Document:

EXHIBIT 4.2

 

REGISTRATION RIGHTS AGREEMENT

 

Dated as of August 18,
2005

 

by
and between

 

AHERN RENTALS, INC.

 

and

 

CIBC WORLD MARKETS CORP.

 

and

 

BANC OF AMERICA SECURITIES LLC

 

as
Initial Purchasers

 

 

$200,000,000

 

91⁄4% SENIOR SECOND PRIORITY
SECURED NOTES DUE 2013

 

 

TABLE OF
CONTENTS

 

	
  1.

  	
  Definitions

  	
   

  
	
  2.

  	
  Exchange
  Offer

  	
   

  
	
  3.

  	
  Shelf Registration

  	
   

  
	
  4.

  	
  Liquidated Damages

  	
   

  
	
  5.

  	
  Registration Procedures

  	
   

  
	
  6.

  	
  Registration Expenses

  	
   

  
	
  7.

  	
  Indemnification

  	
   

  
	
  8.

  	
  Rules 144
  and 144A

  	
   

  
	
  9.

  	
  Underwritten Registrations

  	
   

  
	
  10.

  	
  Miscellaneous

  	
   

  
	
   

  	
  (a)

  	
  Remedies

  	
   

  
	
   

  	
  (b)

  	
  No Inconsistent Agreements

  	
   

  
	
   

  	
  (c)

  	
  Adjustments Affecting Registrable Notes

  	
   

  
	
   

  	
  (d)

  	
  Amendments and Waivers

  	
   

  
	
   

  	
  (e)

  	
  Notices

  	
   

  
	
   

  	
  (f)

  	
  Successors and Assigns

  	
   

  
	
   

  	
  (g)

  	
  Counterparts

  	
   

  
	
   

  	
  (h)

  	
  Headings

  	
   

  
	
   

  	
  (i)

  	
  Governing
  Law

  	
   

  
	
   

  	
  (j)

  	
  Severability

  	
   

  
	
   

  	
  (k)

  	
  Notes Held by the Company or Its Affiliates

  	
   

  
	
   

  	
  (l)

  	
  Third Party Beneficiaries

  	
   

  
	
   

  	
  (m)

  	
  Entire
  Agreement

  	
   

  

 

i

 

REGISTRATION RIGHTS AGREEMENT

 

This
Registration Rights Agreement (the “Agreement”) is made and entered into
as of August 18, 2005, by and between Ahern Rentals, Inc., a Nevada
corporation (the “Company”) and CIBC World Markets Corp. and Banc of
America Securities LLC (the “Initial Purchasers”).

 

This Agreement
is entered into in connection with the Purchase Agreement, dated August 11,
2005, by and between the Company and the Initial Purchasers (the “Purchase
Agreement”) relating to the sale by the Company to the Initial Purchasers
of $200,000,000 aggregate principal amount of the Company’s 91⁄4% Second Priority
Senior Secured Notes due 2013 (the “Notes”).  In order to induce the Initial Purchasers to
enter into the Purchase Agreement, the Company has agreed to provide the
registration rights set forth in this Agreement for the benefit of the holders
of Registrable Notes (as defined), including, without limitation, the Initial
Purchasers.  The execution and delivery
of this Agreement is a condition to the Initial Purchasers’ obligation to
purchase the Notes under the Purchase Agreement.

 

The parties
hereby agree as follows:

 

1.                                       Definitions

 

As used in
this Agreement, the following terms shall have the following meanings:

 

Advice:  See the last paragraph of Section 5.

 

Agreement:  See the first introductory paragraph to this
Agreement.

 

Applicable
Period:  See Section 2(b).

 

Business Day:  A day that is not a Saturday, a Sunday, or a
day on which banking institutions in New York, New York are required to be
closed.

 

Closing Date: 
The Closing Date as defined in the Purchase Agreement.

 

Commission:  The Securities and Exchange Commission.

 

Company:  See the first introductory paragraph to this
Agreement.

 

Effectiveness
Date:  (i) The
180th day after the Issue Date, in the case of the Exchange Registration
Statement or an Initial Shelf Registration filed in lieu of the Exchange Registration
Statement, and (ii) in the case of an Initial Shelf Registration filed
following delivery of a Shelf Notice, the 90th day after the delivery of a
Shelf Notice.

 

Effectiveness
Period:  See Section 3(a).

 

Event Date:  See Section 4(b).

 

 

Exchange Act:  The Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.

 

Exchange Notes:  See Section 2(a).

 

Exchange Offer:  See Section 2(a).

 

Exchange
Registration Statement:  See Section 2(a).

 

Filing Date: 
The 90th day after the Issue Date (regardless of whether the actual
filing precedes such date).

 

Holder:  Any registered holder of Registrable Notes.

 

Indemnified Person:  See Section 7(c).

 

Indemnifying Person:  See Section 7(c).

 

Indenture:  The Indenture, dated as of August 18,
2005, by and between the Company and Wells Fargo Bank, N.A., as trustee,
pursuant to which the Notes are being issued, as amended or supplemented from
time to time in accordance with the terms thereof.

 

Initial
Purchasers:  See
the first introductory paragraph to this Agreement.

 

Initial Shelf
Registration: 
See Section 3(a).

 

Inspectors:  See Section 5(o).

 

Issue Date: 
The date on which the Notes were sold to the Initial Purchasers pursuant
to the Purchase Agreement.

 

Issuer:  The Company.

 

Liquidated Damages:  See Section 4(a).

 

NASD:  National Association of Securities Dealers, Inc.

 

Notes:  See the second introductory paragraph to this
Agreement.

 

Participant:  See Section 7(a).

 

Participating Broker-Dealer:  See Section 2(b).

 

Person:  Any individual, corporation, partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization or government (including any agency or
political subdivision thereof).

 

2

 

Private
Exchange:  See Section 2(b).

 

Private
Exchange Notes: 
See Section 2(b).

 

Prospectus:  The prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance
upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Registrable Notes covered by such Registration
Statement, and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.

 

Purchase
Agreement:  See
the second introductory paragraph to this Agreement.

 

Records: 
See Section 5(o).

 

Registrable
Notes:  Each
Note upon original issuance thereof and at all times subsequent thereto, each
Exchange Note as to which Section 2(c)(iv) hereof is applicable upon
original issuance thereof and at all times subsequent thereto and each Private
Exchange Note upon original issuance thereof and at all times subsequent
thereto, until, in the case of any such Note, Exchange Note or Private Exchange
Note, as the case may be, the earliest to occur of (i) a Registration
Statement (other than, with respect to any Exchange Note as to which Section 2(c)(iv) hereof
is applicable) covering such Note, Exchange Note or Private Exchange Note, as
the case may be, has been declared effective by the Commission and such Note,
Exchange Note or Private Exchange Note, as the case may be, has been disposed
of in accordance with such effective Registration Statement, (ii) such
Note, Exchange Note or Private Exchange Note, as the case may be, is sold in
compliance with Rule 144, (iii) in the case of any Note, such Note
may be resold without restriction under federal securities laws, or (iv) such
Note, Exchange Note or Private Exchange Note, as the case may be, ceases to be
outstanding for purposes of the Indenture.

 

Registration
Statement:  Any
registration statement of the Company, including, but not limited to, the
Exchange Registration Statement, that covers any of the Registrable Notes
pursuant to the provisions of this Agreement, including the Prospectus,
amendments and supplements to such registration statement, including
post-effective amendments, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.

 

Rule 144:  Rule 144 under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other
than Rule 144A) or regulation hereafter adopted by the Commission providing
for offers and sales of securities made in compliance therewith resulting in
offers and sales by subsequent holders that are not affiliates of an issuer of
such securities being free of the registration and prospectus delivery requirements
of the Securities Act.

 

3

 

Rule 144A:  Rule 144A under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other
than Rule 144) or regulation hereafter adopted by the Commission.

 

Rule 415:  Rule 415 under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission.

 

Securities Act:  The Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.

 

Shelf Notice:  See Section 2(c).

 

Shelf
Registration: 
See Section 3(b).

 

Subsequent
Shelf Registration: 
See Section 3(b).

 

TIA:  The Trust Indenture Act of 1939, as amended.

 

Trustee:  The trustee under the Indenture and, if
existent, the trustee under any indenture governing the Exchange Notes and
Private Exchange Notes (if any).

 

underwritten registration or
underwritten offering:  A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.

 

2.                                       Exchange Offer

 

(a)                                  The
Company agrees to file with the Commission promptly, but no later than the
Filing Date, an offer to exchange (the “Exchange Offer”) any and all of
the Registrable Notes (other than Private Exchange Notes, if any) for a like
aggregate principal amount of debt securities of the Company which are
substantially identical to the Notes (the “Exchange Notes”) (and which
are entitled to the benefits of the Indenture or a trust indenture which is
substantially identical to the Indenture (other than such changes to the
Indenture or any such identical trust indenture as are necessary to comply with
any requirements of the Commission to effect or maintain the qualification
thereof under the TIA) and which, in either case, has been qualified under the
TIA), except that the Exchange Notes shall have been registered pursuant to an
effective Registration Statement under the Securities Act, shall contain no
restrictive legend thereon, and shall contain no provisions for Liquidated
Damages.  The Exchange Offer shall be
registered under the Securities Act on the appropriate form (the “Exchange
Registration Statement”) and shall comply with all applicable tender offer rules and
regulations under the Exchange Act.  The
Company agrees to use commercially reasonable efforts to (x) cause the Exchange
Registration Statement to be declared effective under the Securities Act
promptly, but no later than the Effectiveness Date; (y) keep the Exchange Offer
open for at least 20 Business Days (or longer if required by applicable law)
after the date that notice of the Exchange Offer is first mailed to Holders and
keep the Exchange Registration Statement effective until the completion of the
Exchange Offer; and (z) complete the Exchange Offer within 210 days after the
Issue Date.  If after such

 

4

 

Exchange Registration Statement is initially declared effective by the
Commission, the Exchange Offer or the issuance of the Exchange Notes thereunder
is interfered with by any stop order, injunction or other order or requirement
of the Commission or any other governmental agency or court, such Exchange
Registration Statement shall be deemed not to have become effective for
purposes of this Agreement.  Each Holder
who participates in the Exchange Offer will be required to represent that any
Exchange Notes received by it will be acquired in the ordinary course of its
business, that at the time of the completion of the Exchange Offer such Holder
will have no arrangement or understanding with any Person to participate in the
distribution of the Exchange Notes, that such Holder is not an affiliate of the
Company within the meaning of the Securities Act, and any additional
representations that counsel to the Company advises are necessary under
then-existing interpretations of the Commission in order for the Exchange
Registration Statement to be declared effective.  Upon completion of the Exchange Offer in
accordance with this Section 2, the provisions of this Agreement shall
continue to apply, mutatis mutandis, solely
with respect to Registrable Notes that are Private Exchange Notes and Exchange
Notes held by Participating Broker-Dealers, and the Company shall have no
further obligation to register Registrable Notes (other than Private Exchange
Notes and other than in respect of any Exchange Notes as to which clause 2(c)(iv) hereof
applies) pursuant to Section 3 of this Agreement.

 

(b)                                 The
Company shall include within the Prospectus contained in the Exchange Registration
Statement a section entitled “Plan of Distribution,” reasonably acceptable
to the Initial Purchasers, which shall contain a summary statement of the
positions taken or policies made by the Staff of the Commission with respect to
the potential “underwriter” status of any broker-dealer that is the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange Notes
received by such broker-dealer in the Exchange Offer (a “Participating Broker-Dealer”),
whether such positions or policies have been publicly disseminated by the Staff
of the Commission or such positions or policies, in the judgment of the Initial
Purchasers, represent the prevailing views of the Staff of the Commission.  Such “Plan of Distribution” section shall
also allow, to the extent permitted by applicable policies and regulations of
the Commission, the use of the Prospectus by all Persons subject to the
prospectus delivery requirements of the Securities Act, including, to the
extent so permitted, all Participating Broker-Dealers, and include a statement
describing the manner in which Participating Broker-Dealers may resell the
Exchange Notes.

 

The Company
shall use commercially reasonable efforts to keep the Exchange Registration
Statement effective and to amend and supplement the Prospectus contained
therein, in order to permit such Prospectus to be lawfully delivered by all
Persons subject to the prospectus delivery requirements of the Securities Act
for such period of time beginning when the Exchange Notes are first issued in
the Exchange Offer and ending upon the date such Persons are no longer required
to comply with the prospectus delivery requirements in connection with offers
and sales of the Exchange Notes (the “Applicable Period”).

 

If, upon
completion of the Exchange Offer, any Initial Purchaser holds any Notes
acquired by it and having the status of an unsold allotment in the initial
distribution, the Company upon the request of any Initial Purchaser shall,
simultaneously with the delivery of the Exchange Notes in the Exchange Offer,
issue and deliver to such Initial Purchaser, in exchange (the

 

5

 

“Private Exchange”) for the Notes held
by such Initial Purchaser, a like principal amount of debt securities of the
Company that are identical in all material respects to the Exchange Notes
except for the existence of restrictions on transfer thereof under the Securities
Act and securities laws of the several states of the U.S. (the “Private
Exchange Notes”) (and which are issued pursuant to the same indenture as
the Exchange Notes).  The Private
Exchange Notes shall bear the same CUSIP number as the Exchange Notes.  Interest on the Exchange Notes and Private
Exchange Notes will accrue from the last interest payment date on which interest
was paid on the Notes surrendered in exchange therefor or, if no interest has
been paid on the Notes, from the Issue Date.

 

In connection
with the Exchange Offer, the Company shall:

 

(1)                                  mail to each Holder a copy of the Prospectus forming part of
the Exchange Registration Statement, together with an appropriate letter of
transmittal and related documents;

 

(2)                                  utilize
the services of a depositary for the Exchange Offer with an address in the
Borough of Manhattan, The City of New York, which may be the Trustee or an
affiliate thereof;

 

(3)                                  permit
Holders to withdraw tendered Registrable Notes at any time prior to the close
of business, New York time, on the last Business Day on which the Exchange
Offer shall remain open; and

 

(4)                                  otherwise comply in all material respects with all applicable
laws.

 

As soon as
practicable after the close of the Exchange Offer or the Private Exchange, as
the case may be, the Company shall:

 

(1)                                  accept for exchange all Registrable Notes validly tendered
and not validly withdrawn pursuant to the Exchange Offer or the Private Exchange;

 

(2)                                  deliver to the Trustee for cancellation all Registrable
Notes so accepted for exchange; and

 

(3)                                  cause
the Trustee to authenticate and deliver promptly to each Holder tendering such Registrable
Notes, Exchange Notes or Private Exchange Notes, as the case may be, equal in
principal amount to the Notes of such Holder so accepted for exchange.

 

The Exchange
Notes and the Private Exchange Notes may be issued under (i) the Indenture
or (ii) an indenture identical in all material respects to the Indenture,
which in either event will provide that the Exchange Notes will not be subject
to the transfer restrictions set forth in the Indenture and that the Exchange
Notes, the Private Exchange Notes and the Notes, if any, will vote and consent
together on all matters as one class and that none of the Exchange Notes,

 

6

 

the
Private Exchange Notes or the Notes, if any, will have the right to vote or consent
as a separate class on any matter.

 

(c)                                  If,
(i) because of any change in law or in currently prevailing interpretations
of the staff of the Commission, the Company is not permitted to effect an
Exchange Offer, (ii) the Exchange Offer is not completed within 210 days
of the Issue Date, (iii) any holder of Private Exchange Notes so requests
in writing to the Company or (iv) in the case of any Holder that participates
in the Exchange Offer (and tenders its Registrable Notes prior to the
expiration thereof), such Holder does not receive Exchange Notes on the date of
the exchange that may be sold without restriction under federal securities laws
(other than due solely to the status of such Holder as an affiliate of the
Company within the meaning of the Securities Act) and so notifies the Company
within 20 Business Days following the completion of the Exchange Offer (and providing
a reasonable basis for its conclusions), in the case of each of clauses
(i)-(iv), then the Company shall promptly deliver to the Holders and the
Trustee written notice thereof (the “Shelf Notice”) and shall file a
Shelf Registration pursuant to Section 3.

 

3.                                       Shelf
Registration

 

If a Shelf
Notice is delivered as contemplated by Section 2(c), then:

 

(a)                                  Shelf
Registration.  The Company shall as
promptly as practicable file with the Commission a Registration Statement for
an offering to be made on a continuous basis pursuant to Rule 415 covering
all of the Registrable Notes (the “Initial Shelf Registration”).  If the Company shall not have yet filed the
Exchange Registration Statement, the Company shall file with the Commission the
Initial Shelf Registration on or prior to the Filing Date and shall use
commercially reasonable efforts to cause such Initial Shelf Registration to be
declared effective under the Securities Act on or prior to the Effectiveness
Date.  Otherwise, the Company shall file
with the Commission the Initial Shelf Registration within 30 days of the delivery
of the Shelf Notice and shall use commercially reasonable efforts to cause such
Shelf Registration to be declared effective under the Securities Act on or
prior to the Effectiveness Date.  The
Initial Shelf Registration shall be on Form S-1 or another appropriate
form permitting registration of such Registrable Notes for resale by Holders in
the manner or manners designated by them (including, without limitation, one or
more underwritten offerings).  The
Company shall not permit any securities other than the Registrable Notes to be
included in any Shelf Registration.  The
Company shall use commercially reasonable efforts to keep the Initial Shelf
Registration continuously effective under the Securities Act until the date
which is 24 months from the Issue Date (or, if Rule 144(k) under the Securities
Act is amended to permit unlimited resales by non-affiliates within a lesser
period, such lesser period) (subject to extension pursuant to the last
paragraph of Section 5 hereof) (the “Effectiveness Period”) or such
shorter period ending when (i) all Registrable Notes covered by the
Initial Shelf Registration have been sold in the manner set forth and as
contemplated in the Initial Shelf Registration, (ii) a Subsequent Shelf
Registration covering all of the Registrable Notes has been declared effective
under the Securities Act or (iii) there are no longer any Registrable
Notes outstanding.

 

7

 

(b)                                 Subsequent
Shelf Registrations.  If the Initial
Shelf Registration or any Subsequent Shelf Registration ceases to be effective
for any reason at any time during the Effectiveness Period (other than because
of the sale of all of the securities registered thereunder), the Company shall
use commercially reasonable efforts to obtain the prompt withdrawal of any
order suspending the effectiveness thereof, and in any event shall within
30 days of such cessation of effectiveness amend the Shelf Registration in
a manner to obtain the withdrawal of the order suspending the effectiveness
thereof, or file an additional “shelf” Registration Statement pursuant to Rule 415
covering all of the Registrable Notes (a “Subsequent Shelf Registration”).  If a Subsequent Shelf Registration is filed,
the Company shall use commercially reasonable efforts to cause the Subsequent
Shelf Registration to be declared effective as soon as practicable after such
filing and to keep such Subsequent Shelf Registration continuously effective
for a period equal to the number of days in the Effectiveness Period less the
aggregate number of days during which the Initial Shelf Registration or any
Subsequent Shelf Registrations was previously continuously effective.  As used herein the term “Shelf
Registration” means the Initial Shelf Registration and any Subsequent Shelf
Registration.

 

(c)                                  Supplements
and Amendments.  The Company shall
promptly supplement and amend any Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration, if required by the Securities Act, or if reasonably
requested by the Holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Shelf Registration or by any underwriter of
such Registrable Notes, in each case, with the Company’s consent, which consent
shall not be unreasonably withheld or delayed.

 

4.                                       Liquidated Damages

 

(a)                                  The
Company and the Initial Purchasers agree that the Holders of Registrable Notes
will suffer damages if the Company fails to fulfill its obligations under Section 2
or Section 3 hereof and that it would not be feasible to ascertain the
extent of such damages with precision. 
Accordingly, the Company agrees to pay, as liquidated damages and as the
sole remedy to the Holders of Registrable Notes, additional interest on the
Registrable Notes (“Liquidated Damages”) under the circumstances and to
the extent set forth below (each of which shall be given independent effect):

 

(i)                                     if
(A) neither the Exchange Registration Statement nor the Initial Shelf
Registration has been filed on or prior to the Filing Date or (B) notwithstanding
that the Company has completed or will complete an Exchange Offer, the Company
is required to file a Shelf Registration and such Shelf Registration is not
filed on or prior to the 30th day after delivery of the Shelf Notice, then, in
the case of subclause (A), commencing on the day after the Filing Date or, in
the case of subclause (B), commencing on the 31st day following delivery of the
Shelf Notice, Liquidated Damages shall accrue on the Registrable Notes over and
above the stated interest at a rate of 0.25% per annum for the first 90 days
immediately following the Filing Date or such 30th day, as the case may be,
such Liquidated

 

8

 

Damages rate increasing by an additional 0.25% per annum at the
beginning of each subsequent 90-day period;

 

(ii)                                  if
(A) neither the Exchange Registration Statement nor the Initial Shelf
Registration is declared effective on or prior to the Effectiveness Date
applicable thereto or (B) notwithstanding that the Company has completed
or will complete an Exchange Offer, the Company is required to file a Shelf
Registration and such Shelf Registration is not declared effective by the
Commission on or prior to the applicable Effectiveness Date, then, commencing
on the day after such applicable Effectiveness Date, Liquidated Damages shall
accrue on the Registrable Notes over and above the stated interest at a rate of
0.25% per annum for the first 90 days immediately following the day after the
applicable Effectiveness Date, such Liquidated Damages rate increasing by an
additional 0.25% per annum at the beginning of each subsequent 90-day period;
and

 

(iii)                               if
(A) the Company has not exchanged Exchange Notes for all Notes validly
tendered in accordance with the terms of the Exchange Offer on or prior to the
210th day after the Issue Date, (B) the Exchange Registration Statement
ceases to be effective prior to completion of the Exchange Offer or (C) if
applicable, a Shelf Registration has been declared effective and such Shelf
Registration ceases to be effective at any time during the Effectiveness Period
(without, in the case of clauses (B) and (C), being succeeded within 30
days by an additional registration statement filed and declared effective),
then Liquidated Damages shall accrue on the Registrable Notes over and above
the stated interest at a rate of 0.25% per annum for the first 90 days
commencing on the (x) 210th day after the Issue Date in the case of (A) above
or (y) the day such Exchange Registration Statement or Shelf Registration ceases
to be effective in the case of (B) and (C) above, such Liquidated
Damages rate increasing by an additional 0.25% per annum at the beginning of
each such subsequent 90-day period;

 

provided,
however, that the Liquidated Damages rate on the Registrable Notes may
not exceed in the aggregate 1.0% per annum; provided  further that
(1) upon the filing of the Exchange Registration Statement or each Shelf
Registration (in the case of (i) above), (2) upon the effectiveness
of the Exchange Registration Statement or each Shelf Registration, as the case
may be (in the case of (ii) above), or (3) upon the exchange of
Exchange Notes for all Registrable Notes tendered (in the case of (iii)(A) above)
or upon the effectiveness of an Exchange Registration Statement or Shelf
Registration which had ceased to remain effective (in the case of (iii)(B) and
(C) above), Liquidated Damages on any Registrable Notes then accruing
Liquidated Damages as a result of such clause (or the relevant subclause
thereof), as the case may be, shall cease to accrue.

 

(b)                                 The
Company shall notify the Trustee within two Business Days after each and every
date on which an event occurs in respect of which Liquidated Damages are required
to be paid (an “Event Date”).  Any
amounts of Liquidated Damages due pursuant to (a)(i), (a)(ii) or (a)(iii) of
this Section 4 will be payable in cash semi-annually on each regular
interest

 

9

 

payment date specified in the Indenture (to the Holders of Registrable
Notes of record on the regular record date therefor (as specified in the Indenture)
immediately preceding such dates), commencing with the first such regular
interest payment date occurring after any such Liquidated Damages commences to
accrue.  The amount of Liquidated Damages
will be determined by multiplying the applicable Liquidated Damages rate by the
principal amount of the Notes subject thereto, multiplied by a fraction, the
numerator of which is the number of days such Liquidated Damages rate was
applicable during such period (determined on the basis of a 360-day year comprised
of twelve 30-day months), and the denominator of which is 360.

 

5.                                       Registration Procedures

 

In connection
with the filing of any Registration Statement pursuant to Section 2 or 3 hereof,
the Company shall effect such registrations to permit
the sale of such securities covered thereby in accordance with the intended
method or methods of disposition thereof, and pursuant thereto and in
connection with any Registration Statement filed by the Company hereunder, the
Company shall:

 

(a)                                  Prepare
and file with the Commission prior to the Filing Date, the Exchange
Registration Statement or, if the Exchange Registration Statement is not filed
or is unavailable, a Shelf Registration as prescribed by Section 2 or 3,
and use commercially reasonable efforts to cause each such Registration
Statement to become effective and remain effective as provided herein; provided
that, if (1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2
is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period and
has advised the Company that it is a Participating Broker-Dealer, before filing
any Registration Statement or Prospectus or any amendments or supplements
thereto, the Company shall, if requested, furnish to and afford the Holders of
the Registrable Notes to be registered pursuant to such Shelf Registration or
each such Participating Broker-Dealer, as the case may be, covered by such
Registration Statement, their counsel and the managing underwriters, if any, a
reasonable opportunity to review copies of all such documents (including copies
of any documents to be incorporated by reference therein and all exhibits
thereto) proposed to be filed (in each case at least five Business Days prior
to such filing).  The Company shall not
file any such Registration Statement or Prospectus or any amendments or
supplements thereto if the Holders of a majority in aggregate principal amount
of the Registrable Notes covered by such Registration Statement, or any such
Participating Broker-Dealer, as the case may be, their counsel, or the managing
underwriters, if any, shall reasonably object.

 

(b)                                 Prepare
and file with the Commission such amendments and post-effective amendments to
each Shelf Registration or Exchange Registration Statement, as the case may be,
as may be necessary to keep such Registration Statement continuously effective
for the Effectiveness Period or the Applicable Period, as the case may be;
cause the related Prospectus to be supplemented by any Prospectus supplement
required by applicable law, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force) under the Securities Act; and comply
with the provisions of the Securities Act and the Exchange Act applicable to it

 

10

 

with respect to
the disposition of all securities covered by such Registration Statement as so
amended or in such Prospectus as so supplemented and with respect to the
subsequent resale of any securities being sold by a Participating Broker-Dealer
covered by any such Prospectus.  The
Company shall be deemed not to have used commercially reasonable efforts to
keep a Registration Statement effective during the Applicable Period if it
voluntarily takes any action that would result in selling Holders of the
Registrable Notes covered thereby or Participating Broker-Dealers seeking to
sell Exchange Notes not being able to sell such Registrable Notes or such Exchange
Notes during that period unless such action is required by applicable law, rule or
regulation or unless the Company complies with this Agreement, including,
without limitation, the provisions of paragraph 5(k) hereof and the last
paragraph of Section 5.

 

(c)                                  If
(1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2
is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period
from whom the Company has received written notice that it will be a Participating
Broker-Dealer, notify the selling Holders of Registrable Notes, and each such
Participating Broker-Dealer, and the managing underwriters, if any, promptly
(but in any event within three Business Days), and confirm such notice in
writing, (i) when a Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become effective
(including in such notice a written statement that any Holder may, upon
request, obtain, without charge, one conformed copy of such Registration
Statement or post-effective amendment including financial statements and
schedules, documents incorporated or deemed to be incorporated by reference and
exhibits), (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any preliminary prospectus or the
initiation of any proceedings for that purpose, (iii) if at any time when
a prospectus is required by the Securities Act to be delivered in connection
with sales of the Registrable Notes the representations and warranties of the
Company contained in any underwriting agreement contemplated by Section 5(n)
hereof cease to be true and correct in any material respect, (iv) of the
receipt by the Company of any notification with respect to the suspension of
the qualification or exemption from qualification of a Registration Statement
or any of the Registrable Notes or the Exchange Notes to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose, (v) of the happening of
any event, the existence of any condition or any information becoming known
that makes any statement made in such Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in, or amendments or supplements to, such Registration Statement,
Prospectus or documents so that, in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that, in the case of the Prospectus, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,

 

11

 

and (vi) of
the Company’s reasonable determination that a post-effective amendment to a
Registration Statement would be appropriate.

 

(d)                                 If
(1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2
is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period,
use commercially reasonable efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order preventing
or suspending the use of a Prospectus or suspending the qualification (or
exemption from qualification) of any of the Registrable Notes or the Exchange
Notes to be sold by any Participating Broker-Dealer, for sale in any
jurisdiction, and, if any such order is issued, to use commercially reasonable
efforts to obtain the withdrawal of any such order at the earliest possible
date.

 

(e)                                  If
a Shelf Registration is filed pursuant to Section 3 and if requested by
the managing underwriters, if any, or the Holders of a majority in aggregate
principal amount of the Registrable Notes being sold in connection with an
underwritten offering, (i) as promptly as practicable incorporate in a
prospectus supplement or post-effective amendment such information or revisions
to information therein relating to such underwriters or selling Holders as the
managing underwriters, if any, or such Holders or their counsel reasonably
request to be included or made therein, (ii) make all required filings of
such prospectus supplement or such post-effective amendment as soon as
practicable after the Company has received notification of the matters to be
incorporated in such prospectus supplement or post-effective amendment, and (iii) supplement
or make amendments to such Registration Statement.

 

(f)                                    If
(1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2
is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period,
furnish to each selling Holder of Registrable Notes and to each such
Participating Broker-Dealer who so requests and to counsel and each managing
underwriter, if any, without charge, one conformed copy of the Registration
Statement or Registration Statements and each post-effective amendment thereto,
including financial statements and schedules, and, if requested, all documents
incorporated or deemed to be incorporated therein by reference and all
exhibits.

 

(g)                                 If
(1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2
is required to be delivered under the Securities Act by any Participating
Broker-Dealer, deliver to each selling Holder of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, their respective counsel, and
the underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each form of preliminary prospectus) and each amendment
or supplement thereto and any documents incorporated by reference therein as
such Persons may reasonably request; and, subject to the last paragraph of this
Section 5, the Company hereby consents to the use of such Prospectus and
each amendment or supplement thereto by each of the selling Holders of
Registrable Notes and each Participating Broker-Dealer, and the underwriters

 

12

 

or agents, if any, and dealers (if any), in connection with the
offering and sale of the Registrable Notes covered by, or the sale by Participating
Broker-Dealers of the Exchange Notes pursuant to, such Prospectus and any
amendment or supplement thereto.

 

(h)                                 Prior
to any public offering of Registrable Notes or any delivery of a Prospectus
contained in the Exchange Registration Statement by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period,
use commercially reasonable efforts to register or qualify, and cooperate with
the selling Holders of Registrable Notes and each such Participating
Broker-Dealer, and the underwriters, if any, in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Notes or Exchange Notes, as the case may be,
for offer and sale under the securities or Blue Sky laws of such jurisdictions
within the United States as any selling Holder, Participating Broker-Dealer, or
the managing underwriter or underwriters, if any, reasonably request in
writing; provided that where Exchange Notes held by Participating
Broker-Dealers or Registrable Notes are offered pursuant to an underwritten
offering, counsel to the underwriters shall, at the reasonable cost and expense
of the Company, perform the Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h); keep
each such registration or qualification (or exemption therefrom) effective
during the period such Registration Statement is required to be kept effective
and do any and all other acts or things reasonably necessary or advisable to
enable the disposition in such jurisdictions of the Exchange Notes by
Participating Broker-Dealers or the Registrable Notes covered by the applicable
Registration Statement; provided that the Company shall not be required
to (A) qualify generally to do business in any jurisdiction where it is
not then so qualified, (B) take any action that would subject it to
general service of process in any such jurisdiction where it is not then so
subject or (C) subject itself to taxation in any such jurisdiction where
it is not then so subject.

 

(i)                                     If
a Shelf Registration is filed pursuant to Section 3, cooperate with the
selling Holders of Registrable Notes, any Participating Broker-Dealer and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable Notes to be
sold, which certificates shall not bear any restrictive legends and shall be in
a form eligible for deposit with The Depository Trust Company; and enable such
Registrable Notes to be in such denominations and registered in such names as
the managing underwriter or underwriters, if any, or Holders may reasonably
request.

 

(j)                                     Use
commercially reasonable efforts to cause the Registrable Notes covered by the
Registration Statement to be registered with or approved by such governmental
agencies or authorities as may be necessary to enable the seller or sellers
thereof or the underwriters, if any, to complete the disposition of such
Registrable Notes, in which case the Company will cooperate in all reasonable
respects with the filing of such Registration Statement and the granting of
such approvals.

 

(k)                                  If
(1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2
is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period,
upon the occurrence of any event contemplated by

 

13

 

paragraph 5(c)(v) or 5(c)(vi) hereof, as promptly as
practicable prepare and (subject to Section 5(a) hereof) file with
the Commission, at the Company’s sole expense, a supplement or post-effective
amendment to the Registration Statement or a supplement to the related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference, or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Notes being sold thereunder or to the
purchasers of the Exchange Notes to whom such Prospectus will be delivered by a
Participating Broker-Dealer, any such Prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

 

(l)                                     Use
commercially reasonable efforts to cause the Registrable Notes covered by a
Registration Statement to be rated with the appropriate rating agencies, if so
requested by the Holders of a majority in aggregate principal amount of
Registrable Notes covered by such Registration Statement or the managing
underwriter or underwriters, if any.

 

(m)                               Prior
to the effective date of the first Registration Statement relating to the
Registrable Notes, (i) provide the Trustee with printed certificates for
the Registrable Notes or the Exchange Notes, as the case may be, in a form
eligible for deposit with The Depository Trust Company and (ii) provide a
CUSIP number for the Registrable Notes or the Exchange Notes, as the case may
be.

 

(n)                                 In
connection with an underwritten offering of Registrable Notes pursuant to a
Shelf Registration, enter into an underwriting agreement as is customary in
underwritten offerings of debt securities similar to the Notes and take all
such other actions as are reasonably requested by the managing underwriter or
underwriters in order to expedite or facilitate the registration or the
disposition of such Registrable Notes and, in such connection, (i) make
such representations and warranties to the underwriters, with respect to the
business of the Company and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers to underwriters in
underwritten offerings of debt securities similar to the Notes, and confirm the
same in writing if and when requested; (ii) obtain the opinion of counsel
to the Company and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters, addressed to the
underwriters covering the matters customarily covered in opinions requested in
underwritten offerings of debt securities similar to the Notes and such other
matters as may be reasonably requested by managing underwriters; (iii) obtain
“cold comfort” letters and updates thereof in form and substance reasonably
satisfactory to the managing underwriter or underwriters from the independent
certified public accountants of the Company (and, if necessary, any other
independent certified public accountants of any business acquired by the
Company for which financial statements and financial data are, or are required
to be, included in the Registration Statement), addressed to each of the
underwriters, such letters to be in customary form and covering matters of the
type customarily covered in “cold comfort” letters in connection with
underwritten offerings of debt securities similar to the Notes and such other
matters as reasonably requested by the managing underwriter or underwriters;
and (iv) if an underwriting agreement is entered into, the same shall
contain indemnification provisions and procedures no less

 

14

 

favorable than those set forth in Section 7 hereof (or such other
provisions and procedures acceptable to Holders of a majority in aggregate
principal amount of Registrable Notes covered by such Registration Statement
and the managing underwriter or underwriters or agents) with respect to all
parties to be indemnified pursuant to said Section.  The above shall be done at each closing under
such underwriting agreement, or as and to the extent required thereunder.

 

(o)                                 If
(1) a Shelf Registration is filed pursuant to Section 3, or (2) a
Prospectus contained in an Exchange Registration Statement filed pursuant to Section 2
is required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period,
make available for inspection by any selling Holder of such Registrable Notes
being sold, and each Participating Broker-Dealer, any underwriter participating
in any such disposition of Registrable Notes, if any, and any attorney retained
by any such selling Holder, each Participating Broker-Dealer, as the case may
be, or underwriter (collectively, the “Inspectors”), each of which
Inspectors shall have certified to the Company that they have a current
intention to sell the Registrable Notes pursuant to the Shelf Registration, at
the offices where normally kept, during reasonable business hours, all
financial and other records, pertinent corporate documents and properties of
the Company (collectively, the “Records”) as shall be reasonably
necessary to enable them to exercise any applicable due diligence responsibilities,
and cause the officers, directors and employees of the Company to supply all
information reasonably requested by any such Inspector in connection with such
Registration Statement.  Records which
the Company determines, in good faith, to be confidential and any Records which
it notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records is necessary to avoid
or correct a misstatement or omission in such Registration Statement, (ii) the
release of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction, (iii) the information in such Records has
been made generally available to the public other than as a result of a
disclosure or failure to safeguard by such Inspector or (iv) disclosure of
such information is, in the opinion of counsel for any Inspector, necessary or
advisable in connection with any action, claim, suit or proceeding, directly or
indirectly, involving or potentially involving such Inspector and arising out
of, based upon, related to, or involving this Agreement, or any transactions
contemplated hereby or arising hereunder. 
Each selling Holder of such Registrable Notes and each Participating
Broker-Dealer will be required to agree that information obtained by it as a
result of such inspections shall be deemed confidential, and in any event shall
not be used by it as the basis for any market transactions in the securities of
the Company, unless and until such is made generally available to the
public.  Each Inspector, each selling
Holder of such Registrable Notes and each Participating Broker-Dealer will be required
to further agree that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction pursuant to clauses (ii) or (iv) of
the previous sentence or otherwise, give notice to the Company and allow the
Company to undertake appropriate action to obtain a protective order or
otherwise prevent disclosure of the Records deemed confidential at its expense.

 

(p)                                 Provide
an indenture trustee for the Registrable Notes or the Exchange Notes, as the
case may be, and cause the Indenture or the trust indenture provided for in Section 2(a),
as the case may be, to be qualified under the TIA not later than the effective
date of the Exchange

 

15

 

Offer or the first Registration Statement relating to the Registrable
Notes; and, in connection therewith, cooperate with the trustee under any such
indenture and the Holders of the Registrable Notes, to effect such changes to
such indenture as may be required for such indenture to be so qualified in
accordance with the terms of the TIA; and execute, and use commercially reasonable
efforts to cause such trustee to execute, all documents as may be required to
effect such changes, and all other forms and documents required to be filed
with the Commission to enable such indenture to be so qualified in a timely
manner.

 

(q)                                 Comply
with all applicable rules and regulations of the Commission and make
generally available to its securityholders earnings statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no
later than 45 days after the end of any 12-month period (or 90 days after the
end of any 12-month period if such period is a fiscal year) (i) commencing
at the end of any fiscal quarter in which Registrable Notes are sold to
underwriters in a firm commitment or best efforts underwritten offering and (ii) if
not sold to underwriters in such an offering, commencing on the first day of
the first fiscal quarter of the Company after the effective date of a
Registration Statement, which statements shall cover said 12-month periods.

 

(r)                                    Upon
consummation of the Exchange Offer or a Private Exchange, obtain an Officer’s
Certificate addressed to the Trustee for the benefit of all Holders of
Registrable Notes participating in the Exchange Offer or the Private Exchange,
as the case may be, that the articles of incorporation, by-laws and resolutions
of the Company have not been amended or revoked in any manner which would
prohibit the Company from having the authority to duly issue, authenticate and
deliver the Exchange Notes or Private Exchange Notes.

 

(s)                                  If
the Exchange Offer or a Private Exchange is to be completed, upon delivery of
the Registrable Notes by Holders to the Company (or to such other Person as
directed by the Company) in exchange for the Exchange Notes or the Private
Exchange Notes, as the case may be, the Company shall mark, or caused to be
marked, on such Registrable Notes that such Registrable Notes are being
cancelled in exchange for the Exchange Notes or the Private Exchange Notes, as
the case may be; in no event shall such Registrable Notes be marked as paid or
otherwise satisfied.

 

(t)                                    Cooperate
with each seller of Registrable Notes covered by any Registration Statement and
each underwriter, if any, participating in the disposition of such Registrable
Notes in connection with any filings required to be made with the NASD.

 

(u)                                 Use
commercially reasonable efforts to take all other steps reasonably necessary to
effect the registration of the Registrable Notes
covered by a Registration Statement contemplated hereby.

 

The Company
may require each Holder of Registrable Notes as to which any registration is
being effected to furnish to the Company such
information regarding such Holder and the distribution of such Registrable
Notes as the Company may, from time to time, reasonably request.  The Company may exclude from such registration
the Registrable Notes of any Holder

 

16

 

who
fails to furnish such information within a reasonable time after receiving such
request.  Each Holder as to which any
Shelf Registration is being effected agrees to notify the Company as promptly
as practicable of any inaccuracy or change in information previously furnished
by such Holder to the Company or of the occurrence of any event in either case
as a result of which any Prospectus relating to such Shelf Registration
contains or would contain an untrue statement of material fact regarding such
Holder or such Holder’s intended method of disposition of such Registrable
Notes required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading
and promptly to furnish to the Company any additional information required to
correct and update any previously furnished information or required so that
such Prospectus shall not contain, with respect to such Holder or the
disposition of such Registrable Notes, an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading.

 

Each Holder of
Registrable Notes and each Participating Broker-Dealer agrees by acquisition of
such Registrable Notes or Exchange Notes to be sold by such Participating
Broker-Dealer, as the case may be, that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 5(c)(ii),
5(c)(iv), 5(c)(v), or 5(c)(vi), such Holder will forthwith discontinue
disposition of such Registrable Notes covered by such Registration Statement or
Prospectus or Exchange Notes to be sold by such Holder or Participating
Broker-Dealer, as the case may be, and, in each case, dissemination of such
Prospectus until such Holder’s or Participating Broker-Dealer’s receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 5(k),
or until it is advised in writing (the “Advice”) by the Company that the
use of the applicable Prospectus may be resumed, and has received copies of any
amendments or supplements thereto.  In
the event the Company shall give any such notice, each of the Effectiveness
Period and the Applicable Period shall be extended by the number of days during
such periods from and including the date of the giving of such notice to and
including the date when each seller of Registrable Notes covered by such
Registration Statement or Exchange Notes to be sold by such Participating
Broker-Dealer, as the case may be, shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) or (y) the
Advice.

 

6.                                       Registration Expenses

 

All fees and
expenses incident to the performance of or compliance with this Agreement by
the Company shall be borne by the Company whether or not the Exchange Offer or
a Shelf Registration is filed or becomes effective, including, without
limitation, (i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings required to be made with the
NASD in connection with an underwritten offering and (B) fees and expenses
of compliance with state securities or Blue Sky laws (including, without
limitation, reasonable fees and disbursements of counsel in connection with
Blue Sky qualifications of the Registrable Notes or Exchange Notes and
determination of the eligibility of the Registrable Notes or Exchange Notes for
investment under the laws of such jurisdictions (x) where the holders of
Registrable Notes are located, in the case of the Exchange Notes, or
(y) as provided in Section 5(h) hereof, in the case of
Registrable Notes or Exchange Notes to be sold by a Participating Broker-Dealer

 

17

 

during the Applicable Period)), (ii) printing
expenses, including, without limitation, expenses of printing certificates for
Registrable Notes or Exchange Notes in a form eligible for deposit with The
Depository Trust Company and of printing prospectuses if the printing of prospectuses
is requested by the managing underwriter or underwriters, if any, or by the
Holders of a majority in aggregate principal amount of the Registrable Notes
included in any Registration Statement or by any Participating Broker-Dealer,
as the case may be, (iii) reasonable messenger, telephone and delivery
expenses incurred in connection with the Exchange Registration Statement and
any Shelf Registration, (iv) fees and disbursements of counsel for the
Company and reasonable fees and disbursements of one special counsel for the
Initial Purchasers and the sellers of Registrable Notes, (v) fees and
disbursements of all independent certified public accountants referred to in Section 5(n)(iii) (including,
without limitation, the expenses of any special audit and “cold comfort”
letters required by or incident to such performance), (vi) rating agency
fees, (vii) Securities Act liability insurance, if the Company desires
such insurance, (viii) fees and expenses of all other Persons retained by
the Company, (ix) internal expenses of the Company (including, without
limitation, all salaries and expenses of officers and employees of the Company
performing legal or accounting duties), (x) the expense of any annual or
special audit, (xi) the fees and expenses incurred in connection with the
listing of the securities to be registered on any securities exchange,
(xii) the fees and disbursements of underwriters, if any, customarily paid
by issuers or sellers of securities (but not including any underwriting
discounts or commissions or transfer taxes, if any, attributable to the sale of
the Registrable Notes which discounts, commissions or taxes shall be paid by
Holders of such Registrable Notes) and (xiii) the expenses relating to
printing, word processing and distributing all Registration Statements,
underwriting agreements, securities sales agreements, indentures and any other
documents necessary in order to comply with this Agreement.

 

7.                                       Indemnification

 

(a)                                  The
Company agrees to indemnify and hold harmless each Holder of Registrable Notes
and each Participating Broker-Dealer, the officers, directors, employees and
agents of each such Person, and each Person, if any, who controls any such
Person within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act (each, a “Participant”), from and against any and
all losses, claims, damages and liabilities (including, without limitation, the
reasonable legal fees and other reasonable expenses actually incurred in connection
with any suit, action or proceeding or any claim asserted) caused by, arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or caused, by, arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or Prospectus (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or caused by, arising out of or based upon any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any untrue statement or omission

 

18

 

or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Participant furnished to the
Company in writing by or on behalf of such Participant expressly for use
therein; provided, however, that the Company shall not be liable
if such untrue statement or omission or alleged untrue statement or omission
was contained or made in any preliminary prospectus and corrected in the
Prospectus or any amendment or supplement thereto and the Prospectus does not
contain any other untrue statement or omission or alleged untrue statement or
omission of a material fact that was the subject matter of the related
proceeding and any such loss, liability, claim, damage or expense suffered or
incurred by the Participants resulted from any action, claim or suit by any
Person who purchased Registrable Notes or Exchange Notes which are the subject
thereof from such Participant and it is established in the related proceeding
that such Participant failed to deliver or provide a copy of the Prospectus (as
amended or supplemented) to such Person with or prior to the confirmation of
the sale of such Registrable Notes or Exchange Notes sold to such Person if
required by applicable law, unless such failure to deliver or provide a copy of
the Prospectus (as amended or supplemented) was a result of noncompliance by
the Company with Section 5 of this Agreement.

