
Arrangers (as applicable) as determined by a final non-appealable (or the time
to appeal for which has run) judgment of a court of competent jurisdiction or
(y) to the extent such costs and expenses result from a claim brought by any
Borrower against Administrative Agent or such Joint Lead Arranger (as applicable)
for breach in bad faith of such Person’s obligations hereunder, if such
Borrower has obtained a final non-appealable (or the time to appeal for which
has run) judgment in its favor on such claim as determined by a court of
competent jurisdiction.  All amounts
chargeable to Borrowers under this subsection 2.7 shall be
Obligations secured by all of the Collateral, shall be payable on demand to
Administrative Agent or the applicable Co-Lead Arranger, as the case may be,
and shall bear interest from the date such demand is made until paid in full at
the rate applicable to Base Rate Revolving Portions from time to time.  Borrowers shall also reimburse Administrative
Agent for expenses incurred by Administrative Agent in its administration of
the Collateral to the extent and in the manner provided in subsections 2.8
and 2.9 hereof.

 

2.8                                 Bank
Charges.  Borrowers
shall pay to Administrative Agent, for the benefit of itself or the applicable
Lenders, on demand, any and all reasonable fees, costs or expenses which Administrative
Agent or any Lender pays to a bank or other similar institution arising out of
or in connection with (i) the forwarding to any Borrower or any other
Person on behalf of any Borrower, by Administrative Agent or any Lender, of
proceeds of Loans made to Borrowers pursuant to this Agreement and
(ii) the depositing for collection by Administrative Agent or any Lender
of any check or item of payment received or delivered to Administrative Agent
or any Lender on account of 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, and any 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 sale thereof shall be
borne and paid by Borrowers.  All such
expenses shall be payable upon demand, and if Borrowers fail to promptly pay
any portion thereof when due, Administrative Agent may, at its option, but
shall not be required to, pay the same and charge Borrowers therefor, including
by the making of Revolving Credit Loans to Borrowers in the amount thereof and
entering such amount as a debit in the Loan Account.  Additionally, Borrowers shall bear the cost
and expense of (i) the appraisals of the Rental Equipment Inventory
required pursuant to subsection 8.1.1(ii) and (ii) if a Default or
Event of Default shall have occurred and be continuing, appraisals from
appraisers engaged by Administrative Agent from time to time  (who may be personnel of Administrative
Agent), stating the then current fair market value of all or any portion of the
real estate or personal property of any Borrower or any of its Subsidiaries,
including without limitation the Inventory (but excluding the Rental Equipment
Inventory) of any Borrower and its Subsidiaries.

 

2.10                           Payment
of Charges.  All
amounts chargeable to Borrowers under this Agreement shall be Obligations
secured by all of the Collateral, shall be, unless specifically otherwise
provided, payable on demand and shall bear interest from the date demand was
made or such amount is due, as applicable, until paid in full at the Default
Rate.

 

2.11                           No
Deductions.

 

2.11.1                                          Any and all payments or
reimbursements made hereunder or under any other Loan Document shall be made
free 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 any
Lender or franchise taxes by the United States or by the jurisdiction under the
laws of which Administrative Agent or any Lender is organized or doing business
or any political subdivision thereof and (y) taxes imposed on or measured by
its net income by the jurisdiction of Administrative Agent’s or such Lender’s
applicable lending office or any political subdivision thereof or franchise
taxes (all such taxes, levies, imposts, deductions, charges or withholdings and
all liabilities with respect thereto excluding such taxes imposed on net
income, herein “Tax Liabilities”).  If any Borrower shall be required by law to
deduct any such Tax Liabilities from or in respect of any sum payable or
reimbursable hereunder or under any other Loan Document to Administrative Agent
or any Lender, then (x) the sum so payable or reimbursable shall be increased
as may be necessary so that, after all required deductions are made,
Administrative Agent or such Lender receives an amount equal to the sum it
would have received had no such deductions been made, (y) such Borrower shall
make such deductions and pay the full amount deducted to the relevant taxing
authority or other authority in accordance with applicable law and (z) such
Borrower shall deliver to Administrative Agent evidence of such payment.

 

2.11.2                                          In addition each Borrower agrees to
pay any present or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies of the United States or any political
subdivision thereof or any applicable foreign

 

 

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

 

2.11.3                                          Borrowers shall jointly and
severally indemnify Administrative Agent and each Lender for the amount of Tax
Liabilities and Other Taxes (including any Tax Liabilities or Other Taxes
imposed by any jurisdiction on amounts payable under this subsection 2.11)
paid by Administrative Agent or such Lender (as the case may be) and any
liability (including for penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Tax Liabilities or Other Taxes were
correctly or legally asserted.  This
indemnification payment shall be made within 30 days from the date
Administrative Agent or such Lender (as the case may be) makes written demand
therefor.

 

2.11.4                                          Each Lender that is organized under
the laws of any jurisdiction other than the United States or any state or
political subdivision thereof agrees (i) to furnish to Administrative
Agent and Borrowers (x) either IRS Form W-8BEN or IRS Form W-8ECI, in each case
certifying such Lender’s entitlement to a complete exemption from, or a reduced
rate of, United States federal withholding tax on all payments made hereunder
or under any other Loan Document, (y) to the extent that such Lender does not
act or ceases to act for its own account with respect to any portion of any
amounts paid or payable to such Lender hereunder or under any other Loan
Document, IRS Form W-8IMY together with any information such Lender chooses to
transmit with such form, and any other certificate or statement required under
applicable United States laws and regulations, to establish that such Lender is
not acting for its own account with respect to a portion of any such amounts
paid or payable to such Lender or (z) any other form, certificate or document
prescribed by the IRS certifying as to such Lender’s entitlement to complete
exemption from, or a reduced rate of, United States federal withholding tax on
all payments made hereunder or under any other Loan Document, (ii) to
provide to Administrative Agent and Borrowers new forms upon the obsolescence
of any previously delivered forms and comparable statements in accordance with
applicable United States laws and regulations and amendments, duly executed and
completed by such Lender, and (iii) to comply from time to time with all
applicable United States laws and regulations with regard to such withholding
tax 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 the
United States or any state or political subdivision thereof shall be required
to deliver after the date such Lender became a party to this Agreement any
form, certificate, document or statement pursuant to this subsection 2.11.4
that such Lender is not legally entitled to deliver.

 

2.11.5                                          Notwithstanding anything to the
contrary contained in subsection 2.11.1, (i) each Borrower shall be
entitled, to the extent it is required to do so by law, to deduct or withhold
Tax Liabilities imposed by the United States (or any political subdivision or
taxing authority thereof or therein) from interest, fees or other amounts
payable hereunder for the account of any Lender that is organized under the
laws of any jurisdiction other than the United States or any state or political
subdivision

 

 

thereof to the extent
that such Lender has not provided to such Borrower IRS forms that establish
entitlement to a complete exemption from, or a reduced rate of, United States
federal withholding tax (and each Borrower hereby agrees to give Administrative
Agent prompt written notice in the event that it is required to so deduct or
withhold) and (ii) Borrowers shall not be obligated pursuant to subsection 2.11.1
hereof to pay additional amounts to any Lender that is organized under the laws
of any jurisdiction other than the United States or any state or political
subdivision thereof in respect of Tax Liabilities imposed by the United States
to the extent that (x) the obligation to pay such additional amounts would not
have arisen but for the failure of such Lender to comply with the requirements
of subsection 2.11.4 or (y) the obligation to pay such additional
amounts does not result from a change in applicable laws (including applicable
statutes, regulations, administrative interpretations, judicial decisions and
treaties) occurring after the date on which such Lender became a party to this
Agreement.

 

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

 

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

 

2.11.8                                          If any Lender determines, in its
sole discretion, that it has actually received a refund in respect of any Tax
Liabilities with respect to which any Borrower has paid additional amounts to
such Lender pursuant to subsection 2.11.1, such Lender shall
promptly notify Administrative Agent and pay such refund over to the Borrower
Representative (but only to the extent of additional amounts paid by the
relevant Borrower under subsection 2.11.1 with respect to Tax
Liabilities giving rise to such refund), on an after-tax basis, net of all
expenses incurred by such Lender in connection with obtaining such refund and
without interest; provided, that Borrower Representative, upon the
request of such Lender, shall repay to such Lender the amount previously paid
over to Borrower Representative (plus any penalties, interest or other charges
imposed by the relevant taxing authority) in the event that such Lender is
required to repay such refund to such taxing authority.  Nothing in this subsection 2.11.8
shall interfere with the right of any Lender to arrange its tax affairs in
whatever manner it deems fit or require any Lender to disclose to Borrower
Representative, any Borrower or any other Person any information or any
computations relating to its tax affairs.

 

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

 

 

pursuant to this subsection 2.11
shall not constitute a waiver of Administrative Agent’s or such Lender’s right
to demand such compensation; provided that Borrowers shall not be
required to compensate Administrative Agent or a Lender pursuant to this subsection 2.11
for any Tax Liabilities, Other Taxes or additional amounts incurred more than
180 days prior to the date that Administrative Agent or such Lender, as the
case may be, notifies Borrower Representative of its intention to claim
compensation under this subsection; provided  further that, if the
circumstances giving rise to such claim are retroactive, then the 180-day
period referred to above shall be extended to include the period of retroactive
effect thereof.

 

(b)         If
a Lender claims any compensation pursuant to this subsection 2.11,
then (a) such Lender shall use reasonable efforts (consistent with legal and
regulatory restrictions) to designate a different lending office or to file any
statement or document reasonably requested by Borrowers if the making of such
designation or filing would avoid the need for, or reduce the amount of, any
such amounts and would not, in the sole discretion of such Lender, be otherwise
disadvantageous to such Lender and (b) at Borrowers’ request, Administrative
Agent or an Eligible Assignee reasonably acceptable to Administrative Agent and
Borrowers shall have the right (but not the obligation) to purchase from such
Lender, and each such Lender shall, upon such request, sell and assign to
Administrative Agent or such Eligible Assignee, all of such Lender’s
outstanding Loan Commitments hereunder. 
Such sale and assignment shall be consummated promptly after
Administrative Agent has arranged for a purchase by Administrative Agent or an
Eligible Assignee pursuant to an Assignment and Assumption Agreement, and at a
price equal to the outstanding principal balance of such Lender’s Loans, plus
accrued interest and fees, without premium or discount.

 

SECTION 3.  LOAN
ADMINISTRATION

 

3.1                                 Manner of Borrowing Revolving Credit Loans/LIBOR
Option.  Borrowings
under the credit facility established pursuant to Section 1 hereof
shall be as follows:

 

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

 

 

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

 

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

 

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

 

 

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

 

(b)                               If
(i) any Lender fails to make available its Revolving Loan Percentage of any
Revolving Credit Loan to be made on the applicable borrowing date or (ii) in
the event that Administrative Agent has made such Revolving Loan Percentage
available to Borrowers on behalf of such Lender and, such Lender fails to
reimburse Administrative Agent as provided in paragraph (a) above (such Lender,
a “Defaulting Lender”), Administrative Agent will notify Borrower Representative
of such failure to fund and, upon demand by Administrative Agent, Borrowers
shall pay such amount to Administrative Agent for Administrative Agent’s
account, together with interest thereon for each day elapsed since the date of
such borrowing, at a rate per annum equal to the interest rate applicable at
the time to the Revolving Credit Loans comprising that particular
borrowing.  Administrative Agent shall
not be obligated to transfer to a Defaulting Lender any payments made by
Borrowers to Administrative Agent for the Defaulting Lender’s benefit; nor
shall a Defaulting Lender be entitled to the sharing of any payments
hereunder.  Amounts payable to a
Defaulting Lender shall instead be paid to or retained by Administrative
Agent.  In its discretion, Administrative
Agent may loan Borrowers the amount of all such payments received or retained
by it for the account of such Defaulting Lender.  Any amounts so loaned to Borrowers shall bear
interest at the rate applicable to Base Rate Revolving Portions and for all
other purposes of this Agreement shall be treated as if they were Revolving
Credit Loans, provided  however, that for purposes of voting or
consenting to matters with respect to the Loan Documents and determining
Revolving Loan Percentages, such Defaulting Lender shall be deemed not to be a “Lender”.  Until a Defaulting Lender cures its failure
to fund its Revolving Loan Percentage of any borrowing (A) such Defaulting
Lender shall not be entitled to any portion of the Unused Line Fee, (B) the
Unused Line Fee shall accrue in favor of the Lenders which have funded their
respective Revolving Loan Percentages of such requested borrowing and shall be
allocated among such performing Lenders ratably based upon their relative Loan
Commitments and (C) if all of the conditions to such borrowing had been met by
Borrowers and neither Administrative Agent nor any other Lender funds the
Defaulting Lender’s Revolving Loan Percentage of such borrowing, the Unused
Line Fee shall be calculated as if the Defaulting Lender’s Revolving Loan
Percentage of such borrowing had been funded. 
This subsection shall remain effective with respect to such Lender
until such time as the Defaulting Lender shall no longer be in default of any
of its obligations under this Agreement. 
The terms of this subsection shall not be construed to increase or
otherwise affect the Loan Commitment of any Lender, or relieve or excuse the
performance by any Borrower of its duties and obligations hereunder.

 

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

 

 

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

 

3.1.5                                                Letter of Credit Requests. 
A request for a Letter of Credit shall be made in the following
manner:  Borrower Representative, on its
own behalf and on behalf of all other Borrowers, may give Administrative Agent
and Bank a written notice of its request for the issuance of a Letter of
Credit, not later than 11:00 a.m. (Chicago, Illinois time), one Business Day
before the proposed issuance date thereof, in which notice Borrower Representative
shall specify the proposed issuer, issuance date and format and wording for the
Letter of Credit being requested (which shall be satisfactory to Administrative
Agent and the Person being asked to issue such Letter of Credit); provided,
that no such request may be made at a time when a Default or Event of Default
has occurred and is continuing.  Such
request shall be accompanied by an executed application and reimbursement
agreement in form and substance satisfactory to Administrative Agent and the
Person being asked to issue the Letter of Credit, as well as any required
resolutions.

 

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

 

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

 

 

3.1.8                                                Conversion of Base Rate Portions. 
Provided that as of both the date of the LIBOR Request and the first day
of the Interest Period, no Default or Event of Default has occurred and is
continuing, Borrowers may, on any Business Day, convert any Base Rate Portion
into a LIBOR Portion.  If Borrowers
desire to convert a Base Rate Portion, Borrower Representative, on its own
behalf and on behalf of all other Borrowers, shall give Administrative Agent a
LIBOR Request no later than 11:00 a.m. (Chicago, Illinois time) on the third
Business Day prior to the requested conversion date.  After giving effect to any conversion of Base
Rate Portions to LIBOR Portions, Borrowers shall not be permitted to have
outstanding at any one time LIBOR Portions with more than ten (10) different Interest Periods.

 

3.1.9                                                Continuation of LIBOR Portions. 
Provided that, as of both the date of the LIBOR Request and the first
day of the Interest Period, no Default or Event of Default has occurred and is
continuing, Borrowers may, on any Business Day, continue any LIBOR Portions
into a subsequent Interest Period of the same or a different permitted
duration.  If Borrowers desire to
continue a LIBOR Portion, Borrower Representative, on its own behalf and on
behalf of all other Borrowers, shall give Administrative Agent a LIBOR Request
no later than 11:00 a.m. (Chicago, Illinois time) on the third Business Day
prior to the requested continuation date. 
After giving effect to any continuation of LIBOR Portions, Borrowers
shall not be permitted to have outstanding at any one time LIBOR Portions with
more than ten (10) different Interest Periods. 
If Borrower Representative shall fail to give timely notice of its
election to continue any LIBOR Portion or portion thereof as provided above, or
if such continuation shall not be permitted, such LIBOR Portion or portion
thereof, unless such LIBOR Portion shall be repaid, shall automatically be
converted into a Base Rate Portion at the end of the Interest Period then in
effect with respect to such LIBOR Portion.

 

3.1.10                                          Inability to Make LIBOR Portions. 
Notwithstanding any other provision hereof, if any applicable law,
treaty, regulation or directive, or any change therein or in the interpretation
or application thereof, shall make it unlawful for any Lender (for purposes of
this subsection 3.1.10, the term “Lender”
shall include the office or branch where such Lender or any Person then
controlling such Lender makes or maintains any LIBOR Portions) to make or
maintain its LIBOR Portions, or if with respect to any Interest Period,
Administrative Agent is unable to determine the LIBOR relating thereto, or adverse
or unusual conditions in, or changes in applicable law relating to, the London
interbank market make it, in the reasonable judgment of Administrative Agent,
impracticable to fund therein any of the LIBOR Portions, or make the projected
LIBOR unreflective of the actual costs of funds therefor to any Lender, then,
on notice thereof by such Lender or Administrative Agent (as applicable) to
Borrower Representative (with a copy to Administrative Agent, if applicable),
the obligation of Administrative Agent and Lenders to make or continue LIBOR
Portions or convert Base Rate Portions to LIBOR Portions hereunder shall
forthwith be suspended until such Lender or Administrative Agent notifies
Borrower Representative (with a copy to Administrative Agent, if applicable)
that such circumstances no longer exist and, Borrowers shall, if any affected
LIBOR Portions 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
Representative prompt notice of the cessation of the circumstance giving rise
to the suspension of LIBOR availability, provided that the failure to
give any such notice shall not result in any liability of Administrative Agent
or any Lender hereunder or in the modification, alteration, impairment, or
waiver of the rights of Administrative Agent or any Lender hereunder.

 

3.2                                 Payments.

 

3.2.1                                                Principal.

 

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

 

(ii)                                  Term Loan. 
Principal payable on account of the Term Loan shall be payable by
Borrowers in twenty (20) quarterly installments.  Each of the first nineteen (19) installments
of principal shall be in an amount equal to $500,000 and shall be payable on
the first day of each quarter, commencing on September 30, 2004 and ending
on June 30, 2009.  The final
installment of principal shall be in the amount of $190,500,000 or otherwise in
an amount equal to the then remaining principal balance of the Term Loans, and
shall be payable on the last day of the Term. 
Each such installment shall be payable to Administrative Agent for the
account of the applicable Lender.  The
Term Loans shall be payable in 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 on
the earliest of (1) the first calendar day of each month (for the immediately
preceding month), computed through the last calendar day of the preceding
month, (2) the occurrence of an Event of Default in consequence of which
Administrative Agent or Majority Lenders elect to accelerate the maturity and
payment of the Obligations (or in consequence of which 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 each
LIBOR Interest Payment Date and on the earlier of (1) the occurrence of an
Event of Default in consequence of which Administrative Agent or Majority
Lenders elect to accelerate the maturity and payment of the Obligations (or in
consequence 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 and
payable on demand by Administrative Agent.

 

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

 

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

 

3.2.5                                                Prepayment of/Failure to Borrow
LIBOR Portions.  Borrowers may prepay a LIBOR Portion only
upon three (3) Business Days’ prior written notice to Administrative Agent
(which notice shall be irrevocable).  In
the event of (i) the payment of any principal of any LIBOR Portion other
than on the last day of the Interest Period applicable thereto (including as a
result of an Event of Default), (ii) the conversion of any LIBOR Portion
other than on the last day of the Interest Period applicable thereto, or
(iii) the failure to borrow, convert, continue or prepay any LIBOR Portion
on the date specified in any notice delivered pursuant hereto, then, in any
such event (the events described in the foregoing clauses (i),  (ii)
and (iii), each a “Breakage Event”),
Borrowers shall compensate each Lender for the loss, cost and expense
attributable to such event, as determined by such Lender in a manner consistent
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
Representative, within

 

 

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

 

3.3                                 Mandatory and Optional Prepayments.

 

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

 

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

 

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

 

 

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

 

(iii)                               notwithstanding the foregoing clause
(i), if the Net Cash Proceeds with respect to any loss or destruction of
Nonrental Equipment or real Property (A) are less than $5,000,000, unless
an Event of Default has occurred and is continuing on the date such Net Cash
Proceeds are received by the applicable Borrower or its Subsidiary or the conditions
to borrowing set forth in subsection 9.2 cannot be satisfied on the
date such Net Cash Proceeds are to be remitted to Borrowers, Administrative
Agent shall remit such Net Cash Proceeds to Borrowers for use in replacing or
repairing the damaged Collateral or purchasing assets used or useful in the
business of Borrowers and their Subsidiaries (other than Foreign Subsidiaries)
or (B) are equal to or greater than $5,000,000 and Borrowers have requested
that Administrative Agent agree to permit Borrowers or the applicable
Subsidiary to repair or replace the damaged Collateral or to purchase assets
used or useful in the business of Borrowers and their Subsidiaries (other than
Foreign Subsidiaries), such amounts shall be provisionally applied to reduce the
outstanding principal balance of the Revolving Credit Loans until the earlier
of Administrative Agent’s decision with respect thereto (provided, that
if such proceeds exceed $10,000,000, the consent of the Majority Lenders shall
be required) or the expiration of 180 days
from such request.  If Administrative
Agent (or Majority Lenders, as applicable) agrees, in its (or their) reasonable
judgment, to permit such repair, replacement or purchase, such amount shall,
unless an Event of Default has occurred and is continuing or the other
conditions set forth in subsection 9.2 can no longer be satisfied,
be remitted to Borrowers for use in replacing or repairing the damaged
Collateral or to purchase assets used or useful in the business of Borrowers;
if Administrative Agent (or Majority Lenders, as applicable) declines to permit
such repair, replacement or purchase or does not respond to Borrowers within
such 180 day period, such amount
shall be applied to the Loans and other Obligations in the manner specified in clause
(i) of this subsection 3.3.1 until payment thereof in full.

 

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

 

 

mandatory prepayment
of the Obligations, a sum equal to 100% of the Net Cash Proceeds to such
Borrower of the issuance of such Indebtedness or equity.  Any such prepayment shall be applied first
to the installments of principal payable under the Term Loans, in the inverse
order of maturity (beginning with the payment due on the last day of the Term)
and ratably amongst the Lenders until paid in full, second to repay outstanding principal of
Revolving Credit Loans until paid in full, in each case accompanied by a
permanent reduction of the Revolving Loan Commitments (such reduction to be on
a dollar-for-dollar basis with the amount of such repayment and to be ratable
among the Lenders), and third, to cash collateralize outstanding Letters
of Credit.

 

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

 

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

 

 

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

 

3.3.5                                                Optional Prepayments. 
Borrowers may, at their option from time to time upon not less than 1
Business Days’ prior written
notice to Administrative Agent, prepay the Revolving Loans or installments of
the Term Notes, provided that the amount of any such prepayment is at
least $500,000 and in integral
multiples of $100,000 above
$500,000, and that such prepayments are made ratably amongst Lenders with
respect to all Revolving Notes or Term Notes (as applicable).  Each such prepayment of Term Loans shall be
applied to the installments of principal due under the Term Notes in the
inverse order of maturity.  Except for
charges under subsection 3.2.5 applicable to prepayments of LIBOR
Term Portions, such prepayments shall be without premium or penalty.

 

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

 

3.3.7                                                Mandatory Reductions of Revolving
Loan Commitments.  The Revolving Loan Commitments shall be
reduced ratably among the Lenders in connection with mandatory prepayments of
the Revolving Credit Loans to the extent provided in the applicable prepayment
provision in Section 3.

 

3.4                                 Application of Payments and Collections.

 

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

 

 

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

 

3.5                                 All Loans and Letters of Credit to Constitute One
Obligation.  The
Loans and Letters of Credit shall constitute one general Obligation of
Borrowers, and shall be secured by Administrative Agent’s Lien upon all of the
Collateral.

 

3.6                                 Loan
Account. 
Administrative Agent shall enter all Loans as debits to a loan account
(the “Loan Account”) and shall
also record in the Loan Account all payments made by Borrowers on any
Obligations and all proceeds of Collateral which are finally paid to
Administrative Agent, and may record therein, in accordance with customary
accounting practice, other debits and credits, including interest and all
charges and expenses properly chargeable to Borrowers pursuant to this
Agreement or any other Loan Document.

 

3.7                                 Statements
of Account. 
Administrative Agent will account to Borrowers monthly with a statement
of Loans, charges and payments made pursuant to this Agreement during the
immediately preceding month, and such account rendered by Administrative Agent
shall be deemed final, binding and conclusive upon Borrowers absent
demonstrable error unless Administrative Agent is notified by Borrowers in

 

 

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

 

3.8                                 Increased
Costs.  If any law
or any governmental or quasi-governmental rule, regulation, policy, guideline
or directive (whether or not having the force of law) adopted or implemented
after the date of this Agreement and having general applicability to all banks
or finance companies within the jurisdiction in which any Lender operates
(excluding, for the avoidance of doubt, the effect of and phasing in of capital
requirements or other regulations or guidelines passed prior to the date of
this Agreement), or any interpretation or application thereof by any
governmental authority charged with the interpretation or application thereof,
or the compliance of such Lender therewith, shall:

 

(i)                                     (1)  subject such Lender
to any tax with respect to this Agreement (other than (a) any tax based on or
measured by net income or otherwise in the nature of a net income tax,
including, without limitation, any franchise tax or any similar tax based on
capital, net worth or comparable basis for measurement and (b) any tax
collected by a withholding on payments and which neither is computed by
reference to the net income of the payee nor is in the nature of an advance
collection 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 or otherwise in the nature of a net income tax, including, without
limitation, any franchise tax or any similar tax based on capital, net worth or
comparable basis for measurement and (b) any tax collected by a withholding on
payments and which neither is computed by reference to the net income of the
payee nor is in the nature of an advance collection of a tax based on or
measured by the net income of the payee);

 

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

 

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

 

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

 

 

such case,
Borrowers shall pay such Lender, upon written demand therefor, not later than
thirty (30) days following its receipt of notice of the imposition of such
increased costs, such additional amount as will compensate such Lender for such
additional cost or such reduction, as the case may be, to the extent such
Lender has not otherwise been compensated, with respect to a particular Loan,
for such increased cost as a result of an increase in the Base Rate or the
LIBOR.  An officer of the applicable
Lender shall determine the amount of such additional cost or reduced amount
using reasonable averaging and attribution methods and deliver to Borrower
Representative a written statement setting forth the amount of such additional
cost or reduced amount, including an explanation of such additional cost or
reduction.  Such written statement shall
be conclusive absent demonstrable error. 
Failure or delay on the part of any Lender to demand compensation
pursuant to this subsection 3.8 shall not constitute a waiver of
such Lender’s right to demand such compensation; provided that Borrowers
shall not be required to compensate a Lender pursuant to this subsection 3.8
for any increased costs or reductions incurred more than 180 days prior to the
date that such Lender notifies Borrower Representative of its intention to
claim compensation under this subsection; provided, further that,
if the circumstances giving rise to such claim are retroactive, then the
180-day period referred to above shall be extended to include the period of
retroactive effect thereof.  If a Lender
claims any additional cost or reduced amount pursuant to this subsection 3.8,
then (a) such Lender shall use reasonable efforts (consistent with legal and
regulatory restrictions) to designate a different lending office or to file any
statement or document reasonably requested by Borrowers if the making of such
designation or filing would avoid the need for, or reduce the amount of, any
such additional cost or reduced amount and would not, in the sole discretion of
such Lender, be otherwise disadvantageous to such Lender and (b) at Borrowers’
request, Administrative Agent or an Eligible Assignee reasonably acceptable to
Administrative Agent and Borrowers shall have the right (but not the obligation)
to purchase from such Lender, and each such Lender shall, upon such request,
sell and assign to Administrative Agent or such Eligible Assignee, all of such
Lender’s outstanding Loan Commitments hereunder.  Such sale and assignment shall be consummated
promptly after Administrative Agent has arranged for a purchase by
Administrative Agent or an Eligible Assignee pursuant to an Assignment and
Assumption Agreement, and at a price equal to the outstanding principal balance
of such Lender’s 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 have determined that:

 

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

 

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

 

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

 

 

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

 

3.10                           Sharing of Payments, Etc.  If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of setoff,
or otherwise) on account of any Loan made by it (other than any payment (x)
pursuant to subsection 2.11 or subsection 3.8, (y) in
connection with an assignment of its interest hereunder pursuant to subsection 11.9
or (z) in connection with any amendment or waiver as contemplated by the last
sentence of subsection 11.10) in excess of its ratable share of
payments on account of Loans made by all Lenders, such Lender shall forthwith
purchase from each other Lender such participation in such Loan as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with each other Lender; provided that, if all or any portion of such
excess payment is thereafter recovered from such purchasing Lender, such
purchase from each Lender shall be rescinded and such Lender shall repay to the
purchasing Lenders the purchase price to the extent of such recovery, together
with an amount equal to such Lender’s ratable share (according to the
proportion of (i) the amount of such Lender’s required repayment to
(ii) the total amount so recovered from the purchasing Lender) of any
interest or other amount paid or payable by the purchasing Lender in respect of
the total amount so recovered.  Borrowers
agree that any Lender so purchasing a participation from another Lender
pursuant to this subsection 3.10 may, 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 as if such Lender were the
direct creditor of Borrowers in the amount of such participation.  Notwithstanding anything to the contrary
contained herein, all purchases and repayments to be made under this subsection 3.10
shall be made through Administrative Agent.

 

SECTION 4.  TERM AND
TERMINATION

 

4.1                                 Term
of Agreement. 
Subject to the right of Lenders to cease making Loans to Borrowers
during the continuance of any Default or Event of Default, this Agreement shall
be in effect for a period of 5 years from the date hereof, through and

 

 

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

 

4.2                                 Termination.

 

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

 

4.2.2                                                Termination by Borrowers. 
Upon at least 30 days prior
written notice to Administrative Agent and Lenders, Borrowers may, at their
option, terminate this Agreement; provided, however, that no such
termination shall be effective until Borrowers have paid to Administrative
Agent’s satisfaction all of the Obligations (other than unasserted contingent
indemnification obligations and other than Product Obligations that are not
then due and payable, whether by acceleration, termination or otherwise), in
immediately available funds, all Letters of Credit have expired or been
cancelled and returned to Administrative Agent or have been cash collateralized
in a manner satisfactory to Administrative Agent and Borrowers have complied
with subsection 3.2.5.  Any
notice of termination given by Borrowers shall be irrevocable unless all
Lenders otherwise agree in writing and no Lender shall have any obligation to
make any Loans or issue or procure any Letters of Credit on or after the
termination date stated in such notice (provided that a notice of a
refinancing of the entirety of the Loans delivered by Borrowers may state that
such notice is conditioned upon the effectiveness of other credit facilities,
in which case such notice may be revoked by Borrowers (by notice to
Administrative Agent on or prior to the effective date) if such condition is
not satisfied).  Borrowers may elect to
terminate this Agreement in its entirety only. 
No section of this Agreement or type of Loan available hereunder
may be terminated singly.

 

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

 

 

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

 

SECTION 5.  SECURITY INTERESTS

 

5.1                                 Security Interest in Collateral.  To secure the prompt payment and performance
to Administrative Agent, each Lender and each Bank Product Provider of the
Obligations, each Borrower hereby grants to Administrative Agent for the
benefit of itself, each Lender, and each Bank Product Provider a continuing
Lien upon all of the following Property and interests in Property of such
Borrower, whether now owned or existing or hereafter created, acquired or arising
and wheresoever located:

 

(i)                                     Accounts;

 

(ii)                                  Certificated Securities;

 

(iii)                               Chattel Paper;

 

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

 

(v)                                 Deposit Accounts;

 

(vi)                              Documents;

 

(vii)                           Equipment;

 

(viii)                        Financial Assets;

 

(ix)                                Fixtures;

 

(x)                                   General Intangibles, including
Payment Intangibles and Software;

 

(xi)                                Goods (including all of its
Equipment, 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 the
foregoing, all other personal property of any kind or description;

 

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

 

 

5.2                                 Other
Collateral.

 

5.2.1                                                Commercial
Tort Claims.  Borrowers shall
promptly notify Administrative Agent in writing upon any Borrower obtaining
knowledge that it has incurred or otherwise obtained a Commercial Tort Claim
after the Closing Date against any third party and, upon request of
Administrative Agent, promptly enter into an amendment to this Agreement and do
such other acts or things deemed appropriate by Administrative Agent to grant
to Administrative Agent a security interest in any such Commercial Tort
Claim.  Borrowers represent and warrant
that as of the date of this Agreement, to their knowledge, no Credit Party
possesses any Commercial Tort Claims.

 

5.2.2                                                Motor
Vehicles.  Upon the acquisition after
Closing Date by any Borrower of any Motor Vehicle, Borrowers shall promptly
notify Administrative Agent of such acquisition in writing, setting forth a
description of the Motor Vehicle acquired and a good faith estimate of the
current value of such Motor Vehicle.  In
addition, Borrowers shall (a) cause all Motor Vehicles, now owned or hereafter
acquired by any Borrower, which under applicable law are required to be
registered, to be properly registered in the name of such Borrower, (b) cause
all Motor Vehicles, now owned or hereafter acquired by any Borrower, to be
properly titled in the name of such Borrower and (c) cause Administrative Agent’s
Lien in such Motor Vehicles to be a first priority perfected security interest
by noting Administrative Agent’s Lien on such certificates or through any other
security arrangement acceptable to Administrative Agent in its sole discretion,
and deliver to Administrative Agent evidence of their compliance with the
foregoing provisions of this subsection 5.2.2, including, without
limitation, if requested by Administrative Agent, originals of all such
certificates of title or ownership for such Motor Vehicles.  Notwithstanding the foregoing, Borrowers
shall have until the date that is 180 days after the Closing Date (as such date
may be extended by Administrative Agent in its sole discretion up to 270 days
after the Closing Date) to complete the actions in the foregoing clause (c)
with respect to Motor Vehicles owned by any Borrower as of the Closing
Date.  Any certificates of title or
ownership delivered pursuant to the terms hereof shall be accompanied by
odometer statements for each Motor Vehicle covered thereby.

 

5.2.3                                                Other
Collateral.  Borrowers shall (i)
notify Administrative Agent in writing promptly upon (or in the case of Deposit
Accounts, prior to) acquiring or otherwise obtaining any Collateral after the
date hereof consisting of Deposit Accounts, Investment Property,
Letter-of-Credit Rights or Electronic Chattel Paper and (ii) except with regard
to Excluded Deposit Accounts (unless otherwise requested by the Administrative
Agent), promptly execute such other documents, and do such other acts or things
necessary to perfect the Lien of the Administrative Agent by control (within
the meaning of the UCC) with respect to such Collateral; promptly notify
Administrative Agent in writing upon acquiring or otherwise obtaining any
Collateral after the date hereof consisting of Documents or Instruments and
will promptly execute such other documents, and do such other acts or things
necessary to perfect the Lien of the Administrative Agent by possession (within
the meaning of Section 9-313 of the UCC) of such Documents which are
negotiable and Instruments, and, with respect to nonnegotiable Documents, to
have such nonnegotiable Documents issued in the name of Administrative Agent;
and with respect to Collateral in the possession of a third party, other than
Certificated Securities and Goods covered by a Document, obtain an

 

 

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

 

5.3                                 Lien Perfection; Further Assurances.  Borrowers shall execute such instruments,
assignments or documents as are necessary to perfect Administrative Agent’s
Lien upon any of the Collateral and shall take such other action as may be
required to perfect or to continue the perfection of Administrative Agent’s
Lien upon the Collateral and shall take such other actions as may be reasonably
requested by the Administrative Agent to ensure the priority of such Lien.  Each Borrower hereby authorizes
Administrative Agent to file, financing statements that indicate the Collateral
(i) as all assets of such Borrower or words of similar effect, or (ii) as being
of an equal or lesser scope, or with greater or lesser detail, than as set
forth in subsection 5.1, on such Borrower’s behalf.  Each Borrower also hereby ratifies its
authorization for Administrative Agent to have filed in any jurisdiction any
like financing statements or amendments thereto if filed prior to the date
hereof  In addition, each Borrower hereby
appoints Administrative Agent as its attorney-in-fact, effective the date
hereof and terminating upon  the
termination of this Agreement, for the purpose of (A) executing on behalf of
such Borrower title or ownership applications for filing with appropriate state
agencies to enable Motor Vehicles now owned or hereafter acquired by such
Borrower to be re-titled and Administrative Agent listed as lienholder thereof,
and (B) filing such applications with such state agencies.  This appointment as attorney-in-fact is
coupled with an interest and is irrevocable until the date on which all of the
Obligations have been paid in full in cash. 
At Administrative Agent’s request, each Borrower shall also promptly
execute or cause to be executed and shall deliver to Administrative Agent any
and all documents, instruments and agreements deemed necessary by
Administrative Agent, to give effect to or carry out the terms or intent of the
Loan Documents.

 

5.4                                 Lien on
Realty.  The due
and punctual payment and performance of the Obligations shall also be secured
by the Lien created by the Mortgages upon all owned real Property of Borrowers
described therein.  If any Borrower shall
acquire at any time or times hereafter any fee simple interest or leasehold in
other real Property (other than leasehold interests in sales offices or
warehouses), such Borrower agrees promptly to execute and deliver to
Administrative Agent, for its benefit and the ratable benefit of Lenders, as
additional security and Collateral for the Obligations, deeds of trust,
security deeds, mortgages or other collateral assignments reasonably
satisfactory in form and substance to Administrative Agent and its counsel
(herein collectively referred to as “New
Mortgages”) covering such real Property.  The Mortgages and each New Mortgage shall be
duly recorded (at Borrowers’ expense) in each office where such recording is
required to constitute a valid Lien on the owned real Property covered
thereby.  In respect to any Mortgage or
any New Mortgage, Borrowers shall deliver to Administrative Agent, at Borrowers’
expense, mortgagee title insurance policies issued by a title insurance company
reasonably satisfactory to Administrative Agent, which policies shall be in
form and substance reasonably satisfactory to Administrative Agent and shall
insure a valid Lien in favor of Administrative Agent for the benefit of itself
and each Lender on the Property covered thereby, subject only to Permitted
Liens and those other exceptions reasonably acceptable to Administrative Agent
and its counsel.  Borrowers shall also
deliver to Administrative Agent Phase I Environmental Site

 

 

Assessments by a consultant
satisfactory to Administrative Agent reasonably necessary to determine
compliance with or liabilities under Environmental Laws of the Property subject
to such New Mortgage and such other usual and customary documents, including,
without limitation, ALTA Surveys of the real Property described in the
Mortgages or any New Mortgage, as Administrative Agent and its counsel may
reasonably request relating to the real Property subject to the Mortgages or
the New Mortgages.

 

SECTION 6.  COLLATERAL
ADMINISTRATION

 

6.1                                 General.

 

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

 

6.1.2                                                Insurance
of Collateral.  Borrowers shall
maintain and pay for insurance upon all Collateral wherever located and with
respect to the business of Borrowers and each of their Subsidiaries, covering
casualty, hazard, public liability, workers’ compensation and such other risks
in such amounts as is customary for companies similarly situated and with the
insurance companies used by Borrowers on the Closing Date or such other
insurance companies as are reasonably satisfactory to Administrative Agent.  Borrowers shall deliver certified copies of
such policies to Administrative Agent as promptly as practicable, with
reasonably satisfactory lender’s loss payable endorsements, naming
Administrative Agent and Lenders as loss payees, assignees or additional
insureds, as appropriate, as its interest may appear, and showing only such
other loss payees, assignees and additional insureds as are reasonably
satisfactory to Administrative Agent. 
Each policy of insurance or endorsement shall contain a clause requiring
the insurer to give not less than 10 days’ prior written notice to
Administrative Agent in the event of cancellation of the policy for nonpayment
of premium and not less than 30 days’ prior written notice to Administrative
Agent in the event of cancellation of the policy for any other reason
whatsoever and a clause specifying that the interest of Administrative Agent
shall not be impaired or invalidated by any act or neglect of any Borrower, any
of its Subsidiaries or the owner of the Property or by the occupation of the premises
for purposes more hazardous than are permitted by said policy.  Borrowers agree to deliver to Administrative
Agent, promptly as rendered, true copies of all reports made in any reporting
forms to insurance companies.  All
proceeds of business interruption insurance (if any) of Borrowers and their
Subsidiaries shall be remitted to Administrative Agent for application to the
outstanding balance of the Revolving Credit Loans.

 

Unless
Borrowers provide Administrative Agent with evidence of the insurance coverage
required by this Agreement, Administrative Agent may purchase insurance at
Borrowers’ expense to protect Administrative Agent’s interests in the
Properties of

 

 

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

 

6.1.3                                                Protection
of Collateral.  Neither
Administrative Agent nor any Lender shall be liable or responsible in any way
for the safekeeping of any of the Collateral or for any loss or damage thereto
(except for reasonable care in the custody thereof while any Collateral is 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 warehouseman, carrier,
forwarding agency or other person whomsoever, but the same shall be at
Borrowers’ sole risk.

 

6.2                                 Administration
of Accounts.

 

6.2.1                                                Records,
Schedules and Assignments of Accounts. 
Borrowers shall keep accurate and complete records of their Accounts and
all payments and collections thereon and shall submit to Administrative Agent
on such periodic basis as Administrative Agent shall reasonably request a sales
and collections report for the preceding period, in form reasonably acceptable
to Administrative Agent.  Concurrently
with the delivery of each Borrowing Base Certificate described in subsection 8.1.4,
or more frequently as reasonably requested by Administrative Agent, from and
after the date hereof, Borrowers shall deliver to Administrative Agent a
detailed aged trial balance of all of its Accounts, specifying the names,
addresses, face values, dates of invoices and due dates for each Account Debtor
obligated on an Account so listed (“Schedule of
Accounts”), and upon Administrative Agent’s request therefor, copies
of proof of delivery and the original copy of all documents, including, without
limitation, repayment histories and present status reports relating to the
Accounts so scheduled and such other matters and information relating to the
status of then existing Accounts as Administrative Agent shall request.  If requested by Administrative Agent,
Borrowers shall execute and deliver to Administrative Agent formal written
assignments of all of its Accounts weekly or daily, which shall include all
Accounts that have been created since the date of the last assignment, together
with copies of invoices or invoice registers related thereto.

 

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

 

 

6.2.3                                                Account
Verification.  Any of Administrative
Agent’s officers, employees or agents shall have the right, at any time or
times hereafter, in the name of Administrative Agent, any designee of
Administrative Agent or any Borrower, to verify the validity, amount or any
other matter relating to any Accounts by mail, telephone, electronic
communication or otherwise.  Borrowers
shall cooperate with Administrative Agent in an effort to facilitate and
promptly conclude any such verification process.

 

6.2.4                                                Maintenance
of Dominion Account.  Each deposit
account (other than Excluded Deposit Accounts, unless otherwise requested by
the Administrative Agent) which receives any proceeds of Collateral shall be
maintained by Borrowers pursuant to lockbox and blocked account arrangements
acceptable to Administrative Agent (each such account, a “Collection Account” and collectively, the “Collection Accounts”) with Bank or such
other banks as may be selected by Borrowers and be acceptable to Administrative
Agent (each bank maintaining a Collection Account, a “Collection Bank” and collectively, the “Collection Banks”).  All such blocked account arrangements shall
provide for “control” (within the meaning of the Uniform Commercial Code), and
in the event a Dominion Event occurs and is continuing, sole dominion by
Administrative Agent over all cash or other assets deposited into such
accounts.  In addition, Borrowers shall
maintain one or more Dominion Accounts. 
Upon the occurrence of a Dominion Event, Administrative Agent shall be
entitled to deliver notice to each Collection Bank  instructing such Collection Bank to comply
only with the instructions of Administrative Agent relating to each Collection
Account maintained by such Collection Bank and to transfer on a daily basis (or
less frequently as Administrative Agent may specify) all funds collected in
such Collection Account to the Dominion Accounts (each such notice, a “Dominion Notice”).  On or prior to the date hereof, Borrowers
shall deliver to Administrative Agent a control agreement for each Collection
Account maintained as of the Closing Date to provide for control and springing
dominion by Administrative Agent over all assets deposited therein as described
above, each such control agreement to be in form and substance acceptable to
Administrative Agent.  After the
occurrence and during the continuance of a Dominion Event, all funds deposited
in any Collection Account and/or transferred to the Dominion Account shall
immediately become the property of Administrative Agent, for the ratable
benefit of Lenders, and Borrowers shall obtain the agreement by each Collection
Bank in favor of Administrative Agent to waive any recoupment, setoff rights,
and any security interest in, or against, the funds so deposited.  Administrative Agent assumes no
responsibility for lockbox and blocked account arrangements, including, without
limitation, any claim of accord and satisfaction or release with respect to
deposits accepted by any bank thereunder. 
If Administrative Agent has delivered a Dominion Notice to any
Collection Bank and, at any time after the effective date of such Dominion
Notice, Availability for each day during any three consecutive fiscal months of
Holdings equals or exceeds $45,000,000, no Event of Default has occurred during
such three consecutive fiscal month period and no Default shall have occurred
and be continuing on the last day of such three month period, then
Administrative Agent agrees to rescind such Dominion Notice.  Upon a subsequent occurrence of a Dominion
Event, Administrative Agent’s rights under this subsection 6.2.4,
including without limitation, its right to deliver Dominion Notices pursuant to
this Section, shall be reinstated.

 

 

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

 

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

 

6.3                                 Administration
of Inventory. 
Borrowers shall keep records of their Inventory (including, without
limitation, Rental Equipment Inventory) which records shall be accurate and
complete in all material respects. 
Borrowers’ records of all Rental Equipment Inventory shall be itemized
and describe the kind, type, quality, quantity and book value of such Rental
Equipment Inventory and shall list all dispositions made in accordance with subsection 8.2.8.  Borrowers shall furnish to Administrative
Agent reports relating to Serialized Rental Equipment Inventory concurrently
with the delivery of each Borrowing Base Certificate described in subsection 8.1.4
or more frequently as requested by Administrative Agent, which reports shall
contain the foregoing information and will be in such other format and detail
as Administrative Agent shall request and shall include a current list of all
locations of Borrowers’ Serialized Rental Equipment Inventory.  Borrowers shall conduct regular physical
inventories of its Serialized Rental Equipment Inventory and shall maintain the
results of such physical inventories and provide to Administrative Agent a
report based on each such physical inventory promptly thereafter, together with
such supporting information as Administrative Agent shall reasonably
request.  In addition, promptly after the
request therefor, Borrowers shall deliver to Administrative Agent any and all
evidence of ownership of their Serialized Rental Equipment Inventory.

 

 

6.4                                 Payment
of Charges.  All
amounts chargeable to Borrowers under Section 6 hereof shall be
Obligations secured by all of the Collateral, shall be payable on demand and
shall bear interest from the date such advance was made until paid in full at
the rate applicable to Base Rate Revolving Portions from time to time.

 

SECTION 7.  REPRESENTATIONS
AND WARRANTIES

 

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

 

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

 

7.1.2                                                Power
and Authority.  Each Borrower and
each of its Subsidiaries is duly authorized and empowered to enter into,
execute, deliver and perform this Agreement and each of the other Loan
Documents to which it is a party.  The
execution, delivery and performance of this Agreement and each of the other
Loan Documents have been duly authorized by all necessary corporate, limited
partnership or limited liability company action, as applicable, and do not and
will not:  (i) require any consent
or approval of the partners, shareholders or members (as applicable) of any
Borrower or any of the shareholders, partners or members, as the case may be,
of any Subsidiary of any Borrower; (ii) contravene any Borrower’s or any
of its Subsidiaries’ charter, articles or certificate of incorporation,
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 Borrower or any of its Subsidiaries
to be in default under, any provision of any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award in effect having
applicability to such Borrower or any of its Subsidiaries, other than any such
violation as could not reasonably be expected to have a Material Adverse
Effect; (iv) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which any Borrower or any of its Subsidiaries is a party or by which
it or its Properties may be bound or affected, the breach of or default under
which could reasonably be expected to have a Material Adverse Effect; or
(v) result in, or require, the creation or imposition of any Lien (other
than Permitted Liens) upon or with respect to any of the Properties now owned
or hereafter acquired by any Borrower or any of its Subsidiaries.