 

(b)                                 Each
Participant will be required to agree, severally and not jointly, to indemnify
and hold harmless the Company, its directors and officers and each Person who
controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to each Participant, but only with reference to
information relating to such Participant furnished to the Company in writing by
such Participant expressly for use in any Registration Statement or Prospectus,
any amendment or supplement thereto, or any preliminary prospectus.  The liability of any Participant under this
paragraph shall in no event exceed the proceeds received by such Participant
from sales of Registrable Notes or Exchange Notes giving rise to such obligations.

 

(c)                                  If
any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any Person
in respect of which indemnity may be sought pursuant to either of the two
preceding paragraphs, such Person (the “Indemnified Person”) shall
promptly notify the Person against whom such indemnity may be sought (the “Indemnifying
Person”) in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may reasonably designate in such proceeding and shall pay
the reasonable fees and expenses actually incurred by such counsel related to
such proceeding; provided, however, that the failure to so notify
the Indemnifying Person shall not relieve it of any obligation or liability
which it may have under Section 7 (a) or 7 (b) above except to
the extent that the Indemnifying Person is unaware of the commencement of such
action and such omission results in the forfeiture by the Indemnifying Person
of substantial rights and defenses.  In
any such proceeding, any Indemnified Person shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Person unless (i) the Indemnifying Person and the
Indemnified Person shall have mutually agreed in writing to the contrary, (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named
parties in any such proceeding (including any impleaded parties) include both the

 

19

 

Indemnifying Person and the Indemnified Person and the Indemnified
Person shall have reasonably concluded that there may be one or more legal
defenses available to it and/or other Indemnified Persons that are different
from or in addition to those available to any such Indemnifying Person.  It is understood that, unless there is a
conflict among Indemnified Persons, the Indemnifying Person shall not, in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all Indemnified Persons, and that all such fees and
expenses shall be reimbursed as they are incurred.  Any such separate firm for the Participants
and control Persons of Participants shall be designated in writing by
Participants who sold a majority in interest of Registrable Notes sold by all
such Participants and any such separate firm for the Company, its directors,
officers and such control Persons of the Company shall be designated in writing
by the Company.  The Indemnifying Person
shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if there is a
final non-appealable judgment for the plaintiff, the Indemnifying Person agrees
to indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. 
Notwithstanding the foregoing sentence, if at any time an Indemnified
Person shall have requested an Indemnifying Person to reimburse the Indemnified
Person for reasonable fees and expenses actually incurred by counsel as
contemplated by the third sentence of this paragraph, the Indemnifying Person
agrees that it shall be liable for any settlement of any proceeding effected
without its consent if (i) such settlement is entered into more than 30
days after receipt by such Indemnifying Person of the aforesaid request and (ii) such
Indemnifying Person shall not have reimbursed the Indemnified Person in
accordance with such request prior to the date of such settlement; provided,
however, that the Indemnifying Person shall not be liable for any
settlement effected without its consent pursuant to this sentence if the
Indemnifying Person is contesting, in good faith, the request for
reimbursement.  No Indemnifying Person
shall, without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement (A) includes
an unconditional release of such Indemnified Person, in form and substance satisfactory
to such Indemnified Person, from all liability on claims that are the subject
matter of such proceeding and (B) does not include any statement as to an
admission of fault, culpability or failure to act by or on behalf of an
Indemnified Person.

 

(d)                                 If
the indemnification provided for in the first and second paragraphs of this Section 7
is unavailable to, or insufficient to hold harmless, an Indemnified Person in
respect of any losses, claims, damages or liabilities referred to therein, then
each Indemnifying Person under such paragraphs, in lieu of indemnifying such
Indemnified Person thereunder and in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such
Indemnified Person as a result of such losses, claims, damages or liabilities
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Person or Persons on the one hand and the Indemnified Person or
Persons on the other in connection with the statements or omissions (or alleged
statements or omissions) that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations.  The relative
fault of the parties shall be determined by reference to, among other things,
whether

 

20

 

the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or by the Participants or such other
Indemnified Person, as the case may be, on the other, the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission and any other equitable considerations appropriate
under the circumstances.

 

(e)                                  The
parties agree that it would not be just and equitable if contribution pursuant
to this Section 7 were determined by pro  rata allocation
(even if the Participants were treated as one entity for such purpose) or by
any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph.  The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages and liabilities referred to
in the immediately preceding paragraph shall be deemed to include, subject to
the limitations set forth above, any reasonable legal or other expenses
actually incurred by such Indemnified Person in connection with investigating
or defending any such action or claim. 
Notwithstanding the provisions of this Section 7, in no event shall
a Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes, as the case may be, exceeds the amount of any damages that such
Participant has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.  No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any Person who was not guilty of
such fraudulent misrepresentation.

 

(f)                                    The
indemnity and contribution agreements contained in this Section 7 will be
in addition to any liability which the Indemnifying Persons may otherwise have
to the Indemnified Persons referred to above.

 

8.                                       Rules 144 and 144A

 

The Company
covenants that it will file the reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by
the Commission thereunder in a timely manner and, if at any time it is not
required to file such reports, it will, upon the request of any Holder of
Registrable Notes, make publicly available other information so long as
necessary to permit sales pursuant to Rule 144 and Rule 144A under
the Securities Act.  The Company further
covenants, for so long as any Registrable Notes remain outstanding, to make
available to any Holder or beneficial owner of Registrable Notes in connection
with any sale thereof and any prospective purchaser of such Registrable Notes
from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit
resales of such Registrable Notes pursuant to Rule 144A.

 

9.                                       Underwritten Registrations

 

If any of the
Registrable Notes covered by any Shelf Registration are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will manage the offering will be selected by the Holders of a majority
in aggregate principal

 

21

 

amount
of such Registrable Notes included in such offering and reasonably acceptable
to the Company.

 

No Holder of
Registrable Notes may participate in any underwritten registration hereunder
unless such Holder (a) agrees to sell such Holder’s Registrable Notes on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.

 

10.                                 Miscellaneous

 

(a)                                  Remedies.  In
the event of a breach by the Company of any of its obligations under this
Agreement, each Holder of Registrable Notes and each Participating
Broker-Dealer holding Exchange Notes, in addition to being entitled to exercise
all rights provided herein, in the Indenture or, in the case of an Initial
Purchaser, in the Purchase Agreement, or granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement.  The Company agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of any of the provisions of this Agreement and hereby
further agrees that, in the event of any action for specific performance in
respect of such breach, it shall waive the defense that a remedy at law would
be adequate. Notwithstanding the foregoing, payment of Liquidated Damages is
the sole remedy to the Holders of Registrable Notes if the Company breaches its
obligations under Section 2 or Section 3 of this Agreement.

 

(b)                                 No Inconsistent Agreements.  The Company has not entered, as of the date hereof,
and shall not enter, after the date of this Agreement, into any agreement with
respect to any of its securities that is inconsistent with the rights granted
to the Holders of Registrable Notes in this Agreement or otherwise conflicts
with the provisions hereof.  The Company
has not entered and shall not enter into any agreement with respect to any of
its securities which will grant to any Person piggy-back rights with respect to
a Registration Statement.

 

(c)                                  Adjustments Affecting
Registrable Notes.  The Company
shall not, directly or indirectly, take any action with respect to the
Registrable Notes as a class that would adversely affect the ability of the
Holders of Registrable Notes to include such Registrable Notes in a
registration undertaken pursuant to this Agreement.

 

(d)                                 Amendments and Waivers.  The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, without prior written consent of (A) the
Holders of not less than a majority in aggregate principal amount of the then
outstanding Registrable Notes and (B) in circumstances that would
adversely affect Participating Broker-Dealers, the Participating Broker-Dealers
holding not less than a majority in aggregate principal amount of the Exchange
Notes held by all Participating Broker-Dealers; provided, however,
that Section 7 and this Section 10(d) may not be amended, modified
or supplemented without the prior written consent of

 

22

 

the Company, each Holder and each Participating Broker-Dealer
(including any person who was a Holder or Participating Broker-Dealer of
Registrable Notes or Exchange Notes, as the case may be, disposed of pursuant
to any Registration Statement).  Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders of
Registrable Notes whose securities are being tendered pursuant to the Exchange
Offer or sold pursuant to a Registration Statement and that does not directly
or indirectly affect, impair, limit or compromise in any material respect the
rights of other Holders of Registrable Notes may be given by Holders of at
least a majority in aggregate principal amount of the Registrable Notes being
tendered or being sold by such Holders pursuant to such Registration Statement.

 

(e)                                  Notices.  All
notices and other communications provided for or permitted hereunder shall be
made in writing by hand delivery, registered first-class mail, next-day air
courier or telecopier:

 

1.                                       if
to a Holder of Registrable Notes or any Participating Broker-Dealer, at the
most current address of such Holder or Participating Broker-Dealer, as the case
may be, set forth on the records of the registrar under the Indenture, with a
copy in like manner to the Initial Purchasers as follows:

 

CIBC WORLD MARKETS CORP.

BANC OF AMERICA SECURITIES LLC

c/o CIBC World Markets Corp.

300 Madison Avenue

 

New York, New York 10017-6204

Facsimile No.:  (212) 885-4941

Attention:  Leveraged Finance Group

 

with
a copy to:

 

Cahill Gordon &
Reindel LLP

80 Pine Street

New York, New York 10005

Facsimile No.:  (212) 269-5420

Attention:  Luis Penalver, Esq.

 

2.                                       if to the Initial Purchasers, at the address specified in Section 10(e)(1);

 

3.                                       if to the Company, as follows:

 

Ahern Rentals, Inc.

4241 S. Arville Street

Las Vegas, Nevada 89103

Facsimile No.:  (702) 638-2120

Attention:  Don F. Ahern

 

23

 

with copies to:

 

Stoel Rives LLP

900 SW Fifth Avenue

Suite 2600

Portland, Oregon

Facsimile No.:  (503) 220-2480

Attention:  Robert J. Moorman, Esq.

 

All such
notices and communications shall be deemed to have been duly given:  when delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; one Business Day after being timely delivered to a next-day
air courier guaranteeing overnight delivery; and when receipt is acknowledged
by the addressee, if telecopied.

 

Copies of all
such notices, demands or other communications shall be concurrently delivered
by the Person giving the same to the Trustee under the Indenture at the address
specified in such Indenture.

 

(f)                                    Successors and Assigns.  This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties hereto
and the Holders; provided, however, that this Agreement shall not
inure to the benefit of or be binding upon a successor or assign of a Holder
unless and to the extent such successor or assign holds Registrable Notes.

 

(g)                                 Counterparts. 
This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall
be deemed to be an original and all of which taken together shall constitute
one and the same agreement.

 

(h)                                 Headings.  The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

 

(i)                                     Governing Law. 
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED
WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW.  EACH OF THE PARTIES HERETO AGREES
TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.

 

24

 

(j)                                     Severability. 
If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall
in no way be affected, impaired or invalidated, and the parties hereto shall
use their best efforts to find and employ an alternative means to achieve the
same or substantially the same result as that contemplated by such term,
provision, covenant or restriction.  It
is hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.

 

(k)                                  Notes Held by the Company or Its
Affiliates.  Whenever the
consent or approval of Holders of a specified percentage of Registrable Notes
is required hereunder, Registrable Notes held by the Company or its affiliates
(as such term is defined in Rule 405 under the Securities Act) shall not
be counted in determining whether such consent or approval was given by the
Holders of such required percentage.

 

(l)                                     Third Party Beneficiaries.  Holders of Registrable Notes and Participating
Broker-Dealers are intended third party beneficiaries of this Agreement and
this Agreement may be enforced by such Persons.

 

(m)                               Entire Agreement.  This Agreement, together with the Purchase
Agreement and the Indenture, is intended by the parties as a final and
exclusive statement of the agreement and understanding of the parties hereto
and thereto in respect of the subject matter contained herein and therein, and
any and all prior oral or written agreements, representations, or warranties,
contracts, understandings, correspondence, conversations and memoranda between
the Initial Purchasers on the one hand and the Company on the other, or between
or among any agents, representatives, parents, subsidiaries, affiliates,
predecessors in interest or successors in interest, with respect to the subject
matter hereof and thereof are merged herein and replaced hereby.

 

25

 

IN WITNESS
WHEREOF, the parties have executed this Agreement as of the date first written
above.

 

	
   

  	
  AHERN
  RENTALS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ HOWARD BROWN

  
	
   

  	
   

  	
  Name: HOWARD BROWN

  
	
   

  	
   

  	
  Title: CHIEF FINANCIAL OFFICER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  CIBC WORLD
  MARKETS CORP.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ BRIAN S. PERMAN

  
	
   

  	
   

  	
  Name: Brian S. Perman

  
	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BANK OF AMERICA
  SECURITIES LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ KIRM L. MEIGHAN

  
	
   

  	
   

  	
  Name: Kirk L. Meighan

  
	
   

  	
   

  	
  Title: Managing Director

  

 

26EXHIBIT 4.3

 

 

AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

 

Dated as of August 18,
2005

 

among

 

THE FINANCIAL INSTITUTIONS
NAMED HEREIN,

as the Lenders,

 

BANK OF AMERICA, N.A.,

as Administrative Agent,

 

WACHOVIA BANK, NATIONAL
ASSOCIATION,

as Collateral Agent and as Syndication Agent,

 

AHERN RENTALS, INC.,

as the Obligated Party,

 

and

 

BANC OF AMERICA SECURITIES LLC and

WACHOVIA CAPITAL MARKETS, LLC,

as Co-Lead Arrangers

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1
  DEFINITIONS, ACCOUNTING TERMS, AND INTERPRETIVE PROVISIONS 

  	
   

  
	
  Section 1.1

  	
  Definitions

  	
   

  
	
  Section 1.2

  	
  Accounting Terms

  	
   

  
	
  Section 1.3

  	
  Interpretive Provisions

  	
   

  
	
  Section 1.4

  	
  No Strict Construction

  	
   

  
	
  Section 1.5

  	
  No Novation

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2 LOANS AND LETTERS OF CREDIT

  	
   

  
	
  Section 2.1

  	
  Credit Facility

  	
   

  
	
  Section 2.2

  	
  Revolving Loans

  	
   

  
	
  Section 2.3

  	
  [Intentionally Omitted.]

  	
   

  
	
  Section 2.4

  	
  Letters of Credit

  	
   

  
	
  Section 2.5

  	
  Bank Products

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3 INTEREST AND FEES 

  	
   

  
	
  Section 3.1

  	
  Interest

  	
   

  
	
  Section 3.2

  	
  Continuation and Conversion Elections

  	
   

  
	
  Section 3.3

  	
  Maximum Interest Rate

  	
   

  
	
  Section 3.4

  	
  Unused Line Fee

  	
   

  
	
  Section 3.5

  	
  Letter of Credit Fees and Expenses

  	
   

  
	
  Section 3.6

  	
  Other Fees

  	
   

  
	
  Section 3.7

  	
  Incremental Commitments

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4 PRINCIPAL PAYMENTS AND PREPAYMENTS

  	
   

  
	
  Section 4.1

  	
  Repayment

  	
   

  
	
  Section 4.2

  	
  Termination of Credit Facility

  	
   

  
	
  Section 4.3

  	
  Mandatory Prepayment of the Loans

  	
   

  
	
  Section 4.4

  	
  LIBOR Rate Revolving Loan Prepayments

  	
   

  
	
  Section 4.5

  	
  Payments as Revolving Loans

  	
   

  
	
  Section 4.6

  	
  Apportionment, Application, and Reversal of
  Payments

  	
   

  
	
  Section 4.7

  	
  Indemnity for Returned Payments

  	
   

  
	
  Section 4.8

  	
  Administrative Agent’s and the Lenders’
  Books and Records; Monthly Statements

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5 TAXES, YIELD PROTECTION AND ILLEGALITY

  	
   

  
	
  Section 5.1

  	
  Taxes

  	
   

  
	
  Section 5.2

  	
  Illegality

  	
   

  
	
  Section 5.3

  	
  Increased Costs and Reduction of Return

  	
   

  
	
  Section 5.4

  	
  Funding Losses

  	
   

  
	
  Section 5.5

  	
  Inability to Determine Rates

  	
   

  
	
  Section 5.6

  	
  Certificate of the Affected Lender

  	
   

  
	
  Section 5.7

  	
  Survival

  	
   

  

 

i

 

	
  ARTICLE 6 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES 

  	
   

  
	
  Section 6.1

  	
  Books and Records

  	
   

  
	
  Section 6.2

  	
  Financial and Other Information

  	
   

  
	
  Section 6.3

  	
  Notices

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 7 GENERAL WARRANTIES AND REPRESENTATIONS

  	
   

  
	
  Section 7.1

  	
  Authorization, Validity, and Enforceability
  of the Transaction Documents

  	
   

  
	
  Section 7.2

  	
  Validity and Priority of Security Interest

  	
   

  
	
  Section 7.3

  	
  Organization, Authority, and Good Standing

  	
   

  
	
  Section 7.4

  	
  Capitalization and Subsidiaries

  	
   

  
	
  Section 7.5

  	
  Corporate Name; Prior Transactions

  	
   

  
	
  Section 7.6

  	
  Financial Statements and Projections

  	
   

  
	
  Section 7.7

  	
  Solvency

  	
   

  
	
  Section 7.8

  	
  Debt

  	
   

  
	
  Section 7.9

  	
  Distributions

  	
   

  
	
  Section 7.10

  	
  Real Estate; Leases

  	
   

  
	
  Section 7.11

  	
  Proprietary Rights

  	
   

  
	
  Section 7.12

  	
  Trade Names

  	
   

  
	
  Section 7.13

  	
  Litigation

  	
   

  
	
  Section 7.14

  	
  Labor Matters

  	
   

  
	
  Section 7.15

  	
  Environmental Law

  	
   

  
	
  Section 7.16

  	
  No Violation of Law

  	
   

  
	
  Section 7.17

  	
  No Default

  	
   

  
	
  Section 7.18

  	
  ERISA Compliance

  	
   

  
	
  Section 7.19

  	
  Taxes

  	
   

  
	
  Section 7.20

  	
  Regulated Entities

  	
   

  
	
  Section 7.21

  	
  Use of Proceeds; Margin Regulations

  	
   

  
	
  Section 7.22

  	
  No Material Adverse Change

  	
   

  
	
  Section 7.23

  	
  Full Disclosure

  	
   

  
	
  Section 7.24

  	
  Material Agreements

  	
   

  
	
  Section 7.25

  	
  Bank Accounts

  	
   

  
	
  Section 7.26

  	
  Commercial Tort Claims

  	
   

  
	
  Section 7.27

  	
  Governmental Authorization

  	
   

  
	
  Section 7.28

  	
  Second Lien Debt

  	
   

  
	
  Section 7.29

  	
  Certificates of Title

  	
   

  
	
  Section 7.30

  	
  Subordinated Debt

  	
   

  
	
  Section 7.31

  	
  Foreign Assets Control Regulations, Etc.

  	
   

  
	
  Section 7.32

  	
  Ranking

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 8 AFFIRMATIVE AND NEGATIVE COVENANTS 

  	
   

  
	
  Section 8.1

  	
  Taxes and Other Obligations

  	
   

  
	
  Section 8.2

  	
  Legal Existence and Good Standing

  	
   

  
	
  Section 8.3

  	
  Compliance with Law and Agreements;
  Maintenance of Licenses

  	
   

  
	
  Section 8.4

  	
  Maintenance of Property; Inspection of
  Property

  	
   

  
	
  Section 8.5

  	
  Insurance

  	
   

  

 

ii

 

	
  Section 8.6

  	
  Condemnation

  	
   

  
	
  Section 8.7

  	
  Environmental Law

  	
   

  
	
  Section 8.8

  	
  Compliance with ERISA

  	
   

  
	
  Section 8.9

  	
  Mergers, Consolidations, or Sales

  	
   

  
	
  Section 8.10

  	
  Distributions; Capital Change; Restricted
  Investments

  	
   

  
	
  Section 8.11

  	
  Guaranties

  	
   

  
	
  Section 8.12

  	
  Debt

  	
   

  
	
  Section 8.13

  	
  Prepayment; Amendment of Debt Agreements

  	
   

  
	
  Section 8.14

  	
  Transactions with Affiliates

  	
   

  
	
  Section 8.15

  	
  Investment Banking and Finder’s Fees

  	
   

  
	
  Section 8.16

  	
  Business Conducted

  	
   

  
	
  Section 8.17

  	
  Liens

  	
   

  
	
  Section 8.18

  	
  Sale and Leaseback Transactions

  	
   

  
	
  Section 8.19

  	
  New Subsidiaries

  	
   

  
	
  Section 8.20

  	
  Fiscal Year

  	
   

  
	
  Section 8.21

  	
  Financial Covenants

  	
   

  
	
  Section 8.22

  	
  Use of Proceeds

  	
   

  
	
  Section 8.23

  	
  Lenders as Depository

  	
   

  
	
  Section 8.24

  	
  Guaranties of the Obligations

  	
   

  
	
  Section 8.25

  	
  Additional Collateral; Further Assurances

  	
   

  
	
  Section 8.26

  	
  Changes in Accounting Treatment

  	
   

  
	
  Section 8.27

  	
  Invoicing

  	
   

  
	
  Section 8.28

  	
  Acquired Real Estate

  	
   

  
	
  Section 8.29

  	
  Ranking

  	
   

  
	
  Section 8.30

  	
  Kubota and Other Vendors

  	
   

  
	
  Section 8.31

  	
  Other Debt Limitations

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 9 CONDITIONS OF LENDING

  	
   

  
	
  Section 9.1

  	
  Conditions Precedent to Making of Loans on
  the Closing Date

  	
   

  
	
  Section 9.2

  	
  Conditions Precedent to Each Loan

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 10 SECURITY

  	
   

  
	
  Section 10.1

  	
  Grant of Lien

  	
   

  
	
  Section 10.2

  	
  Perfection and Protection of Security
  Interest

  	
   

  
	
  Section 10.3

  	
  Location of Collateral

  	
   

  
	
  Section 10.4

  	
  Appraisals

  	
   

  
	
  Section 10.5

  	
  Accounts

  	
   

  
	
  Section 10.6

  	
  Collection of Accounts; Payments

  	
   

  
	
  Section 10.7

  	
  Inventory; Perpetual Inventory

  	
   

  
	
  Section 10.8

  	
  Equipment

  	
   

  
	
  Section 10.9

  	
  Assigned Contracts

  	
   

  
	
  Section 10.10

  	
  Documents, Instruments, and Chattel Paper

  	
   

  
	
  Section 10.11

  	
  Right to Cure

  	
   

  
	
  Section 10.12

  	
  Power of Attorney

  	
   

  
	
  Section 10.13

  	
  The Collateral Agent’s, the Administrative
  Agent’s and the Lenders’ Rights, Duties, and Liabilities

  	
   

  

 

iii

 

	
  Section 10.14

  	
  Patent, Trademark, and Copyright Collateral

  	
   

  
	
  Section 10.15

  	
  Indemnification

  	
   

  
	
  Section 10.16

  	
  Grant of License to Use Proprietary Rights

  	
   

  
	
  Section 10.17

  	
  Limitation on the Agents’ and the Lenders’
  Duty in Respect of the Collateral

  	
   

  
	
  Section 10.18

  	
  Miscellaneous

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 11 DEFAULT; REMEDIES

  	
   

  
	
  Section 11.1

  	
  Events of Default

  	
   

  
	
  Section 11.2

  	
  Remedies

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 12 TERM AND TERMINATION

  	
   

  
	
  Section 12.1

  	
  Term and Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 13 AMENDMENTS; WAIVERS;
  PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS

  	
   

  
	
  Section 13.1

  	
  Amendments and Waivers

  	
   

  
	
  Section 13.2

  	
  Assignments; Participations

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 14 THE ADMINISTRATIVE AGENT
  AND THE COLLATERAL AGENT

  	
   

  
	
  Section 14.1

  	
  Appointment and Authorization

  	
   

  
	
  Section 14.2

  	
  Delegation of Duties

  	
   

  
	
  Section 14.3

  	
  Liability of the Agents

  	
   

  
	
  Section 14.4

  	
  Reliance by the Agents

  	
   

  
	
  Section 14.5

  	
  Notice of Default

  	
   

  
	
  Section 14.6

  	
  Credit Decision

  	
   

  
	
  Section 14.7

  	
  Indemnification

  	
   

  
	
  Section 14.8

  	
  The Collateral Agent and the Administrative
  Agent in their Individual Capacity

  	
   

  
	
  Section 14.9

  	
  Successor Agents

  	
   

  
	
  Section 14.10

  	
  Withholding Tax

  	
   

  
	
  Section 14.11

  	
  Collateral Matters

  	
   

  
	
  Section 14.12

  	
  Restrictions on Actions by Lenders; Sharing
  of Payments

  	
   

  
	
  Section 14.13

  	
  Agency for Perfection

  	
   

  
	
  Section 14.14

  	
  Payments by Agents to the Lenders

  	
   

  
	
  Section 14.15

  	
  Settlement

  	
   

  
	
  Section 14.16

  	
  Letters of Credit; Intra-Lender Issues

  	
   

  
	
  Section 14.17

  	
  Concerning the Collateral and the Related
  Loan Documents

  	
   

  
	
  Section 14.18

  	
  Field Audit and Examination Reports;
  Disclaimer by Lenders

  	
   

  
	
  Section 14.19

  	
  Relation Among the Lenders

  	
   

  
	
  Section 14.20

  	
  Administrative Agent May File Proofs
  of Claim

  	
   

  
	
  Section 14.21

  	
  Co-Lead Arrangers and Syndication Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 15 MISCELLANEOUS

  	
   

  
	
  Section 15.1

  	
  No Waivers; Cumulative Remedies

  	
   

  

 

iv

 

	
  Section 15.2

  	
  Severability

  	
   

  
	
  Section 15.3

  	
  Governing Law; Choice of Forum; Service of
  Process

  	
   

  
	
  Section 15.4

  	
  Waiver of Jury Trial

  	
   

  
	
  Section 15.5

  	
  Survival of Representations and Warranties

  	
   

  
	
  Section 15.6

  	
  Other Security and Guaranties

  	
   

  
	
  Section 15.7

  	
  Fees and Expenses

  	
   

  
	
  Section 15.8

  	
  Notices and Information

  	
   

  
	
  Section 15.9

  	
  Waiver of Notices

  	
   

  
	
  Section 15.10

  	
  Binding Effect

  	
   

  
	
  Section 15.11

  	
  Indemnity of the Credit Providers by the
  Obligated Parties

  	
   

  
	
  Section 15.12

  	
  Limitation of Liability

  	
   

  
	
  Section 15.13

  	
  Final Agreement

  	
   

  
	
  Section 15.14

  	
  Counterparts

  	
   

  
	
  Section 15.15

  	
  Right of Setoff

  	
   

  
	
  Section 15.16

  	
  Confidentiality

  	
   

  
	
  Section 15.17

  	
  USA Patriot Act Notice

  	
   

  
	
  Section 15.18

  	
  Joint and Several Liability

  	
   

  
	
  Section 15.19

  	
  Contribution and Indemnification among the
  Obligated Parties

  	
   

  
	
  Section 15.20

  	
  Agency of Ahern for Each Other Obligated
  Party

  	
   

  
	
  Section 15.21

  	
  Additional Borrowers and Guarantors

  	
   

  
	
  Section 15.22

  	
  Express Waivers By the Obligated Parties In
  Respect of Cross Guaranties and Cross Collateralization

  	
   

  
	
  Section 15.23

  	
  Intercreditor Agreements

  	
   

  

 

v

 

	
  EXHIBITS:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  -

  	
  Intentionally Omitted

  	
   

  
	
  Exhibit B

  	
  -

  	
  Form of Borrowing Base Certificate

  	
   

  
	
  Exhibit C

  	
  -

  	
  Form of Compliance Certificate

  	
   

  
	
  Exhibit D

  	
  -

  	
  Form of Notice of Borrowing

  	
   

  
	
  Exhibit E

  	
  -

  	
  Form of Notice of
  Continuation/Conversion

  	
   

  
	
  Exhibit F

  	
  -

  	
  Form of Assignment and Acceptance

  	
   

  
	
  Exhibit G

  	
  -

  	
  Form of Incremental Commitment
  Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULES:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule 1.1(A)

  	
  -

  	
  Commitments

  	
   

  
	
  Schedule 1.1(B)

  	
  -

  	
  Permitted Investments

  	
   

  
	
  Schedule 1.1(C)

  	
  -

  	
  Permitted Liens

  	
   

  
	
  Schedule 1.1(D)

  	
  -

  	
  Assigned Contracts

  	
   

  
	
  Schedule 1.1(E)

  	
  -

  	
  Excluded Assets

  	
   

  
	
  Schedule 7.3

  	
  -

  	
  Organization; Authority; and Good Standing

  	
   

  
	
  Schedule 7.4

  	
  -

  	
  Capitalization; Subsidiaries

  	
   

  
	
  Schedule 7.5

  	
  -

  	
  Corporate name; Prior Transactions

  	
   

  
	
  Schedule 7.6

  	
  -

  	
  Undisclosed Material Liabilities

  	
   

  
	
  Schedule 7.9

  	
  -

  	
  Distributions

  	
   

  
	
  Schedule 7.10

  	
  -

  	
  Real Estate; Leases

  	
   

  
	
  Schedule 7.11

  	
  -

  	
  Proprietary Rights

  	
   

  
	
  Schedule 7.12

  	
  -

  	
  Trade Names

  	
   

  
	
  Schedule 7.13

  	
  -

  	
  Litigation

  	
   

  
	
  Schedule 7.14

  	
  -

  	
  Labor Matters

  	
   

  
	
  Schedule 7.15

  	
  -

  	
  Environmental Matters

  	
   

  
	
  Schedule 7.24

  	
  -

  	
  Material Agreements

  	
   

  
	
  Schedule 7.25

  	
  -

  	
  Bank Accounts

  	
   

  
	
  Schedule 7.26

  	
  -

  	
  Commercial Tort Claims

  	
   

  
	
  Schedule 7.29

  	
  -

  	
  Certificates of Title

  	
   

  
	
  Schedule 8.12

  	
  -

  	
  Debt

  	
   

  
	
  Schedule 8.13

  	
  -

  	
  GE Sale and Leaseback Agreement Purchase
  Price Calculation

  	
   

  
	
  Schedule 8.14

  	
  -

  	
  Affiliate Transactions

  	
   

  
	
  Schedule 10.3

  	
  -

  	
  Locations of Collateral

  	
   

  

 

vi

 

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

 

This Amended
and Restated Loan and Security Agreement, dated as of August 18, 2005, is among the lending institutions
from time to time party hereto (such financial institutions, together with
their respective successors and assigns, are referred to hereinafter each
individually as a “Lender” and collectively as the “Lenders”),
Bank of America, N.A. (“BofA”), as administrative agent for the Lenders
(in such capacity, the “Administrative Agent”), Wachovia Bank, National
Association (“Wachovia”), as collateral agent for the Lenders (in such
capacity, the “Collateral Agent”), Ahern Rentals, Inc. (“Ahern”),
each of its subsidiaries party from time to time hereto that becomes a borrower
hereunder with the prior written consent of all the Lenders (such subsidiaries,
together with Ahern, are referred to hereinafter each individually as a “Borrower”
and collectively as the “Borrowers”) and each of the other Obligated
Parties (as hereinafter defined) signatory to this Agreement.

 

RECITALS:

 

WHEREAS, the
Borrowers, the Agents and certain of the Lenders party hereto are party to a
certain Loan and Security Agreement, dated as of October 29, 2004, as
amended through but excluding the date hereof (as so amended, the “Original
Loan and Security Agreement”); and

 

WHEREAS, the
parties hereto desire to amend and restate the Original Loan and Security
Agreement in its entirety, but not as a novation, on the terms and subject to
the conditions hereinafter set forth;

 

NOW,
THEREFORE, in consideration of the mutual conditions and agreements set forth
in this Agreement, and for good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto hereby agree that the Original
Loan and Security Agreement shall be, and hereby is, amended and restated in its
entirety as follows, effective on and as of the Closing Date.

 

ARTICLE 1

 

DEFINITIONS,
ACCOUNTING TERMS, AND INTERPRETIVE PROVISIONS

 

Section 1.1                                      Definitions.  Capitalized terms wherever used in this
Agreement and the other Loan Documents, unless otherwise defined therein, shall
have the meanings specified in this Section 1.1.

 

“Accelerated Delivery Date”
means any date on which the Unused Availability is less than $5,000,000.

 

“Accelerated Delivery Period”
means the period commencing on an Accelerated Delivery  Date and ending on the first day after any
full Fiscal Quarter of Ahern, occurring after an Accelerated Delivery Date,
during which the Unused Availability equals or exceeds $5,000,000 for each day
during such Fiscal Quarter and no Event of Default has occurred or existed.

 

“Accommodation Payment”
has the meaning specified in Section 15.19.

 

1

 

“Account Debtor” means
each Person obligated in any way on or in connection with an Account, Chattel
Paper, or General Intangible (including a payment intangible).

 

“Accounts” means “accounts”,
as such term is defined in the UCC, and any rights to payment for the sale or
lease of goods or rendition of services, whether or not they have been earned
by performance.

 

“Accounts Payable” means
all trade accounts payable of the Obligated Parties and all Debt and other
obligations owing by the Obligated Parties with respect to Inventory or
Equipment.

 

“ACH Transactions” means
any cash management, disbursement, or related services, including overdrafts
and the automated clearinghouse transfer of funds, by BofA or Wachovia for the
account of any Obligated Party.

 

“Additional Mortgaged
Property” has the meaning specified in Section 8.28.

 

“Adjusted Net Earnings from
Operations” means, with respect to any fiscal period of Ahern, net income
of Ahern and its Subsidiaries on a consolidated basis after provision for state
and local income taxes (if any) for such fiscal period, as determined in
accordance with GAAP and reported on the Financial Statements for such fiscal
period, excluding any and all of the following included in the determination of
such net income:  (a) gain or loss
arising from the sale of any capital assets (which shall not include, in any
event, Inventory); (b) gain arising from any write-up in the book value of
any asset or non-cash loss arising from any write-down or write-off in the book
value of any non-operating asset; (c) earnings of any other Person,
substantially all the assets of which have been acquired by Ahern or any of its
Subsidiaries in any manner, to the extent realized by such other Person prior
to the date of acquisition; (d) earnings of any other Person (other than a
Subsidiary of Ahern) in which Ahern or any of its Subsidiaries has an ownership
interest unless (and only to the extent) such earnings shall actually have
been received by Ahern or any of its Subsidiaries in the form of cash
distributions; (e) earnings of any Person to which assets of Ahern or any
of its Subsidiaries shall have been sold, transferred, or disposed of, or into
which Ahern or any of its Subsidiaries shall have been merged, or which has
been a party with Ahern or any of its Subsidiaries to any consolidation or
other form of reorganization, prior to the date of such transaction; (f) gain
arising from the acquisition of debt or equity securities of Ahern or any of
its Subsidiaries or from cancellation or forgiveness of Debt; and (g) gain
or non-cash loss generated or arising from extraordinary items, as determined
in accordance with GAAP, or from any other non-recurring transaction; provided
that any non-cash loss generated from the write-down or write-off of operating
assets shall not be included in this clause (g).

 

“Administrative Agent”
means BofA, solely in its capacity as administrative agent for the Lenders, and
any successor administrative agent.

 

“Affiliate” means, as to
any Person (the “subject Person”), any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control
with, the subject Person or which owns, directly or indirectly, 5.0% or more of
the outstanding Capital Stock of the subject Person.  A Person shall be deemed to control another
Person if the 

 

2

 

controlling
Person possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of the other Person, whether through
the ownership of voting securities, by contract, or otherwise.

 

“Agent” means each of
the Administrative Agent and the Collateral Agent, individually, and “Agents”
means both of such Persons, collectively.

 

“Agent Advances” has the
meaning specified in Section 2.2(j).

 

“Agent-Related Persons”
means the Collateral Agent and the Administrative Agent, together with their
respective Affiliates, and the officers, directors, employees, counsel,
representatives, agents, and attorneys-in-fact of the Collateral Agent and the
Administrative Agent and their respective Affiliates.

 

“Agent’s Liens” means
the Liens in the Collateral granted to the Collateral Agent, for the benefit of
the Credit Providers, pursuant to the terms of this Agreement and the other
Loan Documents.

 

“Aggregate Revolver
Outstandings” means, at any time, the sum of (a) the aggregate unpaid
balance of the Revolving Loans, (b) the aggregate undrawn amount of all
outstanding Letters of Credit, and (c) the aggregate amount of any unpaid
reimbursement obligations in respect of Letters of Credit.

 

“Agreement” means this
Amended and Restated Loan and Security Agreement, as it may be further amended,
restated, or otherwise modified from time to time.

 

“Ahern” means Ahern
Rentals, Inc., a Nevada corporation.

 

“Aircraft Mortgage”
means the Aircraft Security Agreement, dated as of the Original Closing Date, by
and between Ahern and the Collateral Agent, by which the Collateral Agent, for
the benefit of the Credit Providers, acquires a Lien on a certain 1979 Hughes
model 369D helicopter bearing Serial Number 790544D and FAA Registration Number
N58341.

 

“Allocable Amount” has
the meaning specified in Section 15.19.

 

“Anniversary Date” means
an anniversary of the Closing Date.

 

“Applicable Margin”
means, as of the Closing Date,

 

(a)                                  with
respect to Base Rate Revolving Loans and all other Obligations (other than LIBOR
Rate Revolving Loans), .375% per annum,
and

 

(b)                                 with
respect to LIBOR Rate Revolving Loans, 2.125%,

 

in each case subject to adjustment from time to time thereafter to the
applicable percentage specified corresponding to the Leverage Ratio, as set forth
below, respectively:

 

3

 

	
  Leverage Ratio

  	
   

  	
  Base Rate Revolving

  Loans and other

  Obligations (other than

  LIBOR Rate Revolving

  Loans)

  	
   

  	
  LIBOR Rate

  Revolving Loans

  	
   

  
	
  greater than
  4.75:1.00

  	
   

  	
   

  	
  .625

  	
  %

  	
  2.375

  	
  %

  
	
  4.75:1.00 to
  3.50:1.00

  	
   

  	
   

  	
  .375

  	
  %

  	
  2.125

  	
  %

  
	
  less than
  3.50:1.00

  	
   

  	
   

  	
  .125

  	
  %

  	
  1.875

  	
  %

  

 

For the
purpose of determining any such adjustments to the Applicable Margin, the
Leverage Ratio shall be determined, beginning with the Fiscal Quarter ending March 31,
2006, based upon the Financial Statements of Ahern and its Subsidiaries for the
immediately preceding four (4) Fiscal Quarters of Ahern, and for each Fiscal Quarter of Ahern ending thereafter, delivered to the Agents as required by Section 6.2(a) (with
respect to the Financial Statements as of the last day of each Fiscal Year) or Section 6.2(b)(i)
(with respect to the Financial Statements for each of the other Fiscal Quarters of each Fiscal Year), and any such adjustment, if any,
shall become effective prospectively on and after the first day of the calendar
month following the date of delivery of such Financial Statements to the
Agents.  Concurrently with the delivery
of such Financial Statements, Ahern shall deliver to the Agents a certificate,
signed by a Responsible Officer, setting forth in reasonable detail the basis
for the continuance of, or any change in, the Applicable Margin.  In the event the Obligated Parties fail to
timely deliver any such Financial Statements, in addition to any other remedy
provided for in this Agreement, the Applicable Margin shall be deemed to be
equal to the highest level set forth in the preceding table, until the first
day of the calendar month following the date of delivery of such Financial
Statements to the Agents, at which time the Applicable Margin shall be
determined, prospectively, in accordance with the terms hereof.  If a Default or an Event of Default exists at
the time any reduction in the Applicable Margin is to be implemented, such reduction
shall not occur until the first day of the calendar month following the date on
which such Default or Event of Default is Waived or cured.

 

“Assigned Contracts”
means, collectively, all of each Obligated Party’s rights and remedies under,
and all moneys and claims for money due or to become due to such Obligated
Party under, those contracts set forth on Schedule 1.1(D) and any
other material contracts, and any and all amendments, supplements, extensions,
renewals, and other modifications thereof including all rights and claims of
such Obligated Party now or hereafter existing: 
(a) under any insurance, indemnities, warranties, and guaranties
provided for or arising out of or in connection with any of the foregoing
agreements; (b) for any damages arising out of or for breach or default
under or in connection with any of the foregoing contracts; (c) to all
other amounts from time to time paid or payable under or in connection with any
of the foregoing agreements; or (d) to exercise or enforce any and all
covenants, remedies, powers, and privileges thereunder.

 

“Assignee” has the
meaning specified in Section 13.2(a).

 

4

 

“Assignment and Acceptance”
has the meaning specified in Section 13.2(a).

 

“Attorney Costs” means
and includes (a) all reasonable fees, expenses, and disbursements of (i) any
law firm or other counsel engaged by the Collateral Agent or  the Administrative Agent and (ii) one
law firm or other external counsel engaged by the Lenders and (b) the
reasonably allocated costs and expenses of internal legal services of the
Collateral Agent and the Administrative Agent.

 

“Bank Product Reserves”
means all reserves which either or both of the Agents from time to time
establish in its or their reasonable credit judgment for the Bank Products then
provided or outstanding.

 

“Bank Products” means
each and any of the following types of services or facilities extended to any
of the Obligated Parties by (I) in the case of (b) below, BofA or
Wachovia or any Affiliate of BofA or Wachovia and (II) in the case of (a),
(c) and (d) below, any Lender or any Affiliate of any Lender:  (a) commercial credit cards; (b) cash
management services (including controlled disbursement services, ACH
Transactions, and interstate depository network services), (c) Hedge Agreements;
and (d) foreign exchange.

 

“Bankruptcy Code” means
Title 11 of the United States Code (11 U.S.C. § 101 et  seq.).

 

“Base Rate” means, for
any day, the greater of (a) the rate of interest in effect for such day as
publicly announced from time to time by BofA in Charlotte, North Carolina as
its “prime rate” (the “prime rate” being a rate set by BofA based upon various
factors including BofA’s costs and desired return, general economic conditions
and other factors, and is used as a reference point for pricing some loans,
which may be priced at, above, or below such announced rate) or (b) the
Federal Funds Rate in effect for such day, plus 0.50% per annum, provided, that, in the Agents’ sole
discretion, such amount is subject to change at any time without notice to the
Borrowers.  With respect to any
determination of any Interest Rate which is based on the Base Rate, any change
in the prime rate announced by BofA shall take effect at the opening of
business on the day specified in the public announcement of such change, and
any change in the Federal Funds Rate shall take effect as of the date of such
change.

 

“Base Rate Revolving Loan”
means any portion of the Revolving Loans during any period in which such
portion bears interest based on the Base Rate.

 

“Blocked Availability Amount”
means $10,000,000.

 

“BofA” has the meaning
specified in the introductory paragraph of this Agreement.

 

“Borrower” means,
separately and individually, any of Ahern and any other Person who becomes a
party to this Agreement as a “Borrower” pursuant to the terms hereof, jointly,
severally, and collectively, and “Borrowers” means more than one or all
of the foregoing Persons, jointly, severally, and collectively, as the context
requires.

 

“Borrowing” means (a) a
borrowing hereunder consisting of Revolving Loans made available to the
Borrowers, or any of them, on the same day (i) by the Lenders, (ii) by
BofA (in the case of a Borrowing funded as a Non-Ratable Loan), or (iii) by
the Administrative Agent (in 

 

5

 

the case of a
Borrowing consisting of an Agent Advance), or (b) the issuance of a Letter
of Credit hereunder.

 

“Borrowing Base” means,
at any time, (a) an amount equal to the least of (i) the Maximum
Revolver Amount, (ii) the sum of, without duplication, (1) up to
eighty-five percent (85%) of the
Net Amount of Eligible Accounts, plus (2) up to the lesser of (A) ninety-five
percent (95%) of the Net Book Value of Eligible Rental and Sale Equipment
and (B) eighty-five percent (85%) of the Net Orderly Liquidation
Value of Eligible Rental and Sale Equipment, plus (3) up to the
lesser of (A) ninety-five percent (95%) of the Net Book Value of Eligible
Transportation Equipment and (B) eighty-five percent (85%) of the Net
Orderly Liquidation Value of Eligible Transportation Equipment, plus (4) up to the lesser of (A) sixty
percent (60%) of the value (at the lower of cost, on an average cost basis, or
market) of Eligible Spare Parts Inventory and (B) eighty-five percent
(85%) of the Net Orderly Liquidation Value of Eligible Spare Parts Inventory, minus (5) the Blocked Availability Amount minus (6) the aggregate
amount, if any, by which the Commitments and the Maximum Revolver Amount have
been permanently reduced in accordance with Section 4.3(f), and (iii) the
maximum amount of Aggregate Revolver Outstandings permitted to be outstanding
under Section 4.09(b)(1) of the Second Lien Debt Agreement minus (b) such Reserves as
are established from time to time by either or both of the Agents in its or
their reasonable credit judgment.

 

“Borrowing Base Certificate”
means a certificate by a Responsible Officer of the Borrowers, or Ahern on
behalf of the Borrowers, substantially in the form of Exhibit B (or
another form acceptable to the Agents) setting forth the calculation of the
Borrowing Base, including a calculation of each component thereof (including to
the extent a Borrower has received notice of any Reserve from an Agent, any of
the Reserves included in such calculation pursuant to clause (b) of
the definition of Borrowing Base), all in such detail as shall be satisfactory
to the Agents.  All calculations of the
Borrowing Base in connection with the preparation of any Borrowing Base
Certificate shall originally be made by the Borrowers, or Ahern on behalf of
the Borrowers, and certified to the Agents; provided that each of the
Agents shall have the right to review and adjust, in the exercise of its credit
judgment, any such calculation (a) to reflect its estimate of declines in
value of any of the Collateral described therein, (b) to reflect the
receipt of proceeds of the Collateral, and (c) to the extent that such
calculation is not made in accordance with the terms of this Agreement.

 

“Business Day” means (a) any
day that is not a Saturday, Sunday, Nevada Day or a day on which banks in New
York, New York or Charlotte, North Carolina are required or permitted to be
closed and (b) with respect to all notices, determinations, fundings, and
payments in connection with the LIBOR Rate or LIBOR Rate Revolving Loans, any
day that is a Business Day pursuant to clause (a) preceding and
that is also a day on which trading in Dollars is carried on by and between
banks in the London interbank market.  “Nevada
Day” means the holiday celebrating the admission of Nevada into statehood,
which occurs on or about October 31st of each year.