 

 

7.1.3                                                Legally
Enforceable Agreement.  This
Agreement is, and each of the other Loan Documents has been duly executed and
delivered by each Borrower and each of its Subsidiaries party thereto and is a
legal, valid and binding obligation of each such Borrower and each such
Subsidiary, enforceable against it in accordance with its respective terms,
except as enforcement may be limited by (i) the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally and (ii) general principles of equity.

 

7.1.4                                                Capital
Structure.  Exhibit 7.1.4
hereto states, as of the date hereof, (i) the correct name of each of the
Subsidiaries of each Borrower, its jurisdiction of incorporation or
organization and the percentage of its Voting Stock owned by the applicable
Borrower, (ii) the name of each Borrower’s and each of its Subsidiaries’
corporate or joint venture relationships and the nature of the relationship,
(iii) the number, nature and holder of all outstanding Securities of each
Borrower and the holder of Securities of each Subsidiary of each Borrower and
(iv) the number of authorized, issued and treasury Securities of each
Borrower.  Each Borrower has good title
to all of the Securities it purports to own of each of such Subsidiaries, free
and clear in each case of any Lien other than Permitted Liens.  All such Securities have been duly authorized
and issued and are fully paid and non-assessable to the extent such concepts
are applicable to such types of Securities. 
There are no outstanding options to purchase, or any rights or warrants
to subscribe for, or any commitments or agreements to issue or sell any
Securities or obligations convertible into, or any powers of attorney relating
to any Securities of any Borrower or any of its Subsidiaries.  Except as set forth on Exhibit 7.1.4,
there are no outstanding agreements or instruments binding upon any of any
Borrower’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 any Borrower
nor any of its Subsidiaries has been known as or has used any legal, 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 Borrower nor any of
its Subsidiaries has been the surviving entity of a merger or consolidation or
has acquired all or substantially all of the assets of any Person.  Each of each Borrower’s and each of its
Subsidiaries’ state(s) of incorporation or organization, Type of Organization
and Organizational I.D. Number is set forth on Exhibit 7.1.5.  The exact legal name of each Borrower and
each of its Subsidiaries is set forth on Exhibit 7.1.5.

 

7.1.6                                                Business
Locations; Administrative Agent for Process.  Each of each Borrower’s and each of its
Subsidiaries’ chief executive office, location of books and records and other
places of business are as listed on Exhibit 6.1.1 hereto, as
updated from time to time by Borrowers in accordance with the provisions of subsection 6.1.1.    Except as shown on Exhibit 6.1.1,
no Inventory is stored with a bailee, distributor, warehouseman or similar
party, nor is any Inventory consigned to any Person.

 

 

7.1.7                                                Title
to Properties; Priority of Liens.

 

(i)                                     Each Borrower and each of its
Subsidiaries has good, indefeasible and marketable title to and fee simple
ownership of, or valid and subsisting leasehold interests in, all of its real
Property, and good title to all of the Collateral and all of its other
Property, in each case, free and clear of all Liens except Permitted
Liens.  Each Borrower and each of its
Subsidiaries has paid or discharged all lawful claims which, if unpaid, might
become a Lien against any of such Borrower’s or such Subsidiary’s Properties
that is not a Permitted Lien.  The Liens
granted to Administrative Agent under Section 5 hereof are first
priority Liens, subject only to Permitted Liens.

 

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

 

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

 

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

 

(ii)                                  It arises out of a completed, bona
fide sale and delivery of goods or rendition of services by a Borrower,
in the ordinary course of its business and in accordance with the terms and
conditions of all purchase orders, contracts or other documents relating
thereto and forming a part of the contract between a Borrower and the Account
Debtor;

 

(iii)                               It is for a liquidated amount
maturing as stated in the duplicate invoice covering such sale or rendition of
services, a copy of which has been furnished or is available to Administrative
Agent;

 

(iv)                              To Borrowers’ knowledge, there are
no facts, events or occurrences which in any way impair the validity or
enforceability of any Accounts or tend to reduce the amount payable thereunder
from the face amount of the invoice and statements delivered or made available
to Administrative Agent with respect thereto;

 

(v)                                 To Borrowers’ knowledge, the Account
Debtor thereunder (1) had the capacity to contract at the time any contract or
other

 

 

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

 

(vi)                              To Borrowers’ knowledge, there are
no proceedings or actions which are threatened or pending against the Account
Debtor thereunder which might result in any material adverse change in such
Account Debtor’s financial condition or the collectibility of such Account.

 

7.1.9                                                Nonrental
Equipment and Rental Equipment Inventory. 
The Nonrental Equipment and Rental Equipment Inventory of each Borrower
and its Subsidiaries is in good operating condition and repair, and all
necessary replacements of and repairs thereto shall be made so that the
operating efficiency thereof shall be maintained and preserved, reasonable wear
and tear and casualty events excepted. 
Neither any Borrower nor any of its Subsidiaries will permit any
Nonrental Equipment or Rental Equipment Inventory to become affixed to any real
Property leased to any Borrower or any of its Subsidiaries so that an interest
arises therein under the real estate laws of the applicable jurisdiction unless
the landlord of such real Property has executed a landlord waiver or leasehold
mortgage in favor of and in form reasonably acceptable to Administrative Agent,
and Borrowers will not permit any of the Nonrental Equipment or Rental
Equipment Inventory of any Borrower or any of its Subsidiaries to become an
accession to any personal Property other than Nonrental Equipment and Rental
Equipment Inventory that is subject to first priority (except for Permitted
Liens) Liens in favor of Administrative Agent.

 

7.1.10                                          Financial
Statements; Fiscal Year.  The
Consolidated and consolidating  balance
sheets of Holdings and its Subsidiaries (including the accounts of all
Subsidiaries of Holdings  and their
respective Subsidiaries for the respective periods during which a Subsidiary
relationship existed) as of March 31, 2004, and the related statements of
income, cash flow, changes in shareholder’s equity, and changes in financial
position for the periods ended on such dates, have been prepared in accordance
with GAAP, and present fairly in all material respects the financial positions
of Holdings  and such Persons,
taken as a whole,  at such dates
and the results of Holdings and such Persons’ operations, taken as a whole,  for such periods.  Since March 31, 2004, there has been no
material adverse change in the business, assets, liabilities (actual or contingent),
operations or financial condition of Holdings and such other Persons, taken as
a whole, as reflected in the Consolidated balance sheet as of such date.  As of the date hereof, the fiscal year of
Borrowers and each of its Subsidiaries ends on December 31 of each year.

 

7.1.11                                          Full
Disclosure.  The financial statements
referred to in subsection 7.1.10 hereof do not, nor does this
Agreement or any other written statement of Borrowers to Administrative Agent
or any Lender contain any untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein or herein, in
light of the circumstances under which they are made, not misleading as of the
time made or delivered.  There is no fact
which Borrowers have failed to disclose to Administrative Agent or any Lender
in writing which could reasonably be expected to have a Material Adverse
Effect.

 

 

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

 

7.1.13                                          Surety
Obligations.  Except as set forth on Exhibit 7.1.13,
as of the date hereof, neither any Borrower nor any of its Subsidiaries is
obligated as surety or indemnitor under any surety or similar bond or other
contract or has issued or entered into any agreement to assure payment,
performance or completion of performance of any undertaking or obligation of any
Person other than payment, performance or completion of performance by itself
or any Borrower.

 

7.1.14                                          Taxes.  The federal or other applicable tax
identification number of each Borrower and each of its Subsidiaries is shown on
Exhibit 7.1.14 hereto.  Each Borrower
and each of its Subsidiaries has filed all federal, state, local and foreign
income and other material tax returns and other reports relating to taxes it is
required by law to file, and has paid, or made provision for the payment of,
all federal, state, local and foreign income and other material taxes,
assessments, fees, levies and other governmental charges upon it, its income
and Properties as and when such taxes, assessments, fees, levies and charges
are due and payable, unless and to the extent any thereof are being actively
contested in good faith and by appropriate proceedings, and the applicable
Borrower or the relevant Subsidiary maintains reasonable reserves on its books
therefor.  The provision for taxes on the
books of each Borrower and its Subsidiaries is adequate for all years not
closed by applicable statutes, and for the current fiscal year.

 

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

 

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

 

 

(1) permit, and do not restrict, the assignment by any Borrower or
any of its Subsidiaries to Administrative Agent, or any other Person designated
by Administrative Agent, of all of such Borrower’s or such Subsidiary’s, as
applicable, rights, title and interest pertaining to such license agreement or
such similar arrangement and (2) would permit the continued use by such
Borrower or such Subsidiary, or Administrative Agent or its assignee, of such
license agreement or such similar arrangement and the right to sell Inventory
subject to such license agreement for a period of no less than 6 months after a
default or breach of such agreement or arrangement.  The consummation and performance of the
transactions and actions contemplated by this Agreement and the other Loan
Documents, including, without limitation, the exercise by Administrative Agent
of any of its rights or remedies under Section 10, will not result
in the termination or impairment of any of such Borrower’s or any of its
Subsidiaries’ 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 Adverse
Effect, (i) neither any Borrower nor any of its Subsidiaries is in breach
of, or default under, any term of any license or sublicense with respect to any
of its Intellectual Property and (ii) to the knowledge of Borrowers, no
other party to such license or sublicense is in breach thereof or default
thereunder, and such license is valid and enforceable.

 

7.1.17                                          Governmental
Consents.  Each Borrower and each of
its Subsidiaries has, and is in good standing with respect to, all governmental
consents, approvals, licenses, authorizations, permits, certificates,
inspections and franchises necessary to continue to conduct its business as
heretofore or proposed to be conducted by it 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 a Material Adverse Effect.

 

7.1.18                                          Compliance
with Laws.  Each Borrower and each of
its Subsidiaries has duly complied, and its Properties, business operations and
leaseholds are in compliance with, the provisions of all federal, state and
local laws, rules and regulations applicable to such Borrower or such
Subsidiary, as applicable, its Properties or the conduct of its business,
except for such non-compliance as could not reasonably be expected to have a
Material Adverse Effect, and there have been no citations, notices or orders of
noncompliance issued to any Borrower or any of its Subsidiaries under any such
law, rule or regulation, except where such noncompliance could not reasonably
be expected to have a Material Adverse Effect. 
No Inventory has been produced in violation of the Fair Labor Standards
Act (29 U.S.C. §201 et  seq.), as amended.

 

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

 

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

 

 

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

 

7.1.21                                          No
Defaults.  No event has occurred and
no condition exists which would, upon or after the execution and delivery of
this Agreement or any Borrower’s performance hereunder, constitute a Default or
an Event of Default.  Neither any
Borrower nor any of its Subsidiaries is in default (and no event has occurred
and no condition exists which constitutes, or which the passage of time or the
giving of notice or both would constitute, a default) under any Material
Contract.

 

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

 

7.1.23                                          ERISA
Compliance.  Except as specifically
disclosed in Exhibit 7.1.23:

 

(i)                                     Each Plan and Foreign Plan is in
compliance with the applicable Requirement of Law including, but not limited to
ERISA and the Code, except for such non-compliance as could not reasonably be
expected to have a Material Adverse Effect. 
Each Plan which is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the IRS and to the
knowledge of Borrowers, nothing has occurred which would cause the loss of such
qualification.  Each Borrower and each
ERISA Affiliate has made all required contributions to any Pension Plan, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any
Pension Plan.

 

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

 

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

 

 

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

 

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

 

7.1.24                                          Trade
Relations.  There exists no actual
or, to Borrowers’ knowledge, threatened termination, cancellation or limitation
of, or any modification or change in, the business relationship between any
Borrower or any of its Subsidiaries and any customer or any group of customers
whose purchases individually or in the aggregate are material to the business
of Borrowers and their Subsidiaries, or with any material supplier, except in each
case, where the same could not reasonably be expected to have a Material
Adverse Effect, and, to Borrowers’ knowledge, there exists no present condition
or state of facts or circumstances which would prevent any Borrower or any of
its Subsidiaries from conducting such business after the consummation of the
transactions contemplated by this Agreement in substantially the same manner in
which it has heretofore been conducted, which prevention could reasonably be
expected to have a Material Adverse Effect.

 

7.1.25                                          Labor
Relations.  Except as described on Exhibit 7.1.25
hereto, as of the date hereof, neither any Borrower nor any of its Subsidiaries
is a party to any collective bargaining agreement.  There are no asserted pending demands for
collective bargaining by any union or organization of any Borrower’s or any of
its Subsidiaries’ employees, or, to Borrowers’ knowledge, any material
grievances, disputes or controversies with any such union or other
organization, or any threats of strikes or work stoppages, except those that
could not reasonably be expected to have a Material Adverse Effect.

 

7.1.26                                          Related
Businesses.  As of the Closing Date,
Borrowers are engaged in the businesses of renting general and specialty
equipment to industrial and construction end-users, as well as selling used
equipment and complementary parts, supplies and merchandise and providing
repair and maintenance services to its customers. These operations require
financing on a basis such that the credit supplied can be made available from
time to time to Borrowers, as required for the continued successful operation
of Borrowers taken as a whole.  Borrowers
have requested the Lenders to make

 

 

credit available hereunder primarily for the purposes of subsection 1.1.3
and generally for the purposes of financing the operations of Borrowers.  Each Borrower and each Subsidiary of each
Borrower expects to derive benefit (and the Board of Directors of each Borrower
and each Subsidiary of each Borrower has determined that such Borrower or Subsidiary
may reasonably be expected to derive benefit), directly or indirectly, from a
portion of the credit extended by Lenders hereunder, both in its separate
capacity and as a member of the group of companies, since the successful
operation and condition of each Borrower and each Subsidiary of each Borrower
is dependent on the continued successful performance of the functions of the
group as a whole.  Each Borrower
acknowledges that, but for the agreement of each of the other Borrowers to
execute and deliver this Agreement, Administrative Agent and Lenders would not
have made available the credit facilities established hereby on the terms set
forth herein.

 

7.1.27                                          Margin
Regulations.  No Borrower nor any
Subsidiary of any Borrower is engaged in the business of purchasing or selling
Margin Stock or extending credit for the purpose of purchasing or carrying
Margin Stock.

 

7.1.28                                          Regulated
Entities.  No Borrower, no Person
controlling any Borrower, nor any Subsidiary of any Borrower, is an “Investment
Company” within the meaning of the Investment Company Act of 1940.  No Borrower is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code or law, or any other federal
or state statute or regulation limiting its ability to incur indebtedness.

 

7.1.29                                          Environmental
Laws.  Except as otherwise disclosed
on Exhibit 7.1.29 and except for any of the following as could not
reasonably be expected to have a Material Adverse Effect:

 

(i)                                     Each Borrower and its Subsidiaries
have complied with all Environmental Laws and neither any Borrower nor any of
its Subsidiaries nor any of its presently owned real property or presently
conducted operations, nor its previously owned real property or prior
operations, is subject to any pending or threatened Environmental Claim or any
enforcement order from or liability agreement with any Governmental Authority
or private Person respecting (A) compliance with any Environmental Law or (B) any
potential liabilities and costs or remedial action arising from the Release or
threatened Release of a Contaminant.

 

(ii)                                  Each Borrower and its Subsidiaries
have obtained all permits necessary for their current operations under
Environmental Laws, and all such permits are in good standing and each Borrower
and its Subsidiaries are in compliance with all material terms and conditions
of such permits.

 

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

 

 

predecessors
in interest, has in violation of applicable law stored, treated or disposed of
any hazardous waste.

 

(iv)                              Neither any Borrower nor any of its
Subsidiaries has received any summons, complaint, order or similar written
notice indicating that it is not currently in compliance with, or that any
Governmental Authority is investigating its compliance with, any Environmental
Laws or that it is or may be liable to any other Person as a result of a
Release or threatened Release of a Contaminant.

 

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

 

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

 

(A)                     any underground storage tanks or
surface impoundments,

 

(B)                       any asbestos-containing
material, or

 

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

 

(vii)                           Neither any Borrower nor any of its
Subsidiaries has filed any notice under any requirement of Environmental Law
reporting a spill or accidental and unpermitted Release or discharge of a
Contaminant into the environment.

 

(viii)                        Neither any Borrower nor any of its
Subsidiaries has entered into any negotiations or settlement agreements with
any Person (including the prior owner of its property) imposing material
obligations or liabilities on such Borrower or any of its Subsidiaries with
respect to any remedial action in response to the Release of a Contaminant or
environmentally related claim.

 

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

 

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

 

 

7.1.30                                          Motor
Vehicles.  As of the Closing Date, Exhibit
7.1.30 sets forth a complete and accurate list of all Motor Vehicles owned
by any Borrower or any of its Subsidiaries, together with a good faith estimate
of the current value of such Motor Vehicles.

 

7.1.31                                          Anti-Terrorism
Laws.

 

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

 

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

 

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

 

(B)                       a Person or entity with which
any bank or other financial institution is prohibited from dealing or otherwise
engaging 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 in
Executive Order No. 13224;

 

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

 

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

 

None of the
Borrowers, nor any of their Subsidiaries or Affiliates (i) conducts any
business or engages in making or receiving any contribution of funds, 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 or interests 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 a complete and accurate list of
all deposit, checking and other bank accounts, all securities and other
accounts maintained with any securities intermediary or broker dealer and all
other similar accounts maintained by each Borrower and its Subsidiaries,
together with a description thereof (i.e., the bank, securities intermediary or

 

 

broker dealer at which such deposit or other account is maintained and
the account number and the purpose thereof). 
No Borrower or any of its Subsidiaries maintains any other bank,
securities or other similar accounts other than those set forth on Exhibit
7.1.32.

 

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

 

7.3                                 Survival of Representations and Warranties.  All representations and warranties of
Borrowers contained in this Agreement or any of the other Loan Documents shall
survive the execution, delivery and acceptance thereof by Administrative Agent
and each Lender and the parties thereto and the closing of the transactions
described therein or related thereto.

 

SECTION 8.  COVENANTS AND
CONTINUING AGREEMENTS

 

8.1                                 Affirmative
Covenants.  During
the Term, and thereafter for so long as there are any Obligations (other than
unasserted contingent indemnification obligations and Product Obligations that
are not then due and payable, whether by acceleration, termination or
otherwise) outstanding, each Borrower covenants that it shall, and shall cause
each of its Subsidiaries to:

 

8.1.1                                                Visits
and Inspections; Appraisals of Rental Equipment Inventory; Lender Meeting.

 

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

 

 

clause
(ii)
of this subsection 8.1.1  (whether
or not personnel of Administrative Agent), from time to time, as provided in
such Section and clause, but only during normal business hours, to visit
and inspect the Properties of each Borrower and each of its Subsidiaries, for
the purpose of completing appraisals pursuant to subsection 2.9 and
clause (ii) of this subsection 8.1.1.  Administrative Agent, if no Default or Event
of Default then exists, shall give Borrowers reasonable prior notice of any
such Audit or appraisals.    Without
limiting the foregoing, Borrowers will participate and will cause their key
management personnel to participate in a meeting with Administrative Agent and
Lenders periodically during each year during regular business hours and upon
reasonable prior notice, which meeting(s) shall be held at such times and such
places as may be reasonably 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 the
end of each of Holdings’ fiscal quarters (or fiscal months, if requested by
Administrative Agent in its Permitted Discretion), commencing with the fiscal
quarter ending September 30, 2004, deliver to Administrative Agent an
appraisal of each type of Rental Equipment Inventory (both serialized and
non-serialized) performed by an appraiser selected by Administrative Agent,
which appraisal shall be in form and substance reasonably satisfactory to
Administrative Agent and shall state the net orderly liquidation value
(expressed as a percentage of net book value) of all such Rental Equipment
Inventory.  All inventory appraisals
conducted pursuant to this clause (ii) shall be at Borrowers’ expense.

 

8.1.2                                                Notices.  Furnish to Administrative Agent,

 

(i)                                     promptly after the occurrence
thereof, written notice of (A) the occurrence of any event or the existence of
any fact which renders any representation or warranty in this Agreement or any
of the other Loan Documents inaccurate, incomplete or misleading in any
material respect as of the date made or remade and (B) any change in the
information disclosed in any Exhibit hereto, in each case after giving effect
to the materiality limits and Material Adverse Effect qualifications contained
therein;

 

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

 

(iii)                               promptly after the sending or filing
thereof, as the case may be, copies of any proxy statements, financial
statements or reports

 

 

which
Holdings  has made generally
available to its Securities holders and copies of any regular, periodic and
special reports or registration statements which Holdings  or any of its Subsidiaries files with the
Securities and Exchange Commission or any Governmental Authority which may be
substituted therefor or any national securities exchange;

 

(iv)                              promptly after the receipt thereof,
copies of any material notice or communication received by any Borrower or any
of its Subsidiaries from any Governmental Authority (including the Securities
and Exchange Commission), and promptly after the commencement thereof but in
any event not later than five (5) Business Days after service of process with
respect thereto, or the obtaining of knowledge thereof by, any Borrower or any
of its Subsidiaries, notice of each action, suit or proceeding before any court
or other Governmental Authority or other regulatory body or any arbitrator
which, if adversely determined, could reasonably be expected to have a Material
Adverse Effect;

 

(v)                                 within five (5) Business Days after
any Borrower or any ERISA Affiliate knows or has reason to know, that an ERISA
Event or a non-exempt prohibited transaction (as defined in Sections 406 of
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 respect
thereto;

 

(vi)                              upon request, or, in the event that
such filing reflects a significant change with respect to the matters covered
thereby, 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 with
respect to each Pension Plan and (B) a copy of each funding waiver request
filed with the PBGC, the DOL or the IRS with respect to any Pension Plan and
all communications received by any Borrower or any ERISA Affiliate from the
PBGC, the DOL or the IRS with respect to such request;

 

(vii)                           upon request, copies of each
actuarial report for any Pension Plan; and within five (5) Business Days after
receipt thereof by any Borrower or any ERISA Affiliate, copies of the
following:  (A) any notices of the PBGC’s
intention to terminate a Pension Plan or to have a trustee appointed to
administer such Pension Plan; (B) any unfavorable determination letter from the
IRS regarding the qualification of a Pension Plan under Section 401(a) of
the Code; (C) any notice from a Multiemployer Plan regarding the imposition of
withdrawal liability; or (D) any notice from a Governmental Authority
regarding the termination, registration or other event affecting a Foreign Plan
which could reasonably be expected to have a Material Adverse Effect;

 

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

 

 

with
respect thereto by an amount in excess of $250,000; or (B) any failure by any
Borrower or any ERISA Affiliate to make a required installment or any other
required payment under Section 412 of the Code on or before the due date
for such installment or payment;

 

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

 

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

 

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

 

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

 

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

 

(xiv)                         at least 10 days prior to the
consummation of any sale or other disposition of any Inventory of any Borrower
or any of its Subsidiaries (or the consummation of any related series of sales
or dispositions, including any sale or other disposition at auction or pursuant
to a trade package with an original equipment manufacturer) which has an
aggregate book value or fair market value (whichever is greater) in excess of
$5,000,000, notice thereof, which notice shall identify the Inventory to be
sold, 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 to
time, may reasonably request, bearing upon or related to the Collateral or
Borrowers’ or any of their Subsidiaries’ financial condition or results of
operations.