 

“Capital Adequacy Regulation”
means any guideline, request, or directive of any central bank or other
Governmental Authority, or any other law, rule, or regulation, whether or not
having the force of law, in each case, regarding capital adequacy of any bank
or of any corporation controlling a bank.

 

6

 

“Capital Expenditures”
means, with respect to any Person, all payments made by such Person with
respect to the cost of any Inventory (other than spare parts Inventory and
other than Inventory at all times held for sale and not rental), Fixed Asset or
improvement, or replacement, substitution, or addition thereto, which has a
useful life of more than one year, including those costs arising in connection
with the direct or indirect acquisition of such asset or improvement by way of
increased product or service charges or in connection with a Capital Lease,
excluding (a) expenditure of insurance proceeds to rebuild or replace any
asset or improvement after a casualty loss and (b) leasehold improvement
expenditures for which such Person is reimbursed promptly by the lessor.  Without limiting the foregoing and in any
event, any and all payments and purchases of Inventory made by or on behalf of
Ahern under or with respect to the GE Sale and Leaseback Agreement permitted
under Section 8.13(d) shall constitute Capital Expenditures made by
Ahern; provided that the purchase of any such Inventory (and the related
payment of the purchase price therefor) which is held by Ahern, at all times
after such purchase, for sale and not rental shall not constitute Capital
Expenditures under this sentence.

 

“Capital Lease” means
any lease of property by a Person which, in accordance with GAAP, should be
reflected as a capital lease on the balance sheet of such Person.

 

“Capital Stock” means
any and all corporate stock, units, shares, partnership interests, membership
interests, equity interests, rights, securities, or other equivalent evidences
of ownership (howsoever designated) issued by any Person.

 

“Change of Control”
means the occurrence of any of the following: 
(a) except as allowed by Section 8.9, the adoption of a
plan relating to the liquidation or dissolution of any Obligated Party; (b) (i) Don
Ahern shall cease to own, directly or indirectly, at least 51% of the
outstanding voting Capital Stock of Ahern, (ii) Don Ahern, any member of
his immediate family and any trust established for the benefit of Don Ahern
and/or any member of his immediate family shall cease to own, directly or
indirectly, at least 75.0% of the outstanding voting Capital Stock of Ahern, (iii) Don
Ahern shall, by agreement or otherwise, cease to have the right to exercise
voting control of Ahern or (iv) Don Ahern shall die or shall become
incapacitated or disabled such that Don Ahern is unable to properly perform the
duties for Ahern that he performs for Ahern on the Original Closing Date; provided,
that if Don Ahern shall die or become so incapacitated or disabled, a Change of
Control under this clause (b) shall not occur as a result of such
death, incapacitation or disability if, within 90 days after the occurrence of
his death or such incapacity or disability and at all times thereafter, Ahern
shall have employed one or more Persons with requisite experience that are
reasonably satisfactory to the Agents to perform those duties for Ahern that
Don Ahern performs for Ahern on the Original Closing Date; (c) except as
allowed by Section 8.9, any Obligated
Party (other than Ahern) shall cease to be a Wholly-Owned Subsidiary of
Ahern or (d) there shall occur a “Change of Control” or a “Change in
Control” as defined in any Second Lien Debt Document, any Refinancing Second
Lien Debt Document or any other document governing material Debt of any
Obligated Party.

 

“Chattel Paper” means “chattel
paper”, as such term is defined in the UCC, and any electronic chattel paper.

 

“Clearing Account” means
each bank account maintained with BofA or a Clearing Bank, subject to a Deposit
Account Control Agreement providing for the Collateral Agent’s dominion 

 

7

 

and control of
such bank account, to which the funds of an Obligated Party (including proceeds
of Accounts and other Collateral) are deposited or credited, and which is
maintained in the name of the Collateral Agent or such Obligated Party (as the
Agents may determine) on terms acceptable to the Agents.  For purposes of this Agreement, “Clearing
Account” includes any Clearing Accounts opened by any Obligated Party with BofA
and pledged in accordance with Article 10, and any renewals or
rollovers thereof, any successor or substitute deposit accounts, including any
such deposit account as it may have been renumbered or retitled, any proceeds
thereof (including any interest paid thereon), and any general intangibles and
choses in action arising therefrom or related thereto.  Whenever there is more than one Clearing
Account, the term “Clearing Account” shall refer to all such Clearing Accounts,
collectively.

 

“Clearing Bank” means
any banking institution reasonably acceptable to the Agents with whom a
Clearing Account has been established.

 

“Closing Date” means the
date of this Agreement.

 

“Code” means the
Internal Revenue Code of 1986, as amended.

 

“Co-Lead Arrangers”
means Banc of America Securities LLC and Wachovia Capital Markets, LLC, solely
in their respective capacities as co-lead arrangers.

 

“Collateral” has the
meaning specified in Section 10.1.

 

“Collateral Agent” means
Wachovia, solely in its capacity as collateral agent for the Lenders, and any
successor collateral agent.

 

“Collateral Documents”
means this Agreement, the Intercreditor Agreement, the Proprietary Rights
Security Agreements, any Mortgages, any Aircraft Mortgage, any Guaranty Agreements, and any other
agreements, instruments, and documents heretofore, now or hereafter executed
and delivered in connection with this Agreement or the Original Loan and
Security Agreement, pursuant to which liens and security interests are granted
to the Collateral Agent in the Collateral for the benefit of the Credit
Providers.

 

“Collateral Waiver Agreement”
means any agreement, in form and substance reasonably satisfactory to the
Agents, between the Collateral Agent (or the Collateral Agent and the Second
Lien Agent) and any landlord of any Obligated Party for any Real Estate where
any Collateral is located or any third party (including any bailee, consignee,
customs broker, processor, warehouseman, or other similar Person) in possession
of any Collateral, as such agreement may be amended, restated, or otherwise
modified from time to time.

 

“Commitment” means, at
any time with respect to a Lender, the principal amount set forth beside such
Lender’s name under the heading “Revolving Commitment” on Schedule 1.1(A)
or as set forth in the most recent Assignment and Acceptance to which such
Lender is a party, as such Commitment may be (i) increased (or, in the
case of a new Lender, established) as a result of such Lender providing
Incremental Commitment(s) after the Closing Date and/or (ii) otherwise
adjusted from time to time in accordance with the provisions of this Agreement,
and “Commitments” means, collectively, the aggregate amount of the
Commitment of each of the Lenders, collectively.

 

8

 

“Compliance Certificate”
has the meaning specified in Section 6.2(d).

 

“Contaminant” means any
material defined as waste, pollutant, hazardous substance, toxic substance,
hazardous waste, or special waste under any Environmental Law (including
petroleum or petroleum-derived substance or waste, asbestos in any form or
condition, and polychlorinated biphenyls), or any constituent of any such
substance or waste.

 

“Continuation/Conversion Date”
means the effective date of (a) any continuation of LIBOR Rate Revolving
Loans as LIBOR Rate Revolving Loans and (b) any conversion of LIBOR Rate
Revolving Loans to Base Rate Revolving Loans or of Base Rate Revolving Loans to
LIBOR Rate Revolving Loans.

 

“Credit Providers”
means, collectively, the Collateral Agent, the Administrative Agent (in its
capacity as administrative agent for the Lenders and, additionally, as provider
of Agent Advances), the Lenders, BofA, in its capacity as provider of Non-Ratable
Loans, each of BofA, Wachovia and each other Lender and their respective
Affiliates as a provider of Bank Products, the Letter of Credit Issuer, and the
Indemnified Persons, and “Credit Provider” means any of the foregoing,
individually.

 

“Debt” means, without
duplication, with respect to any Person (the “subject Person”) all liabilities,
obligations, and indebtedness of the subject Person to any other Person, of any
kind or nature, now or hereafter owing, arising, due, or payable, howsoever
evidenced, created, incurred, acquired, or owing, whether primary, secondary,
direct, contingent, fixed, or otherwise, consisting of indebtedness for
borrowed money or the deferred purchase price of property, excluding trade
payables and the endorsement of checks and other similar instruments in the
ordinary course of business, but including, in any event and without in any way
limiting the generality of the foregoing: 
(a) in the case of the Obligated Parties, the Obligations; (b) all
such indebtedness, liabilities, and obligations of any Person secured by any
Lien on the subject Person’s property, even if the subject Person shall not
have assumed or become liable for the payment thereof; provided that all
such indebtedness, liabilities, and obligations which are limited in recourse
to such property shall be included in Debt only to the extent of the book value
of such property as would be shown on a balance sheet of the subject Person
prepared in accordance with GAAP; (c) all such indebtedness, liabilities,
and obligations created or arising under any Capital Lease or conditional sale
or other title retention agreement with respect to property used or acquired by
the subject Person, even if the rights and remedies of the lessor, seller, or
lender thereunder are limited to repossession of such property; provided
that all such indebtedness, liabilities, and obligations which are limited in
recourse to such property shall be included in Debt only to the extent of the
book value of such property as would be shown on a balance sheet of the subject
Person prepared in accordance with GAAP; (d) all indebtedness,
liabilities, and obligations under Guaranties of Debt; (e) the present
value (discounted at the implicit interest rate in such transaction) of lease
payments due under synthetic leases; (f) net obligations in respect of
Hedge Agreements; (g) all indebtedness, liabilities and obligations of the
subject Person evidenced by notes, bonds, debentures or similar instruments; (h) all
preferred capital stock issued by the subject Person that is required to be
repurchased or redeemed by the subject Person or is repurchaseable or
redeemable at the option of the holder thereof; and (i) all indebtedness,
liabilities and obligations of the subject Person in respect of letters of
credit or instruments serving a similar function issued or accepted for the
account of the subject Person 

 

9

 

(whether or
not representing obligations for borrowed money).  Debt of any Person shall include all obligations
of such Person of the character described in clauses (a) through (i)
to the extent such Person remains legally liable in respect thereof
notwithstanding that any such obligation is deemed to be extinguished under
GAAP.  Debt of any Person shall include
the Debt of any partnership or Joint Venture in which such Person is a general
partner or a joint venturer, unless such Debt is, by its terms, non-recourse to
the assets of such Person other than as a result of customary exclusions.

 

“Default” means any
event or circumstance which, with the giving of notice, the lapse of time, or
both, would (if not cured, Waived, or otherwise remedied during such time)
constitute an Event of Default.

 

“Default Rate” means a
fluctuating per annum interest rate at all times equal to the sum of (a) the
otherwise applicable Interest Rate, plus
(b) 2.00% per annum.  The Default Rate shall be adjusted
simultaneously with any change in the applicable Interest Rate.

 

“Defaulting Lender” has
the meaning specified in Section 14.15(c).

 

“Deposit Account Control
Agreement” means an agreement, including a blocked account agreement, in
form and substance satisfactory to each Agent, among an Obligated Party, a
banking institution holding funds of such Obligated Party, the Collateral Agent
(or the Collateral Agent and the Second Lien Agent) and the Administrative
Agent with respect to collection and control of all deposits and balances held
in a Deposit Account maintained by such Obligated Party with such banking
institution.

 

“Deposit Accounts” means
“deposit accounts”, as such term is defined in the UCC.

 

“Dilution” means, at the
time of any relevant determination, the average amount for the twelve (12)
consecutive Fiscal Month period most recently ended prior to such time of
determination, by which the amount of Eligible Accounts is reduced due to
returns, discounts, claims, credits, allowances, accrued rebates, offsets,
deductions, counterclaims, disputes and other defenses of any nature at any
time issued, owing, granted, outstanding, available or claimed.

 

“Disposition” or “Dispose”
means the sale, transfer, license, lease, or other disposition (including any
sale and leaseback transaction) of any property by any Person.

 

“Distribution” means,
with respect to any Person (other than a natural person) (a) the payment
or making of any dividend or other distribution of property by such Person in
respect of its Capital Stock (or any options or warrants for, or other rights
with respect to, such Capital Stock), other than distributions solely in such
Person’s Capital Stock (or any options or warrants for, or other rights with
respect to, such Capital Stock) of the same class or (b) the redemption,
repurchase, retirement, or other acquisition by such Person of any Capital
Stock (or any options or warrants for, or other rights with respect to, such
Capital Stock) of such Person.

 

“Documents” means “documents”,
as such term is defined in the UCC, and bills of lading, warehouse receipts,
and other documents of title.

 

10

 

“DOL” means the United
States Department of Labor or any successor department or agency.

 

“Dollar” and “$”
mean dollars in the lawful currency of the U.S. 
Unless otherwise specified, all payments under any Loan Document shall
be made in Dollars.

 

“Early Termination Fee”
has the meaning specified in Section 4.2.

 

“EBITDA” means, with
respect to any fiscal period of Ahern, Adjusted Net Earnings from Operations, plus, to the extent deducted in
the determination of Adjusted Net Earnings from Operations for such fiscal
period, (a) Interest Expense, (b) federal, state, local, and foreign
income taxes, and (c) depreciation and amortization, in each case for
Ahern and its Subsidiaries on a consolidated basis.

 

“Eligible Accounts”
means the Accounts of the Borrowers that both of the Agents in the exercise of
their reasonable credit judgment determine to be Eligible Accounts.  Without limiting the discretion of the Agents
to establish other criteria of ineligibility, Eligible Accounts shall not
include any Account (except as may be otherwise specified below):

 

(a)                                  that does not arise
from the sale or lease of Goods or rendition of services in the ordinary course
of business of a Borrower;

 

(b)                                 that is not subject to
the Agent’s Liens which are perfected as to such Account, or that is subject to
any other Lien (other than the Lien permitted under clause (i) of
the defined term Permitted Liens);

 

(c)                                  with respect to which
either (i) any payment, or part thereof, remains unpaid for more than 90 days from the original due date
therefor, or (ii) more than 120 days
have elapsed from the date of the original invoice therefor, or no invoice has
been issued;

 

(d)                                 with respect to which
any of the representations, warranties, covenants, and agreements contained in
this Agreement are incorrect or have been breached;

 

(e)                                  with respect to which
(or any other Account due from the applicable Account Debtor), in whole or in
part, a check, promissory note, draft, trade acceptance, or other instrument
for the payment of money has been received, presented for payment, and returned
uncollected for any reason;

 

(f)                                    that is the subject
of any debit memo or charge-back, but only to the extent of such debit memo or
charge-back;

 

(g)                                 that represents a
progress billing (for the purposes hereof, “progress billing” means any invoice
for goods sold or leased or services rendered under a contract or agreement
pursuant to which the Account Debtor’s obligation to pay such invoice is
conditioned upon such Borrower’s completion of any further performance under
such contract or agreement, other than, in the case of a lease of Inventory in
the ordinary course of business, the performance of any covenant of quiet
enjoyment);

 

11

 

(h)                                 with respect to which
any one or more of the following events has occurred to the Account Debtor on
such Account:  (i) death or judicial
declaration of incompetency of such Account Debtor who is a natural person; (ii) the
filing by or against such Account Debtor of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as
a bankrupt, winding-up, or other relief under the Bankruptcy Code or any other
Requirement of Law, now or hereafter in effect; (iii) the making of any
general assignment by such Account Debtor for the benefit of creditors; (iv) the
appointment of a receiver or trustee for such Account Debtor or for any of the
assets of such Account Debtor, including the appointment of or taking
possession by a “custodian,” as defined in the Bankruptcy Code; (v) the
institution by or against such Account Debtor of any other type of insolvency
proceeding (under the Bankruptcy Code or otherwise) or of any formal or
informal proceeding for the dissolution or liquidation of, settlement of claims
against, or winding up of affairs of, such Account Debtor; (vi) the sale,
assignment, or transfer of all or any material part of the assets of such
Account Debtor; (vii) the nonpayment generally by such Account Debtor of
its debts as they become due; or (viii) the cessation of the business of
such Account Debtor as a going concern;

 

(i)                                     with respect to
which 50% or more of the
aggregate Dollar amount of outstanding Accounts owed at such time to the
Borrowers by the Account Debtor thereon is classified as ineligible pursuant to
the other provisions of this definition;

 

(j)                                     owed by an Account
Debtor that:  (i) does not maintain
its chief executive office in the U.S.; (ii) is not organized under the
laws of the U.S. or any political subdivision, state or territory thereof; or (iii) is
the government of any foreign country or sovereign state, or of any state,
province, municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality thereof,
except to the extent that such Account is secured or payable by a letter of
credit the terms of which are satisfactory to the Agents in their reasonable
credit judgment and which is in the possession of the Collateral Agent and
which, together with all related Letter-of-Credit Rights, is subject to a first
priority Lien in favor of the Collateral Agent, for the benefit of the Credit
Providers;

 

(k)                                  owed by an Account
Debtor that is an Affiliate, officer, director, or employee of any Borrower or
any Affiliate of any Borrower;

 

(l)                                     except as provided
in clause (n) following, with respect to which either the
perfection or validity of the Agent’s Liens in such Account, or the Collateral
Agent’s right or ability to obtain direct payment to the Collateral Agent of
the proceeds of such Account, is governed by any federal, state, or local
statutory requirements other than those of the UCC;

 

(m)                               owed by an Account
Debtor to which an Obligated Party or any of its Affiliates, is indebted in any
way (including accrued liabilities), or which is subject to any right of setoff
or recoupment by the Account Debtor, unless the Account Debtor has entered into
an agreement acceptable to the Agents to waive setoff rights, or if the Account
Debtor thereon has disputed liability or made any claim with respect to any 

 

12

 

other Account due from such Account Debtor, but in each such case only
to the extent of such indebtedness, setoff, recoupment, dispute, or claim;

 

(n)                                 owed by (i) the
government of the U.S., or any department, agency, public corporation, or other
instrumentality thereof, unless the Federal Assignment of Claims Act of 1940,
as amended (31 U.S.C. § 3727 et seq.), and any other steps necessary to
perfect the Agent’s Liens therein, have been complied with to the Agents’
reasonable satisfaction with respect to such Account or (ii) any state,
municipality, or other political subdivision of the U.S., or any department,
agency, public corporation, or other instrumentality thereof and as to which
either of the Agents determines that the Agent’s Lien therein is not or cannot
be perfected;

 

(o)                                 that represents a sale
on a (i) cash or C.O.D. basis or (ii) bill-and-hold, guaranteed sale,
sale and return, sale on approval, consignment, or other repurchase or return
basis;

 

(p)                                 that is owed by an
Account Debtor either (i) in respect of Inventory subject to the GE Sale
and Leaseback Agreement or any related document or (ii) who is also an
Account Debtor in respect of Inventory subject to the GE Sale and Leaseback
Agreement or any related document (unless, in the case of this clause (ii),
the Inventory subject to the GE Sale and Leaseback Agreement or any related
document is invoiced to such Account Debtor pursuant to different invoices than
those used for any other Inventory);

 

(q)                                 that is evidenced by a
promissory note or other instrument or by Chattel Paper;

 

(r)                                    with respect to
which either Agent believes, in the exercise of its reasonable credit judgment,
that the prospect of collection of such Account is impaired or that such
Account may not be paid by reason of the Account Debtor’s financial inability
to pay;

 

(s)                                  except as may be
permitted by the Agents in their reasonable credit judgment, with respect to
which the Account Debtor is located in any state requiring the filing of a
Notice of Business Activities Report or similar report in order to permit the
applicable Borrower to seek judicial enforcement in such state of payment of
such Account, unless such applicable Borrower has qualified to do business in
such state or has filed a Notice of Business Activities Report or equivalent
report for the then current year;

 

(t)                                    to the extent
constituting finance or similar charges or sales or use tax;

 

(u)                                 with respect to which the
goods giving rise to such Account have not been shipped and delivered to and
accepted by, or have been rejected or objected to by, the Account Debtor or to
the extent the services giving rise to such Account have not been performed by
the applicable Borrower, and, if applicable, accepted by the Account Debtor, or
the Account Debtor revokes its acceptance of such goods or services;

 

(v)                                 owed by an Account
Debtor, or group of affiliated Account Debtors, which is obligated to the
Borrowers respecting Accounts the aggregate unpaid balance of which exceeds 10%
of the aggregate unpaid balance of all Eligible Accounts owed to the 

 

13

 

Borrowers at such time by all of the Borrowers’ Account Debtors, but
only to the extent of such excess;

 

(w)                               that is the subject of
any unreconciled variance between the aging of Accounts delivered to either
Agent, the general ledger of the applicable Borrower, and the applicable
Borrowing Base Certificate; or

 

(x)                                   that either of the
Agents determines in its reasonable credit judgment is ineligible for any other
reason.

 

“Eligible Assignee”
means (a) a commercial bank, commercial finance company, or other asset
based lender having total assets in excess of One Billion Dollars ($1,000,000,000),
(b) any Lender, (c) any Affiliate of any Lender, and (d) if an
Event of Default has occurred and is continuing, any Person reasonably
acceptable to the Agents.

 

“Eligible Inventory”
means Inventory of the Borrowers which both of the Agents, in their reasonable
credit judgment, determine to be Eligible Inventory.  Without limiting the discretion of the Agents
to establish other criteria of ineligibility, Eligible Inventory shall not
include any Inventory (except as may be otherwise specified below):

 

(a)                                  that is not owned by
a Borrower, including goods held by a Borrower on consignment;

 

(b)                                 that is not subject to
the Agent’s Liens, which are perfected as to such Inventory, or that is subject
to any Liens pursuant to the GE Sale and Leaseback Agreement or any related
document or any other Lien (other than the Liens described in clauses (a),
(c), (e) and (i) of the definition of Permitted Liens; provided
that such Permitted Liens (i) are junior in priority to the Agent’s Liens
or subject to Reserves and (ii) do not impair directly or indirectly the
ability of the Collateral Agent to realize on or obtain the full benefit of the
Collateral);

 

(c)                                  that is not finished
goods or raw materials;

 

(d)                                 that consists of
work-in-process, chemicals, samples, prototypes, supplies, or packing and
shipping materials;

 

(e)                                  that is not in good
condition, is unmerchantable or not rentable in the ordinary course of business
of a Borrower, or does not meet all standards imposed by any Governmental
Authority having regulatory authority over such goods or their use or sale;

 

(f)                                    that is obsolete or
defective;

 

(g)                                 consisting of
airplanes, helicopters or other aircraft or spare parts therefor;

 

(h)                                 that is located
outside the U.S. or that is in transit from vendors or suppliers or to buyers; provided
that the Agents may in their discretion include as Eligible Inventory any
Inventory which is in transit within the U.S. or Canada to a Borrower’s place
of business and any Inventory held for lease which is in transit to lessees shall
not be 

 

14

 

excluded by this clause (h), provided that upon the
request of either Agent the Borrowers shall deliver to the Agents a listing of
all such Inventory and its location;

 

(i)                                     that is consigned
to third parties or is subject to any bill-and-hold, guaranteed sale, sale on
approval, or other repurchase or return basis;

 

(j)                                     that
is located in a public warehouse or in possession of a bailee or in a facility
leased by a Borrower, if the applicable warehouseman, bailee, or lessor has not
delivered to the Agents a Collateral Waiver Agreement or if, in lieu of such
Collateral Waiver Agreement, a Reserve for rents or storage charges (in an
amount for any location not to exceed at any time three (3) months’ rent
or storage charges plus any then unpaid rent or storage charges owing with
respect to such location) has not been established to the extent the Agents
deem appropriate in their reasonable credit judgment for Inventory at that
location;

 

(k)                                  that contains or
bears any Proprietary Rights licensed to a Borrower by any Person, if either of
the Agents is not satisfied that the Collateral Agent may sell or otherwise
dispose of such Inventory in accordance with the terms of this Agreement
(including Section 11.2) without infringing the rights of the
licensor of such Proprietary Rights or violating any contract with such
licensor (and without payment of any royalties other than any royalties due
with respect to the sale or disposition of such Inventory pursuant to the
existing license agreement), and, if either of the Agents deems it necessary,
as to which such Borrower has not delivered to the Agents a consent or
sublicense agreement from such licensor in form and substance acceptable to the
Agents;

 

(l)                                     that is not
reflected in the details of a current perpetual inventory report;

 

(m)                               that is leased to any
Person which is not in compliance with the terms of the lease agreement
relating to such lease and as to which there is any restriction or impediment
(legal or otherwise), as determined by either of the Agents in its reasonable
credit judgment, on the ability of the Collateral Agent to obtain access
thereto in order to repossess same; or

 

(n)                                 that either of the
Agents determines in its reasonable credit judgment is ineligible for any other
reason.

 

Notwithstanding that any Inventory acquired as a result of the
termination of the GE Sale and Leaseback Agreement would, absent this sentence,
be considered Eligible Inventory, no such Inventory shall be Eligible Inventory
unless and until such Inventory is included in an Inventory Appraisal delivered
pursuant to Section 10.4.

 

“Eligible Rental and Sale
Equipment” means Eligible Inventory consisting of Inventory (other than
spare parts and merchandise Inventory) held for sale or lease in the ordinary
course of a Borrower’s business, which is marked with an identifiable serial
number.

 

“Eligible Spare Parts
Inventory” means Eligible Inventory consisting of unused spare parts and
merchandise inventory located on premises owned or leased by a Borrower, which
spare parts and merchandise inventory are held for sale by a Borrower in the
ordinary course of 

 

15

 

its business
or for the repair or maintenance of Inventory of a Borrower that is held for
sale or lease by such Borrower in the ordinary course of its business.

 

“Eligible Transportation
Equipment” means Transportation Equipment of the Borrowers marked with an
identifiable serial number which both of the Agents, in their reasonable credit
judgment, determine to be Eligible Transportation Equipment.  Without limiting the discretion of the Agents
to establish other criteria of ineligibility, Eligible Transportation Equipment
shall not include any Transportation Equipment (except as may be otherwise
specified below):

 

(a)                                  that is not owned by
a Borrower, including goods held by a Borrower on consignment;

 

(b)                                 that is not subject to
the Agent’s Liens, which are perfected as to such Transportation Equipment, or
that is subject to any Lien (other than the Liens described in clauses (a),
(c), (e) and (i) of the definition of Permitted Liens; provided
that such Permitted Liens (i) are junior in priority to the Agent’s Liens
or subject to Reserves and (ii) do not impair directly or indirectly the
ability of the Collateral Agent to realize on or obtain the full benefit of the
Collateral);

 

(c)                                  that is not in good
condition or does not meet all standards imposed by any Governmental Authority
having regulatory authority over such goods or their use or sale;

 

(d)                                 that is obsolete or
defective;

 

(e)                                  consisting of
airplanes, helicopters or other aircraft or spare parts therefore;

 

(f)                                    that is located
outside the U.S.; provided that the Agents may in their discretion
include as Eligible Transportation Equipment any Transportation Equipment which
is in transit within Canada moving Inventory to or from a customer of a
Borrower in the ordinary course of such Borrower’s business;

 

(g)                                 that is consigned to
third parties or is subject to any bill-and-hold, guaranteed sale, sale on
approval, or other repurchase or return basis;

 

(h)                                 that is located in a
public warehouse or in possession of a bailee or in a facility leased by a
Borrower, if the applicable warehouseman, bailee, or lessor has not delivered
to the Agents a Collateral Waiver Agreement or if, in lieu of such Collateral
Waiver Agreement, a Reserve for rents or storage charges (in an amount for any
location not to exceed at any time three (3) months’ rent or storage
charges plus any then unpaid rent or storage charges owing with respect to such
location) has not been established to the extent the Agents deem appropriate in
their reasonable credit judgment for Transportation Equipment at that location;

 

(i)                                     that contains or
bears any Proprietary Rights licensed to a Borrower by any Person, if either of
the Agents is not satisfied that the Collateral Agent may sell or otherwise
dispose of such Transportation Equipment in accordance with the terms of this
Agreement (including Section 11.2) without infringing the rights of
the licensor of such Proprietary Rights or violating any contract with such
licensor (and without payment of 

 

16

 

any royalties), and, if either of the Agents deems it necessary, as to
which such Borrower has not delivered to the Agents a consent or sublicense
agreement from such licensor in form and substance acceptable to the Agents; or

 

(j)                                     that either of the
Agents determines in its reasonable credit judgment is ineligible for any other
reason.

 

“Environmental Claim”
means any claim, however asserted, by 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 Compliance
Reserve” means any reserve that either of the Agents establishes from time
to time in its reasonable credit judgment after prior written notice to the
Borrowers for amounts that are reasonably likely to be expended by an Obligated
Party in order for such Obligated Party and its operations and property (a) to
comply with any notice from a Governmental Authority asserting non-compliance
with any Environmental Law or (b) to correct any non-compliance identified
in a report delivered to the Agents pursuant to Section 8.7.

 

“Environmental Law”
means any Requirement of Law relating to environmental, health, safety, and
land use matters.

 

“Environmental Lien”
means a Lien in favor of any Governmental Authority or any other Person for (a) any
liability under any Environmental Law or (b) damages arising from, or
costs incurred by such Governmental Authority or other Person in response to, a
Release or threatened Release of a Contaminant into the environment.

 

“Equipment” means “equipment”,
as such term is defined in the UCC, and all machinery, equipment, furniture,
furnishings, fixtures, and other tangible personal property (except Inventory),
including embedded software, motor vehicles with respect to which a certificate
of title has been issued, aircraft, dies, tools, jigs, molds, and office
equipment, as well as all of such types of property leased by the applicable
Person and all of such Person’s rights and interests with respect thereto under
such leases (including options to purchase), together with all present and
future additions and accessions thereto, replacements therefor, component and
auxiliary parts and supplies used or to be used in connection therewith, and
all substitutes for any of the foregoing, and all manuals, drawings, instructions,
warranties and rights with respect thereto.

 

“Equipment Appraisal”
means, with respect to a Borrower, the most recently delivered appraisal of the
Transportation Equipment of such Borrower delivered to the Agents pursuant to Section 10.4.

 

“ERISA” means the
Employee Retirement Income Security Act of 1974.

 

“ERISA Affiliate” means
any trade or business (whether or not incorporated) under common control with
an Obligated Party 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). 
Any former ERISA Affiliate of a Person or any of its Subsidiaries shall
continue to be considered an ERISA Affiliate of such Person or such Subsidiary
within the meaning of this definition with respect to the period such entity
was an ERISA Affiliate of such Person or such 

 

17

 

Subsidiary and
with respect to liabilities arising after such period for which such Person or
such Subsidiary could be liable under the Code or ERISA.

 

“ERISA Event” means (a) a
Reportable Event with respect to a Pension Plan, (b) a withdrawal by an
Obligated Party 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 that
is treated as such a withdrawal under Section 4062(e) of ERISA, (c) a
complete or partial withdrawal by an Obligated Party or any ERISA Affiliate
from a Multiemployer Plan, (d) the filing of a notice of intent to
terminate, or the commencement of proceedings by the PBGC to terminate a
Pension Plan or the termination, insolvency, or reorganization of a
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 (f) the imposition of any liability under Title IV of
ERISA, other than for PBGC premiums due but not delinquent under Section 4007
of ERISA, upon an Obligated Party or any ERISA Affiliate.

 

“Event of Default” has the
meaning specified in Section 11.1.

 

“Excess Availability”
means Unused Availability determined without giving effect to the deduction of
the Blocked Availability Amount in the calculation of the Borrowing Base.

 

“Exchange Act” means the
Securities Exchange Act of 1934.

 

“Excluded Asset” means
any lease (including any fixtures or improvements on the property subject to
the lease), license, contract or agreement to which Ahern or any Guarantor is a
party or any of its rights or interests thereunder (including any rights or
interests in tangible property in which Ahern or any Guarantor grants a Lien
pursuant to any such agreement), in each instance, if and only for so long as
the grant of a security interest under this Agreement therein shall constitute
or result in a breach, termination or default under any such lease, license,
contract or agreement (other than to the extent that any such term would be
rendered ineffective pursuant to the Uniform Commercial Code of any relevant
jurisdiction (including, without limitation, under Sections 9-406, 9-407, 9-408
or 9-409 thereof) or any other applicable law or principles of equity); provided
that notwithstanding the foregoing (i) no lease, license, contract or
agreement or any right or interest thereunder, in each instance, existing on
the Closing Date shall constitute an Excluded Asset unless described on Schedule 1.1(E),
(ii) no Account or money or other amounts due or to become due to Ahern or
any Guarantor under or with respect to any such lease, license, contract or
agreement or right or interest thereunder (other than amounts constituting
proceeds from the sale of Inventory (other than Eligible Inventory) or
Equipment (other than Eligible Transportation Equipment), in each instance,
subject to purchase money financing permitted hereunder) shall constitute an
Excluded Asset, (iii) no item of tangible property owned by Ahern or any
Guarantor shall constitute an Excluded Asset unless such item is subject to
purchase money Debt or other financing permitted under this Agreement or is an
aircraft (other than the helicopter subject to the Aircraft Mortgage), (iv) any
interest of Ahern or any Guarantor, as lessee, in a lease of real property
shall constitute an Excluded Asset and (v) such lease, license, contract
or agreement or right or interest thereunder shall be an Excluded Asset only to
the extent and for so long as the consequences specified above shall 

 

18

 

result and
shall cease to be an Excluded Asset and shall become subject to the security
interest granted under this Agreement, immediately and automatically, at such
time as such consequences shall no longer result (including, without limitation
and in any event, in the case of any item of tangible property which is the
subject of purchase money Debt or other financing permitted hereunder when such
financing has been paid in full).  The
parties hereto acknowledge that Inventory that is leased to Ahern under the GE
Sale and Leaseback Agreement is an Excluded Asset.

 

“FDIC” means the Federal
Deposit Insurance Corporation, and any Governmental Authority succeeding to any
of its principal functions.

 

“Federal Funds Rate”
means, for any day, the rate per annum (rounded upwards, if necessary, to the
nearest 1/8th of 1.00%) 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 Federal 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 Federal Funds Rate for
such day shall be the average rate charged to BofA on such day on such
transactions as determined by BofA.

 

“Federal Reserve Board”
means the Board of Governors of the Federal Reserve System or any successor
thereto.

 

“Fee Letters” means that
certain fee and payment agreement entered into among BofA, Wachovia and the
Borrowers and that certain fee and payment agreement entered into between BofA
and the Borrowers, each dated the Closing Date, in each case, as amended,
supplemented or otherwise modified from time to time.

 

“Financial Statements”
means, according to the context in which used, the financial statements
referred to in Section 6.2 and Section 7.6 or any other
financial statements required to be given to either of the Agents pursuant to
this Agreement.

 

“Fiscal
Month” means a
calendar month.  There are twelve Fiscal
Months in each Fiscal Year.

 

“Fiscal Quarter” means a
period of three calendar months (with respect to Ahern beginning on the first
day of each January, April, July, and October) constituting
a Person’s fiscal quarter for financial accounting purposes, with the first of
such measurement periods beginning on the first day of each Fiscal Year and the
last of such measurement periods ending on the last day of such Fiscal Year.

 

“Fiscal Year” means,
with respect to any Person, such Person’s fiscal year for financial accounting
purposes.  The current Fiscal Year of
Ahern will end on December 31, 2005, and each Fiscal Year of Ahern is the
relevant calendar year.

 

“Fixed Assets” means,
with respect to any Person, the Equipment and Real Estate of such Person.

 

19

 

“Fixed Charge Coverage Ratio”
means, as of the end of any Fiscal Quarter of Ahern, determined for Ahern and
its Subsidiaries on a consolidated basis for the preceding four Fiscal
Quarters, the ratio of EBITDA, divided by Fixed Charges.

 

“Fixed Charge Rental Fleet
CapEx Percentage” means, at any time, that percentage which is (x) 100% minus
(y) 85% of the Net Orderly Liquidation Percentage at such time with respect to
rental fleet Inventory.

 

“Fixed Charge Rental Fleet
Depreciation Percentage” means, at any time, that percentage which is (x)
100% minus (y) the Fixed Charge Rental Fleet CapEx Percentage at such
time.

 

“Fixed Charges” means,
with respect to any fiscal period, determined for Ahern and its Subsidiaries on
a consolidated basis, without duplication, the sum of:

 

(a)                                  cash Interest
Expense,

 

(b)                                 an amount equal to the
product of (x) the Fixed Charge Rental Fleet CapEx Percentage in effect on the
last day of such fiscal period times (y) the aggregate amount of Capital
Expenditures made or incurred during such fiscal period with respect to
Inventory which was in the rental fleet of Ahern or any of its Subsidiaries at
any time on or prior to the last day of such fiscal period (excluding,
in the case of the Obligated Parties, any such Capital Expenditures to the
extent  funded with proceeds from the
sale of Inventory in the rental fleet of any Obligated Party permitted
hereunder),

 

(c)                                  an amount equal to
the product of (x) the Fixed Charge Transportation CapEx Percentage in effect
on the last day of such fiscal period times (y) the aggregate amount of Capital
Expenditures made or incurred during such fiscal period with respect to
Transportation Equipment (excluding, in the case of the Obligated
Parties, any such Capital Expenditures to the extent (1) funded with Debt
other than Revolving Loans, but including, without duplication, principal
payments with respect to any such Debt or (2) funded with proceeds from
the sale of Transportation Equipment of any Obligated Party permitted
hereunder),

 

(d)                                 an amount equal to the
product of (x) the Fixed Charge Rental Fleet Depreciation Percentage in effect
on the last day of such fiscal period times (y) depreciation expense taken
in such fiscal period with respect to any Inventory which was in the rental
fleet of Ahern or any of its Subsidiaries at any time on or prior to the last
day of such fiscal period,

 

(e)                                  an amount equal to
the product of (x) the Fixed Charge Transportation Depreciation Percentage in
effect on the last day of such fiscal period times (y) depreciation
expense taken in such fiscal period with respect to Transportation Equipment
owned by Ahern or any of its Subsidiaries at any time on or prior to the last
day of such fiscal period,

 

(f)                                    cash Distributions
in respect of any Capital Stock,

 

(g)                                 scheduled principal
payments of Debt, plus

 

20

 

(h)                                 federal, state, local,
and foreign cash income taxes (not less than zero), excluding deferred taxes.

 

“Fixed Charge Transportation
CapEx Percentage” means, at any time, that percentage which is (x) 100% minus
(y) 85% of the Net Orderly Liquidation Percentage at such time with respect to
Transportation Equipment (it being agreed that until the first Equipment
Appraisal is delivered to the Agents pursuant to Section 10.4, the
Net Orderly Liquidation Percentage shall be deemed to be 100%).

 

“Fixed Charge Transportation
Depreciation Percentage” means, at any time, that percentage which is (x)
100% minus (y) the Fixed Charge Transportation CapEx Percentage at such
time.

 

“Funding Account” has the
meaning specified in Section 2.2(d).

 

“Funding Date” means the
date on which a Borrowing occurs.

 

“GAAP” means, subject to
the limitations on the application thereof set forth in Section 1.2,
generally accepted accounting principles and practices set forth from time to
time in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the U.S.
accounting profession) that are applicable to the circumstances as of the
date of determination.

 

“GE Intercreditor Agreement”
has the meaning specified in Section 9.1(r).

 

“GE Sale and Leaseback
Agreement” means that certain Master Lease Agreement, dated as of February 14,
2003, by and between Ahern and General Electric Capital Corporation, together
with all annexes, exhibits and schedules thereto, including without limitation
any equipment schedules and inventory addenda, as amended, supplemented or
otherwise modified from time to time.

 

“General Intangibles”
means, with respect to any Person, “general intangibles”, as such term is
defined in the UCC, and all other choses in action and causes of action,
intangible personal property of every kind and nature (other than Accounts),
including all contract rights, payment intangibles, Proprietary Rights,
corporate or other business records, inventions, designs, blueprints, plans,
specifications, patents, patent applications, trademarks, service marks, trade
names, trade secrets, goodwill, copyrights, computer software, customer lists,
registrations, licenses, franchises, tax refund claims, any funds that may
become due to such Person in connection with the termination of any Plan or
other employee benefit plan or any rights thereto and any other amounts payable
to such Person from any Plan or other employee benefit plan, rights and claims
against carriers and shippers, rights to indemnification, business interruption
insurance and proceeds thereof, property, casualty or any similar type of
insurance and any proceeds thereof, proceeds of insurance covering the lives of
key employees on which such Person is beneficiary, rights to receive dividends,
distributions, cash, Instruments and other property in respect of or in
exchange for pledged equity interests or Investment Property and any 

 

21

 

letter of credit, guarantee, claim, security
interest or other security held by or granted to such Person.

 

“Goods” means “goods” as
such term is defined in the UCC.

 

“Governmental Authority”
means any nation or government, any state or other political subdivision
thereof, any central bank (or similar monetary or regulatory
authority) 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, and any
department, agency, board, commission, tribunal, committee, or instrumentality
of any of the foregoing.

 

“Guarantor” means each
of (a) the Borrowers and (b) each other Person who becomes a party to
any Guaranty Agreement pursuant to the terms of this Agreement, and “Guarantors”
means two or more of the foregoing Persons, collectively.

 

“Guaranty” means, with
respect to any Person, all obligations of such Person that in any manner
directly or indirectly guarantee or assure, or in effect guarantee or assure,
the payment or performance of any indebtedness, dividend, or other obligations
of any other Person (the “guaranteed obligations”), or assure or in effect
assure the holder of the guaranteed obligations against loss in respect
thereof, excluding the endorsement of checks and other similar instruments in
the ordinary course of business, but including any such obligations incurred
through an agreement, contingent or otherwise: 
(a) to purchase the guaranteed obligations or any property
constituting security therefor; (b) to advance or supply funds for the
purchase or payment of the guaranteed obligations or to maintain a working
capital or other balance sheet condition; or (c) to lease property or to
purchase any debt or equity securities or other property or services.  In any computation of the indebtedness or
other liabilities of the obligor under any Guaranty, the indebtedness or other
obligations that are the subject of such Guaranty shall be assumed to be direct
obligations of such obligor.

 

“Guaranty Agreement”
means each guaranty agreement in favor of the Collateral Agent to which any
Person becomes a party pursuant to the terms of this Agreement, and “Guaranty
Agreements” means all of such agreements, collectively.

 

“Hedge Agreement” means
any and all transactions, agreements, or documents now existing or hereafter
entered into, which provide for an interest rate, credit, commodity, or equity
swap, cap, floor, collar, forward foreign exchange transaction, currency swap,
cross currency rate swap, currency option, or any combination of, or option
with respect to, these or similar transactions, for the purpose of hedging a
Person’s exposure to fluctuations in interest or exchange rates, loan, credit
exchange, security, or currency valuations, or commodity prices.

 

“Incremental Commitment”
means, for each Incremental Lender, any commitment by such Incremental Lender
to make Revolving Loans pursuant to Section 2.1(b) as agreed to by
such Incremental Lender in the respective Incremental Commitment Agreement
delivered pursuant to Section 2.1(c)(i); it being understood,
however, that on each date upon which an Incremental Commitment of any
Incremental Lender becomes effective, such Incremental Commitment of such
Incremental Lender shall be added to (and thereafter become a part of) the 

 

22

 

Commitment of
such Incremental Lender for all purposes of this Agreement as contemplated by Section 2.1(b).

 

“Incremental Commitment
Agreement” means an Incremental Commitment Agreement substantially in the
form of Exhibit G (appropriately completed and with such
modifications as may be acceptable to the Administrative Agent).

 

“Incremental Lender” has
the meaning specified in Section 2.1(c)(i).

 

“Incremental Revolving Loan”
has the meaning specified in Section 2.1(b)(vii).

 

“Indemnified
Liabilities” has the meaning specified in Section 15.11(a).

 

“Indemnified Person” has
the meaning specified in Section 15.11(a).

 

“Instruments” means “instruments”,
as such term is defined in the UCC.

 

“Intercompany Accounts”
means all assets and liabilities, however arising, which are due to Ahern or a
Subsidiary of Ahern from, which are due from Ahern or a Subsidiary of Ahern to,
or which otherwise arise from any transaction by Ahern or a Subsidiary of Ahern
with, any Affiliate of Ahern or a Subsidiary of Ahern.

 

“Intercreditor Agreement”
means an Intercreditor Agreement in form and substance satisfactory to the
Agents and their respective counsel, dated as of the Closing Date, by and among
the Obligated Parties, the Collateral Agent, the Second Lien Agent and
Wachovia, as control agent, as amended, restated, supplemented or otherwise
modified from time to time.

 

“Interest Expense” means
with respect to Ahern and its Subsidiaries for any fiscal period, the aggregate
amount of interest required to be paid or accrued on all Debt of Ahern and its
Subsidiaries during such period, whether such interest was or is required to be
reflected as an item of expense or capitalized, including payments consisting
of interest in respect of Capital Leases or synthetic leases, and including
unused commitment fees, facility fees, and similar fees and expenses in
connection with the borrowing of money (including all fees and expenses
incurred in connection with Hedge Agreements entered into with respect to any
Debt).

 

“Interest Payment Date”
means (a) the first day of each calendar month and (b) the
Termination Date.

 

“Interest Period” means,
with respect to any LIBOR Rate Revolving Loan, the period commencing on the
Funding Date of such Loan or on the Continuation/Conversion Date on which such
Loan is continued as or converted into a LIBOR Rate Revolving Loan, and ending
on the date one, two, or three months thereafter as selected by a Borrower in a
Notice of Borrowing or Notice of Continuation/Conversion, provided that:

 

(a)                                  if any Interest
Period would otherwise end on a day that is not a Business Day, such Interest
Period shall be extended to the following Business Day unless the result of
such extension would be to carry such Interest Period into another calendar
month, in which event such Interest Period shall end on the preceding Business
Day;

 

23

 

(b)                                 any Interest Period
that begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of the calendar
month at the end of such Interest Period; and

 

(c)                                  no Interest Period
shall extend beyond the Stated Termination Date.

 

“Interest Rate” means
each or any of the interest rates, including the Default Rate, set forth in Section 3.1.

 

“Inventory” means “inventory”,
as such term is defined in the UCC, and inventory, goods, and merchandise to be
furnished under any contract of service or held for sale or lease, returned
goods, raw materials, work-in-process, finished goods (including embedded
software), other materials and supplies of any kind, nature, or description
which are used or consumed in a Person’s business or used in connection with
the packing, shipping, advertising, selling, or finishing of such goods,
merchandise, and all documents of title or other Documents representing them.