 

8.1.3                                                Financial
Statements and Financial Information.

 

(i)                                     Keep and maintain (A) adequate
records and books of account with respect to its business activities in which
proper entries are made in accordance with customary accounting practices
reflecting all its financial transactions so as to provide reasonable
assurances that transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP; and (B) effective disclosure
controls and procedures designed to ensure that 
material information relating to the Borrowers and their Subsidiaries is
made known to Holdings and its officers in a timely manner; and

 

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

 

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

 

(B)                       not later than 45 days after the
end of each fiscal quarter of Holdings  occurring
after the Closing Date, including the last fiscal quarter of Holdings’ fiscal
year, unaudited interim Consolidated and consolidating  (on a line of business basis) balance
sheets of Holdings and its Subsidiaries (including the accounts of all
Subsidiaries of Holdings  and their
respective Subsidiaries for the respective periods during which a Subsidiary
relationship existed) as of the end of such quarter, together with the related
statements of income, cash flow, changes in shareholder’s equity, and changes
in financial position for the periods ended on such date and for the portion of
the fiscal year then elapsed, certified by the chief financial officer of
Holdings,  in

 

 

such officer’s capacity as such, as prepared in accordance with GAAP
applied consistently with the audited financial statements required to be
delivered pursuant to subsection 8.1.3(ii)(A) and fairly presenting
in all material respects the financial position and results of operations of
Holdings and its Subsidiaries for such quarter and period subject only to
changes from audit and year-end adjustments and except that such statements
need not contain notes;

 

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

 

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

 

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

 

8.1.4                                                Borrowing
Base Certificates.  On or before the
20th  day of each month  from and after the date hereof, deliver to
Administrative Agent, a Borrowing Base Certificate as of the last day of the
immediately preceding month, with such supporting materials, as Administrative
Agent shall reasonably request.  If
Borrowers deem it advisable, or Administrative Agent shall request, Borrowers
shall execute and

 

 

deliver to Administrative Agent Borrowing Base Certificates more
frequently than monthly.  Concurrently
with the delivery of each Borrowing Base Certificate pursuant to this Section, Borrowers
shall deliver to Administrative Agent, in form reasonably acceptable to
Administrative Agent, a reconciliation of the Borrowing Base (including
Accounts, Inventory and Loans) to the general ledger of Borrowers and of such
general ledger to the financial statements most recently delivered pursuant to subsection 8.1.3(ii)(B).

 

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

 

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

 

8.1.7                                                Additional
Borrowers.    Upon any Person
becoming a direct or indirect Subsidiary of any Borrower, (a) cause such Person
(excluding any Foreign Subsidiary) to become a “Borrower” hereunder, jointly
and severally with the other Borrowers, pursuant to a joinder agreement or
other supplement hereto in form and substance reasonably satisfactory to
Administrative Agent, (b) cause such Person (excluding any such Person not
organized under the laws of the United States or any state thereof) to pledge
all of its assets to Administrative Agent on a first priority basis (subject
only to Permitted Liens) pursuant to a security agreement in form and substance
reasonably satisfactory to Administrative Agent, (c) cause all of such Person’s
Securities (or in the case of any Person not organized under the laws of the
United States or any state thereof, sixty-five percent (65%) of its Securities
entitled to vote and 100% of its non-voting Securities) to be pledged and
delivered to Administrative Agent pursuant to a pledge agreement in form and
substance reasonably satisfactory to Administrative Agent (together with
undated stock powers signed in blank), (d) cause such Person (excluding any
such Person not organized under the laws of the United States or any state
thereof) to grant a mortgage in and to all of such Person’s owned real Property
in accordance with subsection 5.4, and (e) deliver such other
documentation as Administrative Agent may reasonably request in connection with
the foregoing, including, without limitation, certified resolutions and other
organizational and authorizing documents of such Person and favorable opinions
of counsel to such Person (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred to
above), all in form, content and scope reasonably satisfactory to
Administrative Agent.

 

 

8.1.8                                                Deposit
and Brokerage Accounts.  For each
deposit account (other than an Excluded Deposit Account, unless otherwise
requested by the Administrative Agent) or brokerage account (including any
Securities Account) that any Borrower or any of its Subsidiaries at any time
opens or maintains, cause Administrative Agent to have “control” (within the
meaning of the Uniform Commercial Code) thereof pursuant to an agreement in
form and substance reasonably satisfactory to Administrative Agent.

 

8.1.9                                                ERISA.  Each Borrower shall, and shall cause each of
its ERISA Affiliates to:  (a) maintain
each Pension Plan and Foreign Plan in compliance in all material respects with
the Requirement of Law, including, but not limited to ERISA, the Code and other
federal or state law; (b) cause each Plan which is qualified under Section 401(a)
of the Code to maintain such qualification; (c) make all required contributions
to any Plan subject to Section 412 of the Code; (d) not engage in a
prohibited  transaction or violation of
the fiduciary responsibility rules with respect to any Plan or Foreign Plan and
(e) not engage in a transaction that could be subject to Section 4069 or
4212(c) of ERISA.

 

8.1.10                                          Environmental
Laws.

 

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

 

(ii)                                  Without limiting the generality of
the foregoing, submit to Administrative Agent and Lenders annually, commencing
on the first anniversary of the Closing Date, and on each anniversary thereof
thereafter, an update of the status of each environmental compliance or
liability issue.  Administrative Agent or
any Lender may request copies of technical reports prepared by Borrowers’ and
their communications with any Governmental Authority to determine whether
Borrowers or any of their Subsidiaries is proceeding reasonably to correct, cure
or contest in good faith any alleged non-compliance or environmental
liability.  Borrowers shall, at
Administrative Agent’s or Majority Lenders’ request and at Borrowers’ expense,
(A) retain an independent environmental engineer acceptable to Administrative
Agent  to evaluate the site, including
tests if appropriate, where the non-compliance or alleged non-compliance with
Environmental Laws has occurred and prepare and deliver to Administrative
Agent, in sufficient quantity for distribution by Administrative Agent to
Lenders, a report setting forth the results of such evaluation, a proposed plan
for responding to any environmental problems described therein, and an estimate
of the costs thereof, and (B) provide to Administrative Agent and Lenders a
supplemental report of such engineer whenever the scope of the environmental
problems, or the response thereto or the estimated costs thereof, shall
increase in any material respect.

 

 

(iii)                               Administrative Agent and its
representatives will have the right at any reasonable time to enter and visit
the real Properties and any other place where any property of the Borrowers is
located for the purposes of observing the real Property, taking and removing
soil or groundwater samples, and conducting tests on any part of the real
Property.  Administrative Agent is under
no 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 of
protecting Administrative Agent’s Liens in the Collateral and preserving
Administrative Agent’s and Lenders’ rights under the Loan Documents.  No site visit, observation or testing by
Administrative Agent and Lenders will result in a waiver of any default of any
Borrower or impose any liability on Administrative Agent or Lenders.  In no event will any site visit, observation
or testing by Administrative Agent be a representation that hazardous
substances are or are not present in, on or under the real Properties, or that
there has been or will be compliance with any Environmental Law.  Neither any Borrower nor any other party is
entitled to rely on any site visit, observation or testing by Administrative
Agent.  Administrative Agent and Lenders
owe no duty of care to protect the Borrowers or any other party against, or to
inform the Borrowers or any other party of, any hazardous substances or any
other adverse condition affecting the real Properties.  Administrative Agent may in its sole
discretion disclose to the Borrowers or to any other party if so required by
law any report or findings made as a result of, or in connection with, any site
visit, observation or testing by Administrative Agent.  Each Borrower understands and agrees that
Administrative Agent makes no warranty or representation to any Borrower or any
other party regarding the truth, accuracy or completeness of any such report or
findings that may be disclosed.  Each
Borrower also understands that depending on the results of any site visit,
observation or testing by Administrative Agent and disclosed to the Borrowers,
such Borrower may have a legal obligation to notify one or more environmental
agencies of the results, that such reporting requirements are site-specific,
and are to be evaluated by such Borrower without advice or assistance from
Administrative Agent.  In each instance,
Administrative Agent will give the Borrowers reasonable notice before entering
the real Properties or any other place Administrative Agent is permitted to
enter under this subsection 8.1.10. 
Administrative Agent will make reasonable efforts to avoid interfering
with the Borrowers’ use of the real Properties or any other property in
exercising any rights provided hereunder.

 

8.1.11                                          Existing
Letters of Credit.  Use commercially
reasonable efforts to cause each Existing Letter of Credit to be cancelled and
returned to the issuer thereof on or prior to the date that is 90 days after
the Closing Date, and, if necessary, replaced with a Letter of Credit issued by
Administrative Agent, Bank or an Affiliate thereof in accordance with the
provisions of subsection 1.2.

 

8.2                                 Negative
Covenants.  During
the Term, and thereafter for so long as there are any Obligations (other than
unasserted contingent indemnification obligations and Product Obligations that
are not then due and payable, whether by acceleration,

 

 

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

 

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

 

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

 

(ii)                                  acquisitions of assets that
constitute Capital Expenditures.

 

8.2.2                                                Loans.  Make any loans or other advances of money to
any Person, other than (i) for salary, travel advances, advances against
commissions and other similar advances to employees in the ordinary course of
business, (ii) extensions of trade credit in the ordinary course of business,
(iii) deposits with financial institutions permitted under this Agreement, (iv) prepaid expenses,
(v) intercompany loans  between
any Borrower and any other Borrower, (vi) deposits permitted to be made by subsection 8.2.5(vi),
(vii) promissory notes received as consideration in connection with the asset
dispositions permitted under subsection 8.2.8(ix) and (viii) to the
extent constituting a loan or advance, rental agreements that contain options
granted to customers of Borrowers to the extent such rental agreements are
entered into in the ordinary course of business and consistent with past
practices, and so long as (x) customers may purchase the Rental Equipment
Inventory rented by such customers at the expiration of the applicable rental
term at a purchase price not less than the fair market value of such Rental
Equipment Inventory and (y) at all times prior to the payment of such purchase
price, the applicable Borrower retains full legal and beneficial 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 Administrative
Agent or any Lender under this Agreement or any of the other Loan Documents;

 

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

 

(iii)                               Permitted Purchase Money
Indebtedness;

 

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

 

 

(v)                                 guaranties of any Indebtedness
permitted hereunder;

 

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

 

(vii)                           obligations to pay Rentals permitted
by subsection 8.2.17;

 

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

 

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

 

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

 

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

 

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

 

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

 

8.2.4                                                Affiliate
Transactions.  Enter into, or be a
party to, any transaction with any Affiliate of any Borrower or any holder of
any Securities of any Borrower or any Subsidiary of any Borrower (other than
any other Borrower), including without limitation in respect of any management,
consulting or similar fees, unless such transaction meets each of the following
conditions (i) such transaction is in the ordinary course of and pursuant
to the reasonable requirements of such Borrower’s or such Subsidiary’s business
and upon fair and reasonable terms which are no less favorable to such Borrower
or such Subsidiary than would be obtained in a comparable arms-length
transaction with a Person not an Affiliate or Security holder of any Borrower, provided
that if such transaction involves consideration in excess of $5,000,000 and
Borrowers have knowledge that the other party or parties to such transaction
are Affiliates of Borrowers or their Subsidiaries, Borrowers shall fully
disclose the terms of such transaction to Administrative Agent prior to the
consummation thereof  and
(ii) such transaction is otherwise permitted under Section 8
of this Agreement.

 

 

8.2.5                                                Limitation
on Liens.  Create or suffer to exist,
any Lien upon any of its Property, income or profits, whether now owned or hereafter
acquired, except:

 

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

 

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

 

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

 

(iv)                              Purchase Money Liens securing
Permitted Purchase Money Indebtedness;

 

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

 

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

 

(vii)                           reservations, covenants, zoning and
other land use regulations, title exceptions or encumbrances granted in the
ordinary course of business, affecting real Property owned or leased by a
Borrower or one of its Subsidiaries; provided that such exceptions do
not in the aggregate materially interfere with the use of such Property in the
ordinary course of any Borrower’s or such Subsidiary’s business;

 

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

 

(ix)                                Liens securing Indebtedness
permitted by subsection 8.2.3(ix), but only so long as the
Intercreditor Agreement shall be in full force and effect and applicable to all
Indebtedness secured by such Liens;

 

 

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

 

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

 

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

 

(xiii)                          Liens
securing Product Obligations incurred in the ordinary course of business and
not for speculative purposes; and

 

(xiv)                         Liens in
favor of New Holland Credit Company and its parent entities, Daewoo Heavy
Industries America Corporation, Stihl Incorporated and Mitsui Machinery
Distribution, Inc. (the “Specified Vendors”),
to the extent and only to the extent such Liens encumber property sold or
leased to Borrowers by such Specified Vendors which has not been paid for in
full, and only to the extent that the obligations secured by such Liens do not
exceed $2,500,000 in the aggregate at any one time outstanding.

 

8.2.6                                                Payments
and Amendments of Certain Debt.

 

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

 

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

 

(iii)                               make
any payment (other than regularly scheduled amortization and interest payments)
or prepayment of principal of, premium, if any, or interest on, or any  redemption, defeasance, sinking fund payment
or other acquisition for value of, or otherwise satisfy prior to the scheduled
maturity thereof in any manner, any of the Second Lien Debt (including, without
limitation, by way of depositing money or securities with the trustee therefor
before the date required for the purpose of paying any portion of such
Indebtedness when due) (each a “Second Lien
Debt Payment”), or refund, refinance, replace or exchange any other
Indebtedness (the “Replacement Debt”)
for any Second Lien Debt, except that:

 

(1)                                  Borrowers and their Subsidiaries may
make mandatory prepayments of principal of the Second Lien Debt, so long as
each of the following conditions has been

 

 

satisfied: (i) immediately prior to and after
the making of such payment, no Default or Event of Default shall have occurred
and be continuing, (ii) if such prepayment is being made pursuant to an excess
cash flow sweep or similar provision in the definitive documentation for the
Second Lien Debt, such payment is made after Borrowers shall have furnished the
Compliance Certificate required to be delivered no later than 90 days after the
close of the immediately preceding fiscal year of Holdings in accordance with subsection 8.1.3(ii)(A),
(iii) if such prepayment is being made pursuant to an excess cash flow sweep or
similar provision in the definitive documentation of the Second Lien Debt, such
payment shall be made within 101 days of after the close of the immediately
preceding fiscal year, but in any event on or prior to the due date therefor
under the Second Lien Debt Loan Agreement, (iv) (x) the Available Liquidity
shall not be less than $50,000,000 on the date such Second Lien Debt Payment is
made immediately before and after giving effect to such Second Lien Debt
Payment and (y) the average Available Liquidity shall not be less than
$50,000,000 for the 30 day period ending on the date of such payment, both
before and after giving effect to such payment, (v) Borrowers and their
Subsidiaries shall have a Fixed Charge Coverage Ratio of not less than 1.25 to
1.00 as of twelve-month period ended as of the last day of the fiscal quarter
most recently ended prior to the date on which such payment is made and for
which financial statements are available and (vi) Borrower Representative shall
have submitted a certificate of the chief financial officer of Borrower
Representative, in such officer’s capacity as such, setting forth reasonably
detailed calculations demonstrating compliance with the required Available
Liquidity and Fixed Charge Coverage Ratio tests described above and certifying
that the other conditions set forth in this clause (1) have been
satisfied;

 

(2)                                  Borrowers and their Subsidiaries may
make voluntary prepayments of principal of the Second Lien Debt after the
delivery of Holdings’ audited financial statements pursuant to and in
accordance with subsection 8.1.3(ii)(A) for the fiscal year ended December 31,
2005, so long as each of the following conditions have been satisfied:  (i) immediately prior to and after the making
of such payment, no Default or Event of Default shall have occurred and be
continuing, (ii) only one such Second Lien Debt Payment is made per fiscal
quarter of Holdings and its Subsidiaries and such payment is made (x) after
delivery of Holdings’ quarterly financial statements pursuant to and in
accordance with subsection 8.1.3(ii)(B) for the preceding fiscal
quarter, (y) on or before the 30th day after Administrative Agent’s
receipt of such quarterly financial statements and (z) after any mandatory
prepayment pursuant to subsection 3.3.4 (or

 

 

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

 

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

 

 

to any portion of the Loans has been
increased over (A) 5.0% with respect to LIBOR Portions and (B) 3.0% with
respect to Base Rate Portions; provided that this subsection 8.2.6(iii)(3)
shall not prohibit any Second Lien Debt Document from providing that the
Indebtedness thereunder shall bear interest at a default rate of up to 2.0% in
excess of the then stated rate at any time an event of default has occurred and
is continuing thereunder, (iv) the terms and conditions of the Replacement
Debt, taken as a whole, including any agreements and documents governing or
evidencing such Replacement Debt, are not materially more restrictive against
or less favorable to Borrowers and their Subsidiaries than the terms and
conditions of the Second Lien Debt and the Second Lien Debt Documents as in
effect on the Closing Date, taken as a whole; provided that no financial
covenant shall be more restrictive against or less favorable to Borrowers and
their Subsidiaries than the terms and conditions of the Second Lien Debt and
the Second Lien Debt Documents as in effect on the Closing Date, and (v) if
Replacement Debt is to be secured by a Lien, such Replacement Debt shall be
subject to the terms of the Intercreditor Agreement and each holder thereof
shall be a party to, or otherwise subject to, the Intercreditor Agreement; or

 

(iv)                              amend or modify any Second Lien Debt
Document if such amendment or modification would (A) shorten the final maturity
of the Indebtedness thereunder to any date that is earlier than the date
occurring 90 days from the last day of the Term, (B) shorten the weighted
average life to maturity of the Indebtedness thereunder, (C) increase the
applicable margin used in determining the interest rate for the Indebtedness
under the Second Lien Debt Documents (or, if the amended Second Lien Debt
Documents provide for a fixed interest rate, increase the effective interest
rate) from the applicable margin used in determining the interest rate
thereunder on the Closing Date (or, if the amended Second Lien Debt Documents
provide for a fixed interest rate, the interest rate that would be applicable
to the Second Lien Debt on the date of such amendment or modification if such
rate were determined by adding the applicable margin as of the Closing Date to
the 9 month LIBOR as of the date of such amendment or modification by an amount
in excess of the sum of (1) 2.0% plus (2) the amount, if any, by which
the applicable margin applicable to any portion of the Loans has been increased
over (A) 5.0% with respect to LIBOR Portions and (B) 3.0% with respect to Base
Rate Portions; provided that this subsection 8.2.6(iv) shall
not prohibit any Second Lien Debt Document from providing that the Indebtedness
thereunder shall bear interest at a default rate of up to 2.0% in excess of the
then stated rate at any time an event of default has occurred and is continuing
thereunder, (D) add any covenant or obligation which, when taken together with
any other amendments or modifications of the Second Lien Debt Documents, would
cause the applicable Second Lien Debt Documents to be materially more
restrictive against Borrowers and their Subsidiaries than the Second Lien Debt
Documents as in effect on the Closing Date or make any

 

 

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

 

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

 

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

 

(ii)                                  Distributions paid solely in
Securities (other than Disqualified Capital Stock) of a Borrower or any of its
Subsidiaries; and

 

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

 

8.2.8                                                Disposition
of Assets.  Sell, lease, license or
otherwise dispose of any of its Properties, including any disposition of
Property as part of a sale and leaseback transaction, to or in favor of any
Person, except for:

 

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

 

(ii)                                  sales or other dispositions of
Serialized Rental Equipment Inventory in the ordinary course of business
(including by way of exchange of such Serialized Rental Equipment Inventory for
other Serialized Rental Equipment Inventory of an equal or greater fair market
value pursuant to original equipment manufacturers’ trade packages in the
ordinary course of business), provided that if the Net Cash Proceeds of
any single disposition or series of related dispositions of such Property
exceed $5,000,000 and such Net Cash Proceeds are not reinvested within 180 days
after receipt of such Net Cash Proceeds, such proceeds shall be remitted to
Administrative Agent for application to the Loans and other Obligations as
provided in subsection 3.3.1;

 

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

 

(iv)                              sales of Property (other than
Accounts or Inventory) with a fair market value or a net book value (whichever
is greater) not exceeding $4,000,000 in the aggregate during any consecutive
twelve-month period;

 

 

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

 

(vi)                              dispositions of Property that is
worn, damaged, uneconomic or obsolete or no longer used or useful, provided
that either (A) (I) such Property is replaced with Property which is used or
useful in the business of a Borrower or one of its Subsidiaries (other than
Foreign Subsidiaries), (II) the replacement Property is acquired or committed
to be purchased within 180 days prior to or following the disposition of the
Property that is to be replaced and (III) the replacement Property shall be
free and clear of Liens other than Liens securing Permitted Purchase Money
Indebtedness or (B) the Net Cash Proceeds of such disposition are remitted to
Administrative Agent for application to the Loans and other Obligations as
provided in subsection 3.3.1;

 

(vii)                           dispositions in the ordinary course
of business of investments described in paragraphs (iv), (v), (vi) and (vii) of
the definition of the term “Restricted
Investments”;

 

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

 

(ix)                                the sale of all or part of the
assets or business constituting the Studio and Hoist business units of
Borrowers 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 of cash
and promissory notes issued by the purchaser of such business (provided,
that in the case of consideration consisting of promissory notes, (1) such
consideration shall not exceed 35% of the aggregate sales price in the case of
the Hoist business and 34% of the aggregate sales price in the case of the
Studio business, (2) such promissory notes shall be pledged to Administrative
Agent, for the benefit of Lenders, pursuant to a pledge agreement in form and
substance reasonably satisfactory to Administrative Agent, (3) all payments of
principal, interest and other amounts payable under such promissory notes and
that are received by Borrowers or their Subsidiaries shall be remitted to
Administrative Agent for application in accordance with subsection 3.3.1(ii)
and (4) the aggregate principal amount of all promissory notes received as
consideration for all asset sales permitted under this subsection 8.2.8(ix)
shall not exceed $7,500,000 at any one time outstanding) and (C) if Borrowers
shall have given Administrative Agent written notice prior to the consummation
of such sale of Borrowers’ intention to use the Net Cash Proceeds thereof to
reinvest in the business of Borrowers through the purchase of assets used or
useful in the business of Borrowers, then the Net Cash Proceeds of such sale
shall not be required to prepay the Loans; provided  further, that
if (a) any Default or Event of Default shall have occurred and be continuing on
the date such Net Cash Proceeds are received by any Borrower or at the time of
such reinvestment or (b) Borrowers shall have failed to complete such
reinvestment within 180 days after consummation of the sale of the applicable
business unit, then such portion of the

 

 

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

 

provided,
that sales or other dispositions pursuant to the foregoing clauses (iv), (vi)
and (viii) shall only be permitted so long as no Default or Event of Default
exists at the time of such sale or disposition; and provided, further,
that if Administrative 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 the this subsection 8.2.8 shall be
remitted to Administrative Agent for application to the Loans and other
Obligations as provided in subsection 3.3.1.

 

8.2.9                                                Issuance
of Securities.  Issue any additional
Securities, except for issuances (i) of Securities of a Borrower (other than
Holdings) to another Borrower, (ii) of Securities of Holdings to management and
employees of any Borrower, (iii) of Securities of Holdings to Persons that are
holders of Securities of Holdings on the Closing Date, (iv) of Securities of
Holdings, the Net Cash Proceeds of which are used to purchase Collateral or (v)
of Securities of Holdings, the Net Cash Proceeds of which are used to repay the
Loans and other Obligations as and to the extent provided in subsection 3.3.2;
provided, however, that no Borrower or any of its Subsidiaries
may issue Securities consisting of Disqualified Capital Stock; and provided,
further, that no issuance shall be permitted pursuant to this subsection if
such issuance would 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, sale and return, sale on
approval, repurchase or return or consignment basis, provided that
Borrowers may provide rental purchase options to their customers in the
ordinary course of business and consistent with past practices, pursuant to
which customers may purchase the Rental Equipment Inventory rented by such
customers at the expiration of the applicable rental term for a purchase price
not less than the fair market value of such Rental Equipment Inventory.