 

“Inventory Appraisal”
means with respect to a Borrower (a) on the Closing Date and until the
first appraisal of the relevant class of Inventory of such Borrower is
delivered to the Agents pursuant to Section 10.4, (i) the
appraisal of Inventory of such Borrower consisting of spare parts and
merchandise inventory or (ii) the appraisal of Inventory of such Borrower
(other than Inventory consisting of spare parts and merchandise inventory), or
both such appraisals, as the context may require, in each case prepared by
Rouse Asset Services and dated June 30, 2005 and (b) thereafter, each
appraisal of the relevant class of Inventory of such Borrower delivered to the
Agents pursuant to Section 10.4.

 

“Investment” means any
acquisition by an Obligated Party of property in exchange for cash or other
property, whether in the form of an acquisition of Capital Stock, Debt, or
other indebtedness or obligation, or the purchase or acquisition of any other
assets or property, or a loan, advance, capital contribution, or subscription,
excluding acquisitions in the ordinary course of business of such Obligated
Party of Real Estate, Equipment, and Inventory to be used in the business of
such Obligated Party.  The amount of any
Investment shall be the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or decreases in value,
or write-ups, write-downs or write-offs with respect to such Investment (other
than adjustments for the repayment of, or the refund of capital with respect
to, the original principal amount of any such Investment).

 

“Investment Property”
means “investment property”, as such term is defined in the UCC, and any (a) securities,
whether certificated or uncertificated, (b) securities entitlements, (c) securities
accounts, (d) commodity contracts, and (e) commodity accounts.

 

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

 

“Joint Venture” means a
joint venture, partnership or other similar arrangement, whether in corporate,
partnership or other legal form.

 

24

 

“Junior Lien Debt” means
all obligations of Ahern or any of the other Obligated Parties under or in
connection with the term debt issued by Ahern to the Junior Lien Lenders on the
Original Closing Date in the original principal amount of $90,000,000 and
secured by a junior Lien on the Collateral.

 

“Junior Lien Lenders”
means Special Value Opportunities Fund, LLC and Special Value Expansion Fund,
LLC and their respective successors and assigns.

 

“Latest Projections”
means:  (a) on the Closing Date and
thereafter until the  Agents receive new
projections pursuant to Section 6.2(e), the monthly projections of
the Obligated Parties’ financial condition, results of operations, cash flow,
Borrowing Base, and Unused Availability, in each case for the period commencing
on January 1, 2005 and
ending on December 31, 2006 and
the annual financial projections for Fiscal Years 2007-2010, each as delivered
to the Agents prior to the Closing Date; and (b) thereafter, the
projections most recently received by the Agents pursuant to Section 6.2(e).

 

“Leasehold Property”
means any leasehold interest of any Obligated Party as lessee under any lease
of real property.

 

“Lender” means any of
the lending institutions signatory to this Agreement as specified on the
signature pages hereto or in any Assignment and Acceptance as a “Lender”,
the Incremental Lenders, the Administrative Agent to the extent of any Agent
Advance outstanding, and BofA to the extent of any Non-Ratable Loan
outstanding, and “Lenders” means any two or more of such Persons,
collectively.

 

“Letter of Credit” has the
meaning specified in Section 2.4(a).

 

“Letter of Credit Fee” has the
meaning specified in Section 3.5.

 

“Letter of Credit Fee
Percentage” means with respect to any Letter of Credit, on any date of
determination, a per annum percentage equal to the Applicable Margin for LIBOR Rate Revolving Loans as of such date of
determination, plus,
during the existence of any Event of Default, an additional 2.00% per annum.

 

“Letter of Credit Issuer”
means BofA or Wachovia or any Affiliate of BofA or Wachovia.

 

“Letter-of-Credit Rights”
means “letter-of-credit rights”, as such term is defined in the UCC, and any
rights to payment or performance under a letter of credit, whether or not the
beneficiary has demanded or is entitled to demand payment or performance.

 

“Letter of Credit
Subfacility” means $10,000,000.

 

“Leverage Ratio” means,
as of the end of any Fiscal Quarter of Ahern, determined for Ahern and its
Subsidiaries on a consolidated basis, the ratio of (a) outstanding Debt of
Ahern and its Subsidiaries as of the last day of such Fiscal Quarter, divided by (b) EBITDA for the four Fiscal
Quarters most recently completed.

 

25

 

“LIBOR Rate” means, for
any Interest Period, with respect to LIBOR Rate Revolving Loans, the rate of
interest per annum determined pursuant to the following formula:

 

	
  LIBOR Rate

  	
   

  	
  =

  	
   

  	
  Offshore Base Rate

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  1.00 -
  Eurodollar Reserve Percentage

  	
   

  

 

Where,

 

“Eurodollar Reserve Percentage” means,
for any day during any Interest Period, the reserve percentage (expressed as a
decimal, rounded upward to the next 1/8th of 1.00%) in effect on such day
applicable to member banks under regulations issued from time to time by the
Federal Reserve Board for determining the maximum reserve requirement
(including any emergency, supplemental, or other marginal reserve requirement)
with respect to Eurocurrency funding (currently referred to as “Eurocurrency
liabilities”).  The LIBOR Rate for each
outstanding LIBOR Rate Revolving Loan shall be adjusted automatically as of the
effective date of any change in the Eurodollar Reserve Percentage.

 

“Offshore Base Rate” means the rate
per annum appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period.  If for any reason such rate is not available,
the Offshore Base Rate shall be, for any Interest Period, the rate per annum
appearing on Reuters Screen LIBO Page as the London interbank offered rate
for deposits in Dollars at approximately 11:00 a.m. (London time) two
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page, the applicable rate
shall be the arithmetic mean of all such rates. 
If for any reason none of the foregoing rates is available, the Offshore
Base Rate shall be, for any Interest Period, the rate per annum determined by
the Administrative Agent as the rate of interest at which Dollar deposits in
the approximate amount of the LIBOR Rate Revolving Loan comprising part of such
Borrowing would be offered by BofA’s London Branch to major banks in the
offshore Dollar market at their request at or about 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest Period for a
term comparable to such Interest Period.

 

“LIBOR Rate Revolving Loan”
means any portion of the Revolving Loans during any period in which such
portion bears interest based on the LIBOR Rate.

 

“Lien” means (a) 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 the
common law, statute, or contract, and including a security interest, charge,
claim, or lien arising from a mortgage, deed of trust, encumbrance, pledge,
hypothecation, assignment, deposit arrangement, agreement, security agreement,
conditional sale or trust receipt or a lease, consignment, or bailment for
security purposes, (b) to the extent not included under clause (a)
preceding, any reservation, exception, encroachment, easement, right-of-way,
covenant, condition, restriction, 

 

26

 

lease, or
other title exception or encumbrance affecting property, and (c) any
contingent or other agreement to provide any of the foregoing.

 

“Loan Account” means the
loan account of the Borrowers, which account shall be maintained by the
Administrative Agent.

 

“Loan Documents” means,
collectively, this Agreement, the Intercreditor Agreement, the GE Intercreditor
Agreement, the Proprietary Rights Security Agreements, any Mortgages, any
Aircraft Mortgage, any Guaranty
Agreements, any agreements providing
for Bank Products, the Fee Letters, any Incremental Commitment
Agreement, and any other agreements, instruments, and documents heretofore, now
or hereafter evidencing, securing, guaranteeing, or otherwise relating to any
of the Obligations, any of the Collateral, or any other aspect of the
transactions contemplated by this Agreement.

 

“Loans” means,
collectively, all loans and advances provided for in Article 2.

 

“Majority Lenders”
means, at any time, Lenders whose Pro Rata Shares aggregate more than 50.0% of
the Commitments (or, if no Commitments are outstanding, of the Loans); provided,
that the Commitment and Loans of any Defaulting Lender and such Defaulting
Lender’s right to vote on any issue shall be excluded for the purpose of making
any determination of Majority Lenders; provided, that so long as BofA
and Wachovia are the Agents and the Pro Rata Shares of BofA and Wachovia
aggregate more than 50.0% of the Commitments (or, if no Commitments are
outstanding, of the Loans), “Majority Lenders” means at least
three (3) Lenders whose Pro Rata Shares aggregate more than 50.0% of
the Commitments (or, if no Commitments are outstanding, of the Loans).

 

“Management Agreement”
means (a) with respect to any corporation, its bylaws, (b) with
respect to any limited liability company or other similar entity, its operating
agreement, (c) with respect to any limited partnership, its partnership
agreement, and (d) with respect to any other entity, any agreement or
other document similar in nature to any of the foregoing.

 

“Margin Stock” means “margin
stock” as such term is defined in Regulation T, U, or X of the Federal Reserve
Board.

 

“Material Adverse Effect”
means:  (a) a material adverse
change in, or a material adverse effect upon, (i) the Collateral or (ii) the
operations, business, properties, prospects or condition (financial or
otherwise) of Ahern and its Subsidiaries, taken as a whole; (b) a
material impairment of the ability of any Obligated Party or any Affiliate of
any Obligated Party to perform under any Loan Document to which it is a party; or (c) a material adverse effect upon
the legality, validity, binding effect, or enforceability against any Obligated Party or any Affiliate of any
Obligated Party of any Loan Document to which it is a party.

 

“Material Contract”
means any contract or other arrangement to which Ahern or any of its
Subsidiaries is a party (other than the Loan Documents) for which breach,
nonperformance, cancellation or failure to renew could reasonably be expected
to have a Material Adverse Effect.

 

27

 

“Maximum Rate” means, at
any time, the highest rate of interest the Lenders may legally contract for,
charge, or receive in respect of the Obligations as allowed by any Requirement
of Law.

 

“Maximum Revolver Amount”
means $175,000,000 as such amount shall be increased by the aggregate amount of
Incremental Commitments, if any, and as reduced in accordance with Section 4.3(f).

 

“Mortgage” means and
includes any mortgage, deed of trust, deed to secure debt, assignment, or other
instrument executed and delivered by any Obligated Party to or for the benefit
of the Collateral Agent by which the Collateral Agent, for the benefit of the
Credit Providers, acquires a Lien on any Real Estate of such Obligated Party,
and all amendments, modifications, and supplements thereto, and “Mortgages”
means two or more of such mortgages, deeds of trust, deeds to secure debt,
assignments, and other instruments, as the context requires.

 

“Multiemployer Plan”
means a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA that is or was at any time during the current calendar year or the
immediately preceding six calendar years contributed to by an Obligated Party
or any ERISA Affiliate.

 

“Negative Pledge” means
any agreement, contract, or other arrangement whereby any Obligated Party is
prohibited from, or would otherwise be in default as a result of, creating,
assuming, incurring, or suffering to exist, directly or indirectly, any Lien on
any of its assets in favor of the Collateral Agent under the Loan Documents.

 

“Net Amount of Eligible
Accounts” means, at any time, without duplication, the gross amount of
Eligible Accounts, less sales, excise, or other similar taxes, and less
returns, discounts, claims, credits, allowances, accrued rebates, offsets,
deductions, counterclaims, disputes, and other defenses of any nature at any
time issued, owing, granted, outstanding, available, or claimed.

 

“Net Book Value” means,
with respect to any item of Eligible Rental and Sale Equipment or Eligible
Transportation Equipment of a Borrower, the cost to such Borrower of such item
of Eligible Rental and Sale Equipment or Eligible Transportation Equipment, as
the case may be, less the accumulated depreciation taken by such Borrower
thereon, all as reflected in the books and records of such Borrower.

 

“Net Orderly Liquidation
Percentage” means (a) with respect to any class of Inventory of a
Borrower at any time, the ratio (expressed as a percentage) computed by
dividing (i) (x) if such percentage is being determined on the
Closing Date or on any date prior to the first delivery of an Inventory
Appraisal of such Borrower’s Inventory (containing such class of Inventory)
required pursuant to Section 10.4, the net recovery value of such
class of Inventory of such Borrower (which in any event shall give effect to
all costs and expenses of liquidation), as set forth in the Inventory Appraisal
of such Borrower’s Inventory (containing such class of Inventory) delivered to
the Agents prior to the Closing Date and (y) if such percentage is being
determined on or after the date of the first delivery of an Inventory Appraisal
of such Borrower’s Inventory (containing such class of Inventory) required
pursuant to Section 10.4, the net recovery value of such class of
Inventory of such Borrower (which in any event shall give effect to all costs
and expenses of 

 

28

 

liquidation),
as set forth in the Inventory Appraisal of such Borrower’s Inventory
(containing such class of Inventory) most recently delivered to the Agents
pursuant to Section 10.4 by (ii) the value of such class of
Inventory of such Borrower, valued at net book value, as set forth in the
corresponding Inventory Appraisal and (b) with respect to Transportation
Equipment of a Borrower at any time, (x) on the Closing Date or on any
date prior to the first delivery of an Equipment Appraisal of such Borrower’s
Transportation Equipment pursuant to Section 10.4, zero, and
(y) if such percentage is being determined on or after the date of the
first delivery of an Equipment Appraisal of such Borrower’s Transportation
Equipment pursuant to Section 10.4, the ratio (expressed as a
percentage) computed by dividing (i) the net recovery value of the
Transportation Equipment of such Borrower (which in any event shall give effect
to all costs and expenses of liquidation), as set forth in the Equipment
Appraisal of such Borrower’s Transportation Equipment most recently delivered
to the Agents pursuant to Section 10.4 by (ii) the value of
the Transportation Equipment of such Borrower, valued at net book value, as set
forth in the corresponding Equipment Appraisal.

 

“Net Orderly Liquidation
Value” means (x) with respect to the applicable class of Eligible
Inventory of a Borrower at any time, an amount equal to the product of (i) the
value of such class of Eligible Inventory of such Borrower at such time valued
at the lower of Net Book Value (or average cost in the case of Eligible Spare
Parts Inventory) or market, multiplied by (ii) the Net Orderly
Liquidation Percentage for such class of Eligible Inventory of such Borrower in
effect at such time and (y) with respect to the Eligible Transportation
Equipment of a Borrower at any time, an amount equal to the product of (i) the
value of the Eligible Transportation Equipment of such Borrower at such time
valued at the lower of Net Book Value or market, multiplied by (ii) the
Net Orderly Liquidation Percentage for the Eligible Transportation Equipment of
such Borrower in effect at such time.

 

“New Aircraft” means a
Cessna Citation CJ3 that was ordered by Ahern prior to the Original Closing
Date, with a purchase price of approximately $6,000,000.

 

“Non-Consenting Lender”
has the meaning specified in Section 13.1(d).

 

“Non-Ratable Loan” and “Non-Ratable
Loans” have the meanings specified in Section 2.2(i).

 

“Notice of Borrowing”
has the meaning specified in Section 2.2(c).

 

“Notice of
Continuation/Conversion” has the meaning specified in Section 3.2(b).

 

“Obligated Party” means
each of the Borrowers and the Guarantors, individually, and “Obligated
Parties” means two or more of such Persons, collectively.

 

“Obligations” means (a) all
present and future loans, advances, liabilities, obligations, covenants,
duties, and debts owing by the Obligated Parties, or any of them, to the
Administrative Agent, the Collateral Agent, BofA, Wachovia, the Letter of
Credit Issuer, each Indemnified Person, and the Lenders, or any of them,
arising under or pursuant to this Agreement or any of the other Loan Documents,
whether or not evidenced by any note, or other instrument or document, whether
arising from an extension of credit, opening of a letter of credit, loan,
guaranty, indemnification, or otherwise, whether direct or indirect, absolute
or contingent, 

 

29

 

due or to
become due, primary or secondary, as principal or guarantor, and including all
principal, interest, charges, expenses, fees, attorneys’ fees (including
Attorney Costs), filing fees, and any other sums chargeable to any Obligated
Party hereunder or under any of the other Loan Documents, including, without
limitation, post-petition interest whether or not such interest is an allowable
claim in a bankruptcy, (b) all debts, liabilities, and obligations owing
by the Obligated Parties, or any of them, now or hereafter arising from or in
connection with the Letters of Credit and (c) all debts, liabilities, and
obligations owing by the Obligated Parties, or any of them, now or hereafter
arising from or in connection with Bank Products.

 

“Operating Lease”, as
applied to any Person, means any lease (including leases that may be terminated
by the lessee at any time) of any property (whether real, personal or mixed)
that is not a Capital Lease other than any such lease under which that Person
is the lessor and excluding Re-Rental Leases.

 

“Organization Certificate”
means, (a) with respect to any corporation, its articles or certificate of
incorporation, (b) with respect to any limited liability company or other
similar entity, its certificate of formation or organization, (c) with
respect to any limited partnership, its certificate of limited partnership, and
(d) with respect to any other entity, any certificate or other document
similar in nature to any of the foregoing.

 

“Original Closing Date”
means October 29, 2004.

 

“Original Loan and Security
Agreement” has the meaning specified in the recitals of this Agreement.

 

“Other Taxes” means any
present or future stamp or documentary taxes or any other excise or property
taxes, charges, or similar levies (excluding, in the case of each Lender and
each Agent, such taxes (including income taxes or franchise taxes) as are
imposed on or measured by such Lender’s or such Agent’s gross or net
income) that arise from any payment made hereunder or from the execution,
delivery, or registration of, or otherwise with respect to, this Agreement or
any other Loan Documents.

 

“Participant” means any
commercial bank, financial institution, or other Person that is not an
Affiliate of the Obligated Parties who shall have been granted the right by any
Lender to participate in the financing provided by such Lender under this
Agreement, and who shall have entered into a participation agreement in form
and substance satisfactory to such Lender.

 

“Patriot Act” means the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001 (Pub. L. No. 107-56, 115
Stat. 272 (Oct. 26, 2001)).

 

“PBGC” means the Pension
Benefit Guaranty Corporation or any Governmental Authority succeeding to the
functions thereof.

 

“Pension Plan” means a pension
plan (as defined in Section 3(2) of ERISA) subject to Title IV of
ERISA that any Obligated Party or any ERISA Affiliate sponsors, maintains, or
to which it makes, is making, or is obligated to make contributions, or in the
case of a 

 

30

 

Multiemployer
Plan has made contributions at any time during the immediately preceding five
plan years.

 

“Permitted Distributions”
means with respect to a period during which Ahern is or was an S Corporation or
a substantially similar pass-through entity for federal income tax purposes,
the making of any Distribution in an amount equal to the aggregate net federal,
state and local income and alternative minimum taxes (including federal and
state estimated income taxes then payable) attributable to income from Ahern
and any Subsidiaries for such period allocated to the holders of Capital Stock
of Ahern (after taking into account the reduction in (i) federal income
tax liability that will result from the payment of such state and local income
taxes, and (ii) federal, state and local income and alternative minimum
tax liability that has previously, or will for such tax period, result from the
utilization of losses from prior periods attributable to the operations of
Ahern and any Subsidiaries that has been allocated to the holders of Capital
Stock of Ahern) and, if required to maintain such S Corporation or similar
pass-through status, a proportionate distribution to all such holders.

 

“Permitted Investment”
means any Investment made by an Obligated Party at a time when no Default or
Event of Default exists or would result therefrom consisting of:  (a) Investments in direct obligations of
the U.S., or any agency thereof, or obligations guaranteed by the U.S., provided
that such obligations mature within one year from the date of acquisition
thereof; (b) Investments in certificates of deposit maturing within one
year from the date of investment, bankers’ acceptances, Eurodollar bank
deposits, or overnight bank deposits, in each case issued by, created by, or
with, a bank or trust company organized under the laws of the U.S. or any state
thereof having capital and surplus aggregating at least One Hundred Million
Dollars ($100,000,000); (c) Investments in commercial paper given a rating
of “A2” or better by Standard & Poor’s Corporation or “P2” or better
by Moody’s Investors Service, Inc. and maturing not more than 90 days from
the date of creation thereof; (d) Investments in Hedge Agreements entered
into for the purpose of limiting the amount of interest payable under this
Agreement; (e) Investments in mutual funds substantially all of the assets
of which are comprised of securities of the types described in clause (a),
clause (b), and clause (c) preceding; (f) Investments
by any Obligated Party in any Borrower; (g) existing Investments listed on
Schedule 1.1(B); (h) loans to executive officers and employees
of the Obligated Parties (that are not also holders of equity of any Obligated
Party); provided that (x) at the time of such loan no Default or
Event of Default shall exist or result therefrom, (y) the aggregate amount
of such loans made by the Obligated Parties and outstanding at any one time
does not exceed $100,000, and (z) such loan does not violate any
Requirement of Law; and (i) other Investments not included in clause (a)
through clause (h) preceding in an aggregate amount at any time not
exceeding $100,000.

 

“Permitted Liens” means:

 

(a)                                  the Agent’s Liens;

 

(b)                                 Liens, if any, that
are described on Schedule 1.1(C) and Liens that secure Debt
permitted pursuant to clause (c) of Section 8.12, provided
that any Liens securing refunded, renewed, or extended Debt pursuant to such clause (c)
shall not attach to any assets other than those assets securing the Debt being
refunded, renewed, or extended;

 

31

 

(c)                                  Liens for (i) taxes,
fees, assessments, or other charges of a Governmental Authority that are not
delinquent and (ii) taxes, fees, assessments, or other charges of a
Governmental Authority in an amount not in excess of $250,000, provided that the payment of such taxes, fees,
assessments, or other charges of a Governmental Authority referenced in this clause (ii)
that are due and payable is being contested in good faith and by appropriate
proceedings diligently pursued and as to which adequate financial reserves have
been established in accordance with GAAP on the applicable Obligated Party’s
books and records and a stay of enforcement of any such Lien is in effect;

 

(d)                                 Liens consisting of
deposits made in the ordinary course of business in connection with, or to
secure payment of, obligations under worker’s compensation, unemployment
insurance, social security, and other similar laws, or to secure the
performance of bids, tenders, or contracts (other than for the repayment of
Debt) or to secure indemnity, performance, or other similar bonds for the
performance of bids, tenders, or contracts (other than for the repayment of
Debt) or to secure statutory obligations (other than Liens arising under ERISA
or Environmental Liens) or surety or appeal bonds, or to secure indemnity,
performance, or other similar bonds;

 

(e)                                  Liens securing the
claims or demands of materialmen, mechanics, carriers, warehousemen, landlords,
and other similar Persons, provided that if any such Lien arises from
the nonpayment of such claims or demands when due, such claims or demands do
not exceed $250,000 in the
aggregate and are being contested in good faith and by appropriate proceedings
diligently pursued and as to which adequate financial reserves have been
established in accordance with GAAP on the applicable Obligated Party’s books
and records and a stay of enforcement of any such Lien is in effect;

 

(f)                                    Liens constituting
encumbrances in the nature of reservations, exceptions, encroachments,
easements, rights of way, covenants running with the land, and other similar
title exceptions or encumbrances affecting any Real Estate, provided
that any such Liens do not in the aggregate materially interfere with the use
of such Real Estate in the ordinary conduct of an Obligated Party’s business;

 

(g)                                 Liens (i) arising
from rights of setoff, but excluding any requirement for provision of cash
collateral, in favor of BofA or Wachovia or any of their respective Affiliates arising
from any agreement entered into in connection with any Obligated Party
obtaining Bank Products from BofA or Wachovia or any of their respective
Affiliates and (ii) arising in favor of the Letter of Credit Issuer under
the applicable application and reimbursement agreement delivered to the Letter
of Credit Issuer in connection with each Letter of Credit;

 

(h)                                 Liens arising from
judgments and attachments in connection with court proceedings, provided
that (i) the attachment or enforcement of such Liens would not otherwise
result in an Event of Default hereunder, (ii) such Liens are being
contested in good faith by appropriate proceedings diligently pursued, (iii) adequate
financial reserves have been established on the applicable Obligated Party’s
books and records in accordance with GAAP, (iv) no material Collateral is
subject to a material risk of loss or 

 

32

 

forfeiture, and (v) a stay of execution pending appeal or
proceeding for review is in effect;

 

(i)                                     Liens granted in
favor of the Second Lien Agent to secure the repayment of the Second Lien Debt
(or if all of the Second Lien Debt is repaid with proceeds of Refinancing
Second Lien Debt, in favor of the holders of the Refinancing Second Lien Debt
or an agent or trustee therefor to secure the repayment of the Refinancing
Second Lien Debt), which Liens are junior and subordinate to the Agent’s Liens
and are subject to the terms of the Intercreditor Agreement (or in the case of
Liens securing Refinancing Second Lien Debt, an intercreditor agreement
substantially identical to the Intercreditor Agreement or otherwise
satisfactory to the Agent and the Majority Lenders);

 

(j)                                     Liens granted in
favor of General Electric Capital Corporation pursuant to the terms of the GE
Sale and Leaseback Agreement;

 

(k)                                  Liens that constitute purchase money Liens
and secure Debt permitted under clause (h) of Section 8.12
including the lessors’ interests under Capital Leases permitted under clause (h)
of Section 8.12, but only to the extent such Liens attach only to
the Transportation Equipment, aircraft or computer or office equipment acquired
by the incurrence of such Capital Leases and purchase money secured Debt, and
Liens securing refinancings of such Debt permitted under clause (c)
of Section 8.12; provided that such Liens are not extended
to property other than the Transportation Equipment, aircraft or computer or
office equipment securing the Debt being refinanced; and

 

(l)                                     Liens that
constitute purchase money Liens and secure Debt permitted under clause (i)
of Section 8.12, but only
to the extent such Liens attach only to the Inventory acquired by the
incurrence of such purchase money secured Debt and not to any Account,
including, in any event, any rental proceeds of any such Inventory;

 

provided
that (i) none of such Liens listed in clause (b) through clause (h)
or clause (k) through clause (l) preceding may attach
to any Accounts of a Borrower, (ii) none of such Liens listed in clause (b)
through clause (h) or clause (k) preceding, other than
such Liens of a type and to the extent provided by clause (c) and clause (e)
preceding, may attach to any Inventory owned by a Borrower and (iii) none
of such Liens listed in clause (b) through clause (h), clause
(j) or clause (l) preceding, other than such Liens of a type
and to the extent provided by clause (c) and clause (e)
preceding, may attach to any Transportation Equipment owned by a Borrower.

 

“Person” means any
individual, sole proprietorship, partnership, limited liability company, joint
venture, trust, unincorporated organization, association, corporation,
Governmental Authority, or any other entity.

 

“Plan” means an employee
benefit plan (as defined in Section 3(3) of ERISA) that any
Obligated Party sponsors or maintains or to which any Obligated Party makes, is
making, or is obligated to make contributions and includes any Pension Plan.

 

“Pro Rata Share” means,
with respect to a Lender, a fraction (expressed as a percentage), the numerator
of which is the amount of such Lender’s Commitment and the denominator of which
is the sum of the amounts of all of the Lenders’ Commitments, or if no
Commitments are 

 

33

 

outstanding, a
fraction (expressed as a percentage), the numerator of which is the amount of
Loans owed to such Lender and the denominator of which is the aggregate amount
of the Loans owed to all Lenders, in each case giving effect to a Lender’s
participation in Non-Ratable Loans and Agent Advances.

 

“Proprietary Rights” means
licenses, franchises, permits, patents, patent rights, copyrights, works that
are the subject matter of copyrights, trademarks, service marks, trade names,
trade styles, patent applications, copyright applications, trademark and
service mark applications, and licenses and rights related to any of the
foregoing, and any other rights under any of the foregoing, extensions,
renewals, reissues, divisions, continuations, and continuations-in-part of any
of the foregoing, and any rights to sue for past, present and future
infringement of any of the foregoing. 
With respect to the Obligated Parties, “Proprietary Rights”
includes, without limitation, all of the items listed on Schedule 7.11.

 

“Proprietary Rights Security
Agreements” means the assignments for security and special powers of
attorney executed and delivered by one or more of the Obligated Parties to the
Collateral Agent, for the benefit of the Credit Providers, to evidence the
Agent’s Liens in each such Obligated Party’s present and future patents,
trademarks, copyrights and related licenses and rights and/or provide certain
rights with respect to such Liens.

 

“Real Estate” means,
with respect to any Person, such Person’s now or hereafter owned or leased
estates in real property (as applicable), including fees, leaseholds, and
future interests, together with such Person’s now or hereafter owned or leased
interests in the improvements thereon, the fixtures attached thereto, and the
easements appurtenant thereto.

 

“Refinancing Second Lien
Debt” has the meaning specified in Section 8.12.

 

“Refinancing Second Lien
Debt Documents” has the meaning specified in Section 8.12.

 

“Release” means 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 Estate or other property,
including the movement of Contaminants through or in the air, soil, surface
water, groundwater, or Real Estate or other property.

 

“Report” has the meaning
specified in Section 14.18(a).

 

“Reportable Event” means
any of the events set forth in Section 4043(b) of ERISA or the
regulations thereunder, other than any such event for which the 30 day notice
requirement under ERISA has been waived in regulations issued by the PBGC.

 

“Requirement of Law”
means, 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.

 

34

 

“Re-Rental Lease” means
any lease of property entered into by Ahern as lessee which property is
immediately subleased by Ahern to another Person in the ordinary course of
business of Ahern.

 

“Reserves” means any and
all reserves that either of the Agents deems necessary in the exercise of its
reasonable credit judgment to
maintain with respect to the Collateral or any Obligated Party that limit the
availability of Borrowings hereunder or that represent amounts the
Administrative Agent, the Collateral Agent or any Lender may be obligated to
pay in the future on behalf of an Obligated Party (including, without
limitation, (a) Bank Product Reserves, (b) reserves for accrued,
unpaid interest on the Obligations, (c) reserves for rent at each leased
location where any Collateral or
the books and records of an Obligated Party are maintained or kept, except to
the extent a Collateral Waiver Agreement is delivered to the Agents for such
leased location, (d) reserves for Inventory shrinkage, (e) Environmental Compliance Reserves, (f) reserves
for customs charges and shipping charges relating to any Inventory in transit, (g) reserves
for warehousemen’s or bailees’ charges, except to the extent a Collateral
Waiver Agreement is delivered to the Agents by the applicable warehouseman or
bailee, (h) reserves for taxes, fees, assessments, and other governmental
charges, (i) a dilution reserve equal to the difference (if a positive
number) between Dilution and 5% of the Net Amount of Eligible Accounts and
(j) reserves for any amounts reflected in any Borrower’s ledger accounts under
any of the following categories: “Equipment Down Long Term” or “Rebate Accrual”).

 

“Responsible Officer”
means, with respect to any Obligated Party, the chief executive officer, the
president, the chief financial officer, the treasurer, the
director of finance, any vice president, or any other officer having
substantially the same authority and responsibility as any of the foregoing.

 

“Revolving Loans” has
the meaning specified in Section 2.2(a) and includes each Agent
Advance, Non-Ratable Loan and Incremental Revolving Loan.

 

“Second Lien Agent”
means Wells Fargo Bank, N.A., as Trustee, in its capacity as collateral trustee
for the Second Lien Lenders and its successors and assigns in such capacity
from time to time.

 

“Second Lien Debt” has
the meaning set forth in Section 9.1(q) hereof.

 

“Second Lien Debt Agreement”
means the Indenture, dated as of August 18, 2005, between Ahern and Wells
Fargo Bank, N.A., as Trustee, providing for the issuance by Ahern of the Second
Lien Notes, as such agreement may be amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms thereof and
hereof.

 

“Second Lien Debt Documents” means the Second Lien
Debt Agreement, the Second Lien Notes, any security agreements in favor of the
Second Lien Agent securing the payment of the Second Lien Debt and any other
agreements between any of the Obligated Parties and the Second Lien Agent
executed from time to time in connection with the Second Lien Debt Agreement,
if any.

 

“Second Lien Lenders”
means the holders of the Second Lien Debt.

 

35

 

“Second Lien Notes”
means the senior secured notes due 2013 issued by Ahern pursuant to the Second
Lien Debt Agreement, as amended, restated, supplemented or substituted for from
time to time in accordance with the terms thereof and hereof.

 

“Settlement” has the
meaning specified in Section 14.15(a)(i).

 

“Settlement Date” has
the meaning specified in Section 14.15(a)(i).

 

“Software” means “software”,
as such term is defined in the UCC, other than software embedded in any
category of Goods, including all computer programs and all supporting
information provided in connection with a transaction related to any program.

 

“Solvent” means, when
used with respect to any Person, that at the time of determination:

 

(a)                                  the assets of such
Person, at a fair valuation, are in excess of the total amount of its debts
(including contingent liabilities);

 

(b)                                 the present fair
saleable value of its assets is greater than its probable liability on its
existing debts as such debts become absolute and matured;

 

(c)                                  it is then able and
expects to be able to pay its debts (including contingent debts and other
commitments) as they mature; and

 

(d)                                 it has capital
sufficient to carry on its business as conducted and as proposed to be
conducted.

 

For purposes of
determining whether a Person is Solvent, the amount of any contingent liability
shall be computed as the amount that, in light of all the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.

 

“Stated Termination Date”
means the fifth Anniversary Date.

 

“Subsidiary” means, with
respect to any Person (the “subject Person”), any corporation, association,
partnership, limited liability company, joint venture, or other business entity
of which more than 50.0% of the voting Capital Stock is owned or controlled
directly or indirectly by the subject Person, or one or more of the
Subsidiaries of the subject Person, or a combination thereof.  Unless the context otherwise clearly
requires, references herein to a “Subsidiary” refer to a Subsidiary of an
Obligated Party.

 

“Supporting Cash Deposit”
has the meaning specified in Section 2.4(g).

 

“Supporting Letter of Credit”
has the meaning specified in Section 2.4(g).

 

“Supporting Obligations”
means “supporting obligations”, as such term is defined in the UCC, including
letters of credit and guaranties issued in support of Accounts, Chattel Paper,
Documents, General Intangibles, Instruments, or Investment Property.

 

36

 

“Syndication Agent”
means Wachovia, solely in its capacity as a syndication agent.

 

“Taxes” means any and
all present or future taxes, levies, imposts, deductions, charges, or
withholdings, and all liabilities with respect thereto, excluding, in the case
of the Administrative Agent, each Lender and the Collateral Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured
by the Administrative Agent’s, such Lender’s or the Collateral Agent’s net
income (or on gross income where such tax is in lieu of a tax on net income and
is not a withholding tax) in any jurisdiction (whether federal, state, or local
and including any political subdivision thereof) under the laws of which the
Administrative Agent, such Lender or the Collateral Agent, as the case may be,
is organized or maintains a lending office or where the contacts with such
jurisdiction (other than the Loan Documents or events contemplated by the Loan
Documents) would otherwise subject the Administrative Agent, such Lender or the
Collateral Agent, as the case may be, to taxes on such net income.

 

“Termination Date” means
the earliest to occur of (a) the Stated Termination Date, (b) the
date the Commitments are terminated (i) by the Borrowers pursuant to Section 4.2
or (ii) pursuant to Section 11.2, and (c) the date this
Agreement is otherwise terminated for any reason whatsoever pursuant to the
terms of this Agreement.

 

“Test Period” means, if
a Trigger Event shall occur, each period of four consecutive fiscal quarters of
Ahern (taken as one accounting period) ending on each of (x) the last day of
the fiscal quarter of Ahern most recently ended prior to the occurrence of such
Trigger Event for which Financial Statements for Ahern and its Subsidiaries
have been delivered to the Administrative Agent pursuant to Section 6.2(a)
or 6.2(b)(i) and (y) the last day of each fiscal quarter of Ahern
after the fiscal quarter referred to in clause (x) ending prior to
or during the Trigger Event Compliance Period for such Trigger Event.

 

“Time Utilization” means
the ratio, calculated on a monthly basis for Ahern and its Subsidiaries, of (i) the
average number of units on rent during such month divided by (ii) the
average number of units available for rent during such month.

 

“Title Company” means
one of more title insurance companies reasonably satisfactory to the Agents.

 

“Transaction Documents”
means, collectively, the Loan Documents, the Second Lien Debt Documents, the
Refinancing Second Lien Debt Documents (if any) and all other documents,
instruments and agreements executed and/or delivered in connection therewith.

 

“Transportation Equipment”
means each of the following types of licensed vehicles and trailers owned by
any Obligated Party so long as they are not included in the rental fleet
available for rental to third parties:  (a) vehicles
and trailers used for delivery, (b) vehicles used for service and (c) vehicles
used by employees for transportation.

 

“Trigger Event” means
for any reason Excess Availability is less than $25,000,000 at any time.

 

37

 

“Trigger Event Compliance
Period” means the period commencing on the occurrence of a Trigger Event
and continuing until such time as Excess Availability is greater than
$25,000,000 for thirty (30) consecutive calendar days.

 

“UCC” means the Uniform
Commercial Code (or any successor statute), as in effect from time to time, of
the State of New York or of any
other state the laws of which are required as a result thereof to be applied in
connection with the issue of perfection of security interests; provided
that to the extent that the UCC is used to define any term herein or in any
other documents and such term is defined differently in different Articles or
Divisions of the UCC, the definition of such term as contained in Article or
Division 9 shall govern.

 

“Unfunded Pension Liability”
means the excess of a Plan’s benefit liabilities under Section 4001(a)(16)
of ERISA, over the current value of that 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.

 

“Unused Availability”
means, at any time, the Borrowing Base minus the Aggregate Revolver Outstandings.

 

“Unused Letter of Credit
Subfacility” means an amount equal to the Letter of Credit Subfacility, minus the sum of (a) the
aggregate undrawn amount of all outstanding Letters of Credit, plus, without duplication, (b) the
aggregate unpaid reimbursement obligations with respect to all Letters of
Credit.

 

“Unused Line Fee” has the
meaning specified in Section 3.4.

 

“U.S.” means the United
States of America.

 

“Wachovia” has the
meaning specified in the introductory paragraph of this Agreement.

 

“Waived” means waived in
accordance with Section 13.1.

 

“Wholly-Owned Subsidiary”
means, with respect to any Person (the “subject Person”), a Subsidiary all of
the issued and outstanding Capital Stock (other than directors’ qualifying
shares) of which are owned by the subject Person or one or more of the subject
Person’s other Wholly-Owned Subsidiaries or by the subject Person and one or
more of the subject Person’s Wholly-Owned Subsidiaries.

 

Section 1.2                                      Accounting
Terms.  Any accounting term used in
this Agreement shall have, unless otherwise specifically provided herein, the
meaning customarily given to such term in accordance with GAAP, and all
financial computations in this Agreement shall be computed, unless otherwise
specifically provided herein, in accordance with GAAP as consistently applied
and using the same method for inventory valuation as used in the preparation of
the Financial Statements.  If at any time
any change in GAAP would affect the computation of any financial covenant or
requirement set forth in any Loan Document, and any of the Obligated Parties,
either of the Agents or the Majority Lenders shall request, the Agents, the
Lenders and the Obligated Parties shall negotiate in good faith to amend such
covenant or requirement to preserve the original intent thereof in light of
such change in GAAP (subject to the approval of the Majority 

 

38

 

Lenders and the Agents); provided that, until
so amended, (a) such covenant or requirement shall continue to be determined
in accordance with GAAP prior to such change and (b) the Obligated Parties
shall provide to the Agents (with sufficient copies to the Administrative Agent
for distribution to each Lender) Financial Statements and other documents
required under this Agreement or as reasonably requested hereunder setting
forth a reconciliation between calculations of such ratio or requirement made
before and after giving effect to such change in GAAP.

 

Section 1.3                                      Interpretive
Provisions.

 

(a)                                  The meanings of
defined terms are equally applicable to the singular and plural forms of the
defined terms.  Terms used herein that
are defined in the UCC and are not otherwise defined herein shall have the
meanings specified therefor in the UCC.

 

(b)                                 The words “hereof,” “herein,”
“hereunder,” and similar words refer to this Agreement as a whole and not to
any particular provision of this Agreement. 
Section, Schedule, and Exhibit references are to this Agreement
unless otherwise specified.  The term “documents”
includes any and all instruments, documents, agreements, certificates,
indentures, notices, and other writings, however evidenced.  The term “including” is not limiting and
means “including, without limitation.” 
In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including,” the words “to” and “until”
each mean “to but excluding” and the word “through” means “to and including.”  The word “or” is not exclusive.

 

(c)                                  Unless otherwise
expressly provided herein, (i) references to agreements (including this
Agreement) and other contractual instruments shall be deemed to include all
subsequent amendments, restatements, and other modifications thereto, but only
to the extent such amendments, restatements, and other modifications are not
prohibited by the terms of any Loan Document, and (ii) references to any
statute or regulation are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing, supplementing, or
interpreting the statute or regulation.

 

(d)                                 The captions and
headings of this Agreement and other Loan Documents are for convenience of
reference only and shall not affect the interpretation of this Agreement and
the other Loan Documents.

 

(e)                                  This Agreement and
the other Loan Documents may use several different limitations, tests, or
measurements to regulate the same or similar matters.  All such limitations, tests, and measurements
are cumulative and shall each be performed in accordance with their terms.

 

(f)                                    For purposes of Section 11.1,
a breach of a financial covenant contained in Section 8.21 shall be
deemed to have occurred as of any date of determination thereof by either of
the Agents or as of the last day of any specified measuring period, regardless
of when the Financial Statements reflecting such breach are delivered to either
of the Agents.

 

39

 

Section 1.4                                      No
Strict Construction.  This Agreement
and the other Loan Documents are the result of negotiations among, and have
been reviewed by counsel to, each Agent, each Lender, and the Obligated Parties
and are the products of all parties. 
Accordingly, this Agreement and the other Loan Documents shall not be
construed against the Administrative Agent, the Collateral Agent, the Lenders,
or the Obligated Parties merely because of their respective involvement in
their preparation.

 

Section 1.5                                      No
Novation.  It is the intent of the
parties hereto that this Agreement does not constitute a novation of the
rights, obligations and liabilities of the respective parties (including the
Obligations) existing under the Original Loan and Security Agreement or
evidence payment of all or any of such obligations and liabilities, and such
rights, obligations and liabilities shall continue and remain outstanding under
the terms and conditions of, and as amended and restated by, this Agreement,
and that this Agreement amends and restates in its entirety the Original Loan
and Security Agreement.  Without limiting
the generality of the foregoing (i) all Revolving Loans outstanding under
the Original Loan and Security Agreement shall on the Closing Date become
Revolving Loans hereunder, (ii) all Letters of Credit under the Original
Loan and Security Agreement shall on the Closing Date become Letters of Credit
hereunder and (iii) all other Obligations outstanding under the Original
Loan and Security Agreement shall on the Closing Date be Obligations under this
Agreement.  Each of the Borrowers and the
other Obligated Parties hereby ratifies and confirms its grant of security
interests and Liens in the Collateral (including, without limitation, any and
all Collateral granted under the Original Loan and Security Agreement and the
other Loan Documents) in which it has rights and confirms and agrees that such
Collateral secures any and all of the Obligations, including, without
limitation, the Revolving Loans.

 

The Borrowers acknowledge and agree that as
of the close of business on August 17, 2005, the Aggregate Revolver
Outstandings under and as defined in the Original Loan and Security Agreement
(excluding the aggregate undrawn amount of all outstanding Letters of Credit
issued under the Original Loan and Security Agreement) is $141,198,219.49.  As of the date hereof, none of the Obligated
Parties or any of their respective Affiliates has offset rights, counterclaims
or defenses of any kind against any of their obligations, indebtedness or
liabilities under the Original Loan and Security Agreement.  As of the date hereof immediately prior to
the amendment and restatement of the Original Loan and Security Agreement
contemplated herein, there exists no Default or Event of Default under and as
defined in the Original Loan and Security Agreement.

 

ARTICLE 2

 

LOANS AND
LETTERS OF CREDIT

 

Section 2.1                                      Credit
Facility.

 

(a)                                  Subject to the terms
and conditions of this Agreement, the Lenders agree to make available a credit facility for use by any one
or more of the Borrowers from time to time during the term of this
Agreement.  Such credit facility shall be composed of a revolving credit facility
consisting of Revolving Loans and Letters of Credit as described in Section 2.2
and Section 2.4.

 

40

 

(b)                                 So long as no Default
or Event of Default then exists or would result therefrom, the Borrowers, with
the prior written consent of the Administrative Agent as to new Lenders as
contemplated under clause (b)(v)(z) below, shall have the right to
request from time to time prior to the Termination Date that one or more Lenders
(and/or one or more other Persons that will become Lenders as provided below)
provide Incremental Commitments and, subject to the terms and conditions
contained in this Agreement, make Incremental Revolving Loans, as the case may
be, pursuant thereto; it being understood and agreed, however, that:

 

(i)                                     no Lender shall be
obligated to provide an Incremental Commitment as a result of any such request
by the Borrowers, and until such time, if any, as such Lender has agreed in its
sole discretion to provide an Incremental Commitment and executed and delivered
to the Administrative Agent an Incremental Commitment Agreement as provided in clause (c)(i)
of this Section 2.1, such Lender shall not be obligated to fund any
Incremental Revolving Loans;

 

(ii)                                  any Lender (or, in
the circumstances contemplated by clause (v) below, any other
Person that qualifies as an Eligible Assignee) may so provide an Incremental
Commitment without the consent of any other Lender;

 

(iii)                               the Incremental
Commitments provided pursuant to this clause (b) shall be in a
minimum aggregate amount (for all Lenders (including in the circumstances
contemplated by clause (v) below, Eligible Assignees who will
become Lenders)) of at least $5,000,000 and in integral multiples of $1,000,000
in excess thereof;

 

(iv)                              the aggregate amount of
all Incremental Commitments permitted to be provided pursuant to this Section 2.1(b)
shall not exceed $50,000,000;

 

(v)                                 if, after the
Borrowers have requested the then existing Lenders (other than Defaulting
Lenders) to provide Incremental Commitments pursuant to this clause (b),
the Borrowers have not received Incremental Commitments in an aggregate amount
equal to that amount of Incremental Commitments which the Borrowers desire to
obtain pursuant to such request (as set forth in the notice provided by the
Borrowers as provided below), then the Borrowers may request Incremental
Commitments from Persons that would qualify as Eligible Assignees hereunder in
an aggregate amount equal to such deficiency, provided that (x) any such
Incremental Commitment provided by any such Eligible Assignee shall be in a
minimum amount (for such Eligible Assignee) of at least $1,000,000, (y) the
fees to be paid to such Eligible Assignee shall be no greater than those paid
(or which were offered) to the then existing Lenders providing (or which were
requested to provide) the respective requested Incremental Commitments and
(z) the prior written consent of the Administrative Agent shall be
required with respect to each Person (not an existing Lender) which provides
any Incremental Commitment;

 

41

 

(vi)                              the prior written consent
of each Letter of Credit Issuer to each new Lender providing an Incremental
Commitment shall be required;

 

(vii)                           each Lender agreeing to
provide an Incremental Commitment pursuant to an Incremental Commitment
Agreement shall, subject to the satisfaction of the relevant conditions set
forth in this Agreement, make revolving loans and advances (each, an “Incremental
Revolving Loan” and, collectively, the “Incremental Revolving Loans”)
to the Borrowers as specified in such Incremental Commitment Agreement and such
Incremental Revolving Loans shall thereafter be deemed to be Revolving Loans
for all purposes of this Agreement and the other Loan Documents;

 

(viii)                        Incremental Revolving Loans to
be made pursuant to such Incremental Commitment Agreement shall mature on the
Termination Date and shall bear interest at the same rates (i.e., have the same
Applicable Margins) applicable to other Revolving Loans; and

 

(ix)                                all actions by the
Borrowers pursuant to this clause (b) shall be taken in
coordination with the Administrative Agent.

 

(c)                                  In connection with
the Incremental Commitments to be provided pursuant to preceding clause (b):

 

(i)                                     the Borrowers, the
Administrative Agent and each such Lender or other Eligible Assignee which
agrees to provide an Incremental Commitment (each such Lender or Eligible
Assignee, an “Incremental Lender”) shall execute and deliver to the
Administrative Agent (with a copy to the Borrowers) an Incremental Commitment
Agreement, with the effectiveness of such Incremental Lender’s Incremental
Commitment to occur upon the delivery of such Incremental Commitment Agreement
to the Administrative Agent, the obtaining of the consents required by Section 2.1(b) (v)
and/or (vi), if and to the extent required pursuant to said clauses, the
payment of any fees required in connection therewith and the satisfaction of
any other conditions precedent that may be set forth in such Incremental
Commitment Agreement;

 

(ii)                                  the Borrowers and the
other Obligated Parties shall have delivered such amendments, modifications
and/or supplements to the Collateral Documents as are necessary or, in the
reasonable opinion of the Administrative Agent, desirable to ensure that the
additional Obligations to be incurred pursuant to the Incremental Commitments
are secured by, and entitled to the benefits of, the Collateral Documents;

 

(iii)                               the Administrative Agent
shall receive an acknowledgment from the Obligated Parties that the Incremental
Revolving Loans to be incurred pursuant to such Incremental Commitments are
entitled to the benefits of the Collateral Documents, together with resolutions
executed by (x) the Borrowers, authorizing the incurrence of such Incremental
Revolving Loans pursuant to such 

 

42

 

Incremental Commitments and (y) each other Obligated Party, stating
that the Incremental Revolving Loans to be incurred pursuant to such Incremental
Commitments are entitled to benefits of the Collateral Documents;

 

(iv)                              the Borrowers shall
deliver to the Administrative Agent a certificate of a Responsible Officer of
Ahern certifying that the Incremental Commitment Agreements and the incurrence
of Debt in connection therewith does not violate any of the Second Lien Debt
Agreement or any of the other Second Lien Debt Documents;

 

(v)                                 the Borrowers shall
deliver to the Administrative Agent an opinion or opinions, in form and
substance satisfactory to the Administrative Agent, from counsel to the
Borrowers satisfactory to the Administrative Agent and dated the date of such
Incremental Commitment Agreement, covering such of the matters set forth in the
opinions of counsel delivered to the Administrative Agent on the Closing Date
pursuant to Section 9.1 and such other matters as the
Administrative Agent may reasonably request, including non-contravention of the
Second Lien Debt Documents;

 

(vi)                              on the date of the making
of such Incremental Revolving Loans, such Incremental Revolving Loans shall be
added to (and form part of) each Borrowing of outstanding Revolving Loans on a pro
rata basis (based on the relative sizes of the various outstanding
Borrowings), so that each Lender will participate proportionately in each then
outstanding Borrowing of Revolving Loans, and so that the existing Lenders
continue to have the same participation (by amount) in each Borrowing as they
had before the making of the new Incremental Revolving Loans; and

 

(vii)                           the Administrative Agent
shall promptly notify each Lender as to the effectiveness of each Incremental
Commitment Agreement, and shall deliver to each Lender a copy of same, and at
such time Schedule 1.1(A) shall be deemed modified to reflect the
Incremental Commitments of such Incremental Lender.

 

To the extent
the provisions contained in clause (c)(vi) above require that
Lenders making Incremental Revolving Loans add such Incremental Revolving Loans
to then outstanding Borrowings of LIBOR Rate Revolving Loans, it is
acknowledged that the effect thereof may result in such new Incremental
Revolving Loans having short Interest Periods (i.e., an Interest Period that
began during an Interest Period then applicable to outstanding LIBOR Rate
Revolving Loans and which will end on the last day of such Interest
Period).  In connection therewith, the
Borrowers may agree, in the respective Incremental Commitment Agreement, to
compensate the Lenders making the new Incremental Revolving Loans for funding
LIBOR Rate Revolving Loans during an existing Interest Period on such basis as
may be agreed by the Borrowers and such respective Lender or Lenders.

 

43

 

Section 2.2                                      Revolving
Loans.

 

(a)                                  Amounts.  Subject to the terms and conditions of this
Agreement, each Lender severally, but not jointly, agrees, upon a Borrower’s
request from time to time on any Business Day during the period from the
Original Closing Date to the Termination Date, to make revolving loans (the “Revolving
Loans”) to the Borrowers in amounts not to exceed such Lender’s Pro Rata
Share of the Commitments.  The Lenders,
however, in their unanimous discretion, may elect to make Revolving Loans that
would cause the Aggregate Revolver Outstandings to exceed the Borrowing Base on
one or more occasions, but if they do so, neither the Agents nor the Lenders
shall be deemed thereby to have changed the limits of the Borrowing Base or to
be obligated to exceed such limits on any other occasion.  If any requested Revolving Loan exceeds the
Unused Availability then the Lenders may refuse to make or may otherwise
restrict the making of such Revolving Loan, subject to the authority of the
Administrative Agent, in its sole discretion, to make Agent Advances pursuant
to the terms of Section 2.2(j).

 

(b)                                 [Intentionally
Omitted.]

 

(c)                                  Procedure for
Borrowing.

 

(i)                                     Each Borrowing of
Revolving Loans shall be made upon a Borrower’s irrevocable written notice
delivered to the Administrative Agent, in the form of a notice of borrowing in
the form of Exhibit D or such other form as may be acceptable to
the Agents in their sole discretion (any such notice being referred to herein
as a “Notice of Borrowing”), which must be received by the
Administrative Agent prior to 1:00 p.m. (New York time) (y) three
Business Days prior to the requested Funding Date, in the case of LIBOR Rate
Revolving Loans or (z) on the requested Funding Date, in the case of Base
Rate Revolving Loans, specifying:

 

(A)                              the amount of the
Borrowing, which in the case of LIBOR Rate Revolving Loans shall be in an
amount that is not less than One Million Dollars ($1,000,000) or an integral
multiple of One Million Dollars ($1,000,000) in excess thereof;

 

(B)                                the requested Funding
Date, which must be a Business Day;

 

(C)                                whether the Revolving
Loans requested are to be Base Rate Revolving Loans or LIBOR Rate Revolving
Loans; provided that if such Borrower fails to specify whether any
Revolving Loans are to be Base Rate Revolving Loans or LIBOR Rate Revolving
Loans, such request shall be deemed a request for Base Rate Revolving Loans;

 

(D)                               if the requested
Revolving Loans are to be LIBOR Rate Revolving Loans, the duration of the
Interest Period; provided that if such Borrower fails to select the
duration of the Interest Period with respect to any requested LIBOR Rate
Revolving Loans, such Borrower shall be 

 

44

 

deemed to have requested such Revolving Loans be made as LIBOR Rate
Revolving Loans with an Interest Period of one month in duration; and

 

(E)                                 whether the proceeds
of such Borrowing are to be deposited to the Funding Account or sent by wire
transfer to a third party, in which case such Borrower shall provide the
Administrative Agent with written wire transfer instructions satisfactory to the
Administrative Agent;

 

provided
that with respect to the Borrowing to be made on the Original Closing Date,
such Borrowing will consist of Base Rate Revolving Loans only.

 

(ii)                                  With respect to any
request for Base Rate Revolving Loans, in lieu of delivering a Notice of
Borrowing, a Borrower may give the Administrative Agent telephonic notice of
such request for advances to the Funding Account not later than the required
time specified in clause (i) preceding.  The Administrative Agent at all times shall
be entitled to rely on such telephonic notice in making any such Revolving
Loans, regardless of whether any written confirmation is received by it.

 

(iii)                               Whenever checks or other
items are presented to BofA for payment against the Funding Account or any other
Deposit Account maintained by a Borrower with BofA in an amount greater than
the then available balance in the Funding Account or such other Deposit
Account, such presentation may, at the election of the Administrative Agent in
its sole discretion, be deemed to be a request by the Borrowers for a Base Rate
Revolving Loan on the date of such presentation in an amount sufficient to
cover all such items presented in the Funding Account or such other Deposit
Account on such date.

 

(iv)                              At the election of either
of the Agents or the Majority Lenders, the Borrowers shall have no right to
request LIBOR Rate Revolving Loans during the existence of any Default or Event
of Default.

 

(d)                                 Disbursement.  On or prior to the Closing Date, the
Borrowers shall have delivered to the Administrative Agent a notice setting
forth the deposit account maintained with BofA (the “Funding Account”)
to which the Administrative Agent is authorized by the Borrowers to transfer
the proceeds of the Revolving Loans requested hereunder.  Each of the Borrowers agrees that the Funding
Account may be established in the name of any other Borrower, and hereby agrees
that the Funding Account has been established for the benefit of all of the
Borrowers for receipt of the proceeds of Revolving Loans hereunder.  Each Borrower hereby appoints each other
Borrower as its agent with respect to receipt of the proceeds of Revolving
Loans in the Funding Account as contemplated herein.  The Borrowers may designate a replacement
Funding Account from time to time by written notice to the Administrative
Agent.  Any designation by the Borrowers
of the Funding Account must be reasonably acceptable to the Administrative
Agent.

 

45

 

(e)                                  Reliance Upon
Authority; No Liability.  The
Administrative Agent is entitled to rely conclusively on any individual’s
request for Revolving Loans on behalf of a Borrower, as long as the proceeds
thereof are to be transferred to the Funding Account or according to such other
instructions as may be provided to the Administrative Agent pursuant to Section 2.2(c)(i)(E).  The Administrative Agent has no duty to
verify the identity of any individual representing himself or herself as a
person authorized by any Borrower to make such requests on its behalf.  The Administrative Agent shall not incur any
liability to the Borrowers as a result of acting upon any notice referred to in
Section 2.2(c) or Section 2.2(d) which the
Administrative Agent reasonably believes to have been given by an officer or
other person duly authorized by a Borrower to request Revolving Loans on its
behalf or for otherwise acting under this Section 2.2.  The crediting of Revolving Loans to the
Funding Account or wire transfer to such Person as a Borrower shall direct shall
conclusively establish the obligation of the Borrowers to repay such Revolving
Loans as provided herein.

 

(f)                                    Notice
Irrevocable.  Any Notice of Borrowing
(or telephonic notice in lieu thereof) made pursuant to Section 2.2(c)
shall be irrevocable and the Borrowers shall be bound to borrow the funds
requested therein in accordance therewith.

 

(g)                                 Administrative
Agent’s Election.  Promptly after
receipt of a Notice of Borrowing (or telephonic notice in lieu thereof), the
Administrative Agent shall elect in its sole discretion to have the terms of Section 2.2(h),
Section 2.2(i), or Section 2.2(j) apply to such
requested Borrowing.  If BofA declines in
its sole discretion to make a Non-Ratable Loan pursuant to Section 2.2(i),
the terms of Section 2.2(h) shall apply to the requested Borrowing
unless such requested Borrowing is to be made by the Administrative Agent as an
Agent Advance pursuant to Section 2.2(j).

 

(h)                                 Making of Revolving
Loans.  If the Administrative Agent
elects to have the terms of this Section 2.2(h) apply to a
requested Borrowing, then promptly after receipt of a Notice of Borrowing or
telephonic notice in lieu thereof, the Administrative Agent shall notify the
Lenders by telecopy, telephone, or
e-mail of the requested Borrowing. 
Each Lender shall transfer its Pro Rata Share of the requested Borrowing
to the Administrative Agent, in immediately available funds, to the account
from time to time designated by the Administrative Agent not later than 3:30 p.m.
(New York time) on the applicable Funding Date. 
After receipt by the Administrative Agent of all proceeds of such
requested Borrowing, it shall make the proceeds of such requested Borrowing
available to the applicable Borrower on the applicable Funding Date by
transferring same day funds to the Funding Account or as otherwise requested by
such Borrower in accordance with Section 2.2(c)(i)(E).  Unless the Lenders in their unanimous
discretion consent otherwise, no Borrowing under this clause (h) shall
be permitted if the requested Borrowing exceeds the Unused Availability on the
applicable Funding Date prior to giving effect to such requested Borrowing.

 

(i)                                     Making of
Non-Ratable Loans.  If the
Administrative Agent elects, with the consent of BofA, in its capacity as a
Lender, to have the terms of this Section 2.2(i) apply to a
requested Borrowing, BofA shall make a Revolving Loan in the amount of such
requested Borrowing available to the Borrowers on the applicable Funding Date
by 

 

46

 

transferring same day funds to the Funding Account or as otherwise
requested by the applicable Borrower in accordance with Section 2.2(c)(i)(E).  Each Revolving Loan made solely by BofA
pursuant to this Section 2.2(i) is referred to hereinafter as a “Non-Ratable
Loan,” and such Revolving Loans are collectively referred to as the “Non-Ratable
Loans.”  Each Non-Ratable Loan shall
be subject to all the terms and conditions applicable to other Revolving Loans
except that all payments of principal and interest thereon shall be payable to
BofA solely for its own account.  The aggregate amount of Non-Ratable Loans
outstanding at any time shall not exceed $10,000,000.  The Administrative Agent shall not request
BofA to make any Non-Ratable Loan if (A) the Administrative Agent has
received written notice from any Lender that one or more of the applicable
conditions precedent set forth in Article 9 will not be satisfied
on the requested Funding Date for the applicable Borrowing or (B) the
Administrative Agent has actual knowledge (based solely on the Borrowing Base
Certificate most recently delivered to it or written notice from any Lender
thereof) that the requested Borrowing exceeds the Unused Availability on the
applicable Funding Date prior to giving effect to such requested
Borrowing.  The Non-Ratable Loans shall
be secured by the Agent’s Liens in and to the Collateral and shall constitute
Base Rate Revolving Loans and Obligations hereunder.

 

(j)                                     Agent Advances.  Subject to the limitations set forth below,
the Administrative Agent is authorized by the Borrowers and the Lenders, from
time to time in its sole discretion in such capacity, after the occurrence of a
Default or an Event of Default or at any time that any of the other conditions
precedent set forth in Article 9 have not been satisfied, to make
Base Rate Revolving Loans to the Borrowers or any Borrower on behalf of the
Lenders in an aggregate amount outstanding at any time not to exceed
$10,000,000 which the Administrative Agent, in its reasonable business
judgment, deems necessary or desirable (i) to preserve or protect the
Collateral, or any portion thereof, (ii) to enhance the likelihood of, or
maximize the amount of, repayment of the Loans and other Obligations (including
through the Borrowers using any proceeds of such Revolving Loans to pay payroll
and associated tax obligations), or (iii) to pay any other amount
chargeable to the Borrowers pursuant to the terms of this Agreement, including
costs, fees, and expenses as described in Section 15.7 (any of such
advances are herein referred to as “Agent Advances”); provided
that after giving effect to the making of any Agent Advance, the Aggregate
Revolver Outstandings shall not exceed the Maximum Revolver Amount.  The Majority Lenders may at any time revoke
the authorization of the Administrative Agent to make Agent Advances.  Any such revocation must be in writing and
shall become effective prospectively upon the receipt by the Administrative
Agent thereof.  The Agent Advances shall
be secured by the Agent’s Liens in and to the Collateral and shall constitute
Base Rate Revolving Loans and Obligations hereunder.

 

Section 2.3                                      [Intentionally
Omitted.]

 

Section 2.4                                      Letters of
Credit.

 

(a)                                  Agreement to Cause
to Issue.  Subject to the terms and
conditions of this Agreement, the Agents agree to cause the Letter of Credit
Issuer to issue for the account 

 

47

 

of any of the Borrowers (whether one or more) one or more
commercial/documentary and standby letters of credit (each a “Letter of
Credit” and collectively, the “Letters of Credit”) from time to time
during the term of this Agreement.

 

(b)                                 Amounts; Outside
Expiration Date.  The Agents shall
not cause to be issued any Letter of Credit at any time if:  (i) the maximum face amount of the
requested Letter of Credit is greater than the Unused Letter of Credit
Subfacility at such time; (ii) the maximum undrawn amount of the requested
Letter of Credit and all commissions, fees, and charges due from such Borrower
in connection with the opening thereof exceeds the Unused Availability prior to
giving effect to issuance of such requested Letter of Credit; (iii) such
Letter of Credit has an expiration date later than 30 days prior to the
Stated Termination Date; or (iv) such Letter of Credit has an expiration
date later than twelve calendar months from the date of issuance for standby
letters of credit and six calendar months from the date of issuance for
commercial/documentary letters of credit, provided that any Letter of
Credit issued hereunder may, subject to this clause (iv) and the
other provisions of this Section 2.4, include an “evergreen” or
automatic renewal provision of the type referenced in Section 2.4(d)(iii)
without contravening the requirement contained in this Section 2.4(b).

 

(c)                                  Other Conditions.  In addition to being subject to the
satisfaction of the applicable conditions precedent contained in Article 9,
the obligation of the Agents to cause any Letter of Credit to be issued is
subject to the following conditions precedent having been satisfied in a manner
satisfactory to the Agents and the Letter of Credit Issuer:

 

(i)                                     the Borrowers
shall have delivered to the Letter of Credit Issuer, at such times and in such
manner as the Letter of Credit Issuer may prescribe, an application in form and
substance satisfactory to the Letter of Credit Issuer and reasonably
satisfactory to each Agent for the issuance of the Letter of Credit and such
other documents as may be required pursuant to the terms thereof, and the form,
terms, and purpose of the proposed Letter of Credit shall be reasonably
satisfactory to each Agent and the Letter of Credit Issuer (provided that
in the event any term of such application or any other document is inconsistent
with the terms of this Agreement and the Letter of Credit Issuer is either the
same Person as an Agent or any Lender, then the terms of this Agreement shall
be controlling); and

 

(ii)                                  as of the date of
issuance, no order of any court, arbitrator, or Governmental Authority shall
purport by its terms to enjoin or restrain money center banks generally from
issuing letters of credit of the type and in the amount of the proposed Letter
of Credit, and no law, rule, or regulation applicable to money center banks
generally and no request or directive (whether or not having the force of
law) from any Governmental Authority with jurisdiction over money center
banks generally shall prohibit, or request that the Letter of Credit Issuer
refrain from, the issuance of letters of credit generally or the issuance of such
Letter of Credit.

 

48

 

(d)                                 Issuance of Letters
of Credit.

 

(i)                                     Request for
Issuance.  Any Borrower that wishes
to cause the issuance of a Letter of Credit shall notify each Agent and the
Letter of Credit Issuer of such request for issuance at least three Business
Days prior to the proposed issuance date. 
Such notice shall be irrevocable and must specify the original face
amount of the Letter of Credit requested, the Business Day of issuance of such
requested Letter of Credit, whether such Letter of Credit may be drawn in a
single or in partial draws, the Business Day on which the requested Letter of
Credit is to expire, the purpose for which such Letter of Credit is to be
issued, and the beneficiary of the requested Letter of Credit.  The applicable Borrower shall attach to such
notice the proposed form of the Letter of Credit.

 

(ii)                                  Responsibilities
of the Agents; Issuance.  As of the
Business Day immediately preceding the requested issuance date of the Letter of
Credit set forth in the notice from a Borrower pursuant to Section 2.3(d)(i),
the Agents shall determine (A) the amount of the Unused Letter of Credit
Subfacility and (B) the Unused Availability (based solely on the Borrowing
Base Certificate most recently delivered to the Agents).  If the face amount of the requested Letter of
Credit is not greater than the Unused Letter of Credit Subfacility (prior to
giving effect to issuance of such requested Letter of Credit) and the
amount of such requested Letter of Credit and all commissions, fees, and
charges due from the Borrower in connection with the opening thereof do not
exceed the Unused Availability (prior to giving effect to issuance of such
requested Letter of Credit and based solely on the Borrowing Base Certificate
most recently delivered to the Agents), the Agents shall cause the Letter of
Credit Issuer to issue the requested Letter of Credit on the requested issuance
date if the other conditions hereof and of the application for such requested Letter
of Credit are met.

 

(iii)                               Extensions and
Amendments.  The Agents shall not be
obligated to cause the Letter of Credit Issuer to extend, renew, or amend any
Letter of Credit issued pursuant hereto unless the requirements of this Section 2.4
are met as though a new Letter of Credit were being requested and issued.  With respect to any Letter of Credit that
contains any “evergreen” or automatic renewal provision, each Lender shall be
deemed to have consented to any such extension or renewal unless such Lender
shall have provided to each Agent written notice that such Lender declines to
consent to any such extension or renewal at least 30 days prior to the date on
which the Letter of Credit Issuer is entitled to decline to extend or renew
such Letter of Credit; provided that, notwithstanding the foregoing, if
all of the requirements of this Section 2.4 are met and no Default
or Event of Default exists, no Lender may decline to consent to any such
extension or renewal.

 

(e)                                  Payments Pursuant
to Letters of Credit.  The Borrowers
agree to reimburse the Letter of Credit Issuer immediately for any draw under
any Letter of Credit and to pay the Letter of Credit Issuer the amount of all
other charges and fees payable to the Letter of Credit Issuer under or in
connection with any Letter of Credit immediately when due, irrespective of any
claim, setoff, defense, or other right that any Borrower may have at 

 

49

 

any time against the Letter of Credit Issuer or any other Person.  Each drawing under any Letter of Credit shall
constitute a request by the Borrower for whose account such Letter of Credit
was issued for a Borrowing of a Base Rate Revolving Loan in the amount of such
drawing.  The Funding Date with respect
to such Borrowing shall be the date of such drawing.

 

(f)                                    Indemnification;
Exoneration; Power of Attorney.

 

(i)                                     Indemnification.  In addition to amounts payable as elsewhere
provided in this Section 2.4, each Borrower agrees to protect,
indemnify, pay, and save the Lenders, the Agents, and the Letter of Credit
Issuer harmless from and against any and all claims, demands, liabilities,
damages, losses, costs, charges, and expenses (including reasonable attorneys’
fees) that any Lender, either Agent, or the Letter of Credit Issuer may
incur or be subject to as a consequence, direct or indirect, of the issuance of
any Letter of Credit.  The foregoing
indemnity shall not apply to the Letter of Credit Issuer to the extent of any
wrongful honor or dishonor of a drawing against any Letter of Credit or to the
extent of any gross negligence or willful misconduct of the Letter of Credit
Issuer as determined in a final, nonappealable judgment by a court of competent
jurisdiction.  The Borrowers’ obligations
under this Section 2.4(f) shall survive payment of all other
Obligations.

 

(ii)                                  Assumption of Risk
by the Borrowers.  As among the
Borrowers, the Lenders, the Agents, and the Letter of Credit Issuer, the
Borrowers assume all risks of the acts and omissions of, or misuse of any of
the Letters of Credit by, the respective beneficiaries of such Letters of
Credit.  In furtherance and not in
limitation of the foregoing, the Lenders, the Agents, and the Letter of Credit
Issuer shall not be responsible for:  (A) the
form, validity, sufficiency, accuracy, genuineness, or legal effect of any
document submitted by any Person in connection with the application for and
issuance of and presentation of drafts with respect to any of the Letters of
Credit, even if it should prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent, or forged; (B) the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any Letter of Credit or the rights or benefits thereunder or
proceeds thereof, in whole or in part, that may prove to be invalid or
ineffective for any reason; (C) the failure of the beneficiary of any
Letter of Credit to comply duly with conditions required in order to draw upon
such Letter of Credit; (D) errors, omissions, interruptions, or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex, or
otherwise, whether or not they be in cipher; (E) errors in interpretation
of technical terms; (F) any loss or delay in the transmission or otherwise
of any document required in order to make a drawing under any Letter of Credit
or of the proceeds thereof; (G) the misapplication by the beneficiary of
any Letter of Credit of the proceeds of any drawing under such Letter of
Credit; (H) any consequences arising from causes beyond the control of any
of the Lenders, either of the Agents, or the Letter of Credit Issuer, including
any act or omission, whether rightful or wrongful, of any present or future de
jure or de  facto Governmental Authority; or (I) the Letter
of Credit Issuer’s honor of a 

 

50

 

draw for which the draw or any certificate fails to comply in any
respect with the terms of the Letter of Credit. 
None of the foregoing shall affect, impair, or prevent the vesting of
any rights or powers of either Agent, any Lender, or, subject to Section 2.4(f)(iv),
the Letter of Credit Issuer under this Section 2.4(f).

 

(iii)                               Exoneration.  Without limiting the foregoing, no action or
omission whatsoever by either Agent, any Lender, or the Letter of Credit Issuer
under or in connection with any of the Letters of Credit or any related matters
shall result in any liability of either Agent, any Lender, or the Letter of
Credit Issuer to any Borrower, or relieve any Borrower of any of its
obligations hereunder to any such Person.

 

(iv)                              Rights Against the
Letter of Credit Issuer.  Nothing
contained in this Section 2.4(f) is intended to limit any Borrower’s
rights, if any, with respect to the Letter of Credit Issuer that arise as a
result of the letter of credit application and related documents executed by
and between such Borrower and the Letter of Credit Issuer.

 

(v)                                 Account Party.  Each Borrower hereby authorizes and directs
the Letter of Credit Issuer to name any Borrower as the “Account Party” in any
Letter of Credit and to deliver to the Agents all instruments, documents, and
other writings and property received by the Letter of Credit Issuer pursuant to
each such Letter of Credit, and to accept and rely upon either Agent’s
instructions and agreements with respect to all matters arising in connection
with each such Letter of Credit or the application therefor.

 

(g)                                 Supporting Letter
of Credit; Cash Collateral.  If,
notwithstanding the provisions of Section 2.4(b) and Section 12.1,
any Letter of Credit is outstanding upon the termination of this Agreement,
then upon such termination the Borrowers shall deposit with the Collateral
Agent, for the benefit of the Agents, the Letter of Credit Issuer, and the
Lenders, with respect to each such Letter of Credit then outstanding, either (i) a
standby letter of credit (a “Supporting Letter of Credit”) in form and
substance satisfactory to each Agent, issued by an issuer satisfactory to the
Agents in their sole discretion in an amount equal to 105% of the maximum
undrawn amount of such Letter of Credit, plus any fees and expenses associated with such Letter of
Credit, under which Supporting Letter of Credit the Collateral Agent is
entitled to draw amounts necessary to reimburse the Agents, the Letter of
Credit Issuer, and the Lenders for payments to be made by either of the Agents,
the Letter of Credit Issuer, and any of the Lenders under such Letter of Credit
and any fees and expenses associated with such Letter of Credit or (ii) cash
(a “Supporting Cash Deposit”) in an amount equal to 105% of the maximum
undrawn amount of such Letter of Credit, plus any fees and expenses associated with such Letter of
Credit.  Such Supporting Letter of Credit
or Supporting Cash Deposit shall be held by the Collateral Agent, for the
benefit of the Agents, the Letter of Credit Issuer, and the Lenders, as
security for, and to provide for the payment of, the aggregate undrawn amount
of such Letters of Credit remaining outstanding and the fees and expenses
associated with such Letters of Credit.

 

51

 

Section 2.5                                      Bank
Products.  Any Obligated Party may
obtain Bank Products from BofA or Wachovia or any of BofA’s or Wachovia’s
Affiliates, or, subject to the definition of Bank Products, another Lender or
any of such Lender’s Affiliates, although no Obligated Party is required to do
so.  To the extent Bank Products are
provided by an Affiliate of BofA, Wachovia or another Lender, the Obligated
Parties agree to indemnify and hold the Agents and BofA, Wachovia or such other
Lender, as applicable, harmless from any and all costs and obligations now or
hereafter incurred by any of the Credit Providers which arise from any
indemnity given by BofA, Wachovia or such other Lender, as applicable, to its
Affiliates related to such Bank Products; provided, however,
nothing contained herein is intended to limit any Obligated Party’s rights,
with respect to BofA, Wachovia or such other Lender, as applicable, or its
Affiliates, if any, that arise as a result of the execution of documents by and
between such Obligated Party and BofA, Wachovia or such other Lender, as
applicable, or its Affiliates that relate to Bank Products.  The agreement contained in this Section 2.5
shall survive termination of this Agreement. 
Each Obligated Party acknowledges and agrees that the obtaining of Bank
Products from BofA, Wachovia , any other Lender or any of their respective
Affiliates (a) is in the sole and absolute discretion of BofA, Wachovia,
such other Lender or such Affiliate, and (b) is subject to all rules and
regulations of BofA, Wachovia, such other Lender or such Affiliate.

 

ARTICLE 3

 

INTEREST AND
FEES

 

Section 3.1                                      Interest.

 

(a)                                  Interest Rates.  All outstanding Obligations shall bear interest
on the unpaid principal amount thereof (including, to the extent permitted by
law, on accrued interest thereon not paid when due) from the date made or
incurred until paid in full in cash at a rate determined by reference to the
Base Rate or the LIBOR Rate, as applicable, plus the Applicable Margin as set forth below, but not to
exceed the Maximum Rate.  If at any time
Loans are outstanding with respect to which a Borrower has not delivered to the
Administrative Agent a notice specifying the basis for determining the interest
rate applicable thereto in accordance herewith, such Loans shall be Base Rate
Revolving Loans and bear interest at a rate determined by reference to the Base
Rate until notice to the contrary has been given to the Administrative Agent in
accordance with this Agreement and such notice has become effective.  Except as otherwise provided herein, the
outstanding Obligations shall bear interest as follows:

 

(i)                                     for all Base Rate
Revolving Loans and other Obligations (other than LIBOR Rate Revolving Loans)
at a fluctuating per annum rate equal to the lesser of (A) the Base Rate, plus the Applicable Margin or (B) the
Maximum Rate; and

 

(ii)                                  for all LIBOR Rate
Revolving Loans at a per annum rate equal to the lesser of (A) the LIBOR
Rate, plus the Applicable
Margin or (B) the Maximum Rate.

 

52

 

Each change in the Base Rate shall be reflected in the interest rate
described in clause (i) preceding as of the effective date of such
change.  Subject to Section 3.3,
all interest charges on the Obligations shall be computed on the basis of a
year of 360 days and actual days elapsed (which results in more interest being
paid than if computed on the basis of a 365 day year).

 

(b)                                 Interest Payments.  The Borrowers shall pay to the Administrative
Agent, for the benefit of the Lenders, accrued interest in arrears on each
Interest Payment Date, as applicable.

 

(c)                                  Default Rate.  During the existence of any Default or Event
of Default if either of the Agents or the Majority Lenders in their discretion
so elect, the Obligations shall, subject to Section 3.3, bear
interest at a rate per annum equal to the lesser of (i) the Default Rate
applicable thereto or (ii) the Maximum Rate.

 

(d)                                 Interest Periods.  After giving effect to any Borrowing of any
LIBOR Rate Revolving Loan, there may not be more than ten (10) different
Interest Periods in effect hereunder.

 

Section 3.2                                      Continuation
and Conversion Elections.

 

(a)                                  A Borrower may upon
irrevocable written notice to the Administrative Agent in accordance with Section 3.2(b):

 

(i)                                     provided that
Borrowing of LIBOR Rate Revolving Loans is permitted pursuant to Section 2.2,
elect, as of any Business Day, in the case of Base Rate Revolving Loans to
convert any such Base Rate Revolving Loans (or any part thereof in an amount
not less than One Million Dollars ($1,000,000), or that is in an integral
multiple of One Million Dollars ($1,000,000) in excess thereof) into
LIBOR Rate Revolving Loans;

 

(ii)                                  provided that
Borrowing of LIBOR Rate Revolving Loans is permitted pursuant to Section 2.2,
elect, as of the last day of the applicable Interest Period, to continue any
LIBOR Rate Revolving Loans having Interest Periods expiring on such day (or any
part thereof) in an amount not less than One Million Dollars ($1,000,000),
or that is in an integral multiple of One Million Dollars ($1,000,000) in
excess thereof as LIBOR Rate Revolving Loans; or

 

(iii)                               elect, as of any
Business Day subject to Section 5.4, in the case of LIBOR Rate
Revolving Loans to convert any such LIBOR Rate Revolving Loans (or any part
thereof not being continued pursuant to clause (ii) preceding) into
Base Rate Revolving Loans;

 

provided
that if at any time the aggregate amount of LIBOR Rate Revolving Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than One Million Dollars ($1,000,000), such LIBOR Rate
Revolving Loans shall automatically convert into Base Rate Revolving Loans; provided,
further, that if the notice shall fail to specify the duration of the
Interest Period of any LIBOR 

 

53

 

Rate Revolving
Loan to result from any such continuation or conversion, such Interest Period
shall be one month in duration.

 

(b)                                 For any continuation
or conversion pursuant to clause (a) preceding, the Borrowers shall
deliver a notice of continuation/conversion in the form of Exhibit E
or such other form as may be acceptable to the Agents, in their sole discretion
(any such notice being referred to herein as a “Notice of Continuation/
Conversion”) to the Administrative Agent not later than 1:00 p.m. (New
York time) at least three Business Days in advance of the
Continuation/Conversion Date specifying:

 

(i)                                     the proposed
Continuation/Conversion Date;

 

(ii)                                  the aggregate amount
of such Loans to be continued or converted and, if continuing LIBOR Rate
Revolving Loans, the specific Loans (or portions thereof) to be continued or
converted;

 

(iii)                               the type of Loans
resulting from the proposed continuation or conversion; and

 

(iv)                              the duration of any
requested Interest Period, provided, however, the Borrowers may
not select an Interest Period that ends after the Stated Termination Date.

 

(c)                                  If upon the
expiration of any Interest Period applicable to LIBOR Rate Revolving Loans, the
Borrowers have failed to timely select a new Interest Period to be applicable
to such LIBOR Rate Revolving Loans, the Borrowers shall be deemed to have
elected to convert such LIBOR Rate Revolving Loans into Base Rate Revolving
Loans effective as of the expiration date of such Interest Period.

 

(d)                                 On or before the deadline set forth in clause (b)
preceding, in lieu of delivering a Notice of Continuation/Conversion, the
Borrowers may give the Administrative Agent telephonic notice of any request for a continuation or conversion.  The Administrative Agent shall be entitled to rely on such telephonic
notice in continuing or converting such Loans, regardless of whether any
written confirmation is received.

 

(e)                                  The Administrative
Agent will promptly notify each Lender of its receipt of a Notice of
Continuation/Conversion.  All
continuations and conversions shall be made ratably according to the respective
outstanding principal amounts of the Loans held by each Lender with respect to
which such notice was given.

 

(f)                                    After giving effect
to any continuation or conversion of any LIBOR Rate Revolving Loan, there may
not be more than ten (10) different Interest Periods in effect hereunder.

 

(g)                                 At the election of
either of the Agents or the Majority Lenders, the Borrowers shall have no right
to convert any Base Rate Revolving Loans into LIBOR Rate Revolving Loans or to
continue any LIBOR Rate Revolving Loans as LIBOR Rate Revolving Loans during
the existence of any Default or Event of Default.

 

54

 

Section 3.3                                      Maximum
Interest Rate.  In no event shall any
Interest Rate provided for in this Agreement exceed the Maximum Rate.  If any Interest Rate, absent the limitation
set forth in this Section 3.3, would otherwise exceed the Maximum
Rate, then such Interest Rate shall be the Maximum Rate, and, if in the future,
such Interest Rate would otherwise be less than the Maximum Rate, then such
Interest Rate shall remain at the Maximum Rate until such time as the amount of
interest paid hereunder equals the amount of interest which would have been
paid if the Interest Rate had not been limited to the Maximum Rate.  In the event that, upon payment in full of
the Obligations, the total amount of interest paid or accrued under the terms
of this Agreement is less than the total amount of interest which would, but
for this Section 3.3, have been charged, paid, or accrued if the
Interest Rate otherwise set forth in this Agreement had at all times been in
effect, then the Borrowers shall, to the extent permitted by applicable law,
pay the Administrative Agent, for the account of the Lenders, an amount equal
to the excess of (a) the lesser of (i) the amount of interest which
would have been charged, paid, or accrued if the Maximum Rate had, at all
times, been in effect or (ii) the amount of interest which would have been
charged, paid, or accrued had the Interest Rate otherwise set forth in this
Agreement, at all times, been in effect over (b) the amount of interest
actually charged, paid, or accrued under this Agreement.  If a court of competent jurisdiction
determines that either Agent and/or any Lender has charged, received, or
demanded interest and other charges hereunder in excess of the Maximum Rate,
such excess shall be deemed charged, received, or demanded on account of, and
shall automatically be applied to reduce, the Obligations other than interest,
in the inverse order of maturity, and if there are no Obligations outstanding,
the applicable Agent and/or such Lender shall refund to the Borrowers (as
applicable) such excess.

 

Section 3.4                                      Unused
Line Fee.  Subject to Section 3.3,
until the Revolving Loans have been paid in full and this Agreement and the
Commitments are terminated, the Borrowers agree to pay to the Administrative
Agent, for the account of the Lenders in accordance with their respective Pro
Rata Shares, on the first day of each calendar month and on the Termination
Date, an unused line fee (the “Unused Line Fee”) computed at a rate
per annum equal to 0.25%, multiplied by the amount by which (A) the
average daily Maximum Revolver Amount exceeded (B) the sum of the average
daily outstanding amount of the Revolving Loans other than Non-Ratable Loans and the average daily undrawn amount
of all outstanding Letters of Credit during the immediately preceding calendar
month or shorter period if calculated for the first calendar month following
the Closing Date or on the Termination Date. 
Subject to Section 3.3, the Unused Line Fee shall be computed
on the basis of a 360 day year for the actual number of days elapsed.  For purposes of calculating the Unused Line
Fee pursuant to this Section 3.4, any payment received by the
Administrative Agent (if received prior to 12:00 noon (New York time)) shall be
deemed to be credited to the Borrowers’ Loan Account on the Business Day such
payment is received by the Administrative Agent.

 

Section 3.5                                      Letter
of Credit Fees and Expenses.

 

(a)                                  Subject to Section 3.3,
the Borrowers agree to pay to the Administrative Agent for the account of the
Lenders in accordance with their respective Pro Rata Shares a fee (the “Letter
of Credit Fee”) equal to the Letter of Credit Fee Percentage, multiplied
by the average undrawn amount of each Letter of Credit issued and outstanding
hereunder.  The Letter of Credit Fee
shall be (i) computed on the basis of a 360 day year for the actual number
of days elapsed and (ii) payable monthly in arrears on the first day 

 

55

 

of each month following any month in which a Letter of Credit was
issued and/or in which a Letter of Credit remained outstanding and on the
Termination Date.

 

(b)                                 Subject to Section 3.3,
the Borrowers agree to pay to the Letter of Credit Issuer, for its sole benefit,
(i) all out-of-pocket costs, fees, and expenses incurred by the Letter of
Credit Issuer in connection with the application for, processing, issuance,
renewal, extension, or amendment of any Letter of Credit and (ii) a “fronting
fee” in an amount equal to 0.125%
of the face amount of such Letter of Credit on the date of issuance, renewal,
or extension of each Letter of Credit.

 

Section 3.6                                      Other Fees.  Subject to Section 3.3, the
Borrowers agree to pay the Agents when due all other fees and expenses as set
forth in the Fee Letters.

 

Section 3.7                                      Incremental
Commitments.  The Borrowers may agree
to pay to any Incremental Lender such up-front fees, and amounts as
contemplated by the last paragraph of Section 2.1, as are specified
in the Incremental Commitment Agreement pursuant to which such Incremental
Commitment has been provided, with such amounts to be payable at the times set
forth in such Incremental Commitment Agreement. 
It is understood that the interest and regularly accruing fees with
respect to the extensions of credit provided pursuant to any Incremental
Commitment, as well as the regularly accruing fees with respect to any
Commitment provided pursuant to any Incremental Commitment Agreements, shall be
as provided in this Agreement.

 

ARTICLE 4

 

PRINCIPAL
PAYMENTS AND PREPAYMENTS

 

Section 4.1                                      Repayment.

 

(a)                                  Revolving Loans.  The Borrowers shall repay the outstanding
principal balance of the Revolving Loans, together with all other
non-contingent Obligations, including all accrued and unpaid interest thereon,
on the Termination Date (or with
respect to any Bank Products, any applicable earlier date).  The Borrowers may prepay the Revolving Loans,
in whole or in part, at any time and from time to time and, subject to the
terms of this Agreement, reborrow prior to the Termination Date.  In addition, and without limiting the
generality of the foregoing, the Borrowers shall immediately pay to the
Administrative Agent, for the account of the Lenders, the amount, if any and
without duplication, by which the Aggregate Revolver Outstandings exceed the
Borrowing Base.

 

(b)                                 [Intentionally
Omitted.]

 

(c)                                  Payments. All
payments to be made by the Borrowers with respect to the Loans shall be made
without setoff, recoupment, or counterclaim. 
Unless otherwise expressly provided herein, all payments by the
Borrowers shall be made to the Administrative Agent, for the account of the
Lenders, to the account designated by the Administrative Agent and shall be
made in Dollars and in immediately available funds, no later than 12:00 noon
(New York time) on the date specified herein.  Any payment received by the Administrative
Agent after such time shall be deemed to have been 

 

56

 

received on the following Business Day and any applicable interest or
fee shall continue to accrue.

 

(d)                                 LIBOR Rate
Revolving Loan Payment Dates. 
Subject to the provisions set forth in the definition of Interest
Period, whenever any payment is due on a day other than a Business Day, such
payment shall be due on the following Business Day, and such extension of time
shall in such case be included in the computation of interest or fees, as the
case may be.

 

Section 4.2                                      Termination
of Credit Facility.  The Borrowers may terminate this Agreement
upon at least ten Business Days prior written notice thereof to the Agents,
upon (a) the payment in full of all outstanding Revolving Loans, together
with accrued and unpaid interest thereon, and the cancellation and return of
all outstanding Letters of Credit (or alternatively with respect to each such
Letter of Credit, the furnishing to the Collateral Agent of either a Supporting
Cash Deposit or a Supporting Letter of Credit as required by Section 2.4(g)),
(b) the payment of the Early Termination Fee defined in the following
sentence (if applicable), and (c) the
payment in full of all reimbursable expenses and other Obligations (including
any amount due under Section 5.4) together with accrued and unpaid
interest thereon.  Subject to Section 3.3,
if this Agreement is terminated at any time prior to the second Anniversary Date, whether pursuant to
this Section or pursuant to Section 11.2, the Borrowers shall
pay to the Administrative Agent, for the account of the Lenders, an early
termination fee (the “Early Termination Fee”) determined in accordance
with the following table:  

 

	
  Period
  during which early termination

  occurs

  	
   

  	
  Early Termination Fee

  
	
  On or prior to the first Anniversary Date

  	
   

  	
  1.00% of the Maximum Revolver Amount

  
	
  After the
  first Anniversary Date, but prior to the second Anniversary Date

  	
   

  	
  0.50% of the Maximum Revolver Amount

  

 

Notwithstanding
the foregoing, no such Early Termination Fee shall be payable in the event this
Agreement is terminated in connection with refinancing of the Obligations in a
transaction in which (i) BofA or any of its Affiliates and (ii) Wachovia
or any of its Affiliates jointly arrange replacement financing; provided
that each Lender (other than BofA and Wachovia) shall continue to be entitled
to its Pro Rata Share of such Early Termination Fee unless such Lender shall
have been given the opportunity to participate in such replacement financing
and such replacement financing shall be on market terms or terms materially the
same as the terms of this credit facility. 
The Maximum Revolver Amount shall not be reduced except in connection
with termination of the Commitments and payment in full of all Obligations as
provided by this Section 4.2 or as otherwise provided in Section 4.3(f)
or Section 11.2.

 

Section 4.3                                      Mandatory
Prepayment of the Loans.  Without
limiting Section 4.1, each of the Borrowers agrees to make a
prepayment with respect to the outstanding Loans and other Obligations as
follows:

 

57

 

(a)                                  On any Business Day,
if the Aggregate Revolver Outstandings exceed the Borrowing Base, the Borrowers
shall immediately pay to the Administrative Agent, for the account of the
Lenders, the amount (if any) of such excess for application to the principal
amount of the Revolving Loans and, if after such application there remains any
portion of such excess, such remaining unapplied amount shall be delivered to
and held by the Collateral Agent as cash collateral for the Obligations
(contingent or otherwise) with respect to outstanding Letters of Credit.

 

(b)                                 All cash proceeds received by any
Borrower from the Disposition or sale of Inventory or collection of Accounts in
the ordinary course of business shall be applied to repayment of the
Obligations promptly (and in any event within one Business Day of receipt) as
specified in Section 4.6(c).

 

(c)                                  The Borrowers shall
pay to the Administrative Agent, for the account of the Lenders, promptly (and
in any event within one Business Day of receipt) all net cash proceeds received
by an Obligated Party in connection with any Disposition, excluding proceeds
received pursuant to clause (b) preceding, for application to the
Obligations as provided in Section 4.6(c).  As used in this Section 4.3(c), “net
cash proceeds” means the proceeds of any applicable Disposition, minus (i) commissions and
other reasonable and customary transaction costs, fees, and expenses properly
attributable to such transaction and payable by such Obligated Party in
connection therewith (in each case, paid to non-Affiliates), (ii) transfer
taxes and (iii) amounts payable to holders of Liens (to the extent such
Liens constitute Permitted Liens hereunder and such Liens are senior to the
Agent’s Liens), if any, on the property subject to such Disposition to the
extent the documentation governing such senior Liens required such payment to
such holders upon such Disposition.

 

(d)                                 All cash payments or other cash
proceeds received by any Obligated Party constituting proceeds of a
Distribution, loan, or other advance (other than a Distribution, loan or
advance by an Obligated Party to an Obligated Party) to such Obligated Party,
excluding proceeds of Revolving Loans, the Second Lien Debt or the Refinancing
Second Lien Debt, such proceeds which are proceeds of a loan or advance from
one Borrower to another Obligated Party, and other than such proceeds which are
proceeds of a loan or advance permitted under clause (c) through clause (j)
of Section 8.12, shall be paid to the Administrative Agent promptly
upon such receipt, for application to the Obligations as specified in Section 4.6(c).