 

8.2.11                                          Restricted
Investment.  Make or have any Restricted
Investment.

 

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

 

 

no Default or
Event of Default shall have occurred and be continuing, (y) immediately before
and after entering into such arrangement, Borrowers and their Subsidiaries
shall have Availability of not less than $25,000,000 for the 90 day period
preceding such transaction and, after giving effect to such arrangement, on the
date on which the applicable Borrower or Subsidiary enters into such
arrangement and (z) Borrower Representative shall submit a certificate of the
chief financial officer of Borrower Representative, in such officer’s capacity
as such, setting forth reasonably detailed calculations demonstrating
compliance with such required pro forma Availability and certifying that the
other conditions set forth in this clause (B) have been satisfied; and provided,
further, that in no event shall any joint venture arrangement entered
into pursuant to this subsection 8.2.12 involve, require or result
in or otherwise obligate any cash or cash consideration made or to be made by
any Borrower or any of its Subsidiaries in an aggregate amount in excess of
$12,000,000.

 

8.2.13                                          Tax
Consolidation.  File or consent to
the filing of any consolidated income tax return with any Person other than
Holdings, another Borrower and Borrowers’ Subsidiaries.

 

8.2.14                                          Organizational
Documents.  Agree to, or suffer to
occur, any amendment, supplement or addition to its or any of their
Subsidiaries’ charter, articles or certificate of incorporation, certificate of
formation, limited partnership agreement, bylaws, limited liability agreement,
operating agreement or other organizational documents (as the case may be),
that, in each case, would reasonably be expected to have a Material Adverse
Effect.

 

8.2.15                                          Fiscal
Year End.  Change its fiscal year
end.

 

8.2.16                                          Negative
Pledges.  Enter into or suffer to
exist any agreement limiting the ability of any Borrower or any of its
Subsidiaries (i) to voluntarily create Liens upon any of its Property,
(ii) to pay dividends or to make any other distribution on any Securities
of any Borrower or any of its Subsidiaries, (iii) to pay or prepay or to
subordinate any Indebtedness owed to any Borrower or any of its Subsidiaries,
(iv) to make loans or advances to any Borrower or any of its Subsidiaries or
(v) to transfer any of its property or assets to any Borrower or any of its
Subsidiaries, or permit any of its Subsidiaries to do any of the foregoing,
except for the Second Lien Debt Documents as in effect on the Closing Date and
any replacements or refinancings thereof (as long as such replacement or
refinancing documents contain provisions with respect to the foregoing that are
not more restrictive than those contained in the Second Lien Debt Documents as
in effect on the Closing Date).

 

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

 

 

8.2.18                                          Anti-Terrorism
Laws. (i)  Conduct any business or
engage in any transaction or dealing with any Blocked Person, including the
making or receiving of any contribution of funds, goods or services to or for
the benefit of any Blocked Person; (ii) deal in, or otherwise engage in any
transaction relating to, any property or interests in property blocked pursuant
to Executive Order No. 13224; or (iii) engage in or conspire to engage in, nor
permit any of their Subsidiaries to engage in or conspire to engage in,  any transaction that evades or avoids, or has
the purpose of evading or avoiding, or attempts to violate, any of the
prohibitions set forth in Executive Order No. 13224 or the USA Patriot
Act.  Each of the Borrowers shall deliver
to Administrative Agent and Lenders any certification or other evidence
requested from time to time by Administrative Agent or any Lender, in
Administrative Agent’s sole discretion, confirming such Person’s compliance
with this subsection 8.2.18.

 

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

 

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

 

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

 

SECTION 9.  CONDITIONS
PRECEDENT

 

9.1                                 Conditions to Initial Loans and
Initial Letters of Credit.  Notwithstanding
any other provision of this Agreement or any of the other Loan Documents, and
without affecting in any manner the rights of Administrative Agent or any
Lender under the other sections of this Agreement, no Lender shall be required
to make the initial Loans, nor shall Administrative Agent be required to issue
or procure the initial Letters of Credit unless and until each of the following
conditions has been satisfied on or prior to the Closing Date:

 

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

 

 

Documents,
together with such additional documents, instruments, opinions and certificates
as Administrative Agent, Syndication Agent and their respective counsel shall
require, all in form and substance satisfactory to Administrative Agent,
Syndication Agent and their respective counsel.

 

9.1.2                                                Real
Property.  Administrative Agent shall
have received:

 

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

 

(ii)                                  Phase I Environmental Site
Assessments by a consultant satisfactory to Administrative Agent reasonably
necessary to determine compliance with or liabilities under Environmental Laws
of each Property subject to a Mortgage for such properties.

 

9.1.3                                                Security Interest Matters. 
Administrative Agent shall have received:

 

(i)                                     certified copies of lien search
reports 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 as
debtor any Borrower or any of its Subsidiaries and which are filed in the
offices referred to in clause (ii) below, together with copies of such
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

 

(ii)                                  duly executed UCC-3 Termination
Statements, mortgage releases and such other instruments, in form and substance
satisfactory to Administrative Agent, as shall be necessary to terminate and
satisfy 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, and
substance, satisfactory to Administrative Agent, of all insurance coverage as
required by this Agreement (including, without limitation a loss payable endorsement
naming Administrative Agent and Lenders as loss payees and as additional
insureds).

 

9.1.5                                                Solvency. 
Administrative Agent and Syndication Agent shall have determined to
their satisfaction that (1) Adjusted Consolidated EBITDA (as defined in Exhibit
8.3) for Holdings and its Subsidiaries for Holdings  fiscal year ended December 31, 2003
shall be equal to or greater than $125,000,000, (2) each Borrower is
adequately capitalized, (3) the fair saleable value of each Borrower’s
assets exceeds its liabilities on the Closing Date and (4) each Borrower
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 Loans made on the Closing Date and the
receipt of the proceeds of the Second Lien Debt, the Prior Indebtedness 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 with
the transactions and related financings contemplated hereby and by the Loan
Documents were obtained by Borrowers and all applicable waiting periods have
expired without any action being taken by any authority that could restrain,
prevent or impose any material adverse conditions on such transactions or that
could seek or threaten any of the foregoing, and no law or regulation shall be
applicable which in the judgment of Administrative Agent could have such
effect.

 

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

 

9.1.9                                                Payment of Fees. 
Administrative Agent shall have received, for its account or the account
of Syndication Agent, the Co-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 the Closing
Date, and Administrative Agent shall have received evidence satisfactory to
Administrative Agent that the reasonable fees and expenses of Administrative
Agent’s, Syndication Agent’s (subject to the limitations set forth herein) and
Lenders’ counsel, financial advisors, appraisers, commercial finance examiners
and other advisers incurred or accrued through the Closing Date have been paid.

 

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

 

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

 

 

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

 

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

 

9.1.13                                          Appraisals. 
Administrative Agent and Syndication Agent shall have received an
appraisal, satisfactory to Administrative Agent and Syndication Agent in form
and substance, of all of the Serialized Rental Equipment Inventory of Borrowers
as of May 31, 2004 and performed by Rouse Asset Services which shall state the
orderly liquidation value (expressed as a percentage of net book value) of all
such Serialized Rental Equipment Inventory.

 

9.1.14                                          USA Patriot Act Certificate. 
Administrative Agent shall have received, at least five (5) Business
Days prior to the Closing Date, a certificate of a Responsible Officer of
Borrower Representative, in such officer’s capacity as such, reasonably
satisfactory thereto, for the benefit of Administrative Agent and the Lenders,
that sets forth information required by the USA Patriot Act including, without
limitation, the identity of Borrowers, the names and addresses of the Borrowers
and other information that will allow Administrative Agent or any Lender, as
applicable, to identify the Borrowers in accordance with the USA Patriot Act.

 

9.2                                 Conditions to all Loans and Letters
of Credit.  Notwithstanding any
other provision of this Agreement or any of the other Loan Documents, and
without affecting in any manner the rights of Administrative Agent or any
Lender under the other sections of this Agreement, no Lender shall be required
to make any Loan, nor shall Administrative Agent be required to issue or
procure any Letter of Credit unless and until each of the following conditions
has been and continues to be satisfied:

 

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

 

 

9.2.2                                                Second Lien Debt Documents. 
The making of such Loan or the issuance of such Letter of Credit shall
not contravene, violate or result in a default under the Second Lien Debt
Documents.

 

9.2.3                                                Borrowing
Base Certificate.  Administrative
Agent shall have received the most recent Borrowing Base Certificate required
to be delivered pursuant to subsection 8.1.4.

 

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

 

Without limiting the generality of the provisions of this Section 9,
for purposes of determining compliance with the conditions specified in this Section 9
on the Closing Date, each Lender that has signed this Agreement shall be deemed
to have consented to, approved or accepted or to be satisfied with, each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to the Administrative Agent, the Syndication
Agent or a Lender unless Administrative Agent shall have received notice from
such Lender prior to the proposed Closing Date specifying its objection
thereto.

 

SECTION 10.  EVENTS OF
DEFAULT;

RIGHTS AND REMEDIES ON DEFAULT

 

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

 

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

 

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

 

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

 

 

hereof within
10 days following the date on which Borrowers are required to perform, keep or
observe such covenant.

 

10.1.4                                          Breach of Other Covenants. 
Any Borrower or any of its Subsidiaries shall fail or neglect to
perform, keep or observe any covenant contained in this Agreement (other than a
covenant which is dealt with specifically elsewhere in subsection 10.1
hereof) or any of the other Loan Documents 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 any
Borrower or any Subsidiary of any Borrower under any agreement, document or
instrument to which such Borrower or such Subsidiary of such Borrower is a
party or by which such Borrower or such Subsidiary of such Borrower or any of
its Property is bound, evidencing or relating to (a) any Indebtedness (other
than the Obligations) with an outstanding principal balance in excess of
$2,500,000, if the payment or maturity of such Indebtedness is or could be
accelerated (or the applicable Derivative Obligation could be terminated) in
consequence of such event of default or demand for payment of such Indebtedness
is made or could be made in accordance with the terms thereof or (b) the Second
Lien Debt.

 

10.1.6                                          Insolvency and Related Proceedings.

 

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

 

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

 

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

 

 

warrant of attachment, execution or similar
process shall be issued against any part of the property of any Borrower or any
Subsidiary of any Borrower;

 

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

 

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

 

10.1.7                                          Business Disruption; Condemnation.  (i) There shall occur a cessation of a
substantial part of the business of any Borrower or any Subsidiary of any
Borrower for a period which materially adversely affects Borrowers’ and their
Subsidiaries’ capacity, taken as a whole, to continue their business on a
profitable basis; or (ii) any Borrower or any Subsidiary of any Borrower shall
suffer the loss or revocation of any material license or permit now held or
hereafter acquired by any Borrower or any Subsidiary of any Borrower which is
necessary to the continued or lawful operation of its business if such loss or
revocation could reasonably be expected to have a Material Adverse Effect; or
(iii) any Borrower or any Subsidiary of any Borrower shall be enjoined,
restrained or in any way prevented by court, governmental or administrative
order from conducting all or any material part of its business affairs, which
injunction, restraint or prevention materially adversely affects Borrowers’ and
their Subsidiaries’ capacity, taken as a whole, to continue their business on a
profitable basis; or (iv) any material lease or agreement pursuant to which any
Borrower or any Subsidiary of any Borrower, uses or occupies any Property shall
be canceled or terminated prior to the expiration of its stated term, except any
such lease or agreement the cancellation or termination of which could not
reasonably be expected to have a Material Adverse Effect; or (v) any material
portion of the Collateral shall be taken through condemnation or the value of
such material portion of the Collateral shall be impaired through condemnation.

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

10.1.15                                    Loan Documents; Liens. 
Any Loan Document shall at any time for any reason (other than pursuant
to the express terms thereof) cease to be valid and binding on or enforceable
against any Credit Party intended to be a party thereto; or any Security
Document shall for any reason fail or cease to create a valid and perfected
and, except to the extent permitted by the terms hereof or thereof, first
priority Lien in favor of Administrative Agent for the benefit of
Administrative Agent and Lenders on any material portion of the Collateral
purported to be covered thereby.

 

 

10.2                           Acceleration of the Obligations.  Upon or at any time after the occurrence
and during the continuance of an Event of Default, (i) the Revolving Loan
Commitments shall, at the option of Administrative Agent or Majority Lenders be
terminated and/or (ii) Administrative Agent or Majority Lenders may
declare all or any portion of the Obligations at once due and payable without
presentment, demand protest or further notice by Administrative Agent or any
Lender, and Borrowers shall forthwith pay to Administrative Agent, the full amount
of such Obligations, provided, that upon the occurrence of an Event of
Default specified in subsection 10.1.6 hereof, the Revolving Loan
Commitments shall automatically be terminated and all of the Obligations shall
become automatically due and payable, in each case without declaration, notice
or demand by Administrative Agent or any Lender; provided  further
that the foregoing shall not apply to Product Obligations, which shall only be
accelerated by the parties to the agreement evidencing such Product Obligations
and in accordance with the terms of such agreement.

 

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

 

10.3.1                                          All of the rights and remedies of a
secured party under the UCC or under other applicable law, and all other legal
and equitable rights to which Administrative Agent or Lenders may be entitled,
all of which rights and remedies shall be cumulative and shall be in addition
to any other rights 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 the Collateral, and to (i) require each Borrower and each of
its Subsidiaries to assemble the Collateral, at Borrowers’ expense, and make it
available to Administrative Agent at a place designated by Administrative Agent
which is reasonably convenient to both parties, and (ii) enter any
premises where any of the Collateral shall be located and to keep and store the
Collateral on said premises until sold (and if said premises be the Property of
any Borrower or any Subsidiary of any Borrower, Borrowers agree not to charge,
or permit any of its Subsidiaries to charge, Administrative Agent for storage
thereof).

 

10.3.3                                          The right to sell or otherwise
dispose of all or any Collateral in its then condition, or after any further
manufacturing or processing 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, all as Administrative Agent, in its sole discretion, may
deem advisable.  Administrative Agent
may, at Administrative Agent’s option, disclaim any and all warranties
regarding the Collateral in connection with any such sale.  Borrowers agree that, if any notice is
required, 10 days’ written notice to Borrowers or any of their Subsidiaries of
any public or private sale or other disposition of Collateral shall be
reasonable notice thereof, and such sale shall be at such locations as
Administrative Agent may designate in said notice.  Administrative Agent shall have the right to
conduct such sales on any Borrower’s or any of its Subsidiaries’ premises,
without charge therefor, and such sales may be adjourned from time to time in
accordance with

 

 

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

 

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

 

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

 

10.4                           Setoff and Sharing of Payments.  In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, during the continuance of any Event of Default, each Lender is hereby
authorized by Borrowers at any time or from time to time and with reasonably
prompt subsequent notice to Borrowers (any prior or contemporaneous notice to
Borrowers being hereby 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 of any Borrower or any of its Subsidiaries (regardless of
whether such balances are then due to a Borrower or its Subsidiaries) and
(ii) other property at any time held or owing by such Lender to or for the
credit or for the account of any Borrower or any of its Subsidiaries, against
and on account of any of the Obligations. 
Any Lender exercising a right to set off shall, to the extent the amount
of any such set off exceeds its Revolving Loan Percentage of the amount set
off, purchase for cash (and the other Lenders shall sell) interests in each
such other Lender’s pro rata share of the Obligations as would be necessary to
cause such Lender to share such excess

 

 

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

 

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

 

SECTION 11.  ADMINISTRATIVE
AGENT

 

11.1                           Authorization and Action.  Each Lender hereby appoints and
authorizes Administrative Agent to take such action on its behalf and to
exercise such powers under this Agreement and the other Loan Documents as are
delegated to Administrative Agent by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto.  Each Lender hereby acknowledges that
Administrative Agent shall not have by reason of this Agreement assumed a
fiduciary relationship in respect of any Lender.  In performing its functions and duties under
this Agreement, Administrative Agent shall act solely as agent of Lenders and
shall not assume, or be deemed to have assumed, any obligation toward, or
relationship of agency or trust with or for, any Borrower.  As to any matters not expressly provided for
by this Agreement and the other Loan Documents (including without limitation
enforcement and collection of the Notes), Administrative Agent may, but shall
not be required to, exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Majority
Lenders, whenever such instruction shall be requested by Administrative Agent
or required hereunder, or a greater

 

 

or lesser number of Lenders if so required hereunder, and such
instructions shall be binding upon all Lenders; provided, that
Administrative Agent shall be fully justified in failing or refusing to take
any action which exposes Administrative Agent to any liability or which is
contrary to this Agreement, the other Loan Documents or applicable law, unless
Administrative Agent is indemnified to its satisfaction by the other Lenders
against any and all liability and expense which it may incur by reason of
taking or continuing to take any such action. 
If Administrative Agent seeks the consent or approval of the Majority
Lenders (or a greater or lesser number of Lenders as required in this Agreement),
with respect to any action hereunder, Administrative Agent shall send notice
thereof to each Lender and shall notify each Lender at any time that the
Majority Lenders (or such greater or lesser number of Lenders) have instructed
Administrative Agent to act or refrain from acting pursuant hereto.

 

11.2                           Administrative Agent’s and
Syndication Agent’s Reliance, Etc. 
Neither Administrative Agent, Syndication Agent, nor any Affiliate
of Administrative Agent or Syndication Agent 
nor any of their respective directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with this Agreement or the other Loan Documents, except (x)
for its or their own gross negligence or willful misconduct, as determined by a
final non-appealable (or the time for appeal for which has run) judgment of a
court of competent jurisdiction or (y) to the extent resulting from a claim
brought by any Borrower against it for breach in bad faith of its obligations
hereunder, if such Borrower has obtained a final non-appealable (or the time to
appeal for which has run) judgment in its favor on such claim as determined by
a court of competent jurisdiction. 
Without limitation of the generality of the foregoing, each of
Administrative Agent and Syndication Agent: 
(i) may treat each Lender party hereto as the holder of Obligations
until Administrative Agent receives written notice of the assignment or
transfer or such lender’s portion of the Obligations signed by such Lender and
in form reasonably satisfactory to Administrative Agent; (ii) may consult
with legal counsel, independent public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or
experts; (iii) makes no warranties or representations to any Lender and
shall not be responsible to any Lender for any recitals, statements, warranties
or representations made in or in connection with this Agreement or any other
Loan Documents; (iv) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or conditions
of this Agreement or the other Loan Documents on the part of Borrowers, to
inspect the property (including the books and records) of Borrowers, to monitor
the financial condition of Borrowers or to ascertain the existence or possible
existence or continuation of any Default or Event of Default;
 (v) shall not be responsible to any Lender for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto;  (vi) shall not be liable to
any Lender for any action taken, or inaction, by Administrative Agent upon the
instructions of Majority Lenders pursuant to subsection 11.1 hereof
or refraining to take any action pending such instructions; (vii) shall
not be liable for any apportionment or distributions of payments made by it in
good faith pursuant to Section 3 hereof; (viii) shall incur no
liability under or in respect of this Agreement 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 genuine and signed or sent
by the proper party or parties; and (ix) may assume that no Event of
Default has occurred and is continuing, unless Administrative Agent has actual
knowledge of the Event of Default, has received notice from Borrowers or
Borrowers’ independent certified public accountants stating the nature of the
Event of Default, or has received notice from a Lender stating the nature of
the Event of Default and that such Lender considers the Event of Default 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 Person
to whom payment was due but not made shall be to recover from the recipients of
such payments any payment in excess of the amount to which they are determined
to have been entitled.

 

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

 

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

 

11.5                           Indemnification.  Lenders agree to indemnify Administrative
Agent (to the extent not reimbursed by Borrowers), in accordance with their
respective Aggregate Percentages, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against Administrative Agent in any way relating
to or arising out of this Agreement or any other Loan Document or any action
taken or omitted by Administrative Agent under this Agreement; provided
that 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 gross
negligence or willful misconduct. 
Without limitation of the foregoing, each Lender agrees to reimburse
Administrative Agent promptly upon demand for its ratable share, as set forth
above, of any out-of-pocket expenses (including attorneys’ fees) incurred by
Administrative Agent

 

 

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

 

11.6                           Rights and Remedies to Be Exercised
by Administrative Agent Only.  Each Lender
agrees that, except as set forth in subsection 10.4, no Lender
shall have any right individually (i) to realize upon the security created
by this Agreement or any other Loan Document, (ii) to enforce any
provision of this Agreement or any other Loan Document, or (iii) to make
demand under this Agreement or any other Loan Document.

 

11.7                           Agency Provisions Relating to
Collateral.  Each Lender
authorizes and ratifies Administrative Agent’s entry into this Agreement, the
Security Documents and the other Loan Documents for the benefit of
Lenders.  Each Lender agrees that any
action taken by Administrative Agent with respect to the Collateral in accordance
with the provisions of this Agreement, the Security Documents or the other Loan
Documents, and the exercise by Administrative Agent of the powers set forth
herein or therein, together with such other powers as are reasonably incidental
thereto, shall be authorized and binding upon all Lenders.  Administrative Agent is hereby authorized on
behalf of all Lenders, without the necessity of any notice to or further
consent from any Lender to take any action with respect to any Collateral or
the Loan Documents which may be necessary to perfect and maintain perfected
Administrative Agent’s Liens upon the Collateral, for its benefit and the
ratable benefit of Lenders.  Lenders
hereby irrevocably authorize Administrative Agent, at its option and in its
sole discretion, to release any Lien granted to or held by Administrative Agent
upon any Collateral (i) upon termination of the Agreement and payment and
satisfaction of all Obligations; or (ii) constituting property being sold
or disposed of if Borrowers certify to Administrative Agent that the sale or
disposition is made in compliance with subsection 8.2.8 hereof (and
Administrative Agent may rely conclusively on any such certificate, without
further inquiry); or (iii) constituting property in which no Borrower
owned any interest at the time the Lien was granted or at any time thereafter;
or (iv) in connection with any foreclosure sale or other disposition of
Collateral after the occurrence and during the continuation of an Event of
Default; or (v) if approved, authorized or ratified in writing by
Administrative Agent at the direction of all Lenders or (vi) if such release is
permitted by the terms of the Intercreditor Agreement.  Upon request by Administrative Agent at any
time, Lenders will confirm in writing Administrative Agent’s authority to
release particular types or items of Collateral pursuant hereto.  Administrative Agent shall have no obligation
whatsoever to any Lender or to any other Person to assure that the Collateral
exists or is owned by any Borrower or is cared for, protected or insured or has
been encumbered or

 

 

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

 

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

 

11.9                           Right of Sale, Assignment,
Participations.  Borrowers hereby
consent to any Lender’s participation, sale, assignment, transfer or other
disposition, at any time 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’s rights, title, interests, remedies, powers and duties
hereunder or thereunder subject to the terms and conditions set forth below:

 

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

 

 

become a “Lender” for all purposes of this Agreement
and (y) the assigning Lender shall have no further liability for funding
the portion of Revolving Loan Commitments assumed by such other Lender.  Notwithstanding the foregoing, (i) the
provisions of this subsection 11.9.1 shall not 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 favor of 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 enforce such pledge or security
interest in any manner permitted under applicable law.

 

11.9.2                                          Participations. 
Any Lender may grant participations in its extensions of credit
hereunder to any other Lender or other lending institution (a “Participant”), provided that
(i) no such participation shall be for an amount of less than $5,000,000,
(ii) no Participant shall thereby acquire any direct rights under this
Agreement, (iii) no Participant shall be granted any right to consent to
any amendment, except to the extent any of the same pertain to (1) reducing
the aggregate principal amount of, or interest rate on, or fees applicable to,
any Loan or (2) extending the final stated maturity of any Loan or the
stated maturity of any portion of any payment of principal of, or interest or
fees applicable to, any of the Loans; provided that the rights described
in this subclause (2) shall not be deemed to include the right to
consent to any amendment with respect to or which has the effect of requiring
any mandatory prepayment of any portion of any Loan or any amendment or waiver
of any Default or Event of Default, (iv) no sale of a participation in
extensions of credit shall in any manner relieve the originating Lender of its
obligations hereunder, (v) the originating Lender shall remain solely
responsible for the performance of such obligations, (vi) Borrowers and
Administrative Agent shall continue to deal solely and directly with the
originating Lender in connection with the originating Lender’s rights and
obligations under this Agreement and the other Loan Documents, (vii) in no
event shall any financial institution purchasing the participation grant a
participation in its participation interest in the Loans without the prior
written consent of Administrative Agent, and, in the absence of a Default or an
Event of Default, Borrowers, which consents shall not unreasonably be withheld
and (viii) all amounts payable by Borrowers hereunder shall be determined
as if the originating Lender had not sold any such participation.