 

(e)                                  Upon any issuance of any Capital Stock of any
Obligated Party, no later than two Business Days after such issuance, the
Borrowers shall make a prepayment in an amount equal to the proceeds of such
issuance, net of underwriting discounts, commissions, and other reasonable and
customary transaction costs, fees, and expenses properly attributable to such
transaction and payable by such Obligated Party in connection therewith (in
each case paid to Persons who are not Affiliates of any Obligated Party) for
application to the Obligations in accordance with Section 4.6(c).

 

(f)                                    In any event, if any Obligated Party receives
(i) net cash proceeds in connection with any Disposition, (ii) cash
payments or other cash proceeds of a 

 

58

 

Distribution, loan, or other advance to such
Obligated Party or (iii) proceeds of any issuance of Capital Stock, on or
after the Closing Date, any such proceeds or payments shall be applied to the
payment of the Revolving Loans to the extent necessary to avoid any requirement
under any Second Lien Debt
Documents or Refinancing Second Lien Debt Documents to prepay or redeem (or to make any offer to prepay or redeem)
any portion of the Second Lien Debt or Refinancing Second Lien Debt, together with a permanent
reduction of the Commitments and the Maximum Revolver Amount in the amount of
any such application to the Revolving Loans (such reduction to result in each
Lender’s Commitment being permanently reduced by its Pro Rata Share of such
reduction).

 

No provision
contained in this Section 4.3 shall constitute a consent to an
asset disposition, Distribution, loan, advance or equity issuance that is
otherwise not permitted by the terms of this Agreement.

 

Section 4.4                                      LIBOR
Rate Revolving Loan Prepayments.  In
connection with any prepayment, if any LIBOR Rate Revolving Loans are prepaid
prior to the expiration date of the Interest Period applicable thereto, the
Borrowers shall pay to the Administrative Agent, for the benefit of the
Lenders, the amounts described in Section 5.4, provided that
the Borrowers shall not be required to pay the amounts described in Section 5.4
in connection with any Lender’s entering into an Assignment and Acceptance.

 

Section 4.5                                      Payments
as Revolving Loans.  At the election
of the Administrative Agent, all payments of principal, interest, reimbursement
obligations in connection with Letters of Credit, fees, premiums, reimbursable
expenses (including all reimbursement for expenses pursuant to Section 15.7),
other sums payable under the Loan Documents, and any and all amounts equal to
the excess of checks and other items presented to BofA for payment against the
Funding Account or any other Deposit Account maintained by a Borrower with BofA
in an amount greater than the then available balance in such Deposit Account
may be paid with the proceeds of Revolving Loans made hereunder whether made
following a request for such purpose by the Borrowers pursuant to Section 2.2
or pursuant to a deemed request as provided in this Section 4.5.  The Borrowers hereby irrevocably authorize
the Administrative Agent to charge the Loan Account for the purpose of paying
all amounts from time to time due under the Loan Documents (including as
described in this Section 4.5) and agree that all such amounts
charged shall constitute Revolving Loans (including Non-Ratable Loans and Agent
Advances) and that all such Revolving Loans shall be deemed to have been
requested pursuant to Section 2.2; provided that, except as
set forth in the succeeding sentence, so long as no Event of Default exists,
the Administrative Agent shall not charge the Loan Account for expenses until
10 days have elapsed since the Administrative Agent has sent an invoice
therefor to Ahern.  In the event the
Collateral Agent is required to make any payment to Wells Fargo Bank, N.A. (“WFB”)
pursuant to the payoff letter delivered by WFB to Ahern and the Collateral
Agent on the Original Closing Date with respect to that certain Credit and
Security Agreement, dated as of July 25, 2003, the Administrative Agent
shall immediately charge the Loan Account for the purpose of reimbursing the
Collateral Agent for all such payments and all such amounts charged shall
constitute Revolving Loans.

 

59

 

Section 4.6                                      Apportionment,
Application, and Reversal of Payments.

 

(a)                                  Principal and
interest payments shall be apportioned ratably among the Lenders (according to
the unpaid principal balance of the Loans to which such payments relate held by
each Lender) and payments of the fees shall, as applicable, be apportioned
ratably among the Lenders, except for fees payable solely to BofA, Wachovia,
the Agents or either of them and the Letter of Credit Issuer and except as
provided in Section 13.1(c).

 

(b)                                 Except as provided
otherwise in this Agreement, all payments shall be remitted to the
Administrative Agent or, if applicable, to the Collateral 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 any Obligated Party’s
Accounts or any other Collateral received by the Administrative Agent or the
Collateral Agent, shall be applied, ratably, subject to the other provisions of
this Agreement, FIRST, to
pay any fees, indemnities, or expense reimbursements then due to either of the
Agents from any Obligated Party, SECOND, to
pay any fees, indemnities, or expense reimbursements then due to any of the
Credit Providers other than the Agents from any Obligated Party, THIRD, to pay interest then due in
respect of the Loans, including Non-Ratable Loans and Agent Advances, FOURTH, to pay or prepay principal
of the Non-Ratable Loans and the Agent Advances, FIFTH,
to pay or prepay principal of the Revolving Loans (other than the Non-Ratable
Loans and the Agent Advances) and unpaid reimbursement obligations in
respect of Letters of Credit, SIXTH,
during the existence of a Default or an Event of Default, to pay an amount to
the Collateral Agent equal to 105% of the aggregate undrawn amount of all
outstanding Letters of Credit and the aggregate amount of any unpaid
reimbursement obligations in respect of Letters of Credit, to be held as cash
collateral for such Obligations, and SEVENTH, to
the payment of any other Obligation including any amounts relating to Bank
Products due to BofA, Wachovia, any other Lender or any of their respective
Affiliates by any of the Obligated Parties. Subject to
items “first” through “seventh” preceding, the Administrative Agent
and the Lenders shall have the continuing and exclusive right to apply and
reverse and reapply any and all such proceeds and payments to any portion of
the Obligations.

 

(c)                                  Payments received
pursuant to Section 4.3(b), Section 4.3(c), Section 4.3(d) and
Section 4.3(e) shall be applied, ratably, subject to the other
provisions of this Agreement, in the order of priority set forth for items “first”
through “fifth” of clause (b) preceding at any time
other than during the existence of a Default or an Event of Default, and during
the existence of any Default or Event of Default, as specified in clause (b) preceding.

 

(d)                                 Notwithstanding
anything to the contrary contained in this Agreement, unless so directed by a
Borrower, or unless an Event of Default is in existence, neither the
Administrative Agent nor any Lender shall apply any payment which it receives
to any LIBOR Rate Revolving Loan, except (i) on the expiration date of the
Interest Period applicable to any such LIBOR Rate Revolving Loan or (ii) in
the event, and only to the extent, that there are no outstanding Base Rate
Revolving Loans and, in any such event, the Borrowers shall pay the LIBOR
breakage losses in accordance with Section 5.4.

 

60

 

Section 4.7                                      Indemnity
for Returned Payments.  If after
receipt of any payment or of any proceeds of Collateral that is applied to the
payment of all or any part of the Obligations, any Credit Provider is for any
reason compelled to surrender such payment or proceeds to any Person because
such payment or application of proceeds is invalidated, declared fraudulent,
set aside, determined to be void or voidable as a preference, impermissible
setoff, or a diversion of trust funds, or for any other reason, then the Obligations
or part thereof intended to be satisfied shall be revived and continued and
this Agreement shall continue in full force as if such payment or proceeds had
not been received by such Credit Provider and the Borrowers shall be liable to
pay to the Administrative Agent, for the benefit of the Credit Providers, and
each Borrower hereby indemnifies the Credit Providers and holds the Credit
Providers harmless for the amount of such payment or proceeds surrendered.  The provisions of this Section 4.7
shall be and remain effective notwithstanding any release of Collateral or
guarantors, cancellation or return of Loan Documents, or other contrary action
that may have been taken by any Credit Provider in reliance upon such payment
or application of proceeds, and any such contrary action so taken shall be
without prejudice to the Credit Providers’ rights under this Agreement and the
other Loan Documents and shall be deemed to have been conditioned upon such
payment or application of proceeds having become final and irrevocable.  The provisions of this Section 4.7
shall survive the termination of this Agreement.

 

Section 4.8                                      Administrative
Agent’s and the Lenders’ Books and Records; Monthly Statements.  The Administrative Agent shall record the
principal amount of the Loans, the undrawn amount of all outstanding Letters of
Credit, and the aggregate amount of unpaid reimbursement obligations
outstanding with respect to the Letters of Credit from time to time on its
books.  In addition, each Lender may note
the date and amount of each payment or prepayment of principal of such Lender’s
Loans in its books and records.  Failure
by the Administrative Agent or any Lender to make any such notation shall not
affect the obligations of the Borrowers with respect to the Loans or the
Letters of Credit.  The Borrowers agree
that the Administrative Agent’s and each Lender’s books and records
showing the Obligations and the transactions pursuant to this Agreement and the
other Loan Documents shall be admissible in any action or proceeding arising
therefrom, and shall constitute presumptive proof thereof, irrespective of
whether any Obligation is also evidenced by a promissory note or other
instrument.  The Administrative Agent
will provide to the Borrowers and the Lenders a monthly statement of Loans,
payments, and other transactions pursuant to this Agreement.  Such statement shall be deemed correct,
accurate, and binding on the Borrowers and an account stated (except for
reversals and reapplications of payments made as provided in Section 4.6
and corrections of errors discovered by either of the Agents), unless a
Borrower notifies the Administrative Agent in writing to the contrary within 30
days after such statement is rendered. 
In the event a timely written notice of objections is given by a
Borrower, only the items to which exception is expressly made will be
considered to be disputed by the Borrowers.

 

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ARTICLE 5

 

TAXES, YIELD
PROTECTION AND ILLEGALITY

 

Section 5.1                                      Taxes.

 

(a)                                  Any and all payments
by the Obligated Parties, or any of them, to either Agent or any Lender under
this Agreement or any other Loan Document shall be made free and clear of, and
without deduction or withholding for, any Taxes.  In addition, subject to Section 14.10(c),
the Obligated Parties shall pay all Other Taxes.

 

(b)                                 The Obligated Parties
agree to indemnify and hold harmless the Administrative Agent, the Collateral
Agent and each Lender for the full amount of Taxes or Other Taxes (including
any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
this Section 5.1) paid by the Administrative Agent, the Collateral
Agent or any Lender and any liability (including penalties, interest, additions
to tax, and expenses) arising therefrom or with respect thereto, whether
or not such Taxes or Other Taxes were correctly or legally asserted.  Payment under this indemnification shall be
made within 30 days after the date the Administrative Agent, the Collateral
Agent or any Lender makes written demand therefor.

 

(c)                                  If an Obligated Party
shall be required by law to deduct or withhold any Taxes or Other Taxes from or
in respect of any sum payable hereunder to the Administrative Agent, the
Collateral Agent or any Lender, then:

 

(i)                                     the sum payable
shall be increased as necessary so that after making all required deductions
and withholdings (including, without limitation, deductions and withholdings
applicable to additional sums payable under this Section 5.1) the
Administrative Agent, the Collateral Agent or such Lender, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made;

 

(ii)                                  such Obligated Party
shall make such deductions and withholdings;

 

(iii)                               such Obligated Party
shall pay the full amount deducted or withheld to the relevant taxing authority
or other authority in accordance with any applicable Requirement of Law; and

 

(iv)                              such Obligated Party
shall also pay to the Administrative Agent, for the account of each Lender, or
each Lender at the time interest is paid, all additional amounts that the
respective Lender specifies as necessary to preserve the after-tax yield such
Lender would have received if such Taxes or Other Taxes had not been imposed.

 

(d)                                 Within 30 days after the
date of any payment by any Obligated Party of Taxes or Other Taxes, such
Obligated Party shall furnish to the Administrative Agent the 

 

62

 

original or a certified copy of a receipt evidencing payment thereof or
other evidence of payment satisfactory to the Administrative Agent.

 

(e)                                  If the Obligated
Parties are required to pay additional amounts to any Lender pursuant to Section 5.1(c),
then such Lender shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its lending office
so as to eliminate any such additional payment by the Obligated Parties that
may thereafter accrue, if such change in the judgment of such Lender is not
otherwise disadvantageous to such Lender.

 

Section 5.2                                      Illegality.

 

(a)                                  If any Lender
determines that, after the date of this Agreement, the introduction of any
Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for such Lender or its applicable lending office to make
LIBOR Rate Revolving Loans, then, on notice thereof by such Lender to the Borrowers
through the Administrative Agent, any obligation of such Lender to make LIBOR
Rate Revolving Loans shall be suspended until such Lender notifies the
Administrative Agent and the Borrowers that the circumstances giving rise to
such determination no longer exist.

 

(b)                                 If a Lender determines
that it is unlawful to maintain any LIBOR Rate Revolving Loan, the Borrowers
shall, upon receipt of notice of such fact and demand from such Lender (with a
copy to the Administrative Agent), prepay in full such LIBOR Rate Revolving
Loans of such Lender then outstanding, together with accrued and unpaid
interest thereon and amounts required under Section 5.4, either on
the last day of the Interest Period thereof, if such Lender may lawfully
continue to maintain such LIBOR Rate Revolving Loans to such day, or
immediately, if such Lender may not lawfully continue to maintain such LIBOR
Rate Revolving Loans.  If the Borrowers
are required to so prepay any LIBOR Rate Revolving Loans, then concurrently
with such prepayment, the Borrowers shall borrow from the affected Lender, in
the amount of such repayment, a Base Rate Revolving Loan.  Each Lender agrees to designate a different
lending office if such designation will avoid the need for such notice and will
not, in the judgment of such Lender, otherwise be disadvantageous to such
Lender.

 

Section 5.3                                      Increased
Costs and Reduction of Return.

 

(a)                                  If any Lender
determines that due to either (i) the introduction of or any change in the
interpretation of any law or regulation after the date of this Agreement or (ii) the
compliance by such Lender with any guideline or request from any central bank
or other Governmental Authority (whether or not having the force of law) made
after the date of this Agreement, there shall be any increase in the cost to
such Lender of agreeing to make or making, funding, or maintaining any LIBOR
Rate Revolving Loans, then the Borrowers shall be liable for, and shall from
time to time, within three Business Days of demand by such Lender (with a copy
of such demand to be sent to the Administrative 

 

63

 

Agent), pay to the Administrative Agent, for the account of such
Lender, additional amounts as are sufficient to compensate such Lender for such
increased costs.

 

(b)                                 If any Lender shall
have determined that (to the extent it occurs after the date of this Agreement)
(i) the introduction of any Capital Adequacy Regulation, (ii) any
change in any Capital Adequacy Regulation, (iii) any change in the
interpretation or administration of any Capital Adequacy Regulation by any
central bank or other Governmental Authority charged with the interpretation or
administration thereof, or (iv) compliance by such Lender or any
corporation or other entity controlling such Lender with any Capital Adequacy
Regulation, affects or would affect the amount of capital required or expected
to be maintained by such Lender or any corporation or other entity controlling
such Lender and (taking into consideration such Lender’s or such corporation’s
or other entity’s policies with respect to capital adequacy and such Lender’s
desired return on capital) determines that the amount of such capital is
increased as a consequence of its Commitment, loans, credits, or obligations
under this Agreement, then, within three Business Days of demand by such Lender
(with a copy of such demand to be sent to the Administrative Agent), the
Borrowers shall pay to the Administrative Agent, for the account of such
Lender, from time to time as specified by such Lender, additional amounts
sufficient to compensate such Lender for such increase.

 

Section 5.4                                      Funding
Losses.  The Borrowers shall
reimburse each Lender and hold each Lender harmless from any loss or expense
that such Lender may sustain or incur as a consequence of:

 

(a)                                  the failure of the
Borrowers to make on a timely basis any payment of principal of any LIBOR Rate
Revolving Loan;

 

(b)                                 except as permitted by
Section 5.5, the failure of the Borrowers to (i) borrow any
requested LIBOR Rate Revolving Loan, (ii) continue any LIBOR Rate
Revolving Loan, or (iii) convert a Base Rate Revolving Loan to a LIBOR
Rate Revolving Loan, in each case, after any Borrower has given (or is deemed
to have given) a Notice of Borrowing, a Notice of Continuation/Conversion,
or any telephonic notice in lieu thereof with respect thereto; or

 

(c)                                  the prepayment or
other payment (including after acceleration thereof) of any LIBOR Rate
Revolving Loans on a day that is not the last day of the relevant Interest
Period;

 

including any
such loss of anticipated profit and any loss or expense arising from the
liquidation or reemployment of funds obtained by such Lender (but excluding
loss of the Applicable Margin) to maintain its LIBOR Rate Revolving Loans or
from fees payable to terminate the deposits from which such funds were
obtained.  The Borrowers shall also pay
any customary administrative fees, including a processing fee (the processing
fee is currently Three Hundred Fifty Dollars ($350) but is subject to change
from time to time by the Administrative Agent without notice), charged by the
Administrative Agent or any Lender in connection with the foregoing.

 

64

 

Section 5.5                                      Inability
to Determine Rates.  If the
Administrative Agent determines that for any reason adequate and reasonable
means do not exist for determining the LIBOR Rate for any requested Interest
Period with respect to a proposed LIBOR Rate Revolving Loan or that the LIBOR
Rate for any requested Interest Period with respect to a proposed LIBOR Rate
Revolving Loan does not adequately and fairly reflect the cost to the Lenders
of funding such Loan, the Administrative Agent will promptly so notify the Borrowers
and each Lender.  Thereafter, the
obligation of the Lenders to make or maintain LIBOR Rate Revolving Loans
hereunder shall be suspended until the Administrative Agent revokes such notice
in writing.  Upon receipt of a notice
pursuant to the first sentence of this Section 5.5, the Borrowers
may revoke any Notice of Borrowing or Notice of Continuation/Conversion then
submitted by any of them.  If the
Borrowers do not revoke any such Notice of Borrowing or Notice of
Continuation/Conversion, the Lenders shall make, convert, or continue the
Loans, as proposed by the Borrowers, in the amount specified in the applicable
notice submitted by a Borrower, but such Loans shall be made, converted, or
continued as Base Rate Revolving Loans instead of LIBOR Rate Revolving Loans.

 

Section 5.6                                      Certificate
of the Affected Lender.  If any
Lender claims reimbursement or compensation under this Article 5,
the affected Lender shall determine the amount thereof and shall deliver to the
Borrowers (with a copy to the Administrative Agent) a certificate setting
forth in reasonable detail the amount payable to the affected Lender, and such
certificate shall be conclusive and binding on the Borrowers in the absence of
manifest error.

 

Section 5.7                                      Survival.  The agreements and obligations of the
Borrowers in this Article 5 shall survive the payment of all other
Obligations.

 

ARTICLE 6

 

BOOKS AND
RECORDS; FINANCIAL INFORMATION; NOTICES

 

Section 6.1                                      Books
and Records.  The Obligated Parties
shall maintain, and shall cause each of their Subsidiaries to maintain, at all
times, correct and complete books, records, and accounts in which full, true,
complete, correct, and timely entries are made of such Person’s transactions in
accordance with GAAP consistently applied. 
The Obligated Parties shall reflect, and shall cause each of their
Subsidiaries to reflect, by means of appropriate entries, in such accounts and
in all Financial Statements proper liabilities and reserves for all taxes and
proper provision for depreciation and amortization of property and bad debts,
all in accordance with GAAP.  The
Obligated Parties shall maintain at all times books and records pertaining to
the Collateral in such detail, form, and scope as the Agents shall reasonably
require, including, but not limited to, timely records of (a) all payments
received and all credits and extensions granted with respect to the Accounts, (b) the
return, rejection, repossession, stoppage in transit, loss, damage, or
destruction of any Inventory, and (c) all other dealings affecting the
Collateral.

 

Section 6.2                                      Financial
and Other Information.  The Obligated
Parties shall promptly furnish to the Agents all such information regarding the
Obligated Parties’ and each of their Subsidiaries’ financial and business
affairs as either of the Agents or any Lender (through either of the Agents,
and the applicable Agent agrees to pass along all such reasonable requests by
any Lender to the Obligated Parties) may reasonably request.  Without limiting the foregoing, the 

 

65

 

Obligated Parties will furnish, or cause to be
furnished, to both Agents (with sufficient copies to the Administrative Agent
for distribution to each Lender) the following, in such detail as either of the
Agents or the Lenders (through either of the Agents, and the applicable Agent
agrees to pass along all such reasonable requests by any Lender to the
Obligated Parties) shall reasonably request:

 

(a)                                  The Obligated Parties
will furnish, or cause to be furnished, as soon as available, but in any event
not later than 120 days after
the close of each Fiscal Year of Ahern, consolidated audited balance sheets and
statements of income, cash flow, and stockholders’
equity for Ahern and its Subsidiaries for such Fiscal Year, and the accompanying
notes thereto, setting forth in each case in comparative form figures for the
previous Fiscal Year, all in reasonable detail, fairly presenting the financial
position and the results of operations of Ahern and its Subsidiaries on a
consolidated basis as at the date thereof and for the Fiscal Year then ended,
and prepared in accordance with GAAP; provided that the Obligated
Parties will furnish or cause to be furnished unaudited drafts of each of such
financial statements to the Agents as soon as available, but in any event not
later than 90 days after the close of each Fiscal Year of Ahern.  Such Financial Statements shall be audited in
accordance with generally accepted auditing standards by and accompanied by a
report thereon containing an opinion that is unqualified in any respect of,
independent certified public accountants selected by Ahern (it being agreed by
the parties hereto, however, that at any time after the Closing Date, the
Agents shall have the right, in their reasonable discretion, to require that
Ahern and its Subsidiaries retain independent certified public accountants of
national standing to perform such examinations and provide such reports).  The Obligated Parties hereby authorize each
of the Agents to communicate directly with the Obligated Parties’ certified
public accountants and, by this provision, authorizes such accountants to
disclose to each of the Agents any and all financial statements and other
supporting financial documents and schedules relating to the Obligated Parties
and to discuss directly with each of the Agents the finances and affairs of the
Obligated Parties, provided that the applicable Agent shall provide the
Obligated Parties the opportunity to attend and participate in such
discussions.

 

(b)                                 The Obligated Parties
will furnish or cause to be furnished,

 

(i)                                     as soon as
available, but in any event not later than 45 days after the end of each Fiscal Quarter, other than a Fiscal
Quarter that is a year end, an unaudited balance sheet, income statement, and statement
of cash flow for Ahern and its Subsidiaries prepared on a consolidated basis
for the period from the beginning of the current Fiscal Year to the end of such
Fiscal Quarter, all in reasonable detail and fairly presenting the financial
position and results of operations of Ahern and its Subsidiaries as at the date
thereof and for such period, and, in each case, in comparable form, figures for
the corresponding period in the prior Fiscal Year, and in the Latest
Projections, and prepared in accordance with GAAP (other than the omission of
footnotes and subject to normal year-end audit adjustments, if any) applied
consistently with the audited Financial Statements required to be delivered
pursuant to Section 6.2(a) and

 

66

 

(ii)                                  as soon as available,
but in any event not later than 30
days after the end of each Fiscal Month, an unaudited balance sheet, income
statement, and statement of cash flow for Ahern and its Subsidiaries prepared
on a consolidated basis for the period from the beginning of the current Fiscal
Year to the end of such Fiscal Month, all in reasonable detail and fairly
presenting the financial position and results of operations of Ahern and its
Subsidiaries as at the date thereof and for such period, and, in each case, in
comparable form, figures for the corresponding period in the prior Fiscal Year,
and in the Latest Projections, and prepared in accordance with GAAP (other than
the omission of footnotes and subject to normal year-end audit adjustments, if
any, and, solely in the case of the financial statements for the Fiscal Months
of January and February of each Fiscal Year, subject to normal
year-end audit adjustments from the prior Fiscal Year that have an impact on
the financial statements for such Fiscal Months) applied consistently with the
audited Financial Statements required to be delivered pursuant to Section 6.2(a).

 

Ahern shall
certify by a certificate signed by a Responsible Officer that all such
Financial Statements have been prepared in accordance with GAAP (other than the
omission of footnotes and subject to normal year-end audit adjustments, if any)
applied consistently with the audited Financial Statements required to be
delivered pursuant to Section 6.2(a) and present fairly,
subject to normal year-end audit adjustments, the financial position of Ahern
and its Subsidiaries as at the dates thereof and their results of operations
for the periods then ended.

 

(c)                                  The Obligated Parties
will cause to be furnished, with each of the Financial Statements delivered
pursuant to Section 6.2(a), a letter from the independent certified
public accountants that audited such Financial Statements to the effect that
such accountants are familiar with this Agreement and that, in auditing such Financial
Statements, they did not become aware of any fact or condition which then
constituted a Default or Event of Default with respect to a financial covenant
set forth in Section 8.21, except for those, if any, described in
reasonable detail in such letter.

 

(d)                                 The Obligated Parties
will furnish or cause to be furnished, with each of the Financial Statements
delivered pursuant to Section 6.2(a), and with each of the
Financial Statements delivered pursuant to Section 6.2(b)(i), a
certificate of a Responsible Officer of Ahern in the form of Exhibit C
(a “Compliance Certificate”), or another form acceptable to the Agents
in their discretion, (i) setting forth in reasonable detail the
calculations required to establish compliance with the covenants set forth in Section 8.21
during the period covered by such Financial Statements and as at the end
thereof and (ii) except as explained in reasonable detail in such
certificate, (A) stating that all of the representations and warranties of
the Obligated Parties contained in this Agreement and the other Loan Documents
are correct and complete in all material respects as at the date of such
certificate as if made at such time, except for those that speak as of a
particular date, (B) stating that the Obligated Parties are, at the date
of such certificate, in compliance in all material respects with all of their
respective covenants and agreements in this Agreement and the other Loan
Documents, (C) stating that no Default or Event of Default then exists or
existed during the period covered by such Financial Statements, 

 

67

 

(D) analyzing in reasonable detail the material variances of the
figures in the Latest Projections and corresponding Financial Statements for
the prior Fiscal Year and (E) certifying, to the Obligated Parties’
knowledge, that the amount of the Unused Availability during the period covered
by such certificate did not fall to an amount which would give rise to an
Accelerated Delivery Date and that the amount of the Excess Availability during
the period covered by such certificate did not fall to an amount which would
give rise to a Trigger Event, or, if the Unused Availability or Excess
Availability fell to any such amount, the first date on which such event
occurred.  If such certificate discloses
that a representation or warranty is not correct or complete, or that a
covenant has not been complied with, or that a Default or Event of Default
existed or exists, such certificate shall set forth what action the Obligated
Parties have taken or propose to take with respect thereto.  In addition, if, as a result of any change in
accounting principles and policies from those used in the preparation of the
audited Financial Statements referred to in Section 7.6(a), the
consolidated Financial Statements of Ahern and its Subsidiaries delivered
pursuant to Section 6.2(a) or (b) will differ in
any material respect from the consolidated Financial Statements that would have
been delivered pursuant to such clauses had no such change in accounting
principles and policies been made, then the Obligated Parties will deliver to
both Agents (with sufficient copies to the Administrative Agent for
distribution to each Lender) (i) together with the first delivery of
Financial Statements pursuant to Section 6.2(a) or (b) following
such change, consolidated Financial Statements of Ahern and its Subsidiaries
for (y) the current Fiscal Year to the effective date of such change and
(z) one full Fiscal Year immediately preceding the Fiscal Year in which
such change is made, in each case prepared on a pro forma basis as if such
change had been in effect during such periods, and (ii) together with each
delivery of Financial Statements pursuant to Section 6.2(a) or
(b) following such change, subject to Section 1.2, a
written statement of a Responsible Officer of Ahern setting forth the
differences (including, subject to Section 1.2, any differences
that would affect any calculations relating to the financial covenants set
forth in Section 8.21) which would have resulted if such Financial
Statements had been prepared without giving effect to such change.  The Obligated Parties will furnish or cause
to be furnished, with each of the Financial Statements delivered pursuant to Section 6.2(b)(ii),
a monitoring report, in form, scope and substance reasonably satisfactory to
the Agents, for the Fiscal Month covered by such Financial Statements.

 

(e)                                  The Obligated Parties
will furnish, or cause to be furnished, no sooner than 60 days but not less
than 30 days prior to the beginning of each Fiscal Year of Ahern, annual
forecasts prepared by Ahern (to include forecasted consolidated balance sheets,
income statements, statements of cash flow, and Borrowing Base and Unused
Availability projections) for Ahern and its Subsidiaries as at the end of
and for each Fiscal Month of such Fiscal Year and the following Fiscal Year.

 

(f)                                    Upon the request of either of the Agents, the
Obligated Parties will furnish, or cause to be furnished, within three Business
Days of such request, a copy of the most recent annual report or other
requested filing filed with the PBGC, IRS or any other Governmental Authority
with respect to each Plan of any Obligated Party.

 

68

 

(g)                                 The Obligated Parties
will furnish, or cause to be furnished, within three Business Days after filing
thereof, copies of (i) all reports, if any, or other documents filed by
Ahern or any of its Subsidiaries with the Securities and Exchange Commission
under the Exchange Act or any other similar Governmental Authority pursuant to
any Requirement of Law, (ii) all reports, notices, or statements sent or
received by Ahern or any of its Subsidiaries to or from the holders of any Debt
of Ahern or any of its Subsidiaries registered under the Securities Act of 1933
or to or from the trustee under any indenture under which the same is issued,
and (iii) all press releases and other statements made available generally
by Ahern or any of its Subsidiaries to the public concerning material
developments in the business of Ahern or any of its Subsidiaries.

 

(h)                                 The Obligated Parties
will furnish, or cause to be furnished, as soon as available, but in any event
not later than fifteen days after Ahern’s or any of its Subsidiaries’ receipt thereof,
a copy of all reports and letters prepared by any independent certified public
accountants of Ahern or any of its Subsidiaries and submitted by such
independent certified public accountants to the board of directors (or the
audit committee of the board of directors) of Ahern or any of its
Subsidiaries; provided that the Obligated Parties shall request such
reports and letters at least once per year.

 

(i)                                     The Obligated
Parties will furnish, or cause to be furnished, (i) concurrently with
distribution thereof to the owners of Capital Stock of any Obligated Party,
copies of any and all proxy statements and financial statements which such
Obligated Party makes available to any such Person, (ii) concurrently with
distribution thereof to the primary recipients, copies of any and all proxy
statements, financial statements, and reports which any Obligated Party makes
available to any holder of any Debt of any Obligated Party, (iii) not
later than three (3) Business Days after execution, receipt or delivery thereof,
copies of any material notices or other communications that any Obligated Party
executes, receives or delivers in connection with any Second Lien Debt Document
or any Refinancing Second Lien Debt Document and (iv) not later than five (5) Business
Days (or such lesser number of Business Days as agreed to by the Agents) prior
to the effectiveness thereof, copies of substantially final drafts of any
proposed amendment, supplement, waiver or other modification with respect to
any Second Lien Debt Document, Refinancing Second Lien Debt Document or any
related document, and promptly after the execution thereof, copies of any
executed amendment, supplement, waiver or other modification with respect to
any Second Lien Debt Document, any Refinancing Second Lien Debt Document or any
related document.

 

(j)                                     If requested by
either of the Agents, the Obligated Parties will furnish, or cause to be
furnished, promptly after such request, a copy of each tax return filed by
Ahern or any of its Subsidiaries with the IRS or any other Governmental
Authority.

 

(k)                                  The Obligated Parties
will furnish, or cause to be furnished to the Agents,

 

(i)                                     as soon as
available, but in any event within twenty (20) days after the end of each
Fiscal Month of Ahern as of the end of such Fiscal Month, and at such other
times as may be requested by either of the Agents, a Borrowing Base Certificate
and supporting information in connection therewith; provided, that 

 

69

 

during each Accelerated Delivery Period, the Borrowers shall deliver a
Borrowing Base Certificate and supporting information in connection therewith
to the Agents on a weekly basis (not later than the fourth Business Day after
the last Business Day of the previous week) with the information thereon to be
as of the last Business Day of such previous week;

 

(ii)                                  within twenty (20)
days of the end of each Fiscal Month, or more frequently if requested by either
of the Agents, a schedule (in form reasonably satisfactory to the Agents)
of each Borrower’s Accounts created, credits given, cash collected, and other
adjustments made to such Borrower’s Accounts as of the last day of such Fiscal
Month since the date of the previous such schedule;

 

(iii)                               within twenty (20) days
of the end of each Fiscal Month, or more frequently if requested by either of
the Agents, an aging (in form reasonably satisfactory to the Agents) of each
Borrower’s Accounts as of the last day of such Fiscal Month, together with a
reconciliation to the corresponding Borrowing Base and to such Borrower’s
general ledger;

 

(iv)                              within twenty (20) days
of the end of each Fiscal Month, or more frequently if requested by either of
the Agents, an aging (in form reasonably satisfactory to the Agents) of each
Borrower’s accounts payable as of the last day of such Fiscal Month together
with a reconciliation to the corresponding general ledger of such Borrower;

 

(v)                                 within twenty (20) days of the end of each Fiscal Month, or more frequently if requested by either of the
Agents, a detailed calculation (in form reasonably satisfactory to the Agents)
of Eligible Accounts, Eligible Transportation Equipment and Eligible Inventory
as of the last day of such Fiscal Month;

 

(vi)                              within twenty (20) days
of the end of each Fiscal Month,
or more frequently if requested by either of the Agents, Inventory and
Transportation Equipment reports by each Borrower, category, quantity, cost,
and location (in form reasonably satisfactory to the Agents), together with a
reconciliation to the corresponding Borrowing Base and to the Borrowers’
general ledger as of the last day of such Fiscal Month;

 

(vii)                           within twenty (20) days of
the end of each Fiscal Month, a schedule identifying each location, if
any, where any Collateral is located with a sales representative, agent,
contractor, or other Person under any bailee, consignee, or warehouse
arrangement, in each case setting forth, as of the last day of the immediately
preceding Fiscal Month, (A) the name and address of each such sales
representative, agent, contractor, or other Person and a description of the
nature of any such arrangement and (B) the cost of such Inventory and
Transportation Equipment at each such location;

 

70

 

(viii)                        upon request by either of the
Agents, within three (3) Business Days of such request, copies of
invoices, customer statements, credit memos, remittance advices and reports,
leases, lease forms, deposit slips, and leasing, shipping and delivery
documents with respect to each Borrower’s Accounts and Inventory, and purchase
orders and invoices with respect to any Equipment or Inventory acquired by any
Borrower or a written explanation of why the requested items can not be
delivered within such three (3) Business Day period (in which case, such
requested items shall then be delivered as promptly thereafter as is reasonably
practicable);

 

(ix)                                within twenty (20) days
of the end of each Fiscal Month, a report in a format to be agreed upon between
the Agents and Ahern with relevant operating information including Time
Utilization by product category, average discount and average rental rates;

 

(x)                                   upon request by
either of the Agents, within three (3) Business Days of such request, a
statement of the balance of each of the Intercompany Accounts; and

 

(xi)                                within three (3) Business
Days, such other reports with respect to the Collateral as either of the Agents
may reasonably request or a written explanation of why the requested reports
can not be delivered within such three (3) Business Day period (in which
case such requested reports shall then be delivered as promptly thereafter as
is reasonably practicable).

 

With the
delivery of each of the foregoing, the Obligated Parties shall furnish a
certificate executed by a Responsible Officer of the Borrowers certifying as to
the accuracy and completeness of the foregoing. 
If any of any Borrower’s records or reports with respect to the
Collateral are prepared by an accounting service or other agent, such Borrower
hereby authorizes such service or agent to deliver such records, reports, and
related documents to the Administrative Agent for distribution to the Lenders.

 

(l)                                     The Obligated
Parties will provide the Agents the information required by Section 8.7(b).

 

(m)                               Within 30 days following
the date franchise taxes are due, the Obligated Parties will, unless the Agents
shall each otherwise consent, provide to the Administrative Agent a certificate
of the applicable Governmental Authority evidencing each Obligated Party’s good
standing in its jurisdiction of formation, incorporation, or organization, as
applicable.

 

(n)                                 The Obligated Parties
will furnish, or cause to be furnished, such additional information as either
Agent and/or any Lender (through either of the Agents, and the applicable Agent
agrees to pass along all such reasonable requests by any Lender to the
Obligated Parties) may from time to time reasonably request regarding the
financial and business affairs of Ahern or any Subsidiary of Ahern.

 

71

 

(o)                                 The Obligated Parties
will furnish, or cause to be furnished, with each of the Financial Statements
delivered pursuant to Section 6.2(b), a description of any
commercial tort claim acquired by any Obligated Party during the period covered
by such Financial Statements.

 

(p)                                 The Obligated Parties
will furnish, or cause to be furnished, with each of the Financial Statements
delivered pursuant to Section 6.2(b), a description of all
Collateral acquired by any Obligated Party during the period covered by such
Financial Statements which is subject to any certificate of title law of the
U.S. or any state.

 

(q)                                 After any item of
Inventory is no longer subject to a Lien described in clause (l) of
the definition of “Permitted Liens”, the Obligated Parties will furnish, or
cause to be furnished, either a UCC partial release for such item of Inventory
or a statement from the vendor of such item of Inventory that such vendor no
longer has a Lien in such item of Inventory, and until such partial release or
statement is delivered to the Agents such item of Inventory shall in no event
constitute Eligible Inventory and no Accounts created with respect to such
Inventory shall constitute Eligible Accounts.

 

(r)                                    After any item of
Transportation Equipment is no longer subject to a Lien described in clause (k)
of the definition of “Permitted Liens”, the Obligated Parties will furnish, or
cause to be furnished, (i) if a certificate of title is not required with
respect to such item of Transportation Equipment under the titling statutes of
any relevant Governmental Authority, either a UCC partial release for such item
of Transportation Equipment or a statement from the vendor or lessor of such
item of Transportation Equipment that such vendor or lessor, as the case may
be, no longer has a Lien in such item of Transportation Equipment or (ii) if
a certificate of title has been issued with respect to such item of
Transportation Equipment, such certificate of title endorsed by the secured
party releasing its Lien in such item of Transportation Equipment or, if such
original certificate of title cannot be furnished, such other lien release as
is acceptable to the Governmental Authority issuing such certificate of title
to permit the issuance of a replacement certificate of title without the
notation of such Lien, and until such partial release, statement, certificate
of title or other release, as applicable, is delivered to the Agents such item
of Transportation Equipment shall in no event constitute Eligible
Transportation Equipment.

 

Section 6.3                                      Notices.  The Obligated Parties shall notify each Agent
in writing of the following matters at the following times:

 

(a)                                  immediately after a
Responsible Officer’s becoming aware of any Default or Event of Default;

 

(b)                                 within three (3) Business
Days after a Responsible Officer’s becoming aware of the assertion by the
holder of any Capital Stock of Ahern or any Subsidiary of Ahern or the holder
of any Debt of Ahern or any Subsidiary of Ahern in excess of $500,000 that a default exists with respect thereto or that any such
Person is not in compliance with the terms thereof, or the written threat or
commencement by such holder of any enforcement action because of such asserted
default or non-compliance;

 

72

 

(c)                                  within five (5) Business
Days after a Responsible Officer’s becoming aware of any pending or threatened
(in writing) action, suit, proceeding, or counterclaim by any Person, or
any pending or threatened (in writing) investigation by a Governmental
Authority, that could reasonably be expected to result in, or has resulted in,
liability in excess of $500,000 or otherwise could reasonably be expected to
have, or has resulted in, a Material Adverse Effect;

 

(d)                                 within five (5) Business
Days after a Responsible Officer’s becoming aware of any pending or threatened
(in writing) strike, work stoppage, unfair labor practice claim or other
similar labor dispute affecting any Obligated Party that could reasonably be
expected to result in, or has resulted in, liability in excess of $500,000 or
otherwise could reasonably be expected to have, or has resulted in, a Material
Adverse Effect;

 

(e)                                  within five (5) Business
Days after a Responsible Officer’s becoming aware of any violation of any
Requirement of Law affecting any Obligated Party that reasonably could be
expected to result in, or has resulted in, liability in excess of $500,000 or
otherwise could reasonably be expected to have, or has resulted in, a Material
Adverse Effect;

 

(f)                                    within five (5) Business
Days after (i) a Responsible Officer’s receipt of any written notice of
any violation by any Obligated Party of any Environmental Law or (ii) a
Responsible Officer’s obtaining knowledge that any Governmental Authority has
asserted that any Obligated Party is not in compliance with any Environmental
Law or that any Governmental Authority is investigating any Obligated Party’s
compliance therewith, which in any event under clause (i) or clause (ii) preceding
could reasonably be expected to result in, or has resulted in, liability in
excess of $500,000 or otherwise could reasonably be expected to have, or has
resulted in, a Material Adverse Effect;

 

(g)                                 within five (5) Business
Days after a Responsible Officer’s receipt of any written notice from any
Governmental Authority or other Person or otherwise obtaining knowledge that
any Obligated Party is or may be liable to any Person as a result of the
Release or threatened Release of any Contaminant or that any Obligated Party 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 that, in either case, could reasonably be expected to result
in, or has resulted in, liability in excess of $500,000 or
otherwise could reasonably be expected to have, or has resulted in, a Material
Adverse Effect;

 

(h)                                 within five (5) Business
Days after a Responsible Officer’s receipt of any written notice of the
imposition of any Environmental Lien against any property of any Obligated
Party;

 

(i)                                     not less than 30
days prior to any change in any Obligated Party’s (i) name as it appears
in the jurisdiction of its formation, incorporation, or organization, (ii) type
of entity, (iii) organizational identification number, or (iv) trade
names under which such Obligated Party will sell Inventory or create Accounts,
or to which instruments in payment of Accounts may be made payable;

 

73

 

(j)                                     within five (5) Business
Days after any Responsible Officer knows or has reason to know, (i) that
an ERISA Event or a prohibited transaction (as defined in Sections 406 of ERISA
and 4975 of the Code) has occurred or (ii) that any action has been taken
or threatened (in writing) by the IRS, the DOL, or the PBGC with respect to any
such ERISA Event or prohibited transaction;

 

(k)                                  upon either Agent’s
request, copies of the following:  (i) each
annual report (form 5500 series), including Schedule B thereto, filed with
the DOL or the IRS with respect to each Plan; (ii) a copy of each funding
waiver request filed with the IRS with respect to any Plan and all
communications received by any Obligated Party or any ERISA Affiliate from the
IRS with respect to such request; and (iii) a copy of each other filing or
notice filed with the PBGC, the DOL, or the IRS, with respect to each Plan by
any Obligated Party or any ERISA Affiliate;

 

(l)                                     upon request from
either Agent, copies of each most recent actuarial report for any Plan (except
that in the case of a Multiemployer Plan, the Obligated Party will request of
the plan administrator thereof that a copy of each actuarial report and annual
report for the Multiemployer Plan be sent to the requesting Agent), and within
five (5) Business Days after receipt thereof by any Obligated Party or any
ERISA Affiliate, copies of the following: 
(i) any notices of the PBGC’s intention to terminate a Plan or to
have a trustee appointed to administer such Plan; (ii) any favorable or
unfavorable determination letter from the IRS regarding the qualification of a
Plan under Section 401(a) of the Code; or (iii) any notice from
a Multiemployer Plan regarding the imposition of withdrawal liability;

 

(m)                               within five (5) Business
Days after the occurrence thereof:  (i) any
changes in the benefits of any existing Plan which the Obligated Party expects
to increase any Obligated Party’s annual costs with respect thereto by an
amount in excess of $500,000, or the establishment of any new Plan or the
commencement of contributions to any Plan to which any Obligated Party or any
ERISA Affiliate was not previously contributing; or (ii) any failure by
any Obligated Party or any ERISA Affiliate to make a required installment or
any other required payment to any Plan in excess of $250,000 under Section 412
of the Code on or before the due date for such installment or payment;

 

(n)                                 within five (5) Business
Days after commencement of any proceedings contesting any tax, fee, assessment,
or other governmental charge in excess of $500,000;

 

(o)                                 within five (5) Business
Days after any Responsible Officer becomes aware that any material assumption
on which the Obligated Parties prepared and presented the Latest Projections is
no longer valid;

 

(p)                                 with each of the
financial statements required to be delivered pursuant to Section 6.2(b),
a listing of (i) each Deposit Account opened by any Obligated Party and (ii) any
Proprietary Rights registered with the United States Patent and Trademark
Office or the United States Copyright Office, in the preceding Fiscal Month;

 

74

 

(q)                                 within five (5) Business
Days after the occurrence thereof, any loss, damage, or destruction to the
Collateral, whether due to any casualty, condemnation, or other reason, having
a value in excess of $500,000, whether or not covered by insurance;

 

(r)                                    within five (5) Business
Days after any Responsible Officer becomes aware of any Lien (other than
Permitted Liens) against, or any claim in excess of $100,000 made or asserted in writing
against, any of the Collateral;

 

(s)                                  within five (5) Business
Days after a Responsible Officer’s becoming aware of any event or circumstance
not covered by clause (a) through clause (r) preceding
that could reasonably be expected to have, or has resulted in, a Material
Adverse Effect;

 

(t)                                    not less than ten (10) Business
Days prior to the lease under the GE Sale and Leaseback Agreement of any item
of property which was not leased under that agreement on the Original Closing
Date, a description in reasonable detail (including serial numbers thereof, if
any) of the item of property to be leased (including, without limitation, any
such item to be leased as a result of Ahern’s exercise of a replacement option
under the GE Sale and Leaseback Agreement or as a result of the occurrence of a
casualty to another item of property leased thereunder);

 

(u)                                 promptly, any material
additions to or deletions from any Obligated Party’s Inventory or
Transportation Equipment that are not made in the ordinary course of business;

 

(v)                                 promptly, any material
change in insurance coverage maintained by any Obligated Party, specifying the
changes and reasons therefor;

 

(w)                               promptly, and in any
event within ten (10) Business Days after any Material Contract of any
Obligated Party set forth on Schedule 7.24 is terminated or amended
in a manner that is materially adverse to any Obligated Party, a written
statement describing such event with copies of such material amendments, and an
explanation of any actions being taken with respect thereto; and

 

(x)                                   not less than ten (10) days
prior to any Asset Sale (as defined in the Second Lien Debt Agreement) or any
application of proceeds thereof to the payment of any Obligations, in each
instance, that will result in a reduction of the maximum amount of Aggregate
Revolver Outstandings permitted to be incurred under Section 4.09(b)(1) of
the Second Lien Debt Agreement (other than solely as a result of a reduction
due to the borrowing base formula under Section 4.09(b)(1)(b) of the
Second Lien Debt Agreement), notice of such Asset Sale and the amount of such
reduction.