 

11.9.3                                          Certain Agreements of Borrowers. 
Borrowers agree that (i) they will assist and cooperate with each
Lender in any manner reasonably requested by such Lender to effect the sale of
participation in or assignments of any of the Loan Documents or any portion
thereof or interest therein, including, without limitation, assisting in the
preparation of appropriate disclosure documents and making members of
management available at reasonable times to meet with and answer questions of
potential assignees and Participants; and (ii) subject to the provisions
of subsection 12.13 hereof, such Lender may disclose credit
information regarding Borrowers to any potential Participant or assignee.

 

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

 

 

States or any
state or political subdivision thereof, the transferor Lender shall cause such
transferee (other than any Participant), and may cause any Participant,
concurrently with and as a condition precedent to the effectiveness of such
transfer, to (i) represent to the transferor Lender (for the benefit of
the transferor Lender, Administrative Agent, and Borrowers) that under
applicable law and treaties no taxes will be required to be withheld by
Administrative Agent, any Borrowers or the transferor Lender with respect to
any payments to be made to such transferee in respect of the interest so
transferred, (ii) furnish to the transferor Lender, Administrative Agent
and Borrowers either United States Internal Revenue Service Form W-8BEN or
United States Internal Revenue Service Form W-8ECI (wherein such transferee
claims entitlement to complete exemption from United States federal withholding
tax on all payments made hereunder or under any other Loan Document), and
(iii) agree (for the benefit of the transferor Lender, Administrative
Agent and Borrowers) to provide the transferor Lender, Administrative Agent and
Borrowers a new Form W-8BEN or Form W-8ECI upon the obsolescence of any
previously delivered form and comparable statements in accordance with
applicable United States laws and regulations and amendments duly executed and
completed by such transferee, and to comply from time to time with all applicable
United States laws and regulations with regard to such withholding tax
exemption.

 

11.9.5                                          Register. 
Administrative Agent shall maintain, on behalf of Borrowers, a “register”
for recording the name, address, Obligations and principal and interest owing to
each Lender (which register may be the Loan Account).  The entries in such register shall be
presumptive evidence of the amounts due and owing to each Lender in the absence
of manifest error.  Each Borrower,
Administrative Agent and each Lender shall treat each Person whose name is
recorded in such register pursuant to the terms hereof as a Lender for all
purposes of this Agreement.  The
Obligations are registered and the right, title and interest of any Lender and its
assignees in and to such Obligations shall be transferable only upon notation
of such transfer in the register (and each Note shall expressly so
provide).  This subsection 11.9.5  shall be construed so that the Obligations
are at all times maintained in “registered form” within the meaning of Sections
163(f), 871(h)(2) and 881(c)(2) of the Code and any related regulations.  The register described herein shall be
available for inspection by any Borrower or any Lender, at any reasonable time
upon reasonable prior notice.

 

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

 

 

principal of, or
interest on, any amounts payable hereunder (including any fees) or under any
Note, other than those payable only to BofA in its capacity as Administrative
Agent, which may be postponed by BofA unilaterally, (5) increase any of the
percentages contained in the definition of the term Borrowing Base or to decrease the amount contained in the
definition of the term the Availability
Reserve, (6) reduce the number of Lenders that shall be required for
Lenders or any of them to take any action hereunder, (7) release or discharge
any Borrower from the Obligations or release or discharge any other Person
liable for the performance of any obligations of any Borrower hereunder or
under any of the Loan Documents, (8) amend any provision of this Agreement that
requires the consent of all Lenders or consent to or waive any breach thereof,
(9) amend the definition of the term Majority
Lenders, (10) amend subsections 1.1.2, 3.4.2 or this subsection 11.10,
(11) release any substantial portion of the Collateral, unless otherwise
permitted pursuant to subsection 11.7 hereof, (12) permit the sale,
assignment or transfer by any Borrower of its interest in this Agreement or any
of the Obligations, or any portion thereof, including, without limitation, such
Borrower’s rights, title, interests, remedies, powers and duties hereunder,
(13) subordinate any Lien of Administrative Agent in any material portion of
the Collateral to the Lien of any other Person or (14) amend subsection 11.9.1(vi)
to permit non-pro-rata assignments; or (ii) in writing and signed by
Administrative Agent in addition to the Lenders required above to affect the
rights or duties of Administrative Agent under this Agreement, any Note or any
other Loan Document.  If a fee is to be
paid by Borrowers in connection with any waiver or amendment hereunder, the
agreement evidencing such amendment or waiver may, at the sole discretion of
Administrative Agent (but shall not be required to), provide that only Lenders
executing such agreement by a specified date may share in such fee (and in such
case, such fee shall be divided among the applicable Lenders on a pro rata
basis without including the interests of any Lenders who have not timely
executed such agreement).

 

11.11                     Resignation of Administrative Agent; Appointment of
Successor.  Administrative
Agent may resign as Administrative Agent by giving not less than thirty (30)
days’ prior written notice to Lenders and Borrowers.  If Administrative Agent shall resign under
this Agreement, then, (i) subject to the consent of Borrowers (which
consent shall not be unreasonably withheld and which consent shall not be
required during any period in which a Default or an Event of Default exists),
Majority Lenders shall appoint from among Lenders a successor agent for Lenders
or (ii) if a successor agent shall not be so appointed and approved within
the thirty (30) day period following Administrative Agent’s notice to Lenders
and Borrowers of its resignation, then Administrative Agent shall appoint a
successor agent who shall serve as Administrative Agent until such time as
Majority Lenders appoint a successor agent, subject to Borrowers’ consent as
set forth above, provided that if Administrative Agent shall notify
Borrower and the Lenders that no qualifying Person has accepted such
appointment, then such resignation shall nonetheless become effective in
accordance with such notice and (1) the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents (except that in the case of any Collateral held by the Administrative
Agent on behalf of the Lenders under any of the Loan Documents, the retiring
Administrative Agent shall continue to hold such Collateral until such time as
a successor Administrative Agent is appointed) and (2) all payments,
communications and determinations provided to be made by, to or through
Administrative Agent shall instead

 

 

be made by or
to each Lender directly, until such time as the Majority Lenders appoint a
successor Administrative Agent as provided for above in this subsection 11.11.  Upon its appointment, such successor agent
shall succeed to the rights, powers and duties of Administrative Agent and the
term “Administrative Agent” shall
mean such successor effective upon its appointment, and the former
Administrative Agent’s rights, powers and duties as Administrative Agent shall
be terminated without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement.  After the resignation of any Administrative
Agent hereunder, the provisions of this Section 11 shall inure to
the benefit of such former Administrative Agent and such former Administrative
Agent shall not by reason of such resignation be deemed to be released from
liability for any actions taken or not taken by it while it was an
Administrative Agent under this Agreement.

 

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

 

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

 

(ii)                                  expressly agrees and acknowledges
that Administrative Agent (i) does not make any representation or warranty
as to the accuracy of any Report, and (ii) shall not be liable for any
information contained in any Report;

 

(iii)                               expressly agrees and acknowledges
that the Reports are not comprehensive audits or examinations, that
Administrative Agent or other party performing any audit or examination will
inspect only specific information regarding Borrowers and will rely
significantly upon Borrowers’ books and records, as well as on representations
of Borrowers’ personnel;

 

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

 

(v)                                 without limiting the generality of
any other indemnification provision contained in this Agreement, agrees:  (i) to hold Administrative Agent and any
such other Lender preparing a Report harmless from any action the indemnifying
Lender may take or conclusion the indemnifying Lender may reach or draw from
any Report in connection with any loans or other credit accommodations that the
indemnifying Lender has made or may make to Borrowers, or the indemnifying
Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or
loans of Borrowers; and (ii) to pay and protect, and indemnify, defend and
hold Administrative Agent and any such other 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 Lender preparing a Report as the direct or indirect
result of any third parties who might obtain all or part of any Report through
the indemnifying Lender.

 

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

 

11.14                     No Reliance on Administrative Agent’s Customer
Identification Program. 
Each Lender acknowledges and agrees that neither such Lender, nor
any of its affiliates, participants or assignees, may rely on Administrative
Agent to carry out such Lender’s, affiliate’s, participant’s or assignee’s
customer identification program, or other obligations required or imposed under
or pursuant to the USA Patriot Act or the regulations thereunder, including the
regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other
Anti-Terrorism Law, including any programs involving any of the following items
relating to or in connection with the Borrowers, their affiliates or agents,
the Loan Documents or the transactions hereunder:  (1) any identity verification procedures, (2)
any record keeping, (3) any comparisons with government lists, (4) any customer
notices or (5) any other procedures required under the CIP Regulations or such
other laws.

 

11.15                     USA
Patriot Act.  Each Lender
or assignee or participant of a Lender that is not organized under the laws of
the United States of America or a state thereof (and is not excepted from the
certification requirement contained in Section 313 of the USA Patriot Act
and the applicable regulations because it is both (i) an affiliate of a
depository institution or foreign bank that maintains a physical presence in
the United States or foreign country, and (ii) subject to supervision by a
banking authority regulating such affiliated depository institution or foreign
bank) shall deliver to Administrative Agent the certification, or, if
applicable, recertification, certifying that such Lender is not a “shell” and
certifying to other matters as required by Section 313 of the USA Patriot
Act and the applicable regulations:  (1)
within ten (10) days after the Closing Date 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
an amount equivalent to any applicable withholding tax.  If the IRS or any other Governmental
Authority asserts a claim that Administrative Agent did not properly withhold
tax from amounts paid to or for the account of any Lender because the
appropriate form was not delivered or was not properly executed or because such
Lender failed to notify

 

 

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

 

SECTION 12.  MISCELLANEOUS

 

12.1                           Power
of Attorney.  Each Borrower
hereby irrevocably designates, makes, constitutes and appoints Administrative
Agent (and all Persons designated by Administrative Agent) as such Borrower’s
true and lawful attorney (and agent-in-fact), solely with respect to the
matters set forth in this subsection 12.1, and Administrative
Agent, or Administrative Agent’s agent, may, without notice to any Borrower and
in any Borrower’s or Administrative Agent’s name, but at the cost and expense
of Borrowers:

 

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

 

12.1.2                                          At such time or times upon or after
the occurrence and during the continuance of an Event of Default (provided
that the occurrence of an Event of Default shall not be required with respect
to clauses (iv), (vi), (viii), and (ix)
below), as Administrative Agent or its agent in its sole discretion may
determine: (i) demand payment of the Accounts from the Account Debtors,
enforce payment of the Accounts by legal proceedings or otherwise, and
generally exercise all of any Borrower’s rights and remedies with respect to
the collection of the Accounts; (ii) settle, adjust, compromise, discharge
or release any of the Accounts or other Collateral or any legal proceedings
brought to collect any of the Accounts or other Collateral; (iii) sell or
assign any of the Accounts and other Collateral upon such terms, for such
amounts and at such time or times as Administrative Agent deems advisable, and
at Administrative Agent’s option, with all warranties regarding the Collateral
disclaimed; (iv) take control, in any manner, of any item of payment or
proceeds relating to any Collateral; (v) prepare, file and sign any
Borrower’s name to a proof of claim in bankruptcy or similar document against
any Account Debtor or to any notice of lien, assignment or satisfaction of lien
or similar document in connection with any of the Collateral;
(vi) receive, open and dispose of all mail addressed to any Borrower and
notify postal authorities to change the address for delivery thereof to such
address as Administrative Agent may designate; (vii) endorse the name of
any Borrower upon any of the items of payment or proceeds relating to any
Collateral and deposit the same to the account of Administrative Agent on
account of the Obligations; (viii) endorse the name of any Borrower upon
any chattel paper, document, instrument, invoice, freight bill, bill of lading
or similar document or agreement relating to the Accounts, Inventory and any
other Collateral; (ix) use any Borrower’s stationery and sign the name of
any Borrower to verifications of the Accounts and notices thereof to Account
Debtors; (x) use the information recorded on or contained in any data
processing

 

 

equipment and
Computer Hardware and Software relating to the Accounts, Inventory, Equipment
and any other Collateral; (xi) make and adjust claims under policies of
insurance; and (xii) do all other acts and things necessary, in
Administrative Agent’s determination, to fulfill any Borrower’s obligations
under this Agreement.

 

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

 

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

 

12.3                           Severability.  Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.

 

 

12.4                           Successors and Assigns.  This Agreement, the Other Agreements and the
Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of each Borrower, Administrative Agent and each Lender
permitted under subsection 11.9 hereof.  Notwithstanding anything to the contrary
herein, no Borrower may sell, assign or otherwise transfer any of its interest
in this Agreement or any of the Obligations, or any portion thereof, including,
without limitation, such Borrower’s rights, title, interests, remedies, powers
and duties hereunder, unless such sale, assignment or other transfer is
approved in a writing signed by each Lender and Administrative Agent; provided
that this subsection shall not prohibit mergers of Borrowers that are expressly
permitted by subsection 8.2.1.

 

12.5                           Cumulative Effect; Conflict of Terms.  The provisions of the Other Agreements and
the Security Documents are hereby made cumulative with the provisions of this
Agreement.  Except as otherwise provided
in any of the other Loan Documents by specific reference to the applicable
provision of this Agreement, if any provision contained in this Agreement is in
direct conflict with, or inconsistent with, any provision in any of the other
Loan Documents, the provision contained in this Agreement shall govern and
control.

 

12.6                           Execution in Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original and
all of which counterparts taken together shall constitute but one and the same
instrument.

 

12.7                           Notice.  Except as
otherwise provided herein, all notices, requests and demands to or upon a party
hereto or pursuant to any other Loan Document, to be effective, shall be in
writing, and shall be sent by certified or registered mail, return receipt
requested, by personal delivery against receipt, by overnight courier or by
facsimile and, unless otherwise expressly 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 Day after 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.

  
	
   

  	
  One South Wacker Drive

  
	
   

  	
  Suite 3400

  
	
   

  	
  Chicago, Illinois 60606

  
	
   

  	
  Attention: Loan Administration Manager

  
	
   

  	
  Facsimile No.:  (312) 332-6537

  
	
   

  	
   

  
	
  With a copy to:

  	
  Skadden, Arps, Slate, Meagher & Flom LLP

  
	
   

  	
  333 West Wacker Drive

  
	
   

  	
  Chicago, IL 60606

  
	
   

  	
  Attention: Seth E. Jacobson

  
	
   

  	
  Facsimile No.:  (312) 407-0889

  

 

 

	
   

  	
   

  
	
  (B)

  	
  If to Borrowers:

  	
  c/o National Equipment Services, Inc.

  
	
   

  	
  8770 West Bryn Mawr

  
	
   

  	
  4th Floor

  
	
   

  	
  Chicago, IL 60631

  
	
   

  	
  Attention: Chief Financial Officer

  
	
   

  	
  Facsimile No.:  773-714-0650

  
	
   

  	
   

  
	
  With a copy to:

  	
  Kirkland & Ellis LLP

  
	
   

  	
  200 East Randolph Drive

  
	
   

  	
  Chicago, Illinois 60601

  
	
   

  	
  Attention: H. Kurt von Moltke,
  P.C.

  
	
   

  	
  Facsimile: 312-861-2200

  
			

 

(C)                                If to any Lender, at
its address indicated on the signature pages hereof or in an Assignment and
Assumption Agreement,

 

or to such
other address as each party may designate for itself by notice given in
accordance with this subsection 12.7; provided, however,
that any notice, request or demand to or upon Administrative Agent or a Lender
pursuant to subsection 3.1.1 or 4.2.2 hereof shall not be
effective until received by Administrative Agent or such Lender.

 

12.8                           Consent.  Whenever Administrative Agent’s, Majority
Lenders’ or all Lenders’ consent is required to be obtained under this
Agreement, any of the Other Agreements or any of the Security Documents as a
condition to any action, inaction, condition or event, except as otherwise
specifically provided herein, Administrative Agent, Majority Lenders or all
Lenders, as applicable, shall be authorized to give or withhold such consent in
its or their sole discretion and to condition its or their consent upon the giving
of additional Collateral security for the Obligations, the payment of money or
any other matter.

 

12.9                           Credit
Inquiries.  Borrowers
hereby authorize and permit Administrative Agent and each Lender to respond to
usual and customary credit inquiries from third parties concerning any Borrower
or any of its Subsidiaries.

 

12.10                     Time
of Essence.  Time
is of the essence of this Agreement, the Other Agreements and the Security
Documents.

 

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

 

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

 

 

hereto by any
court or other governmental or judicial authority by reason of such party
having or being deemed to have structured or dictated such provision.

 

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

 

12.14                     GOVERNING LAW; CONSENT TO FORUM.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.  AS PART OF THE CONSIDERATION FOR NEW VALUE
RECEIVED, AND REGARDLESS OF ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE
OF BUSINESS OF ANY BORROWER, ADMINISTRATIVE AGENT OR ANY LENDER, EACH BORROWER
HEREBY CONSENTS AND AGREES THAT THE COURTS OF THE STATE OF NEW YORK, OR, AT
ADMINISTRATIVE AGENT’S OPTION, THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWERS ON THE ONE HAND AND
ADMINISTRATIVE AGENT OR ANY LENDER ON THE OTHER HAND PERTAINING TO THIS
AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT.  EACH BORROWER EXPRESSLY SUBMITS AND CONSENTS
IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH
COURT, AND EACH BORROWER HEREBY WAIVES ANY OBJECTION WHICH ANY BORROWER MAY
HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM  NON
CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT.  EACH BORROWER HEREBY WAIVES PERSONAL SERVICE
OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT
AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER PROCESS MAY BE
MADE BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO BORROWERS AT THE ADDRESS SET
FORTH IN THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON
THE EARLIER OF BORROWERS’ ACTUAL RECEIPT THEREOF OR 3 DAYS AFTER DEPOSIT IN THE
U.S. MAILS, PROPER POSTAGE PREPAID. 
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT
OF ADMINISTRATIVE AGENT OR ANY LENDER TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW, OR TO PRECLUDE THE ENFORCEMENT BY ADMINISTRATIVE AGENT
OR ANY LENDER OF ANY JUDGMENT OR ORDER

 

 

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

 

12.15                     WAIVERS
BY BORROWERS.  EACH
BORROWER WAIVES (i) THE RIGHT TO TRIAL BY JURY (WHICH ADMINISTRATIVE 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 THE LOAN
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 ALL COMMERCIAL
PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS , CHATTEL PAPER AND
GUARANTIES AT ANY TIME HELD BY ADMINISTRATIVE AGENT OR ANY LENDER ON WHICH
BORROWERS MAY IN ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER
ADMINISTRATIVE AGENT OR ANY LENDER MAY DO IN THIS REGARD; (iii) NOTICE
PRIOR TO ADMINISTRATIVE AGENT’S TAKING POSSESSION OR CONTROL OF THE COLLATERAL
OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO ALLOWING
ADMINISTRATIVE 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 BY LAW, ANY RIGHT TO
CLAIM OR RECOVER ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR
ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.  EACH BORROWER ACKNOWLEDGES THAT THE FOREGOING
WAIVERS ARE A MATERIAL INDUCEMENT TO ADMINISTRATIVE AGENT’S AND EACH LENDER’S
ENTERING INTO THIS AGREEMENT AND THAT ADMINISTRATIVE AGENT AND EACH LENDER IS
RELYING UPON THE FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWERS.  EACH BORROWER WARRANTS AND REPRESENTS THAT IT
HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND
VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, THIS AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

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

 

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

 

 

credit
received by such Borrower and all interest, costs, fees and expenses
attributable to such loans, advances or other extensions of credit, then such
Borrower shall be reimbursed by the other Borrowers for the amount of such
excess.  This subsection 12.17
is intended only to define the relative rights of Borrowers, and nothing set
forth in subsection 12.17 is intended or shall impair the
obligations of each Borrower, jointly and severally, to pay to Administrative
Agent and Lenders the Obligations as and when the same shall become due and
payable in accordance with the terms hereof. 
Notwithstanding anything to the contrary set forth in this subsection 12.17
or any other provisions of this Agreement, it is the intent of the parties
hereto that the liability incurred by each Borrower in respect of the
Obligations of the other Borrowers (and any Lien granted by each Borrower to
secure such Obligations), not constitute a fraudulent conveyance or fraudulent
transfer under the provisions of any applicable law of any state or other
governmental unit (“Fraudulent Conveyance”).
 Consequently, each Borrower,
Administrative Agent and each Lender hereby agree that if a court of competent
jurisdiction determines that the incurrence of liability by any Borrower in
respect of the Obligations of any other Borrower (or any Liens granted by such
Borrower to secure such Obligations) would, but for the application of this
sentence, constitute a Fraudulent Conveyance, such liability (and such Liens)
shall be valid and enforceable only to the maximum extent that would not cause
the same to constitute a Fraudulent Conveyance, and this Agreement and the
other Loan Documents shall automatically be deemed to have been amended
accordingly, nunc pro tunc.

 

12.18                     Holdings as Agent for Borrowers.  Each Borrower hereby irrevocably appoints
Holdings as the borrowing agent and attorney-in-fact for itself (the “Borrower Representative”) which
appointment shall remain in full force and effect unless and until
Administrative Agent shall have received prior written notice signed by all of
the Borrowers that such appointment has been revoked and that another Borrower
has been appointed Borrower Representative. 
Each Borrower hereby irrevocably appoints and authorizes Borrower
Representative (i) to provide to Administrative Agent and receive from
Administrative Agent all notices with respect to Loans obtained for the benefit
of any Borrower and all other notices and instructions under the Loan Documents
and (ii) to take such action on its behalf as Borrower Representative
deems appropriate to obtain Loans and to exercise such other powers as are
reasonably incidental thereto to carry out the purposes of this Agreement.  It is understood that the handling of the
Loan Account and Collateral of Borrowers in a combined fashion, as more fully
set forth herein, is done solely as an accommodation to Borrowers in order to
utilize the collective borrowing powers of Borrowers in the most efficient and
economical manner and at their request, and that none of Administrative Agent
nor Lenders shall incur liability to Borrowers as a result hereof.  Each Borrower expects to derive benefit,
directly or indirectly, from the handling of the Loan Account and the
Collateral in a combined fashion since the successful operation of each
Borrower is dependent on the continued successful performance of the integrated
group.  To induce Administrative Agent
and Lenders to do so, and in consideration thereof, each Borrower hereby
jointly and severally agrees to indemnify the Indemnitees and hold the Indemnitees
harmless against any and all liability, expense, loss or claim of damage or
injury, made against such Indemnitee by any Borrower or by any third party
whosoever, arising from or incurred by reason of (a) the handling of the
Loan Account and Collateral of Borrowers as herein provided,

 

 

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

 

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

 

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

 

(Signature Pages Follow)

 

 

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

 

	
   

  	
  Borrowers:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NES RENTALS HOLDINGS, INC.

  
	
   

  	
  NATIONAL EQUIPMENT SERVICES, INC.

  
	
   

  	
  NES REAL ESTATE MANAGEMENT, INC.

  
	
   

  	
  NES IT SERVICES, INC.

  
	
   

  	
  NES EQUIPMENT SERVICES CORPORATION

  
	
   

  	
  REBEL STUDIO RENTALS, INC.

  
	
   

  	
  NES SHORING ACQUISITION, INC.

  
	
   

  	
  NES MANAGEMENT SERVICE CORPORATION

  
	
   

  	
  NES INDIANA PARTNERS, INC.

  
	
   

  	
  FALCONITE REBUILD CENTER, INC.

  
	
   

  	
  NES PARTNERS, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  NES TRAFFIC SAFETY, L.P.

  
	
   

  	
  NES EQUIPMENT RENTAL, L.P.

  
	
   

  	
   

  	
  By: NES
  INDIANA PARTNERS, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  NES COMPANIES, L.P.

  
	
   

  	
   

  	
  By: NES
  PARTNERS, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
							

 

S-1

 

	
   

  	
  BANK OF AMERICA,
  N.A.

  
	
   

  	
   as Administrative Agent and as a
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

	
   

  	
  WACHOVIA BANK,
  NATIONAL

  
	
   

  	
  ASSOCIATION,
  as a Lender and as 

  
	
   

  	
  Syndication Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

	
   

  	
  MERRILL LYNCH
  CAPITAL, A

  
	
   

  	
  DIVISION OF MERRILL
  LYNCH

  
	
   

  	
  BUSINESS FINANCIAL
  SERVICES,

  
	
   

  	
  INC.,
  as a Lender and as Co-Documentation

  
	
   

  	
  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

	
   

  	
  GENERAL ELECTRIC
  CAPITAL

  
	
   

  	
  CORPORATION,
  as a Lender and as Co-

  
	
   

  	
  Documentation Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

	
   

  	
  THE CIT
  GROUP/BUSINESS CREDIT,

  
	
   

  	
  INC.,
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

	
   

  	
  WELLS FARGO
  FOOTHILL, LLC, as a

  
	
   

  	
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

	
   

  	
  PNC BANK, NATIONAL

  
	
   

  	
  ASSOCIATION,
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

	
   

  	
  UBS AG, STAMFORD
  BRANCH, as a

  
	
   

  	
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

	
   

  	
  UNION BANK OF
  CALIFORNIA, N.A.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  
							

 

 

APPENDIX A

 

GENERAL
DEFINITIONS

 

When used in
the Loan and Security Agreement dated as of August 17, 2004, by and among
NES Rentals Holdings, Inc. and certain subsidiaries of NES Rentals Holdings,
Inc., as borrowers, the financial institutions party thereto, as lenders,
Wachovia Bank, National Association as syndication agent, Merrill Lynch
Capital, A Division of Merrill Lynch Business Financial Services, Inc. and
General Electric Capital Corporation, as co-documentation agents, and Bank of
America, N.A., as administrative agent, (a) the terms Account, Certificated
Security, Chattel Paper, Commercial
Tort Claims, Deposit Account,
Document, Electronic Chattel Paper, Equipment, Financial Asset, Fixture,
General Intangibles, Goods, Instruments,
Investment Property, Letter-of-Credit Rights, Money, Payment
Intangibles, Proceeds, Securities
Account,  Security Entitlement, Software, Supporting
Obligations, Tangible Chattel
Paper and Uncertificated
Security have the respective meanings assigned thereto under the
UCC; (b) all terms reflecting Collateral having the meanings assigned thereto
under the UCC shall be deemed to mean such Property, whether now owned or
hereafter created or acquired by any Borrower or in which such Borrower now has
or hereafter acquires any interest; (c) capitalized terms which are not
otherwise defined in this Appendix A have the respective meanings assigned
thereto in said Loan and Security Agreement; and (d) the following terms shall
have the following meanings (terms defined in the singular to have the same
meaning when used in the plural and vice versa):

 

Account
Debtor - any Person who is or may become obligated
under, or in connection with, or on account of, any Account, Contract Right,
Chattel Paper, General Intangible or any Supporting Obligation in respect
thereof.

 

Administrative
Agent - as defined in the preamble to the Agreement.

 

Administrative
Agent Loans - as defined in subsection 1.1.5
of the Agreement.

 

Affiliate
- a Person: (i) which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
a Person; (ii) which beneficially owns or holds 10% or more of any class
of 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 the
equity interest) of which is beneficially owned or held by a Person or a
Subsidiary of a Person.  For purposes of
this definition, “control” of a Person means the power, directly or indirectly,
to direct or cause the direction of the management and policies of such Person
whether by contract or otherwise.

 

Aggregate
Percentage - with respect to each Lender, the
percentage equal to the quotient of (i) such Lender’s Loan Commitment divided
by (ii) the aggregate of all Loan Commitments, provided, that, if
the aggregate Loan Commitments have been reduced to zero, the numerator shall
be the aggregate unpaid principal amount of such Lender’s Revolving Credit Loans
and Term Loans and its interest in the LC Obligations and the

 

A-1

 

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

 

Agreement
- the Loan and 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 may be amended, restated, supplemented or otherwise modified from time
to time.

 

ALTA
Survey - a survey prepared in accordance with the
standards adopted by the American Land Title Association and the American
Congress on Surveying and Mapping in 1997, known as the “Minimum Standard Detail Requirements of Land Title
Surveys”.  The ALTA Survey shall
be in sufficient form to satisfy the requirements of Chicago Title Insurance
Company to provide extended coverage over survey defects and shall also show
the location of all easements, utilities, and covenants of record, dimensions
of all improvements, encroachments from any adjoining property, and certify as
to the location of any flood plain area affecting the subject real estate.  The ALTA Survey shall contain the following
certification:  “To [Name of Applicable Borrower], Bank of
America, N.A., as Administrative Agent, and                   Title
Insurance Company.  This is to certify
that this map of plat and the survey on which it is based were made in
accordance with the “Minimum Standard Detail Requirements for Land Title
Surveys” 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 of future acts of terrorism, in each case as such
law may be amended from time to time.

 

Applicable
Margin – from the Closing Date to, but not including,
the first Adjustment Date (as hereinafter defined) the percentages set forth
below with respect to the Base Rate Revolving Portion, the Base Rate Term
Portion, the LIBOR Revolving Portion, the LIBOR Term Portion and the Unused
Line Fee:

 

	
  Base Rate
  Revolving Portion

  	
   

  	
  .50

  	
  %

  
	
  Base Rate
  Term Portion

  	
   

  	
  .50

  	
  %

  
	
  LIBOR
  Revolving Portion

  	
   

  	
  2.5

  	
  %

  
	
  LIBOR Term
  Portion

  	
   

  	
  2.5

  	
  %

  
	
  Unused Line
  Fee

  	
   

  	
  0.375

  	
  %

  

 

The
percentages set forth above will be adjusted on the first day of the month
following delivery by Borrowers to Administrative Agent of the quarterly
financial statements required to be delivered pursuant to subsection 8.1.3(ii)(B)
of the Agreement for each fiscal quarter during the Term, commencing with the
fiscal quarter ending March 31, 2005 (each such date an “Adjustment Date”), effective
prospectively, by reference to the applicable “Financial
Measurement” (as defined below) for the four quarters most recently
ending in accordance with the following:

 

A-2

 

 

	
  Financial Measurement

  (Total Funded Senior

  Leverage Ratio)

  	
   

  	
  Level of

  Applicable Margins:

  
	
  >
  4.00

  	
   

  	
  Level I

  
	
  >
  3.75, but < 4.00

  	
   

  	
  Level II

  
	
  >
  3.25, but < 3.75

  	
   

  	
  Level III

  
	
  < 3.25

  	
   

  	
  Level IV

  

 

	
   

  	
   

  	
  Level I

  	
   

  	
  Level II

  	
   

  	
  Level III

  	
   

  	
  Level IV

  	
   

  
	
  Base Rate
  Revolving Portion

  	
   

  	
  1.00

  	
  %

  	
  0.75

  	
  %

  	
  .50

  	
  %

  	
  .25

  	
  %

  
	
  LIBOR
  Revolving Portion

  	
   

  	
  3.00

  	
  %

  	
  2.75

  	
  %

  	
  2.50

  	
  %

  	
  2.25

  	
  %

  
	
  Base Rate
  Term Portion

  	
   

  	
  1.00

  	
  %

  	
  0.75

  	
  %

  	
  .50

  	
  %

  	
  .25

  	
  %

  
	
  LIBOR Term
  Portion

  	
   

  	
  3.00

  	
  %

  	
  2.75

  	
  %

  	
  2.50

  	
  %

  	
  2.25

  	
  %

  
	
  Unused Line
  Fee

  	
   

  	
  0.50

  	
  %

  	
  0.375

  	
  %

  	
  0.375

  	
  %

  	
  0.25

  	
  %

  

 

provided
that, (i) if Holdings audited financial statements for any fiscal year
delivered pursuant to subsection 8.1.3(ii)(A) of the Agreement
reflect a Financial Measurement that yields a higher Applicable Margin than
that yielded by the quarterly financial statements previously delivered
pursuant to subsection 8.1.3(ii)(B) of the Agreement for the last
month of such fiscal year, the Applicable Margin shall be readjusted
retroactively for the period that was incorrectly calculated and (ii) if
Borrowers fail to deliver the financial statements required to be delivered
pursuant to subsection 8.1.3(ii)(A) or subsection 8.1.3(ii)(B)
of the Agreement on or before the due date thereof, the interest rate shall
automatically adjust to the highest interest rate set forth above, effective
prospectively from such due date until the next Adjustment Date.  For purposes hereof, “Financial Measurement” shall mean the Total Funded Senior Leverage Ratio.

 

Approved
Fund - any Person (other than a natural person) that
is (or will be) engaged in making, purchasing, holding or otherwise investing
in commercial loans and similar extensions of credit (including, to the extent
such Person becomes a Lender prior to the termination of the aggregate Loan
Commitments, revolving loans) in the ordinary course of its business and that
is administered or managed by (i) a Lender, (ii) an Affiliate of a Lender or
(iii) an entity or an Affiliate of an entity that administers or manages a
Lender.

 

Assignment
and Assumption Agreement - an assignment and
assumption agreement in the form of Exhibit 11.9 or otherwise in form
and content reasonably acceptable to Administrative Agent pursuant to which a
Lender assigns to another Lender all or any portion of any of such Lender’s
Revolving Loan Commitment or Term Loan Commitment, as permitted pursuant to the
terms of this Agreement.

 

Audit
– an audit,  inspection, valuation or
field examination of the Properties (including the books and records) of
Borrowers and their Subsidiaries or the Collateral performed by Administrative
Agent or its representative, which may include making extracts from such books
and records and discussing with the officers, employees and independent
accounts of any Borrower or its Subsidiary, the business, assets, liabilities,

 

A-3

 

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

 

Automotive
Account Debtor – each Account Debtor engaged in the
automotive business listed on Exhibit 9.0 to the Agreement, as such
Exhibit may be supplemented from time to time by Borrowers with the prior
written consent of Administrative Agent in its sole discretion.

 

Availability
- the amount of additional money which Borrowers are entitled to borrow from
time to time as Revolving Credit Loans, such amount being the difference
derived when the sum of the principal amount of Revolving Credit Loans then
outstanding (including any amounts which Administrative Agent or any Lender may
have paid for the account of any Borrower pursuant to any of the Loan Documents
and which have not been reimbursed by Borrowers), the LC Amount, the
Outstanding LC Obligations  and any
reserves is subtracted from the lesser of (i) the Revolving Credit Maximum
Amount minus the Equipment Acquisition Reserve and (ii) the Borrowing
Base.  If the amount outstanding is equal
to or greater than the Borrowing Base, Availability is 0.

 

Availability
Reserve  –
$20,000,000.

 

Available
Liquidity – the sum of Availability plus cash in
deposit accounts meeting either of the following two conditions:  (x) such deposit account is maintained at
Bank and is subject to a first priority security interest in favor of Administrative
Agent 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
Administrative Agent that are otherwise permitted to be incurred hereunder or
(y) such deposit account is maintained with any other bank or financial
institution and is (i) subject to a first priority security interest in favor
of the Administrative Agent 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 Administrative Agent that are otherwise
permitted to be incurred hereunder; and (ii) subject to a control agreement in
favor of Administrative Agent.

 

Bank
– BofA.

 

Bank
Product Provider  -
each of Administrative Agent, Bank, Wachovia Bank, any other Lender and any
Affiliate of Administrative Agent, Bank, Wachovia Bank or any other Lender, in
each case, as provider of the products or services described in the definition
of “Product Obligations.”

 

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

 

Base
Rate Portion - a Base Rate Term Portion or a Base Rate
Revolving Portion.

 

Base
Rate Revolving Portion - that portion of the Revolving
Credit Loans that is not subject to a LIBOR Option.

 

A-4

 

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

 

Blocked
Person – as defined in subsection 7.1.31(ii)
of the Agreement.

 

BofA
– as defined in the preamble to the Agreement.

 

Borrower
– as defined in the preamble to the Agreement.

 

Borrower
Representative – as defined in subsection 12.18
of the Agreement.

 

Borrowing
Base - as at any date of determination thereof, an amount
equal to the sum of (without duplication):

 

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

 

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

 

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

 

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

 

(v)                                 the Availability Reserve, minus

 

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

 

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

 

Borrowing
Base Certificate - a certificate by the chief
financial officer or treasurer of Borrower Representative, on its own behalf
and on behalf of all other Borrowers, substantially in the form of Exhibit 8.1.4
to the Agreement (or another form acceptable to Administrative Agent) setting
forth the calculation of the Borrowing Base, including a calculation of each
component thereof, all in such detail as shall be

 

A-5

 

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

 

Borrowing
Base Party – each Borrower and each subsidiary of each
Borrower which is organized under the laws of United States of America (or a
political subdivision thereof).  At the
election of Borrowers, NES Canada shall be a Borrowing Base Party after the
Closing Date if: (a) Administrative Agent receives a Collateral exam and
third party appraisal relating to the assets and properties of NES Canada with
results satisfactory to Administrative Agent and (b) Administrative Agent
receives such documents, instruments, agreements and legal opinions as
Administrative Agent requests to (i) cause NES Canada to be liable for,
and satisfy Administrative Agent that it is liable for, all of Borrowers’
Obligations under the Loan Documents and (ii) cause Administrative Agent
to obtain, and satisfy Administrative Agent that Administrative Agent has
obtained, a first priority perfected security interest in the equity and assets
of NES Canada.

 

Business
Day - any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of Wisconsin, the State of
Illinois or the State of New York or is a day on which banking institutions
located in either of such states are closed, provided that with respect
to the borrowing, prepayment or continuation of, or determination of the
interest rate on, any LIBOR Portion, Business Day shall include a London
Banking Day.

 

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

 

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

 

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 Section 13(d)(3) of the Securities Exchange Act of 1934, as amended)
(other than any Permitted Holder) of beneficial ownership of more than 20% of
the aggregate outstanding Voting Stock of Holdings;

 

(b)                                 during
any period of two consecutive years, individuals who at the beginning of such
period constituted the Board of Directors of Holdings (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the shareholders of Holdings was approved by a vote of at least a
majority the

 

A-6

 

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

 

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

 

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

 

Closing
Date – August 17, 2004.

 

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

 

Co-Lead
Arrangers – each of Banc of America Securities LLC and
Wachovia Capital Markets, LLC.

 

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

 

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

 

Collection
Bank– as defined 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 Borrower’s rights
(including rights as licensee and lessee) with respect to (i) computer and
other electronic data processing hardware, 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 related computer hardware; (ii) all Software
and all software programs designed for use on the computers and electronic data
processing hardware described in clause (i) above, including all
operating system software, utilities and application programs in any form
(source code and object code in magnetic tape, disk or hard copy format or any
other listings whatsoever); (iii) any firmware associated with any of the
foregoing; and (iv) any documentation for 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
- the consolidation in accordance with GAAP of the accounts or other items as
to which such term applies.

 

A-7

 

Contaminant
- any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any 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 or intended to guarantee any
Indebtedness, leases, dividends or other obligations (“primary obligations”) of any other Person
(the “primary obligor”) in any
manner, whether directly or indirectly, including, without limitation, (i) the
direct or indirect guaranty, endorsement (other than for collection or deposit
in the ordinary course of business), co-making, discounting with recourse or
sale 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, regardless
of nonperformance by any other party or parties to an agreement, (iii) any
obligation of such Person, whether or not contingent, (A) to purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (B) to advance or supply funds (1) for the purchase or payment of any
such primary obligation or (2) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (C) to purchase property, assets, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation or (D) otherwise to assure or hold harmless the holder of such
primary obligation against loss in respect thereof; provided, however,
that the term “Contingent Obligation”
shall not include any product warranties extended in the ordinary course of
business.  The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation with respect to which such Contingent
Obligation is made (or, if less, the maximum amount of such primary obligation
for which such Person may be liable pursuant to the terms of the instrument
evidencing such Contingent Obligation) or, if not stated or determinable, the
maximum reasonably anticipated liability with respect thereto (assuming such
Person is required to perform thereunder), as determined by such Person in good
faith.

 

Contract
Right - any right of any Borrower to payment under a
contract for the sale or lease of goods or the rendering of services, which
right is at the time not yet earned by performance.

 

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

 

A-8

 

Credit
Party – each Borrower.

 

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

 

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

 

Default
Rate - as defined in subsection 2.1.2 of
the Agreement.

 

Defaulting
Lender – as defined in subsection 3.1.3 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 agreement), 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 its terms
(or by the terms of any security into which it is convertible or for which it
is exchangeable), or upon the happening of any event, (a) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the first anniversary of the last day of the Term, (b) is convertible
into or exchangeable for (i) debt securities or (ii) any Securities referred to
in (a) above, in each case at any time prior to the first anniversary of the
last day of the Term, (c) contains any repurchase obligation which may come
into effect prior to payment in full of all Obligations, (d) requires cash
Distributions prior to one year after the last day of the Term, (e) does not
provide that any claims of any holder of such Security may have against any
Borrower (including any claims as a judgment creditor or other creditor in
respect of claims for the breach of any covenants contained therein) shall be
fully subordinated (including a full remedy bar) to the Obligations in a manner
satisfactory to the Majority Lenders, (f) provides the holders of such Security
thereof with any rights to receive any cash upon the occurrence of a change of
control prior to the first anniversary of the date on which the Obligations
have been paid in full in cash, unless the rights to receive such cash are
contingent upon the prior payment in full in cash of the Obligations or (g) is
prohibited by the terms of the Agreement.

 

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

 

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

 

A-9

 

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

 

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

 

Dominion
Notice - as defined in subsection 6.2.4 of
the Agreement.

 

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

 

(i)                                     it
arises out of a sale made or services rendered by a Borrowing Base Party to a
Subsidiary of a Borrowing Base Party or an Affiliate of a Borrowing Base Party
or to a Person controlled by an Affiliate of a Borrowing Base Party; or

 

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

 

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

 

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

 

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

 

A-10

 

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

 

(vii)                           it
arises from a sale made or services rendered to an Account Debtor (A) located
outside the United States, unless the sale is either (1) to an Account
Debtor located in Ontario or any other province of Canada in which the Personal
Property Security Act has been adopted in substantially the same form as
currently in effect in Ontario or (2) on letter of credit, guaranty or
acceptance terms, in each case acceptable to Administrative Agent in its
Permitted Discretion; or (B) located in a state or jurisdiction (e.g. New
Jersey, Minnesota and West Virginia) that requires, as a condition to access to
the courts of such jurisdiction, that a creditor qualify to transact business,
file a business activities report or other report or form, or take one or more
other actions, unless the applicable Borrowing Base Party has so qualified,
filed such reports or forms, or taken such actions (and, in each case, paid any
required fees or other charges), except to the extent such Borrowing Base Party
may qualify subsequently as a foreign entity authorized to transact business in
such state or jurisdiction and gain access to such courts, without incurring
any cost or penalty viewed by Administrative Agent to be significant in amount,
and such later qualification cures any access to such courts to enforce payment
of such Account; or

 

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

 

(ix)                                the
Account Debtor is the United States of America or any department, agency or
instrumentality thereof, unless the applicable Borrowing Base Party assigns its
right to payment of such Account to Administrative Agent, in a manner
satisfactory to Administrative Agent, in its Permitted Discretion, so as to
comply with the Assignment of Claims Act of 1940 (31 U.S.C. §203 et  seq.,
as amended); or

 

(x)                                   it
is not at all times subject to Administrative Agent’s duly perfected, first
priority security interest or is subject to a Lien that is not a Permitted
Lien; or

 

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

 

A-11

 

(xii)                             the
Account is evidenced by chattel paper or an instrument of any kind, or has been
reduced to judgment; or

 

(xiii)                          Any
Borrowing Base Party or a Subsidiary of any Borrowing Base Party has made any
agreement with the Account Debtor for any extension, compromise, settlement or
modification of the Account or deduction therefrom, except for discounts or
allowances which are made in the ordinary course of business for prompt payment
and which discounts or allowances are reflected in the calculation of the face
value of each invoice related to such Account; or

 

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

 

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

 

(xvi)                         it
represents service charges, late fees or similar charges;

 

(xvii)                      it
represents an unbilled Account; or

 

(xviii)                   it is not
otherwise acceptable to Administrative Agent in its Permitted Discretion.

 

Eligible
Assignee - (a) any Lender, any Affiliate of any Lender
and any Approved Fund or (b) any other Person (i) which is a commercial bank,
finance company, insurance company or other financial institution or fund and
which, in the ordinary course of business, extends credit of the type
contemplated herein; (ii) which is organized 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 “Eligible Assignee”
shall not include any Borrower or any of its Affiliates, financial sponsors or
Subsidiaries.

 

Eligible
Rental Equipment Inventory – Rental Equipment
Inventory of any Borrowing Base Party (other than packaging materials and
supplies, tooling, samples and literature) which Administrative Agent, in its
Permitted Discretion, deems to be Eligible Rental Equipment Inventory.  Without limiting the generality of the
foregoing, no Rental Equipment Inventory shall be Eligible Rental Equipment
Inventory if:

 

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

 

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

 

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

 

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

 

A-12

 

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

 

(vi)                              it
is not at all times subject to Administrative Agent’s duly perfected, first
priority security interest or is subject to a Lien that is not a Permitted
Lien; or

 

(vii)                           it is
not situated at a location in compliance with the Agreement; or

 

(viii)                        it is in
transit; or

 

(ix)                                is
held on consignment; or

 

(x)                                   is
not insured in accordance with the terms of the Agreement or other terms reasonably
acceptable to Administrative Agent; or

 

(xi)                                it
is not otherwise acceptable to Administrative Agent in its Permitted
Discretion.

 

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

 

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

 

Environmental
Claims - all complaint, 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 other Person alleging potential liability or
responsibility for violation of any Environmental 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 - a Lien in favor of any  Governmental Authority for (a) any liability
under Environmental Laws, or (b) damages arising from, or costs incurred by
such Governmental Authority in response to, a Release or threatened Release of
a Contaminant into the environment.

 

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

 

A-13

 

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

 

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

 

ERISA
Affiliate - any trade or business (whether or not
incorporated) under common control with any Borrower within the meaning of Section 414(b)
or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes 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 any Borrower or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which
it was a substantial employer (as defined in Section 4001(a)(2) of ERISA)
or a cessation of operations which is treated as such a withdrawal under Section 4062(e)
of ERISA, (c) a complete or partial withdrawal by any Borrower or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan
is in reorganization, (d) the filing of a notice of intent to terminate, the
treatment of a Pension Plan amendment as a termination under Section 4041
or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate
a Pension Plan or Multiemployer Plan, (e) the occurrence of an event or
condition which might reasonably be expected to constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to administer,
any Pension Plan or Multiemployer Plan, or (f) the imposition of any material
liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon any Borrower 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, 2005, and each fiscal year of Borrowers
thereafter, the amount equal to the sum of Consolidated Net Income (Loss) (as
defined in Exhibit 8.3), plus depreciation, amortization and
other non-cash charges deducted in determining Consolidated Net Income (Loss)
and minus the sum of payments of principal on Indebtedness for Money
Borrowed (excluding payments made on the Closing Date in respect of the Prior
Indebtedness and repayments of revolving loans except to the extent the
applicable revolving loan commitments are permanently reduced in connection
with such

 

A-14

 

repayments), non-cash income included in determining Consolidated Net
Income (Loss) and Net Capital Expenditures for such period or fiscal year, as
applicable, all determined for Holdings 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 making payroll, replenishing petty cash,
payment of specified accounts payable, and other occasional corporate needs in
the ordinary course of business, so long as the balance in any such account
does not exceed $100,000 at any time and the aggregate balances in all such
accounts does not exceed $200,000 at any time.

 

Existing
Letter of Credit  -
each of the letters of credit listed on Exhibit 1.2 to the Agreement
issued by Wachovia Bank for the account of the Persons identified on such
Exhibit.