 

Each notice
given under this Section 6.3 shall describe the subject matter
thereof in reasonable detail, and shall set forth the action that any Obligated
Party or any ERISA Affiliate, as applicable, has taken or proposes to take with
respect thereto.

 

75

 

ARTICLE 7

 

GENERAL
WARRANTIES AND REPRESENTATIONS

 

Each Obligated
Party warrants and represents to the Agents and the other Credit Providers as
follows:

 

Section 7.1                                      Authorization,
Validity, and Enforceability of the Transaction Documents.  Each Obligated Party has the power and
authority to execute, deliver, and perform this Agreement and the other
Transaction Documents to which it is a party, to incur the indebtedness,
liabilities, and obligations it has agreed to undertake under the Transaction
Documents to which it is a party, and to grant the Agent’s Liens.  Each Obligated Party has taken all necessary
action (including obtaining approval of the owners of its Capital Stock or any
other Person required to provide approval or consent, if necessary) to
authorize its execution, delivery, and performance of the Transaction Documents
to which it is a party.  The Transaction
Documents to which each Obligated Party is a party have been duly executed and
delivered by such Obligated Party, and constitute the legal, valid, and binding
obligations of such Obligated Party, enforceable against it in accordance with
their respective terms without defense, setoff, or counterclaim except as such
enforceability is limited by applicable bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting the rights of creditors generally and to
the effect of general principles of equity whether applied by a court of law or
equity.  Each Obligated Party’s
execution, delivery, and performance of the Transaction Documents to which it
is a party do not and will not conflict with, or constitute a violation or
breach of, or constitute a default under, or result in or require the creation
or imposition of any Lien upon any property of any Obligated Party by reason of
the terms of (a) any contract, mortgage, Lien, lease, agreement,
indenture, document, or instrument to which such Obligated Party is a party or
that is binding upon it, (b) any Requirement of Law applicable to such
Obligated Party, or (c) the Organization Certificate or Management
Agreement of such Obligated Party.  Each
Borrowing and each delivery by any or all of the Borrowers (or Ahern on behalf
of the Borrowers) of a Borrowing Base Certificate constitutes a representation
and warranty by Ahern that, as of the date of such Borrowing or delivery, as
the case maybe (both before and after giving effect to such Borrowing, if
applicable), the financial accommodations provided to the Borrowers hereunder
do not violate the debt incurrence limits set forth in the Second Lien Debt
Agreement or exceed the Maximum First Lien Principal Indebtedness (as defined
in the Intercreditor Agreement).  Without
limitation of the foregoing, the Borrowers represent and warrant that (i) each
Borrowing is permitted under Section 4.09(b)(1) of the Second Lien
Debt Agreement, (ii) each Borrowing is permitted to be incurred and
secured by all applicable Secured Debt Documents (as defined in the Second Lien
Debt Agreement) and constitutes Priority Lien Debt (as defined in the Second
Lien Debt Agreement), (iii) all Obligations constitute “First Lien
Obligations” as defined in the Intercreditor Agreement, (iv) there are in
existence no Credit Facilities (as defined in the Second Lien Debt Agreement)
other than this Agreement and (v) there is in existence no Parity Lien
Debt (as defined in the Second Lien Debt Agreement) other than Second Lien
Debt.

 

Section 7.2                                      Validity
and Priority of Security Interest. 
The provisions of the Loan Documents create legal and valid Liens on the
Collateral in favor of the Collateral Agent, for the benefit of the Credit
Providers, and such Liens (a) constitute perfected and continuing Liens on
the Collateral, securing the Obligations, (b) are enforceable against the
applicable Obligated 

 

76

 

Party and all third parties, and (c) have
priority over all other Liens on the Collateral except for those Liens
identified in clause (b) through clause (h) or
clause (k) through clause (l) of the definition of
Permitted Liens (but only to the extent any such Permitted Liens would have
priority over the Agent’s Liens pursuant to any Requirement of Law) and Liens
perfected only by possession (including possession of any certificate of title)
to the extent the Collateral Agent has not obtained or does not maintain
possession of such Collateral.

 

Section 7.3                                      Organization,
Authority, and Good Standing.  Each
of the Obligated Parties

 

(a)                                  is a corporation,
limited liability company, partnership, limited partnership, or other business
entity duly and properly formed, incorporated, or organized and validly
existing under Requirements of Law of the jurisdiction of its formation,
incorporation, or organization as set forth in Schedule 7.3, and
such jurisdiction is the only jurisdiction under which it is formed,
incorporated, or organized,

 

(b)                                 has all requisite
power and authority to conduct its business in each jurisdiction in which it
conducts business and to own its property, and

 

(c)                                  to the extent
applicable, is qualified and in good standing under the Requirements of Law of (i) its
jurisdiction of formation, incorporation, or organization and (ii) each
other jurisdiction in which qualification is necessary in order for it to own
or lease its property and conduct its business.

 

Section 7.4                                      Capitalization
and Subsidiaries.  As of the Closing
Date, Schedule 7.4 sets forth (a) a correct and complete list
of the relationship of the Obligated Parties and all of their respective
Subsidiaries, (b) the location of the chief executive office of each of
the Obligated Parties, (c) a true and complete listing of each class of
the Capital Stock of each of the Obligated Parties, of which all of such issued
shares or other interests are validly issued, outstanding, fully paid and
non-assessable, and owned beneficially and of record by the Persons identified
in Schedule 7.4, (d) the
type of entity of each of the Obligated Parties, (e) the jurisdiction of formation,
incorporation or organization of each of the Obligated Parties and the employer
or taxpayer identification number of each of the Obligated Parties and the
organizational identification number issued by each of the Obligated Parties’
jurisdiction of formation, incorporation, or organization (or a statement that
no such number has been issued).  Each
Obligated Party has only one state of formation, incorporation, or
organization.

 

Section 7.5                                      Corporate
Name; Prior Transactions.  As of the
Closing Date, Schedule 7.5 sets forth a correct and complete list
of the name of each Obligated Party as it appears in official filings in the
jurisdiction of its formation, organization, or incorporation.  Except as set forth in Schedule 7.5,
no Obligated Party has, during the past five years, been known by or used any
other corporate or fictitious name, or been a party to any merger or
consolidation, or acquired all or substantially all of the assets of any
Person, or acquired any of its property outside of the ordinary course of
business.

 

77

 

Section 7.6                                      Financial
Statements and Projections.

 

(a)                                  The Obligated Parties
have delivered to each Agent and the Lenders the audited financial statements
for Ahern and its Subsidiaries for the Fiscal Years ended December 31,
2001, December 31, 2002, December 31, 2003 and December 31,
2004, accompanied by the report thereon of Ahern’s independent certified public
accountants, Piercy Bowler Taylor & Kern.  The Obligated Parties have also delivered to
each Agent and the Lenders the unaudited balance sheet and related statements
of income and cash flow for Ahern and its Subsidiaries on a consolidated basis
as of the end of each Fiscal Month ending January 31, 2005 through June 30, 2005.  All such financial statements have been
prepared in accordance with GAAP and fairly present the financial position of
Ahern and its Subsidiaries as at the dates thereof and their results of
operations for the periods then ended (except with respect to the unaudited
financial statements referred to immediately above, for the omission of
applicable footnotes and subject to normal year-end audit adjustments).  Except as set forth on Schedule 7.6,
as of the Closing Date, Ahern and its Subsidiaries do not have any material
liabilities that are not disclosed in such financial statements.

 

(b)                                 The Latest Projections
when submitted to the Agents as required herein represent the Obligated Parties’
good faith estimate of the future financial performance of the Borrowers for
the periods set forth therein.  The
Latest Projections have been prepared on the basis of the assumptions set forth
therein, which the Obligated Parties believe are fair and reasonable in light
of current and reasonably foreseeable business conditions at the time submitted
to the Agents.

 

(c)                                  The pro forma balance sheet of Ahern and its
Subsidiaries as at June 30, 2005, delivered to the Agents presents fairly
and accurately Ahern’s and its Subsidiaries’ financial condition as of such
date and after giving effect to consummation of the transactions contemplated
by this Agreement and the Second Lien Debt Documents.

 

Section 7.7                                      Solvency.  As of the Closing Date, prior to and after
giving effect to all of the transactions to occur on the Closing Date
(including the Borrowings to be made on the Closing Date), and at all
times after the Closing Date, each of the Obligated Parties is Solvent.

 

Section 7.8                                      Debt.  As of the Closing Date, after giving effect
to the Borrowings to be made on the Closing Date, the Obligated Parties and
their Subsidiaries have no Debt, except (a) the Obligations and (b) Debt
permitted pursuant to Section 8.12.

 

Section 7.9                                      Distributions.  Schedule 7.9 accurately sets
forth, as of the date hereof,
all Distributions which have been declared, paid, or made upon or in respect of
any Capital Stock of Ahern since December 31, 2003.

 

Section 7.10                                Real
Estate; Leases.  As of the Closing
Date, Schedule 7.10 sets forth a correct and complete list of all
Real Estate owned by each Obligated Party, all leases and subleases of real or
personal property by each Obligated Party as lessee or sublessee (other than
leases of personal property as to which such Obligated Party is lessee or
sublessee for which the value of such personal property under any such lease in
the aggregate is less than $10,000, and 

 

78

 

Re-Rental Leases) and all leases and subleases of real
or personal property by each Obligated Party as lessor or sublessor.  Schedule 7.10 also sets forth a
correct and complete list, as of the Closing Date, of all inventory and
equipment that is subject to the GE Sale and Leaseback Agreement.  Each material lease and sublease between an
Obligated Party and DFA LLC is valid and enforceable in accordance with its
terms and is in full force and effect, and no default by any party to any such
lease or sublease exists.  All other
leases and subleases of the Obligated Parties are in full force and effect, and
no default by any party to any such lease or sublease exists, except if the
result thereof would not have a Material Adverse Effect; provided that,
as of the Closing Date, each lease and sublease set forth on Schedule 7.10
is valid and enforceable in accordance with its terms and is in full force and
effect, and no default by any party to any such lease or sublease exists.  Each Obligated Party has good and
indefeasible title in fee simple to the Real Estate identified in Schedule 7.10
as “owned” by such Obligated Party, or valid leasehold interests in all Real
Estate identified in Schedule 7.10 as “leased” by such Obligated
Party, and each Obligated Party has good, indefeasible, and merchantable title
to all of its other property reflected on the June 30, 2005 Financial
Statements of Ahern and its Subsidiaries delivered to the Agents and the
Lenders, except as disposed of in the ordinary course of business since the
date thereof, free of all Liens except Permitted Liens.

 

Section 7.11                                Proprietary
Rights.  As of the Closing Date, (a) Schedule 7.11
sets forth a correct and complete list of all of each Obligated Party’s
registered patents, trademarks, copyrights, and other material Proprietary
Rights, (b) none of the Proprietary Rights listed in Schedule 7.11
is subject to any licensing agreement or similar arrangement except as set
forth in Schedule 7.11, (c) the Proprietary Rights listed in Schedule 7.11
constitute all of the property of such type necessary to the current and
anticipated future conduct of the Obligated Parties’ business, (d) to the
best of each Obligated Party’s knowledge, none of the Proprietary Rights listed
in Schedule 7.11 infringes upon or conflicts with any rights held
by any other Person, and (e) no claim or litigation regarding any of the
foregoing is pending or threatened (in writing).

 

Section 7.12                                Trade
Names.  All trade names or styles
under which any Obligated Party will sell or lease Inventory or create
Accounts, or to which instruments in payment of Accounts may be made payable,
are listed in Schedule 7.12.

 

Section 7.13                                Litigation.  Except as set forth in Schedule 7.13,
there is no pending or threatened (in writing), action, suit, proceeding, or
counterclaim by any Person, or investigation by any Governmental Authority, or
any basis for any of the foregoing, that could reasonably be expected to have a
Material Adverse Effect.

 

Section 7.14                                Labor
Matters.  As of the Closing Date,
except as set forth in Schedule 7.14, (a) there is no
collective bargaining agreement or other labor contract covering employees of
any Obligated Party, (b) no such collective bargaining agreement or other
labor contract is scheduled to expire during the term of this Agreement, (c) to
the best of any Obligated Party’s knowledge, no union or other labor
organization is seeking to organize, or to be recognized as, a collective
bargaining unit of employees of any Obligated Party or for any similar purpose,
(d) to the best of any Obligated Party’s knowledge, there is no pending or
threatened strike, work stoppage, unfair labor practice claim, or other material
dispute against or affecting any Obligated Party or its employees, and (e) to
the best of any Obligated Party’s knowledge, there is no pending or threatened
unfair labor practice claim or other similar labor 

 

79

 

dispute against or affecting any Obligated Party or
its employees that could reasonably be expected to result in, or has resulted
in, liability in excess of $500,000 or that could reasonably be expected to
have a Material Adverse Effect.

 

Section 7.15                                Environmental
Law.  Except as otherwise set forth
in Schedule 7.15 and except as could not reasonably be expected to
result in liability in excess of $500,000 in the aggregate for all the
Obligated Parties and otherwise could not reasonably be expected to have a
Material Adverse Effect:

 

(a)                                  Each Obligated Party
is in compliance with all applicable Environmental Laws, and neither any
Obligated Party nor any of their respective presently or previously owned Real
Estate or presently conducted or prior operations, is subject to any
enforcement order from, or liability agreement with, any Governmental Authority
or private Person respecting (i) compliance with any Environmental Law or (ii) any
potential liabilities and costs or remedial action arising from a Release or
threatened Release of a Contaminant.

 

(b)                                 Each Obligated Party
has obtained all permits necessary for its current operations under applicable
Environmental Law, and all such permits are in good standing, and each
Obligated Party is in compliance with all terms and conditions of such permits.

 

(c)                                  No Obligated Party is
in violation of any Environmental Law with respect to storage, treatment, or
disposal of any hazardous waste (as defined pursuant to 40 CFR Part 261 or
any equivalent Environmental Law).

 

(d)                                 No Obligated Party has
received any summons, complaint, order, or similar written notice of any
Environmental Claim indicating that it is not currently in compliance with, or
that any Governmental Authority is currently investigating such Obligated Party’s
compliance with, any Environmental Law or that it is or may be liable to any
other Person as a result of a Release or threatened Release of a Contaminant.

 

(e)                                  To the best of each
Obligated Party’s knowledge, none of the present or past operations of any
Obligated Party 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.

 

(f)                                    To the best of each
Obligated Party’s knowledge, there is not now on the Real Estate of any
Obligated Party in violation of any Environmental Law:

 

(i)                                     any underground
storage tanks or surface impoundments,

 

(ii)                                  any
asbestos-containing material, or

 

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

 

80

 

(g)                                 No Obligated Party has
filed, or has had the obligation to file, any notice under any requirement of
Environmental Law reporting a spill or accidental and unpermitted Release or
discharge of a Contaminant into the environment.

 

(h)                                 No Obligated Party has
entered into any pending or ongoing negotiations or any currently effective
settlement agreements with any Person (including any prior owner of such
Obligated Party’s property) imposing obligations or liabilities on any
Obligated Party with respect to any remedial action in response to the Release
of a Contaminant or environmentally related claim.

 

(i)                                     None of the
products manufactured, distributed, or sold by any Obligated Party or any
Subsidiary of any Obligated Party contains asbestos containing material.

 

(j)                                     No presently
effective Environmental Lien has attached to any of the Real Estate owned by
any Obligated Party.

 

Section 7.16                                No
Violation of Law.  No Obligated Party
is in violation of any Requirement of Law applicable to it, which violation
could reasonably be expected to have a Material Adverse Effect.

 

Section 7.17                                No
Default.  No Obligated Party is in
default with respect to any note, indenture, loan agreement, mortgage, lease,
deed, or other agreement to which such Obligated Party is a party or by which
it is bound, which default could reasonably be expected to have a Material
Adverse Effect.

 

Section 7.18                                ERISA
Compliance.

 

(a)                                  Each Plan is in
compliance in all material respects with the applicable provisions of ERISA,
the Code, and other federal or state law;

 

(b)                                 Each Plan that is
intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS and, to the best
knowledge of each Obligated Party, nothing has occurred which would cause the
loss of such qualification;

 

(c)                                  Each Obligated Party
and each ERISA Affiliate has made all required contributions to any Plan
subject to Section 412 of the Code, 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 Plan;

 

(d)                                 There are no pending
or, to the best knowledge of any Obligated Party, threatened (in writing)
claims, actions, or lawsuits, or action by any Governmental Authority, with
respect to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect;

 

(e)                                  There has been no
prohibited transaction or violation of the fiduciary responsibility rules with
respect to any Plan that has resulted or could reasonably be expected to result
in a Material Adverse Effect; and

 

81

 

(f)                                    Except where the
occurrence or existence could not, individually or in the aggregate, result in
liability in excess of $500,000 or otherwise
be reasonably expected to have a Material Adverse Effect, (i) no ERISA
Event has occurred or is reasonably expected to occur, (ii) no Pension
Plan has any Unfunded Pension Liability, (iii) no Obligated Party and no
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), (iv) no
Obligated Party and no ERISA Affiliate has incurred, or reasonably expects to
incur, any liability (and no event has occurred that, 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, and (v) no
Obligated Party and no ERISA Affiliate has engaged in a transaction that could
be subject to Section 4069 or 4212(c) of ERISA.

 

Section 7.19                                Taxes.  Each Obligated Party has filed all federal,
state, and other tax returns and reports required to be filed (or appropriate
extensions have been timely filed), and has paid all federal, state, and other
taxes, assessments, fees, and other governmental charges levied or imposed upon
it or its properties, income, or assets otherwise due and payable unless such
unpaid taxes and assessments would constitute a Permitted Lien.

 

Section 7.20                                Regulated
Entities.  No Obligated Party or
Affiliate of any Obligated Party is an “Investment Company” within the meaning
of the Investment Company Act of 1940. 
No Obligated Party or Affiliate of any Obligated Party is subject to
regulation under the Public Utility Holding Company Act of 1935, any state
public utilities Requirement of Law, the Federal Power Act, the Interstate
Commerce Act, or any other Requirement of Law limiting its ability to incur
indebtedness.

 

Section 7.21                                Use
of Proceeds; Margin Regulations.  The
proceeds of the Loans are to be used solely for the purposes specified in Section 8.22.  No Obligated Party is engaged in the business
of buying or selling Margin Stock or extending credit for the purpose of buying
or carrying Margin Stock.  Margin Stock
constitutes less than 5.0% of the value of those assets of the Obligated
Parties that are subject to any limitation on sale, pledge, or other
restriction hereunder.

 

Section 7.22                                No
Material Adverse Change.  No Material
Adverse Effect has occurred since the date of the latest Financial Statements
delivered to the Agents and the Lenders referenced in Section 7.6(a).

 

Section 7.23                                Full
Disclosure.  None of the
representations or warranties made by any Obligated Party in any of the Loan
Documents as of the date such representations and warranties are made or deemed
made, and none of the statements contained in any document, agreement, exhibit,
report, statement, or certificate furnished by or on behalf of any Obligated
Party in connection with the Loan Documents (including any offering and
disclosure materials delivered by or on behalf of any Obligated Party to either
of the Agents or any of the Lenders prior to the Closing Date), contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in light of
the circumstances under which they are made, not misleading as of the time when
made or delivered.

 

82

 

Section 7.24                                Material
Agreements.  As of the Closing Date, Schedule 7.24
sets forth a complete and accurate list of all material agreements and
contracts (other than the Loan Documents) to which any Obligated Party is a
party or is bound.

 

Section 7.25                                Bank
Accounts.  As of the Closing Date, Schedule 7.25
contains a complete and accurate list of all bank accounts maintained by each
Obligated Party with any bank or other financial institution.

 

Section 7.26                                Commercial
Tort Claims.  As of the Closing Date,
Schedule 7.26 contains a complete and accurate list of all
commercial tort claims owned by each Obligated Party.

 

Section 7.27                                Governmental
Authorization.  No approval, consent,
exemption, authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in connection
with the execution, delivery, or performance by, or enforcement against, any
Obligated Party of any Transaction Document except for those that have been
duly obtained by the Obligated Parties, copies of which, with respect to the
Loan Documents, have been provided to the Agents, and for filing of financing
statements and recording of Mortgages (if any).

 

Section 7.28                                Second
Lien Debt.  The transactions
contemplated by the Second Lien Debt Documents have been duly and validly
consummated in accordance with the terms, conditions and provisions of such
documents.  Each of the representations
and warranties made by any of the Obligated Parties pursuant to any of the
Second Lien Debt Documents is true and correct, in all material respects.  None of the transactions contemplated by this
Agreement, any of the other Loan Documents or any of the Second Lien Debt
Documents shall result in a breach of any of the representations and warranties
or other provisions contained in any of the Transaction Documents.

 

Section 7.29                                Certificates
of Title.  As of the Closing Date, Schedule 7.29
contains a complete and accurate list of all Collateral owned by each Obligated
Party which is subject to a certificate of title law of the U.S. or any state.

 

Section 7.30                                Subordinated
Debt.  The Obligations constitute
senior indebtedness that is entitled to the benefits of the subordination
provisions, if any, of all Debt of the Obligated Parties.

 

Section 7.31                                Foreign
Assets Control Regulations, Etc.

 

(a)                                  None of the
execution, delivery or performance of the Loan Documents by the Obligated
Parties nor the use of the proceeds of the Revolving Loans hereunder will
violate (i) the United States Trading with the Enemy Act, as amended, (ii) any
of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto, (iii) Executive Order No. 13,224,
66 Fed Reg 49,079 (2001), issued by the President of the United States
(Executive Order Blocking Property and Prohibiting Transactions with Persons
Who Commit, Threaten to Commit or Support Terrorism) (the “Terrorism Order”) or
(iv) the Patriot Act.  No part of
the proceeds from the Revolving Loans will be used, directly or indirectly, for
any payments to any governmental official 

 

83

 

or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order
to obtain, retain or direct business or obtain any improper advantage, in
violation of the United States Foreign Corrupt Practices Act of 1977, as
amended.

 

(b)                                 No Obligated Party (i) is
or will become a “blocked person” as described in Section 1 of the
Terrorism Order or (ii) engages or will engage in any dealings or
transactions, or is otherwise associated, with any such blocked person or any
such Person.

 

(c)                                  Each Obligated Party
and its Affiliates are in compliance, in all material respects, with the
Uniting And Strengthening America By Providing Appropriate Tools Required To
Intercept And Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, Public Law 107-56
(October 26, 2001).

 

Section 7.32                                Ranking.  All Obligations constitute direct,
unconditional and general obligations of the Obligated Parties and rank in
right of payment either pari passu or senior to all other Debt of the Obligated
Parties.

 

ARTICLE 8

 

AFFIRMATIVE
AND NEGATIVE COVENANTS

 

Each Obligated
Party covenants to each Agent and each Lender that as long as any of the
Obligations remain outstanding or this Agreement is in effect each Obligated
Party will keep and perform each of the following covenants:

 

Section 8.1                                      Taxes
and Other Obligations.  Except as
otherwise permitted by the terms of this Agreement, each Obligated Party shall (a) file
when due (after giving effect to all timely filed appropriate extensions) all
tax returns and other reports that it is required to file, (b) pay, or
provide for the payment, when due, of all taxes, fees, assessments, and other
governmental charges against it or upon its property, income, and franchises,
make all required withholding and other tax deposits, and establish adequate
reserves for the payment of all such items in accordance with GAAP, and provide
to the Agents and the Lenders, upon request, satisfactory evidence of its
timely compliance with the foregoing, and (c) pay when due all Debt and
claims owed to materialmen, mechanics, carriers, warehousemen, landlords,
processors, and other like Persons, and all other indebtedness, liabilities,
and obligations the nonpayment of which could result in a Lien on any of the
Collateral; provided that upon prior written notice to each Agent, such
Obligated Party need not pay any of the foregoing (x) which it is
contesting in good faith by appropriate proceedings diligently pursued,
(y) for which it has established proper reserves as required in accordance
with GAAP, and (z) for which no Lien (other than a Permitted
Lien) results from such non-payment.

 

84

 

Section 8.2                                      Legal
Existence and Good Standing.  Except
as allowed by Section 8.9, each Obligated Party shall maintain (i) its
legal existence and good standing in the jurisdiction of its formation,
incorporation, or organization and (ii) its qualification and good
standing in all other jurisdictions in which the failure to maintain such
qualification and good standing could reasonably be expected to have a Material
Adverse Effect.  No Obligated Party shall
change the jurisdiction of its formation, incorporation, or organization or
change its type of entity as identified on Schedule 7.3 without the
prior written consent of the Agents.

 

Section 8.3                                      Compliance
with Law and Agreements; Maintenance of Licenses.  Each Obligated Party shall, and shall cause
each of its Subsidiaries to, comply in all material respects with all
Requirements of Law.  Each Obligated
Party shall, and shall cause each of its Subsidiaries to, obtain and maintain
all licenses, permits, franchises, and governmental authorizations necessary to
own its property and to conduct its business as conducted on the Original
Closing Date or as permitted by Section 8.16.  No Obligated Party shall modify, amend, or
alter its Organization Certificate or Management Agreement other than in a
manner that does not adversely affect the rights of the Lenders or the Agents
under any of the Loan Documents.

 

Section 8.4                                      Maintenance
of Property; Inspection of Property.

 

(a)                                  Each Obligated Party
shall (i) maintain all of its inventory, equipment and facilities
necessary and useful in the conduct of its business in good operating order and
condition, ordinary wear and tear excepted and (ii) make all necessary
repairs thereto and renewals and replacements thereof.

 

(b)                                 Each Obligated Party
shall permit employees, representatives and independent contractors of each of
the Agents (accompanied by any Lender that so elects with the consent of such
Agent, such consent not to be unreasonably withheld) to visit and inspect any
of such Obligated Party’s properties, to examine, audit, make extracts from or
copies of and inspect any or all of such Obligated Party’s Collateral, its
corporate, financial, and operating records, files, and books of account, and
make copies thereof or abstracts therefrom, and to discuss its affairs,
finances, and accounts with its officers, directors, and independent public
accountants (provided that the relevant Agent shall provide the
Obligated Parties the opportunity to attend and participate in such discussions
with such public accountants) at such reasonable times during normal
business hours and as soon as may be reasonably desired, upon reasonable
advance notice to such Obligated Party, provided that during the
existence of any Event of Default, each Agent (accompanied by any Lender that
so elects with the consent of such Agent, such consent not to be unreasonably
withheld) may do any of the foregoing at any time without advance
notice.  Each Obligated Party will
deliver to each Agent any instrument necessary for such Agent to obtain records
from any service bureau maintaining records for such Obligated Party.  Each Agent shall have the right, at any time,
in the applicable Obligated Party’s name, in such Agent’s name, or in the name
of a nominee of such Agent, to verify the validity, amount, or any other matter
relating to the Accounts, Inventory, or other Collateral, by mail, telephone,
or otherwise.  The Obligated Parties
shall reimburse each of the Agents for its expenses incurred in connection with
any such audit, inspection, and examination as provided in Section 15.7.  Each of the Agents may, without expense to
any of them, 

 

85

 

use such of each Obligated Party’s respective personnel, supplies, and
Real Estate as may be necessary for maintaining or enforcing the Agent’s Liens.

 

Section 8.5                                      Insurance.

 

(a)                                  Each Obligated Party
shall maintain with financially sound and reputable insurers having a rating of
at least A+ or better by Best Rating Guide (or self-insure with respect to
workers compensation, health, and other insurance (excluding insurance of the
Collateral), including deductible and loss retention provisions, compatible
with the standards set forth in this Section 8.5(a)), insurance
against (i) loss or damage by fire (with extended coverage), theft,
burglary, pilferage, and loss in transit, (ii) public liability and third
party property damage, (iii) larceny, embezzlement, or other criminal
liability, (iv) business interruption, and (v) such other hazards or
of such other types as is customary for Persons engaged in the same or similar
business, in amounts, and under policies reasonably acceptable to the
Agents.  Without limiting the foregoing,
in the event that any improved Real Estate covered by a Mortgage is determined
to be located within an area that has been identified by the Director of the
Federal Emergency Management Agency as a Special Flood Hazard Area (“SFHA”),
the applicable Obligated Party shall purchase and maintain flood insurance on
such improved Real Estate and any Equipment and Inventory located on such Real
Estate.  Each Obligated Party shall also maintain flood insurance for its
Inventory and Equipment that is, at any time, located in a SFHA.  Without limiting the Agents’ discretion with
respect to the amount of any insurance as provided by the first sentence of
this Section 8.5, the amount of any flood insurance required by
this Section 8.5 shall, at a minimum, comply with applicable
federal regulations as required by the Flood Disaster Protection Act of 1973.

 

(b)                                 For each of the
insurance policies issued as required by this Section 8.5 that
insures Collateral against loss or damage, each Obligated Party shall cause the
Collateral Agent to be named as secured party or mortgagee and loss payee, in a
manner acceptable to the Collateral Agent. 
Each policy of insurance shall contain (i) a clause or endorsement
requiring the insurer to give not less than ten days prior written notice to
the Collateral Agent in the event of cancellation of such policy for
non-payment of premiums and not less than thirty days prior written notice to
the Collateral Agent in the event of cancellation of such policy for any other
reason whatsoever and (ii) a clause or endorsement stating that the
interest of the Collateral Agent shall not be impaired or invalidated by any
act or neglect of the insured Person or the owner of any premises for purposes
more hazardous than are permitted by such policy.  All premiums for insurance required to be
maintained by this Section 8.5 shall be paid by the applicable
Obligated Party when due.  Certificates
of insurance and, if requested by either of the Agents, photocopies of the
policies shall be delivered to each of the Agents (with sufficient copies to
the Administrative Agent for distribution to each of the Lenders).  If any Obligated Party fails to procure (or
cause to be procured) such insurance or to pay the premiums therefor when
due, the Administrative Agent may, and at the direction of the Majority Lenders
shall, do so from the proceeds of Revolving Loans.

 

(c)                                  The Obligated Parties
shall deliver all proceeds of any insurance policies covering any Collateral to
the Administrative Agent.  If any
Obligated Party fails to

 

86

 

promptly do so or
if any Event of Default exists, the Collateral Agent may directly collect all
insurance proceeds in respect of any loss, damage, or destruction of
Collateral.  All proceeds of any
insurance policy covering any Collateral received by the Administrative Agent
or the Collateral Agent shall be applied to the Obligations in the manner
provided for in Section 4.3 as if such Collateral were the subject
of a Disposition permitted pursuant to this Agreement.

 

Section 8.6                                      Condemnation.  The Obligated Parties shall deliver to the
Administrative Agent all proceeds received with respect to any Collateral that
is the subject of any condemnation or other similar proceeding.  If any Obligated Party fails to promptly do
so or if any Event of Default exists, the Collateral Agent may directly collect
all such proceeds.  All proceeds
resulting from any condemnation or other similar proceeding received by the
Administrative Agent or the Collateral Agent shall be applied to the
Obligations in the manner provided for in Section 4.3 as if such
Collateral were the subject of a Disposition permitted pursuant to this
Agreement.

 

Section 8.7                                      Environmental
Law.

 

(a)                                  Each Obligated Party
shall conduct, and shall cause each of its Subsidiaries to 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 Obligated Party shall
take, and shall cause each of its Subsidiaries to take, prompt and appropriate
action to respond to any non-compliance with any Environmental Law.  Each Obligated Party shall regularly report
to the Agents on any such response with respect to any circumstance that could
reasonably be expected to result in, or has resulted in, liability in excess of
$500,000 or otherwise could reasonably be expected to result in, or has
resulted in, a Material Adverse Effect.

 

(b)                                 Without limiting the
generality of the foregoing, the Obligated Parties shall submit to each of the
Agents (with sufficient copies to the Administrative Agent for distribution to
the Lenders) annually, or more frequently if requested by either of the Agents,
commencing on the first Anniversary Date, and on each Anniversary Date
thereafter, an update of the status of each environmental compliance or
liability issue concerning any Obligated Party or any Subsidiary of an
Obligated Party or any of their respective properties or operations (whether
past or present), if any, that could reasonably be expected to result in, or
has resulted in, liability in excess of $500,000 or otherwise could reasonably
be expected to result in, or has resulted in, a Material Adverse Effect.  Each Agent (or any Lender through either of
the Agents) may request, in which case the Borrowers will promptly furnish
or cause to be promptly furnished to each of the Agents (with sufficient copies
to the Administrative Agent for distribution to the Lenders), copies of
technical reports prepared or received by any Obligated Party or any Subsidiary
of an Obligated Party and its communications with any Governmental Authority to
determine whether such Obligated Party or Subsidiary of an Obligated Party is
proceeding reasonably to correct, cure, or contest in good faith any alleged
non-compliance or environmental liability. 
Each Obligated Party shall, at either of the Agent’s request (or at the
Majority Lenders’ request through either of the Agents) and at such
Obligated Party’s expense, (i) retain an independent environmental
engineer 

 

87

 

acceptable to the Agents to evaluate any site, including tests if
appropriate, where the non-compliance or alleged non-compliance with any
Environmental Law has occurred and prepare and deliver to each of the Agents
(with sufficient copies to the Administrative Agent for distribution to the
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 (ii) provide to each of the Agents (with
sufficient copies to the Administrative Agent for distribution to the Lenders)
a supplemental report of such engineer whenever the scope of the environmental
problems (if any), or the response thereto or the estimated costs thereof,
shall increase in any material respect.

 

Section 8.8                                      Compliance
with ERISA.  Each Obligated Party
shall, and shall cause each of its ERISA Affiliates to:  (a) maintain each Plan in compliance in
all material respects with the applicable provisions of ERISA, the Code, and
Requirements of Law; (b) cause each Plan that 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 in a timely
fashion; (d) not engage in a prohibited transaction or violation of the
fiduciary responsibility rules with respect to any Plan; and (e) not
engage in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA.

 

Section 8.9                                      Mergers,
Consolidations, or Sales.  No
Obligated Party shall enter into any transaction of merger, reorganization, or
consolidation, or transfer, sell, assign, lease, or otherwise Dispose of all or
any part of its property, or sell or issue any of its preferred Capital Stock,
or wind up, liquidate, or dissolve, or agree to do any of the foregoing, except
for (A) sales and other Dispositions of Inventory in the ordinary course
of its business, (B) sales or other Dispositions of Equipment in the
ordinary course of business that is (1) damaged, worn out, unserviceable,
or obsolete, (2) no longer necessary for the proper conduct of business
with a good faith estimated value not in excess of $100,000 in any Fiscal Year
of Ahern, or (3) contemporaneously replaced with Equipment of comparable
utility, in each case in the ordinary course of business and operations of the
Obligated Parties and on a basis consistent with past practices, (C) the
sale of the helicopter that is the subject of the Aircraft Mortgage or the
Cessna 525 aircraft (serial number 525-0341); provided that the purchase
price received by the relevant Obligated Party for each such aircraft shall not
be less than the fair market value of such aircraft and at least 75% of the
purchase price therefor shall be payable in cash on the closing date of such
sale or by the assumption of Debt secured by such aircraft, (D) payments
of cash in the ordinary course of business and as otherwise permitted by this
Agreement, and (E) subject to Section 8.10, other transactions
between or among the Obligated Parties in the ordinary course of each Obligated
Party’s business consistent with past practices; provided that,
notwithstanding the foregoing or any other provision of this Agreement, as long
as no Default or Event of Default exists or would result therefrom and provided
Ahern gives the Agents prior written notice:

 

(a)                                  a Borrower (other
than Ahern) may wind-up, dissolve, or liquidate if (i) its property is
transferred to another Borrower and (ii) the Borrower acquiring such
property complies with its obligations under Section 8.25 and Section 10.2
simultaneously with such acquisition;

 

88

 

(b)                                 an Obligated Party
that is not a Borrower may wind-up, dissolve, or liquidate if (i) its
property is transferred to another Obligated Party and (ii) the Obligated
Party acquiring such property complies with its obligations under Section 8.25
and Section 10.2 simultaneously with such acquisition;

 

(c)                                  a Borrower may merge
or consolidate with another Borrower, provided
that if Ahern is a party to any such merger or consolidation, Ahern shall be
the surviving entity;

 

(d)                                 an Obligated Party may
transfer assets in connection with a Permitted Investment; and

 

(e)                                  an Obligated Party
that is not a Borrower may merge or consolidate with another Obligated Party, provided
that if a Borrower is a party to any such merger or consolidation, such
Borrower shall be the surviving entity, and a Subsidiary of an Obligated Party
that is not an Obligated Party may merge or consolidate with an Obligated
Party; provided that the Obligated Party is the survivor of any such
merger or consolidation.

 

The inclusion
of proceeds in the definition of Collateral shall not be deemed to constitute
the Administrative Agent’s, the Collateral Agent’s or any Lender’s consent to
any sale or other Disposition of the Collateral except as expressly permitted
herein.

 

Section 8.10                                Distributions;
Capital Change; Restricted Investments. 
Ahern will not, nor will it permit any of its Subsidiaries to, (a) directly
or indirectly declare or pay any Distributions, except that (i) any
Subsidiary of Ahern that is an Obligated Party may make Distributions to a
Borrower, and (ii) any Subsidiary of Ahern that is not an Obligated Party
may make Distributions to Ahern or any other Subsidiary of Ahern that is an Obligated
Party, and Ahern may make Permitted Distributions (but only to the extent that
such Permitted Distribution is not prohibited to be made under the terms of any
other agreement to which Ahern is a party or by which it is otherwise bound), (b) make
any change in its capital structure which could have an adverse effect on the
ability of any of the Obligated Parties to perform any of its duties and
obligations under any Loan Document or pay the Obligations when due, or (c) make
any Investment other than Permitted Investments.

 

Section 8.11                                Guaranties.  No Obligated Party shall make, issue, or
become liable on any Guaranty, except (a) Guaranties of Debt allowed under
Section 8.12 and (b) endorsement in the ordinary course of
business of negotiable instruments for deposit or collection.

 

Section 8.12                                Debt.  No Obligated Party shall incur or maintain
any Debt, other than:

 

(a)                                  the Obligations;

 

(b)                                 the Debt existing on
the Closing Date described in Schedule 8.12;

 

(c)                                  Debt evidencing a
refunding, renewal, or extension of the Debt described in clause (b) preceding
or in clause (h) below; provided that (i) the
principal amount thereof is not increased at the time of such renewal,
refinancing, refunding, or extension thereof; (ii) no Obligated Party that
is not an obligor or guarantor of such Debt as of the Closing 

 

89

 

Date shall become an obligor or guarantor thereof, (iii) the terms
of such refunding, renewal, or extension are no less favorable to the Obligated
Parties and the Lenders than the original Debt and (iv) the Liens, if any,
securing such refunded, renewed or extended Debt do not attach to any assets in
addition to those assets, if any, securing the Debt to be refunded, renewed or
extended (except additions to the aircraft);

 

(d)                                 Debt owing by an
Obligated Party to another Obligated Party for intercompany loans and advances
made for working capital in the ordinary course of business; provided
that (i) all such intercompany Debt shall be evidenced by promissory
notes, (ii) all such intercompany Debt owed by Ahern to any of its
Subsidiaries shall be subordinated in right of payment to the payment in full
of the Obligations pursuant to the terms of the applicable promissory notes or
an intercompany subordination agreement satisfactory to the Agents, and (iii) any
payment by any Subsidiary of Ahern under any guaranty of the Obligations or the
Second Lien Debt shall result in a pro  tanto reduction of the
amount of any intercompany Debt owed by such Subsidiary to Ahern or to any of
its Subsidiaries for whose benefit such payment is made;

 

(e)                                  subject to clause (c)(ii) above,
Guaranties permitted under Section 8.11;

 

(f)                                    Debt incurred in
connection with the financing of premiums payable with respect to insurance policies
required to be maintained by the Obligated Parties pursuant to this Agreement;

 

(g)                                 the Second Lien Debt; provided
that the aggregate principal amount of such Debt under this clause (g) shall
not at any time exceed $200,000,000 less all payments and prepayments
of principal thereon, and the refinancing thereof (the Debt under or with
respect to such refinancing, the “Refinancing Second Lien Debt” and the
agreements evidencing, governing, securing or guaranteeing any of the
Refinancing Second Lien Debt (as amended, modified or supplemented from time to
time in a manner not in contravention of the terms of this Agreement),
collectively, the “Refinancing Second Lien Debt Documents”); provided
that such refinancing shall be permitted only so long as (i) all, and not
a portion of, the Second Lien Debt is refinanced and the principal amount of
such refinancing is not greater than the principal amount of Debt being
refinanced (other than with respect to any reasonable fees and other costs of
refinancing and with respect to accrued interest on the Second Lien Debt), (ii) the
Liens, if any, securing such refinancing do not attach to any assets in
addition to those assets securing the Second Lien Debt and those Liens shall be
junior and subordinate to the Agent’s Liens and be subject to the terms and
conditions of an intercreditor agreement between the Collateral Agent and the
holders of the Refinancing Second Lien Debt (or an agent or trustee therefor)
substantially identical to the Intercreditor Agreement or otherwise
satisfactory to the Agents and the Majority Lenders, (iii) no Person that
is not an obligor or guarantor of the Second Lien Debt immediately prior to the
refinancing shall become an obligor or guarantor of the Refinancing Second Lien
Debt, unless such Person simultaneously becomes a Guarantor, (iv) the
terms under the Refinancing Second Lien Debt Documents are no less favorable in
all material respects to the Obligated Parties, the Agents and the Lenders than
the terms under the Second Lien Debt Documents (without in any way limiting the
foregoing, in no event shall the financial or other covenants or 

 

90

 

events of default in the Refinancing Second Lien Debt Documents be more
restrictive than those in the Second Lien Debt Documents in effect on the
Closing Date), (v) no payments of principal on the Refinancing Second Lien
Debt shall be scheduled to be due and payable prior to one year after the
Stated Termination Date and the final scheduled maturity of the Refinancing
Second Lien Debt shall be no earlier than the final scheduled maturity of the
Second Lien Debt under the Second Lien Debt Documents as in effect on the
Closing Date and (vi) no Default or Event of Default shall exist either
immediately prior to or after giving effect to such refinancing;

 

(h)                                 Capital Leases of
Transportation Equipment, the New Aircraft and/or computer and office equipment
and Debt to finance (as purchase money or otherwise (any such financing that is
not purchase money Debt to be on terms reasonably satisfactory to the Agents))
Transportation Equipment, the New Aircraft (purchase money Debt only) and/or
computer and office equipment; provided that (1) the aggregate
amount of Debt (including Capital Leases but excluding Revolving Loans)
relating to Transportation Equipment incurred in any Fiscal Year shall not
exceed $4,000,000, (2) the aggregate amount of Debt (including Capital
Leases) permitted to be outstanding under this Section 8.12
(including, without limitation, under clauses (b), (c) and
(h) hereof) relating to Transportation Equipment (but excluding
Revolving Loans) shall not exceed $15,000,000 at any time outstanding, (3) the
aggregate amount of Debt relating to the New Aircraft (including, without
limitation, any refinancings thereof) shall not exceed $6,000,000 at any time
outstanding and (4) the aggregate amount of Debt (including Capital
Leases) relating to computer and office equipment under this clause (h) and
any refinancings thereof under clause (c) shall not exceed
$2,000,000 at any time outstanding;

 

(i)                                     purchase money
Debt to vendors to finance the purchase from such vendors of Inventory not to
exceed an aggregate amount at any time outstanding equal to $10,000,000 less
the aggregate amount of inventory consigned to the Obligated Parties at such
time; provided that (1) on or prior to the incurrence of any such
Debt, the applicable Obligated Party has identified to the Agents in writing,
in reasonable detail, the specific items of Inventory being financed thereby, (2) the
applicable Obligated Party shall be able to readily identify such financed
Inventory in its computer records in a manner reasonably satisfactory to the
Agents; provided that during the existence of an Event of Default, if
requested by either Agent, the applicable Obligated Party shall attach to such
Inventory in a conspicuous location an insignia, stencil, plaque, or other form
of notice indicating in a manner satisfactory to the Agents that such Inventory
is being financed by such vendor, (3) the Liens created in connection with
such purchase money Debt shall attach only to (and any UCC financing statements
filed by any such vendor with respect to such Liens shall only cover) either
(x) the specific items of Inventory being purchased and proceeds of the sale of
such Inventory or (y) Inventory purchased from time to time by such Obligated
Party from such vendor for which there remains an unpaid purchase price owing
and proceeds of the sale of such Inventory (and a copy of each UCC financing
statement filed by a vendor shall be delivered to the Agents promptly after
filing thereof with the appropriate Governmental Authority), (4) the Liens
created in connection with such purchase money Debt shall not attach to any
Account arising from the rental of such Inventory, and (5) such Obligated
Party shall cause any vendor whose 

 

91

 

Lien and UCC financing statement is of the type included in clause (3)(y)
above to deliver to the Agents a monthly statement, in form and substance
reasonably satisfactory to the Agents, detailing those items of Inventory for
which there remains an unpaid purchase price and the amount of such unpaid
purchase price and those items of Inventory that have been released from the
vendor’s Lien since the last day of the period covered by the last monthly
statement delivered to the Agents; and

 

(j)                                     other unsecured
Debt; provided that the aggregate amount of unsecured Debt outstanding
under this clause (j) does not exceed $2,000,000 at any time
outstanding.

 

Section 8.13                                Prepayment;
Amendment of Debt Agreements.

 

(a)                                  No Obligated Party
shall voluntarily prepay or redeem any Debt, except the Obligations or through
the proceeds of a refinancing permitted under Section 8.12(c) or
(g) or as permitted under clause (c) or (d) below.