 

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

 

Fee
Letter - as defined in subsection 2.3 of
the Agreement.

 

Foreign
Plan – any material pension, retirement, retiree
benefit or similar plan, arrangement or policy sponsored or contributed to by
any Borrower in a jurisdiction other than the United States.

 

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

 

GAAP
- generally accepted accounting principles in the United States of America in
effect from time 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, any department, commission, board, bureau,
instrumentality or agency thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.

 

Hoist
– the business of the Borrower of renting certain hoist equipment as currently
conducted by NES Industrial Hoist.

 

Holdings
– as defined in the preamble to the Agreement.

 

A-15

 

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

 

Indebtedness
- as applied 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 than performance, surety or similar
bonds), debentures, notes or similar instruments, or upon which interest
payments are customarily made, (iii) all obligations of such Person under
conditional sale or other title retention agreements relating to property
purchased by such Person (other than customary reservations or retentions of
title under agreements with suppliers entered into in the ordinary course of
business), (iv) all obligations of such Person issued or assumed as the
deferred purchase price of property or services purchased by such Person (other
than trade debt incurred in the ordinary course of business and due within 180
days of the incurrence thereof), (v) the principal portion of all
obligations of such Person under Capitalized Lease Obligations, (vi) the
maximum amount of all letters of credit issued or bankers’ acceptances
facilities created for the account of such Person and, without duplication, all
drafts drawn thereunder (to the extent unreimbursed), (vii) all preferred
Securities issued by such Person and required by the terms thereof to be
redeemed, or for which mandatory sinking fund payments are due, by a fixed date
prior to 180 days following the applicable maturity date thereof,
(viii) the principal portion of all obligations of such Person under
off-balance sheet financing arrangements (other than leases which, in
accordance with GAAP, would be classified as operating leases), (ix) all
Contingent Obligations of such Person, (x) all Derivative Obligations of such
Person, (xi) to the extent not included in the foregoing clauses (i) through
(x), all items which in accordance with GAAP would be included in determining
total liabilities as shown on the liability side of a balance sheet of such
Person as at the date as of which Indebtedness is to be determined, (xii) all
Indebtedness of another Person of the type referred to in clauses (i)
through (xi) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on, or payable out of 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 Person is legally obligated or has a reasonable expectation of being
liable with respect thereto.

 

Indemnified
Liabilities – as defined in subsection 12.2
of the Agreement.

 

Indemnitee
– as defined in subsection 12.2 of the
Agreement.

 

Intellectual
Property - all past, present and future:  trade secrets, know-how and other proprietary
information; trademarks, internet domain names, service marks, trade dress,
trade names, business names, designs, logos, slogans (and all translations,
adaptations, derivations and combinations of the foregoing) indicia and other
source

 

A-16

 

and/or business identifiers, and the goodwill of the business relating
thereto and all registrations or applications for registrations which have
heretofore been or may hereafter be issued thereon throughout the world;
copyrights (including copyrights for computer programs) and copyright
registrations or applications for registrations which have heretofore been or
may hereafter be issued throughout the world and all tangible property
embodying the copyrights, unpatented inventions (whether or not patentable);
patent applications and patents; industrial design applications and registered
industrial designs; license agreements related to any of the foregoing and
income therefrom; books, records, writings, computer tapes or disks, flow
diagrams, specification sheets, computer software, source codes, object codes,
executable code, data, databases and other physical manifestations, embodiments
or incorporations of any of the foregoing; the right to sue for all past,
present and future infringements of any of the foregoing; all other
intellectual property; and all common law and other rights throughout the world
in and to all of the foregoing.

 

Intercreditor
Agreement - that certain Intercreditor Agreement by
and between Administrative Agent and Second Lien Debt Agent, as acknowledged by
Borrowers substantially in the form of Exhibit 8.4 attached hereto
and otherwise in form and substance satisfactory to Majority Lenders, as
amended, restated, supplemented or otherwise modified from time to time.

 

Interest
Period - as applicable to any LIBOR Portion, a period
commencing on the date such LIBOR Portion is advanced, continued or converted,
and ending on the date which is one (1) month, two (2) months, three (3)
months, or six (6) months (or, if available to all Lenders, nine (9) months)
later, as may then be requested by Borrowers; provided that unless
Administrative Agent notifies Borrowers that the initial syndication of the
Loan commitments have been completed, each Interest Period commencing (a)
within the first 60 days after the Closing Date shall be a period of 1 month
and (b) thereafter shall be a period of 7 days; and provided  further
that (i) any Interest Period which would otherwise end on a day which is
not a Business Day shall end in the next preceding or succeeding Business Day
as is Administrative Agent’s custom in the market to which such LIBOR Portion
relates; (ii) there remains a minimum of one (1) month, two (2) months,
three (3) months, six (6) months or nine (9) months (depending upon which
Interest Period Borrowers select) in the Term, unless Borrowers and Lenders
have agreed to an extension of the Term beyond the expiration of the Interest
Period in question; (iii) all Interest Periods of the same duration which
commence on the same date shall end on the same date; and (iv) with
respect to any LIBOR Term Portion, no applicable Interest Period shall extend
beyond the scheduled installment payment date for such LIBOR Term Portion.

 

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

 

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

 

A-17

 

LC
Amount - at any time, the aggregate undrawn face
amount of all Letters of Credit then outstanding.

 

LC
Obligations - any Obligations that arise from any draw
against any Letter of Credit.

 

Lender
– as defined in the preamble to the Agreement.

 

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

 

LIBOR
- as applicable to any LIBOR Portion, for the applicable Interest Period, the
rate per annum (rounded upward, if necessary, to the nearest 1/8 of one
percent) as determined on the basis of the offered rates for deposits in U.S.
dollars, for a period of time comparable to such Interest Period which appears
on the Telerate page 3750 as of 11:00 a.m. (London time) on the day that is two
(2) London Banking Days preceding the first day of such Interest Period; provided,
however, that if the rate described above does not appear on the
Telerate System on any applicable interest determination date, the LIBOR shall
be the rate (rounded upwards as described above, if necessary) for deposits in
U.S. dollars for a period substantially equal to the Interest Period on the
Reuters Page “LIBO” (or such other
page as may replace the LIBO Page on that service for the purpose of displaying
such rates), as of 11:00 a.m. (London Time), on the day that is two (2) London
Banking Days prior to the first day of such Interest Period.  If both the Telerate and Reuters systems are
unavailable, then the rate for that date will be determined on the basis of the
offered rates for deposits in U.S. dollars for a period of time comparable to
such Interest Period which are offered by four (4) major banks in the London
interbank market at approximately 11:00 a.m. (London time), on the day that is
two (2) London Banking Days preceding the first day of such Interest Period as
selected by Administrative Agent.  The
principal London office of each of the major London banks so selected will be
requested to provide a quotation of its U.S. dollar deposit offered rate.  If at least two (2) such quotations are
provided, the rate for that date will be the arithmetic mean of the
quotations.  If fewer than two quotations
are provided as requested, the rate for that date will be determined on the
basis of the rates quoted for loans in U.S. dollars to leading European banks
for a period of time comparable to such Interest Period offered by major banks
in New York City at approximately 11:00 a.m. (New York City time), on the day
that is two (2) London Banking Days preceding the first day of such Interest Period.  In the event that Administrative Agent is
unable to obtain any such quotation as provided above, it will be determined
that LIBOR pursuant to an Interest Period cannot be determined.  In the event that the Board of Governors of
the Federal Reserve System shall impose a Reserve Percentage with respect to
LIBOR deposits of Bank, then for any period during which such Reserve
Percentage shall apply, LIBOR shall be equal to the amount determined above
divided by an amount equal to 1 minus the Reserve Percentage.

 

A-18

 

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

 

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

 

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

 

LIBOR
Request - a notice in writing (or by telephone
confirmed electronically or by telecopy or other facsimile transmission on the
same day as the telephone request) from Borrower Representative to
Administrative Agent requesting that interest on a Revolving Credit Loan or all
or any portion of the Term Loan be based on the LIBOR, specifying: (i) the
first day of the Interest Period (which shall be a Business Day); (ii) the
length of the Interest Period; (iii) whether the LIBOR Portion is a new
Loan, a conversion of a Base Rate Portion, or a continuation of a LIBOR
Portion; and (iv) the dollar amount of the LIBOR Revolving Portion or
LIBOR Term Portion, which shall be in an amount not less than $5,000,000 or an integral multiple of $1,000,000 in
excess thereof.

 

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

 

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

 

Lien
- any interest in Property securing an obligation owed to, or a claim by, a
Person other than the 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 other encumbrance or security or preferential arrangement of any nature, any
conditional 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
affecting Property and any assignment, deposit arrangement or financing lease
intended as, or having the effect of, security. 
For the purpose of the Agreement, a Borrower shall be deemed to be the
owner of any Property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to the Property has
been retained by or vested in some other Person for security purposes.

 

A-19

 

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

 

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

 

Loan
Documents - the Agreement, the Other Agreements and
the Security Documents.

 

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

 

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

 

Majority
Lenders - as of any date, Lenders holding more than
50% of the Term Loan and Revolving Loan Commitments determined on a combined
basis and following the termination of the Revolving Loan Commitments, Lenders
holding more than 50% or more of the outstanding Loans, LC Amounts and
Outstanding LC Obligations; provided, that (i) in each case, if
there are 2 or more Lenders with outstanding Loans, LC Amounts, Outstanding LC
Obligations or Revolving Loan Commitments, at least 2 Lenders shall be required
to constitute Majority Lenders; and (ii) prior to termination of the
Revolving Loan Commitments, if any Lender breaches its obligation to fund any
requested Revolving Credit Loan, for so long as such breach exists, its voting
rights hereunder shall be calculated with reference to its outstanding Loans,
LC Amounts and Outstanding LC Obligations, rather than its Revolving Loan
Commitment.

 

Margin
Stock - “margin stock” 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 or contingent), results of operations or
financial condition of Borrowers and their Subsidiaries taken as a whole,
(ii)  the rights and remedies of Administrative Agent or Lenders under the
Loan Documents, (iii)  the ability of any Borrower or any of its
Subsidiaries to perform its obligations hereunder or under any Loan Document,
(iv) the legality, validity or enforceability of the Agreement or any other
Loan Document or (v) the validity, perfection or priority of any Lien in favor
of Administrative Agent on any Collateral.

 

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

 

Maximum
Rate – as defined in subsection 2.1.3 of
the Agreement.

 

A-20

 

Money
Borrowed - (i) Indebtedness arising from the
lending of money by any Person to any Borrower or any of its Subsidiaries;
(ii) Indebtedness, whether or not in any such case arising from the
lending by any Person of money to any Borrower or any of its Subsidiaries,
(1) which is represented by notes payable or drafts accepted that evidence
extensions of credit, (2) which constitutes obligations evidenced by
bonds, debentures, notes or similar instruments, or (3) upon which
interest charges are customarily paid (other than accounts payable) or that was
issued or assumed as full or partial payment for Property;
(iii) Indebtedness that constitutes a Capitalized Lease Obligation;
(iv) reimbursement obligations with respect to letters of credit or
guaranties of letters of credit and (v) Indebtedness of any Borrower or
any of its Subsidiaries under any guaranty of obligations that would constitute
Indebtedness for Money Borrowed under clauses (i) through (iii)
hereof, if owed directly by Borrower or any of its Subsidiaries.  Money Borrowed shall not include trade
payables or accrued expenses.

 

Mortgages
– each mortgage or deed of trust executed by a Borrower on or about the Closing
Date in favor of Administrative Agent, for the benefit of itself and Lenders,
by which such Borrower has granted to Administrative Agent, as security for the
Obligations, a Lien upon the real Property of such Borrower described therein,
together with all mortgages, deeds of trust and comparable documents now or at
any 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 equipment and any
Rental Equipment Inventory) for which the title to such motor vehicle or
Property is governed by a certificate of title or ownership.

 

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

 

NES
Canada - NES Equipment Services, Inc. (Canada), a
corporation organized under the laws of Canada.

 

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

 

Net
Cash Proceeds - with respect to (a) any sale, assignment, transfer or other
disposition of any Property (an “Asset
Disposition”) by any Borrower or any of its Subsidiaries, all
proceeds in the form of cash or cash equivalents received by such Borrower or
Subsidiary from or in respect of such Asset Disposition (including any cash
proceeds received as income or other proceeds of any noncash proceeds of such
Asset Disposition and including any insurance payment or condemnation award in
respect of

 

A-21

 

any
assets of such Borrower or Subsidiary), (b) any issuance of Securities or
Indebtedness (a “Capital Issuance”)
by any Borrower or any of its Subsidiaries, all cash proceeds received in
respect thereof and (c) any loss of, damage to or destruction of, or any
condemnation or other taking for public use of, any Property of any Borrower or
any of its Subsidiaries (an “Involuntary
Disposition”), all cash proceeds received by such Borrower or
Subsidiary in respect thereof, and in
the case of the foregoing clauses (a), (b) and (c), net of (i) reasonable and
customary expenses incurred or reasonably expected to be incurred in connection
with such Asset Disposition, Capital Issuance or Involuntary Disposition, (ii)
any income, franchise, transfer or other tax payable by such Borrower or such
Subsidiary in connection with such Asset Disposition, Capital Issuance or
Involuntary Disposition and (iii) any Indebtedness secured by a Lien on such
property or assets and required to be repaid as a result of such Asset
Disposition, 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 a
Person that is not an Affiliate and are properly attributable to such
transaction or to the asset that is the subject thereof.

 

Net
Orderly Liquidation Value - as to Rental Equipment
Inventory, the orderly liquidation value (expressed as a percentage of net book
value) of such Rental Equipment Inventory as set forth in the most recent
inventory appraisal relating thereto delivered to and accepted by
Administrative Agent in accordance with the terms of the Agreement less
liquidation expenses in an amount not less than 12% of such orderly liquidation
value.

 

New
Mortgages - as defined in subsection 5.4
of the Agreement.

 

Nonrental
Equipment – Equipment as defined in the UCC and
including, without limitation, all equipment 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 the ordinary course of business or is held for rent by
such Credit Party.

 

Notes
- the Revolving Notes and the Term Notes.

 

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

 

A-22

 

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

 

Organizational
I.D. Number - with respect to any Person, the
organizational identification number assigned to such Person by the applicable
governmental unit or agency of the jurisdiction 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 evidencing any Derivative Obligation), heretofore,
now or hereafter executed or delivered in connection with the Agreement or the
transactions contemplated thereby.

 

Other
Taxes – as defined in subsection 2.11.2 of
the Agreement.

 

Outstanding
LC Obligations – at any time, LC Obligations that have
not yet been reimbursed by Borrowers or funded with a Revolving Credit Loan.

 

Overadvance
- as defined in subsection 1.1.2 of the Agreement.

 

PBGC
- the Pension Benefit Guaranty Corporation or any Governmental Authority
succeeding to the functions thereof.

 

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

 

Permitted
Discretion - 
the commercially reasonable credit judgment of Administrative Agent
determined on a basis consistent with its credit procedures for lending
purposes.

 

Permitted
Holder – each of the Persons identified on Exhibit
9.1 to the Agreement.

 

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

 

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

 

Permitted
Purchase Money Indebtedness - Purchase Money Indebtedness
of any Borrower incurred after the date hereof which is secured by a Purchase
Money Lien and the principal amount of which, when aggregated with the
principal amount of all other such Indebtedness and Capitalized Lease
Obligations of Borrowers and their Subsidiaries at the time outstanding, does
not exceed $10,000,000.  For the purposes
of this definition, the principal amount of any Purchase Money Indebtedness
consisting of capitalized leases (as opposed to operating leases) shall be
computed as a Capitalized Lease Obligation.

 

A-23

 

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

 

Plan
– an employee benefit plan (as defined in Section 3(3) of ERISA) which any
Borrower sponsors or maintains or to which any Borrower 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  Borrowers in favor of
Administrative Agent, as amended, restated, supplemented or otherwise modified
from time to time, and each other pledge or security agreement entered into
from time to time by any Borrower in favor of Administrative Agent, for the
benefit of itself and Lenders, by which such Borrower has granted to
Administrative Agent, as security for the Obligations, a Lien upon the equity
or debt interests held by such Borrower.

 

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

 

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

 

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

 

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

 

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

 

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

 

A-24

 

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

 

Purchase
Money Lien - a Lien upon Rental Equipment Inventory
which secures Purchase Money Indebtedness, but only if such Lien shall at all
times be confined solely to the Rental Equipment Inventory the purchase price
of which was financed through the 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 environment or into or out of any real
Property or other Property, including the movement of Contaminants through or
in the air, soil, surface water, groundwater or real Property or other
Property.

 

Rental
Equipment Inventory - all of each Borrowing Base Party’s
Inventory consisting of Property which is rented by such Credit Party in the
ordinary course of business or is held for rent by such Credit Party.

 

Rentals
- as defined in subsection 8.2.17 of the Agreement.

 

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

 

Replacement
Debt – as defined in subsection 8.2.6 of
the Agreement.

 

Report
– as defined in subsection 11.12 of the Agreement.

 

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

 

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

 

Requirement
of Law  - as to
any Person, any law (statutory or common), treaty, rule or regulation or
determination of an arbitrator or of a Governmental Authority, in each case
applicable to or binding upon the Person or any of its property or to which the
Person or any of its property is subject.

 

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

 

A-25

 

the Federal Reserve System against “Euro-currency
Liabilities” as defined in Regulation D.

 

Responsible
Officer  - the chief
executive officer or the president of a Borrower, or any other officer having
substantially the same authority and responsibility; or, with respect to
compliance with financial covenants and the preparation of the Borrowing Base
Certificate, the chief financial officer or the treasurer of a Borrower, or any
other Responsible Officer having substantially the same authority and responsibility.

 

Restricted
Investment - any investment made in cash or by
delivery of Property to any Person, whether by acquisition of stock,
Indebtedness or other obligation or Security, or by loan, advance or capital
contribution, or otherwise, or in any Property except the following:

 

(i)                                     investments
by a Borrower, to the extent existing on the Closing Date, in one or more
Subsidiaries of such Borrower;

 

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

 

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

 

(iv)                              investments
in direct obligations of the United States of America, or any agency thereof or
obligations guaranteed by the United States of America; provided that
such obligations mature within one year from the date of acquisition thereof;

 

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

 

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

 

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

 

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

 

(ix)                                investments
existing on the date hereof and listed on Exhibit 8.2.12 to the
Agreement;

 

(x)                                   investments
consisting of Product Obligations that are Derivative Obligations, entered into
in the ordinary course of business and not for speculative purposes; and

 

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

 

A-26

 

Revolving
Credit Loan - any Loan made by Administrative Agent or
any Lender (including charges made to the Loan Account in accordance with the
terms of the Agreement) pursuant to the Agreement other than a Term Loan.

 

Revolving
Credit Maximum Amount - $100,000,000, as such amount
may be reduced from time to time pursuant to the terms of the Agreement.

 

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

 

Revolving
Loan Percentage - with respect to each Lender, the
percentage equal to the quotient of such Lender’s Revolving Loan Commitment divided
by the aggregate of all Revolving Loan Commitments.

 

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

 

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

 

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

 

Second
Lien Debt Agent - at any time in respect of any Credit
Facility, the Person serving at such time as the “Agent,” “Administrative
Agent,” “Collateral Agent,”  “Collateral
Trustee” or “Trustee” under such Credit Facility or any other representative in
a similar capacity then most recently designated in accordance with the
applicable provisions of the Credit Facility, together with its successors in
such capacity.

 

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

 

A-27

 

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

 

Second
Lien Debt Payment – as defined in subsection 8.2.6(iii)
of the Agreement.

 

Second
Lien Debt Security Documents - all security
agreements, pledge agreements, collateral assignments, mortgages, collateral
agency agreements, control agreements, deeds of trust or other grants or
transfers for security executed and delivered by any Borrower or any Subsidiary
of any Borrower or any guarantor of the Second Lien Debt creating (or purporting
to create) a Lien upon any assets or properties of such Person in favor of the
Second Lien Debt Agent or the Administrative Agent, as applicable, 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 terms of the Loan Documents.

 

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

 

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

 

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

 

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

 

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

 

Subordinated
Debt - Indebtedness of any Borrower or any Subsidiary
of any Borrower that is subordinated to the Obligations in a manner
satisfactory to Administrative Agent, and contains terms, including without
limitation, payment terms, satisfactory to Administrative Agent.

 

A-28

 

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

 

Swingline
Loans - as defined in subsection 1.1.4 of
the Agreement.

 

Tax
Liabilities – as defined in subsection 2.11
of the Agreement.

 

Term
- as defined in subsection 4.1 of the Agreement.

 

Term
Loan - the Loan described in subsection 1.3.1
of the Agreement.

 

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

 

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

 

Term
Loan Percentage - with respect to each Lender, the
percentage equal to the quotient of such Lender’s Term Loan Commitment divided
by the aggregate of all Term Loan Commitments.

 

Term
Loan Reserve - 
means $200,000,000; provided, upon written notice from Borrowers
to Administrative Agent, the Term Loan Reserve may be reduced to the then
outstanding principal balance of the Term Loan.

 

Total
Credit Facility - $300,000,000, as reduced from time
to time pursuant to the terms of the Agreement.

 

Total
Funded Senior Leverage  Ratio – as defined in Exhibit 8.3 to the Agreement.

 

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

 

UCC
- the Uniform Commercial Code as in effect in the State of New York on the date
of the Agreement, 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 in accordance with the
assumptions used for funding the Pension Plan pursuant to Section 412 of
the Code for the applicable plan year.

 

A-29

 

Unused
Line Fee - as defined in subsection 2.5 of
the Agreement.

 

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

 

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

 

Wachovia
Bank – Wachovia Bank, National Association, in its
individual capacity.

 

Other
Terms  - All other terms
contained in the Agreement shall have, when the context so indicates, the
meanings provided by the UCC to the extent the same are used or defined
therein.

 

Certain
Matters of Construction  -
The terms “herein”, “hereof” and “hereunder” and other words of similar import refer to the
Agreement as a whole and not to any particular section, paragraph or
subdivision.  Any pronoun used shall be
deemed to cover all genders.  The section titles,
table of contents and list of exhibits appear as a matter of convenience only
and shall not affect the interpretation of the Agreement.  All references to statutes and related
regulations shall include any amendments of same and any successor statutes and
regulations.  All references to any of
the Loan Documents shall include any and all modifications thereto and any and
all extensions or renewals thereof.

 

Accounting Terms and
Determinations

 

Unless
otherwise defined or specified herein, all accounting terms shall be construed
herein and all accounting determinations for purposes of determining compliance
with subsection 8.3 of the Agreement and otherwise to be made under
the Agreement shall be made in accordance with GAAP applied on a basis
consistent in all material respects with the financial statements delivered
pursuant to subsection 8.1.3 
of the Agreement (the “Financials”).  All financial statements required to be
delivered hereunder from and after the Closing Date and all financial records
shall be maintained in accordance with GAAP and to the extent required or
permitted under GAAP, shall give effect to changes from time to time required
as a result of the application of fresh start accounting.  If GAAP shall change from the basis used in
preparing the Financials (or the application of fresh start accounting shall
require such a change), the certificates required to be delivered pursuant to subsection 8.1.3
demonstrating compliance with the covenants contained herein shall include calculations
setting forth the adjustments necessary to demonstrate how Borrowers are in
compliance with the financial covenants based upon GAAP as in effect on the
Closing Date.  If Borrowers shall change
its method of inventory accounting, all calculations necessary to determine
compliance with the

 

A-30

 

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

 

Borrowers
shall deliver to Administrative Agent and each Lender at the same time as the
delivery of any annual financial statements given in accordance with the
provisions of subsection 8.1.3 of the Agreement, (i) a description
in reasonable detail of any material change in the application of accounting
principles employed in the preparation of such financial statements from those
applied in the most recently preceding annual financial statements and (ii) a
reasonable estimate of the effect on the financial statements on account of
such changes in application.

 

A-31

 

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00074-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00074-of-00352.parquet"}]]