 

(b)                                 No Obligated Party
shall, directly or indirectly, amend, modify, supplement, waive compliance with
or consent to any departure from any provision of (1) existing Debt (other
than the Second Lien Debt Documents or the Refinancing Second Lien Debt
Documents) or of any agreement (including any purchase agreement, indenture,
loan agreement or security agreement) relating thereto (other than the Second
Lien Debt Documents or the Refinancing Second Lien Debt Documents), other than
any amendments or modifications to such Debt which do not in any way materially
adversely affect the interests of the Credit Providers and are otherwise
permitted under Section 8.12; (2) any of the Second Lien Debt
Documents or any of the Refinancing Second Lien Debt Documents in any material
respect; or (3) the GE Sale and Leaseback Agreement or any related
document in any material respect.

 

(c)                                  In no event shall any
Borrower or any other Obligated Party make any payment or prepayment of principal
or interest on any Second Lien Debt or any Refinancing Second Lien Debt, except
(i) scheduled payments of interest on the Second Lien Debt and the
Refinancing Second Lien Debt when due and payable, (ii) the scheduled
payment of principal on the Second Lien Debt or the Refinancing Second Lien
Debt, as the case may be, on the stated maturity date thereof and (iii) in
the case of Second Lien Debt, through the proceeds of a refinancing permitted
under Section 8.12(g).

 

(d)                                 In no event shall any
Borrower or any other Obligated Party make any payment or prepayment of any
obligation or liability under or in connection with the GE Sale and Leaseback
Agreement or purchase any Inventory subject to the GE Sale and Leaseback
Agreement, except in connection with the termination of the lease arrangements
under the GE Sale and Leaseback Agreement, the payment in full of all
obligations under the GE Sale and Leaseback Agreement (the amount of which
payment shall be determined in accordance with Schedule 8.13) and
the concurrent purchase by Ahern of all Inventory subject to the GE Sale and
Leaseback Agreement, but only so long as no Default or Event of Default exists
immediately prior to or after giving effect to such payment and purchase.

 

92

 

Section 8.14                                Transactions
with Affiliates.  Except as otherwise
provided in Section 8.10, Section 8.11, Section 8.12
and this Section 8.14 or except as set forth on Schedule 8.14,
during the term of this Agreement, no Obligated Party shall sell, transfer,
distribute, or pay any money or property, including, but not limited to, any
fees or expenses of any nature (including, but not limited to, any fees or
expenses for management services), to any Affiliate that is not a Borrower, or
lend or advance money or property to any Affiliate that is not a Borrower, or
invest in (by capital contribution or otherwise) or purchase or repurchase
any Capital Stock or indebtedness, or any property, of any Affiliate that is
not a Borrower, or become liable on any Guaranty of the indebtedness,
liabilities, dividends, or other obligations of any Affiliate that is not a
Borrower, or enter into a lease for real or personal property with any
Affiliate that is not a Borrower or extend or renew any such lease (whether
such lease is existing on the Closing Date or entered into thereafter).  Notwithstanding the foregoing, if no Default
or Event of Default is in existence or would result therefrom, an Obligated
Party may engage in transactions with an Affiliate that is not a Borrower
(including, without limitation, any such transaction that constitutes an
extension or renewal of a transaction permitted under this Section 8.14
that was in existence on the Original Closing Date) in the ordinary course of
such Obligated Party’s business consistent with past practices in amounts and
upon terms fully disclosed to the Agents and the Lenders and no less favorable
to such Obligated Party than would be obtained in a comparable arm’s-length
transaction with a third party who is not an Affiliate; provided, that (i) with
respect to any transaction or series of transactions with an Affiliate that is
not a Borrower involving aggregate consideration in excess of $500,000, such
transaction shall require the approval of the Board of Directors of Ahern and
evidence of such approval shall be delivered to the Agents; provided further,
that with respect to any transaction or series of transactions with an
Affiliate that is not a Borrower involving aggregate consideration in excess of
$2,500,000, the relevant Obligated Party shall obtain a favorable written
opinion as to the fairness of such transaction to such Obligated Party from a
financial point of view from an independent investment banking firm of national
reputation in the U.S. or, if pertaining to a matter for which such investment
banking firms do not customarily render such opinions, an appraisal or
valuation firm of national reputation in the U.S., and a copy of such opinion
shall be delivered to the Agents.

 

Section 8.15                                Investment
Banking and Finder’s Fees.  No
Obligated Party shall pay or agree to pay, or reimburse any other party with
respect to, any investment banking or similar or related fee, underwriter’s
fee, finder’s fee, or broker’s fee to any Person in connection with this Agreement.  The Obligated Parties shall defend and
indemnify the Agents and the Lenders against and hold them harmless from (a) all
claims of any Person that any Obligated Party is obligated to pay any such fees
and (b) all costs and expenses (including reasonable attorneys’ fees and
Attorney Costs) incurred by either Agent and/or any Lender in connection
therewith.

 

Section 8.16                                Business
Conducted.  The Obligated Parties
shall not engage, directly or indirectly, in any line of business other than
the lines of business in which the Obligated Parties are engaged on the Closing
Date and those reasonably similar, related, or incidental thereto.

 

Section 8.17                                Liens.

 

(a)                                  No Obligated Party
shall create, incur, assume, or permit to exist, and will defend the Collateral
against, and take such other action as is necessary to remove, any 

 

93

 

Lien on any property now owned or hereafter acquired by it, except
Permitted Liens.  Each Obligated Party
will defend the right, title, and interest of the Collateral Agent in and to
any of such Obligated Party’s rights under the Collateral against the claims
and demands of all Persons whomsoever. 
Each Obligated Party will advise each Agent promptly, in reasonable
detail, (i) of any Lien (other than Permitted Liens) or claim made or
asserted against any of the Collateral and (ii) of the occurrence of any
other event with respect to the Collateral that could reasonably be expected to
have, or has resulted in, a Material Adverse Effect.

 

(b)                                 Other than as set
forth in the GE Sale and Leaseback Agreement or in connection with the creation
of any Debt under Section 8.12(c), (h) or (i) or
in any agreement relating to the lease of an Excluded Asset by an Obligated
Party as lessee or sublessee, no Obligated Party will enter into or become
subject to any Negative Pledge; provided that any Negative Pledge under
the GE Sale and Leaseback Agreement shall be limited to property being leased
to Ahern thereunder; and provided  further that any Negative
Pledge entered into or existing in connection with the creation of Debt under Section 8.12(c),
(h) or (i) or in any agreement relating to the lease of an
Excluded Asset by an Obligated Party as lessee or sublessee shall be limited to
the applicable property being financed or leased, as the case may be.

 

(c)                                  No Obligated Party
shall create, incur, assume or otherwise cause or permit to exist or become
effective any consensual encumbrance, condition, prohibition or restriction of
any kind on any Obligated Party’s right to: 
(a) incur or repay Debt (whether owing to any Obligated Party or
otherwise); (b) guarantee the Obligations pursuant to any Guaranty
Agreement; (c) amend, modify, extend or renew any agreement evidencing
Debt; (d) repay any obligations owed to any Obligated Party; (e) make
loans or advances to any Obligated Party; (f) pay dividends or make any
other distributions on any Subsidiary’s Capital Stock owned by Ahern or any
other Subsidiary of Ahern; or (g) transfer any of its property to any Obligated
Party, in each case except as provided in this Agreement, the other Loan
Documents and the Second Lien Debt Documents or the Refinancing Second Lien
Debt Documents and, in the case of clause (g), as provided in the
GE Sale and Leaseback Agreement or in connection with any Debt permitted under Section 8.12(h) or
(i), or in any agreement relating to the lease of an Excluded Asset by
any Obligated Party as lessee or sublessee.

 

Section 8.18                                Sale
and Leaseback Transactions.  No
Obligated Party shall, directly or indirectly, enter into or otherwise be
subject to any arrangement with any Person providing for such Obligated Party
to lease or rent property that such Obligated Party has sold or will sell or
otherwise transfer to such Person other than pursuant to the GE Sale and
Leaseback Agreement (but only to the extent of the Inventory subject thereto on
the Original Closing Date).

 

Section 8.19                                New
Subsidiaries.  No Obligated Party
shall, directly or indirectly, organize, create, acquire, or permit to exist
any Subsidiary without the prior written consent of the Majority Lenders, other
than those listed on Schedule 7.4.

 

Section 8.20                                Fiscal
Year.  Each Obligated Party (other
than Ahern) shall cause its Fiscal Year to be the same as Ahern’s.  Ahern shall not change its Fiscal Year.

 

94

 

Section 8.21                                Financial
Covenants.

 

(a)                                  Fixed Charge
Coverage Ratio.  As of the last day
of each Fiscal Quarter of Ahern, the Obligated Parties will not permit the
Fixed Charge Coverage Ratio of Ahern and its Subsidiaries for any Test Period
to be less than 1.00 to 1.00:

 

(b)                                 Leverage Ratio.  As of the last day of each Fiscal Quarter of
Ahern, the Obligated Parties will not permit the Leverage Ratio of Ahern and
its Subsidiaries for any Test Period to exceed the ratio specified
corresponding to the applicable Fiscal Quarter end in the table below,
respectively:

 

	
  Fiscal Quarter End

  	
   

  	
  Leverage Ratio

  	
   

  
	
  September 30, 2005

  	
   

  	
  5.10 to 1.00

  	
   

  
	
  December 31, 2005

  	
   

  	
  5.10 to 1.00

  	
   

  
	
  March 31, 2006

  	
   

  	
  5.10 to 1.00

  	
   

  
	
  June 30, 2006

  	
   

  	
  5.10 to 1.00

  	
   

  
	
  September 30, 2006

  	
   

  	
  5.00 to 1.00

  	
   

  
	
  December 31, 2006

  	
   

  	
  5.00 to 1.00

  	
   

  
	
  March 31, 2007

  	
   

  	
  4.90 to 1.00

  	
   

  
	
  June 30, 2007

  	
   

  	
  4.90 to 1.00

  	
   

  
	
  September 30, 2007

  	
   

  	
  4.80 to 1.00

  	
   

  
	
  December 31, 2007

  	
   

  	
  4.80 to 1.00

  	
   

  
	
  March 31, 2008

  	
   

  	
  4.70 to 1.00

  	
   

  
	
  June 30, 2008

  	
   

  	
  4.70 to 1.00

  	
   

  
	
  September 30, 2008

  	
   

  	
  4.60 to 1.00

  	
   

  
	
  December 31, 2008

  	
   

  	
  4.60 to 1.00

  	
   

  
	
  March 31, 2009

  	
   

  	
  4.50 to 1.00

  	
   

  
	
  June 30, 2009

  	
   

  	
  4.50 to 1.00

  	
   

  
	
  September 30,
  2009 and each Fiscal Quarter end thereafter

  	
   

  	
  4.50 to 1.00

  	
   

  

 

95

 

(c)                                  [Intentionally
Omitted].

 

(d)                                 Minimum Equipment
Utilization.  The Obligated Parties
shall not permit the average actual customer lease utilization of all of the
Borrowers’ aerial lift Inventory during any two consecutive Fiscal Quarter
period ending during a Trigger Event Compliance Period and during the two
consecutive Fiscal Quarter period most recently ended prior to the commencement
of such Trigger Event Compliance Period to be less than 45% of the maximum
average customer lease utilization possible for all such Inventory during such
two consecutive Fiscal Quarter period (assuming that all such Inventory of the
Borrowers was available to be leased at all times during such two consecutive
Fiscal Quarter period).

 

Section 8.22                                Use
of Proceeds.  The Borrowers shall use
the proceeds of the Loans (a) to pay costs and expenses incurred in
connection with the closing of this Agreement and the transactions contemplated
hereby, (b) to pay interest, costs, and expenses incurred in connection
with this Agreement, (c) to issue Letters of Credit and to repay
reimbursement obligations related thereto, and (d) to finance ongoing
general working capital needs and Capital Expenditures (in each case, not
otherwise prohibited by this Agreement) of the Obligated Parties in the
ordinary course of business, and shall not use any portion of the Revolving
Loan proceeds, directly or indirectly, (x) to fund a personal loan to or
for the benefit of a director or executive officer of any Obligated Party or
for any purpose that is prohibited by the Sarbanes-Oxley Act of 2002 (Pub. L. No. 107-204,
116 Stat. 745), (y) to buy or carry any Margin Stock, to repay or
otherwise refinance indebtedness of any of the Borrowers or others incurred to
buy or carry any Margin Stock, to extend credit for the purpose of buying or
carrying any Margin Stock, or to acquire any security in any transaction that
is subject to Sections 13 or 14 of the Exchange Act, or (z) for any purpose
that is prohibited by any Requirement of Law.

 

Section 8.23                                Lenders as Depository.  Each Obligated Party shall maintain one or
both of BofA and Wachovia as its principal depository, including for the
maintenance of operating, administrative, cash management, collection activity,
and other deposit accounts for the conduct of its business.  Without limitation of the foregoing, each
Obligated Party shall use and maintain its deposit accounts, securities
accounts and cash management systems in a manner reasonably satisfactory to the
Agents.

 

Section 8.24                                Guaranties
of the Obligations.  Each Obligated
Party, including any Person that becomes a Borrower or a Guarantor after the
Closing Date pursuant to the terms of this Agreement, shall guarantee payment
and performance of the Obligations (other than Obligations owing by such
Obligated Party) pursuant to a Guaranty Agreement, duly executed by each
such Obligated Party.

 

96

 

Section 8.25                                Additional
Collateral; Further Assurances.

 

(a)                                  Subject to
Requirements of Law, each Obligated Party shall, unless the Majority Lenders
otherwise consent in writing, cause each Subsidiary of Ahern to become a
Guarantor.

 

(b)                                 Upon request of either
of the Agents, each Obligated Party shall (i) grant Liens to the
Collateral Agent, for the benefit of the Credit Providers, pursuant to such
agreements, certificates, documents, and instruments as such Agent, as the case
may be, may reasonably deem necessary and deliver such property, agreements,
certificates, documents, and instruments as such Agent, as the case may be, may
request to perfect the Liens of the Collateral Agent in any property of such
Obligated Party that constitutes Collateral, (ii) execute a Guaranty
Agreement as required by Section 8.24, and (iii) in connection
with the foregoing requirements, or either of them, deliver to the Agents all
items of the type required by Section 9.1 (as applicable).  Upon execution and delivery of such Loan
Documents and other agreements, certificates, documents, and instruments, each
such Person shall automatically become a Guarantor hereunder and thereupon
shall have all of the rights, benefits, duties, and obligations in such
capacity under the Loan Documents.

 

(c)                                  Without limiting the
foregoing, each Obligated Party shall, and shall cause each of Ahern’s
Subsidiaries that is required to become an Obligated Party pursuant to the
terms of this Agreement to, execute and deliver, or cause to be executed and
delivered, to the Agents such documents and agreements, and shall take or cause
to be taken such actions as either of the Agents may, from time to time,
reasonably request to carry out the terms and conditions of this Agreement and
the other Loan Documents.

 

Section 8.26                                Changes
in Accounting Treatment.

 

(a)                                  No Borrower shall,
without the prior written consent of each of the Agents, change any accounting
treatment for, or method of valuation of, its Inventory or its Transportation
Equipment, including with respect to the method of depreciation of Inventory or
Transportation Equipment, from that in effect on the Original Closing Date; provided
that a Borrower may make such changes as are required by GAAP.

 

(b)                                 No Borrower shall,
without the prior written consent of each of the Agents, change in any respect
from that in effect on the Original Closing Date and consistent with past
practices the manner or method in which such Borrower keeps its books and
records or makes entries with respect to any of its ledger accounts “Equipment
Down Long Term”, “Rebate Accrual” or “Rent Purchase Option” or any items
recorded therein, including without limitation and in any event, any change
which would in any manner affect the type or amount of any item that would or
should be recorded in any such general ledger account; provided that a
Borrower may make such changes as are required by GAAP.

 

(c)                                  Notwithstanding the
proviso in either clause (a) or (b) of this Section 8.26,
unless otherwise agreed to in writing by the Agents and the Lenders, the
Borrowing Base 

 

97

 

and all related definitions (including, without limitation, Net Book
Value and Reserves) shall continue to be determined as if no such change had
been made.

 

Section 8.27                                Invoicing.  Each Obligated Party shall invoice customers
for all Inventory which is subject to the GE Sale and Leaseback Agreement
separately from invoices relating to Inventory that is Collateral.

 

Section 8.28                                Acquired
Real Estate.  From and after the
Closing Date, in the event that (i) any Obligated Party acquires any Real
Estate in fee interest or (ii) at the time any Person becomes a Guarantor,
such Person owns or holds any Real Estate in fee interest (any such Real Estate
described in the foregoing clause (i) or (ii) being
an “Additional Mortgaged Property”),
such Obligated Party will deliver to the Agents:

 

(a)                                  A fully executed and
notarized Mortgage in proper form for recording in all appropriate places in
all applicable jurisdictions, encumbering the interest of such Obligated Party
in such Additional Mortgaged Property;

 

(b)                                 A boundary survey
prepared and certified to the Collateral Agent by a credentialed surveyor acceptable to the Agents,

 

(c)                                  A mortgagee’s policy of title insurance, or,
in the Agents’ discretion, a commitment for the issuance of such title
insurance, containing only such exceptions as may be acceptable to the Agents,
such insurance to be in an amount equal to 110% of the fair market value of
such parcel of Real Estate,

 

(d)                                 An appraisal prepared by a credentialed
independent appraiser acceptable to each of the Agents, satisfying Requirements
of Law and indicating whether or not such Real Estate is located within an area
that has been identified by the Director of the Federal Emergency Management
Agency as a Special Flood Hazard Area, and

 

(e)                                  Such other
information, documentation, and certifications, including an environmental
assessment, as may be reasonably requested by either of the Agents.

 

Section 8.29                                Ranking.  Each Obligated Party shall ensure that, at
all times, all Obligations shall rank in right of payment either pari  passu
or senior to all other Debt of the Obligated Parties.

 

Section 8.30                                Kubota
and Other Vendors.  No Inventory
manufactured, sold or consigned by Kubota Tractor Corporation or consigned by
any other vendor to any Obligated Party shall be rented by an Obligated Party
to a customer of such Obligated Party unless and until such Obligated Party
shall have purchased such Inventory and paid the purchase price for such
Inventory in full.

 

Section 8.31                                Other
Debt Limitations.  No Obligated Party
shall (i) enter into or permit to exist any Credit Facilities (as defined
in the Second Lien Debt Agreement) other than this Agreement or (ii) issue
or permit to exist any Parity Lien Debt (as defined in the Second Lien Debt
Agreement) other than Second Lien Debt or designate, in an officer’s
certificate or otherwise, any Debt as Parity Lien Debt for purposes of the
Second Lien Debt Agreement.

 

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ARTICLE 9

 

CONDITIONS OF
LENDING

 

Section 9.1                                      Conditions
Precedent to Making of Loans on the Closing Date.  The obligation of the Lenders to make any
Revolving Loans on the Closing Date, and the obligation of the Agents to cause
the Letter of Credit Issuer to issue any Letter of Credit on the Closing Date,
are subject to the following conditions precedent having been satisfied in a
manner satisfactory to each Agent and each Lender.

 

(a)                                  This Agreement shall
have been executed and delivered by each party hereto.

 

(b)                                 The Agents shall have
received duly executed copies of each of the Proprietary Rights Security
Agreements, the Intercreditor Agreement, the GE Intercreditor Agreement, each
Fee Letter and the Aircraft Mortgage.

 

(c)                                  The Agents shall have
received each of the following from each Obligated Party, all of which shall be
satisfactory in form and substance to each of the Agents and the Lenders:

 

(i)                                     copies of the
Organization Certificate of such Obligated Party, with all amendments thereto,
each certified by the appropriate Governmental Authority of the jurisdiction of
such Obligated Party’s formation, incorporation, or organization (as
applicable) certified by the secretary, general partner, or comparable
authorized representative of such Obligated Party as being true, correct,
complete, and in effect on the Closing Date;

 

(ii)                                  copies of the
Management Agreement of such Obligated Party certified by the secretary,
general partner, or comparable authorized representative of such Obligated
Party as being true, correct, complete, and in effect on the Closing Date;

 

(iii)                               copies of duly approved
Resolutions authorizing the execution and delivery of the Loan Documents to
which such Obligated Party is a party, and, with respect to the Borrowers,
authorizing the Borrowings, certified by the secretary, general partner, or
comparable authorized representative of such Obligated Party as being true,
correct, complete, and in effect on the Closing Date;

 

(iv)                              a certificate evidencing
the existence of such Obligated Party, and certificates evidencing the good
standing and tax status of such Obligated Party in the jurisdiction of its
organization and in each other jurisdiction in which it is required to be
qualified as a foreign business entity to transact its business as presently
conducted; and

 

(v)                                 a certificate of
incumbency and specimen signatures with respect to each individual authorized
to execute and deliver this Agreement and the other Loan Documents on behalf of
such Obligated Party, and any other individual 

 

99

 

executing any document, certificate, or instrument to be delivered in
connection with this Agreement and the other Loan Documents and, in the case of
each Borrower, to request Borrowings.

 

(d)                                 The Agents shall have
received, in form and substance satisfactory to each Agent, each of the
following:

 

(i)                                     with respect to
any Letter of Credit to be issued, all documentation required by Section 2.4,
duly executed by a Responsible Officer of the applicable Borrower;

 

(ii)                                  a Guaranty Agreement
duly executed and delivered by each Obligated Party as required pursuant to Section 8.24;

 

(iii)                               a certificate of the
Borrowers executed by a Responsible Officer of each Borrower:

 

(A)                              specifying the account of
the Borrowers that is the Funding Account,

 

(B)                                attaching certified
copies of (1) each of the Second Lien Debt Documents and (2) the GE
Sale and Leaseback Agreement, each to be in form and substance satisfactory to
each of the Agents, and

 

(C)                                certifying to such other
factual matters as may be reasonably requested by either Agent or any Lender;

 

(iv)                              each Deposit Account
Control Agreement required to be provided pursuant to Section 10.2(g) and
Section 10.6(c);

 

(v)                                 each Collateral Waiver
Agreement required to be provided pursuant to Section 10.2(c);

 

(vi)                              acknowledgment copies of
proper UCC financing statements with respect to the Collateral, duly authorized
by each of the Obligated Parties, filed on or before the Original Closing Date
in all jurisdictions that either of the Agents may deem necessary or desirable
in order to perfect the Agent’s Liens or, at the Agents’ option, such other
evidence satisfactory to the Agents of the filing of such financing statements;

 

(vii)                           UCC-3 financing statements
and such other instruments, in form and substance satisfactory to each Agent,
as shall be necessary to terminate all existing UCC filings on the property of
each of the Obligated Parties that are not Permitted Liens, and satisfactory
evidence that the Collateral Agent has a valid, exclusive (except for Permitted
Liens), and perfected first priority (except for Permitted Liens that according
to the terms of this Agreement are permitted to have priority over the Agent’s
Liens) Lien as of the Closing Date in the Collateral as security for the
Obligations, to the extent any such Liens may be perfected 

 

100

 

under the UCC (but excluding any Liens perfected solely by possession,
but only to the extent neither of the Agents has requested possession of such
Collateral), in each case in form and substance satisfactory to each of the
Agents; provided that upon either of the Agent’s request, the Obligated
Parties shall provide any additional agreement, document, instrument,
certificate, or other item relating to any other Collateral as may be required
for perfection under any Requirement of Law;

 

(viii)                        a Borrowing Base Certificate
that calculates the Borrowing Base as of the end of the Business Day
immediately preceding the Closing Date;

 

(ix)                                evidence, in form,
scope, and substance satisfactory to each of the Agents, of all insurance
coverage, with appropriate loss payable endorsements, as required by this
Agreement;

 

(x)                                   satisfactory
evidence that all filings, consents, or approvals with or of the owners of any
Capital Stock of any Obligated Party, any Governmental Authority, or any other
third party have been made or obtained, as applicable;

 

(xi)                                a revised sources and
uses table with respect to the transactions contemplated to occur under the
Transaction Documents on the Closing Date, which shall be in form and substance
satisfactory to the Agents and shall, in any event, include all of the
transaction costs with respect thereto; and

 

(xii)                             such other agreements,
certificates, documents, and instruments as either Agent or any Lender may
reasonably request.

 

(e)                                  The Agents shall have
received signed opinions of counsel for the Obligated Parties, opining as to
such matters in connection with the transactions contemplated by this Agreement
as either of the Agents may reasonably request, each such opinion to be in
form, scope, and substance satisfactory to the Agents, the Lenders, and their
respective counsel.

 

(f)                                    After giving effect
to all Borrowings on the Closing Date and payment of all fees and expenses due
hereunder or due with respect to the other transactions contemplated under the
Transaction Documents (consistent with the sources and uses table delivered
pursuant to clause (d)(xi) above), and with all of the Borrowers’
indebtedness, liabilities, and obligations current, the Unused Availability
shall not be less than $25,000,000.

 

(g)                                 All representations
and warranties made hereunder and in the other Loan Documents shall be true and
correct.

 

(h)                                 The Borrowers shall
have paid (i) all fees and expenses of the Agents and the Attorney Costs
incurred in connection with any of the Loan Documents and the transactions
contemplated thereby to the extent invoiced and (ii) all fees payable to
the Lenders on the Closing Date (or shall have made provision for the direct
payment of all 

 

101

 

such fees, expenses and Attorney Costs out of the proceeds of any
Borrowing to be funded on the Closing Date).

 

(i)                                     No Default or
Event of Default shall exist or would exist after giving effect to the
Borrowings to be made on the Closing Date.

 

(j)                                     The Agents and the
Lenders shall have had an opportunity to examine the books of account and other
records and files of the Obligated Parties and to make copies thereof, to inspect
each of the locations where any Obligated Party maintains any Inventory or
other Collateral, to review each of the material licenses of any Obligated
Party and the contracts referenced in Section 7.24, and to conduct
a pre-closing audit that shall include verification of Inventory, Accounts, and
the Borrowing Base, and the results of such examination and audit shall have
been satisfactory to the Agents and the Lenders in all respects.

 

(k)                                  All proceedings taken
by the Obligated Parties in connection with the execution of this Agreement,
the other Transaction Documents, and all documents and papers relating thereto
shall be satisfactory in form, scope, and substance to the Agents and the
Lenders.

 

(l)                                     Without limiting
the generality of the items described above, each of the Obligated Parties and
each other Person guaranteeing payment of any of the Obligations shall have
delivered or caused to be delivered to the Agents (in form and substance
reasonably satisfactory to each of the Agents), the financial statements,
instruments, resolutions, documents, agreements, certificates, opinions, and
other items required by either of the Agents and the Lenders.

 

(m)                               Since December 31,
2003 there shall not have occurred any
event, and no circumstances shall exist, that could reasonably be expected to
result in a Material Adverse Effect.

 

(n)                                 There shall exist no
action, suit, investigation, litigation or proceeding pending, or to the
knowledge of any of the Obligated Parties, threatened in any court or before
any arbitrator or governmental instrumentality that (i) either of the
Agents has determined could reasonably be expected to have a Material Adverse
Effect or (ii) purports to adversely affect any of the Loan Documents or
other Transaction Documents or any of the transactions contemplated thereby in
any material respect.

 

(o)                                 Each of the material
agreements and contracts set forth on Schedule 7.24 shall be in
form and substance satisfactory to each of the Agents.

 

(p)                                 Each Inventory
Appraisal prepared by Rouse Asset Services dated June 30, 2005 shall be in
form and substance satisfactory to each of the Agents, and the Agents shall
have received an update of each such Inventory Appraisal, each in form and
substance satisfactory to each of the Agents.

 

(q)                                 Ahern shall have
received cash proceeds of at least $200,000,000 from the issuance to the Second
Lien Lenders of the Second Lien Notes secured by a second Lien 

 

102

 

on the Collateral (hereinafter referred to as the “Second Lien Debt”), which
Second Lien Debt and Liens securing the same shall have been issued and granted
on terms and conditions and pursuant to documentation satisfactory to the
Agents and their counsel in their sole discretion and shall be subject to the
Intercreditor Agreement.

 

(r)                                    The lessor under
the GE Sale and Leaseback Agreement shall have entered into an intercreditor
agreement with the Collateral Agent in form and substance satisfactory to the
Agents (the “GE Intercreditor Agreement”).

 

(s)                                  The Obligated Parties
and their Subsidiaries shall have established cash management systems in form
and substance satisfactory to each of the Agents.

 

(t)                                    Each of the Agents
shall be satisfied that no Inventory purchased by a Borrower from Xtreme
Manufacturing, LLC contains or bears any Proprietary Rights of a third party
(including Xtreme Manufacturing, LLC) which would make such Inventory
ineligible under clause (k) of the definition of Eligible
Inventory.

 

(u)                                 Each of the Agents
shall have received the Latest Projections referred to in clause (a) of
that definition and the financial statements and pro forma balance sheet
referred to in Sections 7.6(a) and (c), all of which shall
be satisfactory to the Agents and the Lenders.

 

(v)                                 The Junior Lien Debt
shall have paid in full and all Liens granted in connection therewith shall
have been released.

 

The acceptance
by the Borrowers of any Loans made or Letters of Credit issued on the Closing
Date shall be deemed to be a representation and warranty made by each of the
Obligated Parties to the effect that all of the conditions precedent to the
making of such Loans or issuance of such Letters of Credit have been satisfied,
with the same effect as delivery to the Agents and the Lenders of a certificate
signed by a Responsible Officer of each of the Obligated Parties, dated the
Closing Date, to such effect.  Execution
and delivery to either of the Agents by a Lender of a counterpart of this
Agreement shall be deemed confirmation by such Lender that (1) all
conditions precedent in this Section 9.1 have been fulfilled to the
satisfaction of such Lender, (2) the decision of such Lender to execute
and deliver to either of the Agents an executed counterpart of this Agreement
was made by such Lender independently and without reliance on either of the
Agents or any other Lender as to the satisfaction of any condition precedent
set forth in this Section 9.1, and (3) all documents sent to
such Lender for approval, consent, or satisfaction were acceptable to such
Lender.

 

Section 9.2                                      Conditions
Precedent to Each Loan.  The
obligation of the Lenders to make each Loan, including any Loans on the Closing
Date, and the obligations of the Agents to cause the Letter of Credit Issuer to
issue any Letter of Credit shall be subject to the further conditions precedent
that on and as of the date of any such Borrowing the following statements shall
be true, and the request or deemed request by the Borrowers of any Borrowing
shall be deemed to be a statement by each of the Obligated Parties to the effect
set forth in clause (a), clause (b), clause (c),
clause (d) and clause (e) following with the same
effect as the delivery to 

 

103

 

the Agents of a certificate signed by a Responsible
Officer of each of the Obligated Parties, dated the date of such extension of
credit, stating that:

 

(a)                                  the representations
and warranties contained in this Agreement and the other Loan Documents are
correct in all material respects on and as of the date of such Borrowing as
though made on and as of such date, other than any such representation or
warranty that relates to a specified prior date and except to the extent the
Agents and the Lenders have been notified in writing by the Obligated Parties
that any representation or warranty is not correct and the Majority Lenders
have explicitly waived in writing compliance with such representation or
warranty;

 

(b)                                 no event or
circumstance exists, or would result from such Borrowing, that constitutes a
Default or an Event of Default;

 

(c)                                  no event or
circumstance exists, or would result from such Borrowing, that has had, or
could reasonably be expected to have, a Material Adverse Effect;

 

(d)                                 the proposed Borrowing
does not exceed the Unused Availability prior to giving effect to such
Borrowing; and

 

(e)                                  the proposed
Borrowing does not violate the borrowing or debt incurrence limits set forth in
any of the Second Lien Debt Documents and is permitted to be incurred and
secured by all applicable Secured Debt Documents (as defined in the Second Lien
Debt Agreement).

 

provided
that the foregoing conditions precedent are not conditions to any Lender (i) participating
in or reimbursing BofA (individually or in its capacity as the Administrative
Agent, as applicable) for such Lender’s Pro Rata Share of any Non-Ratable Loan
or Agent Advance made in accordance with the provisions of Section 2.2(i) or
Section 2.2(j) or (ii) participating in any Letter of Credit
in accordance with the provisions of Section 14.16(b).

 

ARTICLE 10

 

SECURITY

 

Section 10.1                                Grant
of Lien.  As security for the
Obligations, each Obligated
Party hereby grants to the Collateral Agent, for the benefit of the Credit
Providers, a continuing security interest in, lien on, pledge of, collateral
assignment of, and right of setoff against, all of the following property and
assets of such Obligated Party, whether now owned or existing or hereafter
acquired or arising, regardless of where located:

 

(a)                                  Accounts;

 

(b)                                 Inventory;

 

104

 

(c)                                  contract rights,
including Assigned Contracts and rights under leases of personal property
whether as lessor or lessee (including any option to purchase thereunder);

 

(d)                                 Chattel Paper;

 

(e)                                  Documents;

 

(f)                                    Instruments;

 

(g)                                 Supporting Obligations
and Letter-of-Credit Rights;

 

(h)                                 General Intangibles
(including payment intangibles and Software);

 

(i)                                     Goods;

 

(j)                                     Equipment;

 

(k)                                  Investment Property;

 

(l)                                     money, cash, and
cash equivalents;

 

(m)                               Deposit Accounts,
credits, and balances with and other claims against any financial institution
with which such Obligated Party maintains deposits, including any Clearing
Accounts;

 

(n)                                 a Hughes model 369D
helicopter bearing manufacturer’s serial number 790544D and U.S. registration
number N58341, together with one (1) Allison Model 250-C20B
helicopter engine bearing manufacturer’s serial number CAE-832068, which has
less than 750 rated take off horsepower, and five (5) Main Rotor Blades
bearing manufacturer’s serial numbers 8231, 8310, 8311, 8314 and 8235, respectively,
and all available operating, repair, and maintenance records pertaining to the
foregoing;

 

(o)                                 books, records, and
other property related to or referring to any of the foregoing, including
books, records, account ledgers, data processing records, computer software,
and other property and General Intangibles at any time evidencing or relating
to any of the foregoing;

 

(p)                                 the commercial tort
claims described in Schedule 7.26 and from time to time disclosed
to the Agents pursuant to Section 6.2(o); and

 

(q)                                 any and all accessions
and additions to, substitutions for, and replacements, products, and proceeds
of any of the foregoing, including, but not limited to, proceeds of any
insurance policies, claims against third parties, and condemnation or requisition
payments with respect to all or any of the foregoing.

 

All of the
foregoing, together with any Real Estate covered by any Mortgage and all other
property of any of the Obligated Parties in which either of the Agents or any
Lender may at any 

 

105

 

time be
granted a Lien as collateral for any of the Obligations, is herein collectively
referred to as the “Collateral.” 
Notwithstanding anything contained herein to the contrary, Collateral
shall not include Excluded Assets.

 

Section 10.2                                Perfection
and Protection of Security Interest.

 

(a)                                  Actions By the
Obligated Parties.  Each Obligated
Party shall, at the expense of the Borrowers, perform all steps reasonably
requested by either of the Agents at any time to perfect, maintain, protect,
and enforce the Agent’s Liens, including, as applicable:  (i) executing, delivering, and filing
and recording of the Mortgage(s), the Proprietary Rights Security Agreements
and the Aircraft Mortgage and authorizing the filing of financing or
continuation statements, and amendments thereof, in form and substance
reasonably satisfactory to the Agents; (ii) delivering to the Collateral
Agent warehouse receipts covering any portion of the Collateral located in
warehouses and for which warehouse receipts are issued and certificates of
title covering any portion of the Collateral for which certificates of title
have been issued indicating the Collateral Agent as the lienholder thereon; (iii) at
any time during the existence of an Event of Default, transferring Inventory to
warehouses or other locations designated by the Collateral Agent; (iv) placing
notations on such Obligated Party’s books of account to disclose the Agent’s
Liens; and (v) taking such other steps as are deemed necessary or
desirable by either of the Agents to maintain and protect the Agent’s Liens.

 

(b)                                 Delivery of
Collateral.  Upon the Administrative
Agent’s or the Collateral Agent’s request, each Obligated Party shall promptly
deliver to the Collateral Agent all Collateral consisting of negotiable
Documents, certificated securities (accompanied by stock powers executed in
blank), Chattel Paper, and Instruments.

 

(c)                                  Landlords and
Bailees  Each Obligated Party will
use its best efforts in good faith to provide to the Collateral Agent upon the
Administrative Agent’s or the Collateral Agent’s request, an executed
Collateral Waiver Agreement (i) from each landlord of leased Real Estate
on which any Collateral is located and (ii) from each Person that is not
an Obligated Party and is in possession of any Collateral (other than a
customer of a Borrower in possession of an item or items of Inventory leased to
such customer by such Borrower in the ordinary course of such Borrower’s
business), in each case, without the payment of fees or giving of other
consideration to such landlord or other Person, as applicable.  In the event that any Collateral Waiver
Agreement requested by either of the Agents pursuant to this Section 10.2(c) is
not provided, in lieu of such delivery, either of the Agents may, in its
discretion, establish a Reserve as contemplated in the definitions of Eligible
Inventory and Eligible Transportation Equipment with respect to any Collateral
located on any leased Real Estate or in the possession of any third party that
is not an Obligated Party for which the Collateral Agent has not received such
executed Collateral Waiver Agreement, and/or exclude such Collateral from the
determination of the Borrowing Base.

 

(d)                                 Control Agreements.  Upon the Administrative Agent’s or the
Collateral Agent’s request, each Obligated Party shall obtain authenticated
control agreements from each issuer of uncertificated securities, securities
intermediary, or commodities 

 

106

 

intermediary issuing or holding any financial assets or commodities to
or for such Obligated Party.

 

(e)                                  Letter of Credit
Agreements.  If any Obligated Party
is or becomes the beneficiary of any letter of credit arising from the sale or
other disposition of Collateral, such Obligated Party shall promptly notify the
Agents thereof and, upon either of the Agent’s request, enter into a tri-party
agreement (in form and substance reasonably satisfactory to the Agents) with
the Collateral Agent and the issuer and/or the confirmation bank with respect
to all Letter-of-Credit Rights thereunder assigning such Letter-of-Credit
Rights to the Collateral Agent and directing all payments thereunder to a
Clearing Account.

 

(f)                                    Electronic
Chattel Paper.  In accordance with
the UCC (or other applicable Requirement of Law) and to the extent requested by
either of the Agents, each Obligated Party shall take all steps reasonably
necessary to grant the Collateral Agent control of all of such Obligated Party’s
electronic chattel paper and all “transferable records” as defined in the
Uniform Electronic Transactions Act.

 

(g)                                 Deposit Accounts  In accordance with the UCC (or other
applicable Requirement of Law) and to the extent requested by either of the
Agents, each Obligated Party shall take all steps reasonably necessary to grant
the Collateral Agent control of all of such Obligated Party’s Deposit Accounts,
including delivery of such Deposit Account Control Agreements as either of the
Agents may request.

 

(h)                                 Financing
Statements.  Each Obligated Party
hereby irrevocably authorizes each of the Agents at any time and from time to
time to file in, transmit to, or communicate with any filing office any
financing statements and amendments thereto that (i) indicate the
Collateral (A) as “all assets” of such Obligated Party, or words of
similar effect, regardless of whether any particular asset included in the
Collateral falls within the scope of Article 9 of the UCC, or (B) as
being of an equal or lesser scope or with greater detail and (ii) contain
any other information required by Part 5 of Article 9 of the UCC for
the sufficiency or filing office acceptance of any financing statement or
amendment, including (A) whether such Obligated Party is an organization,
the type of organization, any organization identification number issued to such
Obligated Party, and any employer or taxpayer identification number issued to
such Obligated Party and (B) in the case of a financing statement filed as
a fixture filing or indicating any Collateral as as-extracted collateral or
timber to be cut, a sufficient description of real property to which such
Collateral relates.  Each Obligated Party
agrees to furnish any such information to the Agents promptly upon request.  Each Obligated Party also ratifies its
authorization for each of the Agents to file any like financing statements or
amendments thereto if filed prior to the date hereof.

 

(i)                                     Commercial Tort
Claims.  With respect to each
commercial tort claim required to be disclosed by Section 6.2(o),
unless otherwise consented in writing by the Agents, the applicable Obligated
Party shall enter into documentation satisfactory to the Agents to grant to the
Collateral Agent a first priority perfected Lien in such commercial tort claim.

 

107

 

(j)                                     Confirmations.  From time to time, each Obligated Party
shall, upon the Administrative Agent’s or the Collateral Agent’s request,
execute and deliver confirmatory written instruments pledging to the Collateral
Agent, for the benefit of the Credit Providers, the Collateral, but such
Obligated Party’s failure to do so shall not affect or limit any security
interest or any other rights of the Collateral Agent, the Administrative Agent
or any other Credit Provider in and to the Collateral with respect to such
Obligated Party.  As long as this
Agreement is in effect and until all Obligations have been fully satisfied, the
Agent’s Liens shall continue in full force and effect in all Collateral
(whether or not deemed eligible for the purpose of calculating the Unused
Availability or as the basis for any advance, loan, extension of credit, or
other financial accommodation).

 

(k)                                  Terminations and
Amendments Not Authorized.  Each
Obligated Party acknowledges that it is not authorized to file any financing
statement or amendment or termination statement with respect to any financing
statement filed by either of the Agents in connection with this Agreement or
any other Loan Document without the prior written consent of the Agents and
agrees that it will not do so without the prior written consent of the Agents,
subject to such Obligated Party’s rights under Section 9-509(d)(2) of
the UCC.

 

Section 10.3                                Location
of Collateral.  Each Obligated Party
represents and warrants to each of the Agents and the Lenders that, as of the
Closing Date, Schedule 10.3 contains a correct and complete list of
(a) the location of such Obligated Party’s chief executive office, (b) each
location of its books and records, (c) each location and address where any
Collateral is held (other than any location or address of any Inventory that as
of the Closing Date is in the possession of a customer of a Borrower that is
leasing such Inventory from such Borrower in the ordinary course of such
Borrower’s business), (d) with
respect to each location referenced in clause (c) preceding
where any Collateral is held by a representative, agent, warehouseman, or
bailee, the name and address of such representative, agent, warehouseman, or
bailee and the cost of such Inventory and Transportation Equipment and the net
book value of Inventory and Fixed Assets at such location.  Each Obligated Party covenants and agrees
that it will not maintain any Collateral (other than (i) Transportation
Equipment or (ii) Inventory which is in the possession of, or in transit
to or from, a customer of a Borrower that is leasing such Inventory from such
Borrower and Inventory in transit from one location on Schedule 10.3
(or such other location identified to the Agents in accordance with this Section 10.3)
to another such location in the ordinary course of such Borrower’s business) at
any location other than those locations listed for such Obligated Party in Schedule 10.3,
otherwise change or add to any of the locations listed for such Obligated Party
in Schedule 10.3, or change the location of its chief executive
office from the location identified in Schedule 10.3 unless, in any
such case, it gives each of the Agents at least 30 days prior written notice
thereof and authorizes the filing of any and all financing statements and
executes any other documents that either of the Agents reasonably request in
connection therewith; provided, however, that if a Borrower
enters into a lease for a new retail branch, such Borrower shall notify the
Agents in writing thereof on or prior to entering into such lease and such
Borrower shall not maintain any Collateral at such leased location until it has
delivered to the Agents an executed Collateral Waiver Agreement from the
landlord of such premises or, in lieu of such Collateral Waiver Agreement, if
either Agent so requests, a Reserve shall be established in the manner
contemplated in clause (j) of the definition of “Eligible 

 

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Inventory” and/or clause (h) of the definition of
“Eligible Transportation Equipment”. 
Without limiting the foregoing, each Obligated Party represents that all
of its Inventory (other than Inventory in transit and Inventory which is in the
possession of a customer of a Borrower that is leasing such Inventory from such
Borrower in the ordinary course of such Borrower’s business) will be, located
either (x) on premises owned by such Obligated Party, (y) on premises
leased by such Obligated Party, provided that the Agents have received
an executed Collateral Waiver Agreement from the landlord of such premises to
the extent required by Section 10.2(c) (but subject to the
proviso of the immediately preceding sentence), or (z) in the possession
of a representative, agent, warehouseman, consignee, or bailee, provided
that the Agents have received an executed Collateral Waiver Agreement from the
applicable warehouseman, representative, agent, consignee, or bailee to the
extent required by Section 10.2(c). 
Each Obligated Party represents and warrants to each of the Agents and
the Lenders that all Transportation Equipment is based out of a location listed
in Schedule 10.3 or, so long as it gives each of the Agents at
least 30 days prior written notice thereof, another retail branch of an
Obligated Party located in the United States.

 

Section 10.4                                Appraisals.

 

(a)                                  The Agents shall,
once each Fiscal Quarter, engage Rouse Asset Services or another appraiser
acceptable to the Agents to conduct and deliver (i) an Inventory Appraisal
of the Inventory of each Borrower consisting of spare parts and merchandise
inventory, (ii) an Inventory Appraisal of the Inventory of each Borrower
(other than Inventory consisting of spare parts and merchandise inventory) and (iii) an
Equipment Appraisal of the Transportation Equipment of each Borrower, each such
Inventory Appraisal and Equipment Appraisal to be in form and scope
satisfactory to the Agents and using a methodology to determine orderly
liquidation value reasonably requested by the Agents.  In addition, each Obligated Party will permit
the Collateral Agent and its representatives to conduct quarterly appraisals of
any and all of the Collateral.

 

(b)                                 Notwithstanding the
provisions of clause (a) of this Section 10.4,
whenever an Event of Default exists, either of the Agents may, and at the
direction of the Majority Lenders, the Agents shall, engage an appraiser
acceptable to the Agents to conduct and deliver appraisals of any or all of the
Collateral (if directed by the Majority Lenders, of such Collateral as
specified in such direction), each such appraisal to be in form and scope
satisfactory to the Agents and using a methodology reasonably requested by the
Agents.

 

(c)                                  The Borrowers agree,
jointly and severally, to pay to the Agents on demand the cost of each
appraisal conducted pursuant to this Section 10.4.

 

Section 10.5                                Accounts.

 

(a)                                  Representations.  Each Obligated Party hereby represents and
warrants, with respect to its Accounts, that: 
(i) each existing Account represents, and each future Account will represent,
a bona  fide sale or lease and delivery of goods by such Obligated
Party, or rendition of services by such Obligated Party, in the ordinary course
of such Obligated Party’s business; (ii) each existing Account is, and
each future Account will

 

109

 

be, for a liquidated amount payable by the Account Debtor thereon on
the terms set forth in the invoice therefor or in the schedule thereof
delivered to the Agents, without any offset, deduction, defense, or
counterclaim except those known to such Obligated Party and disclosed to the
Agents pursuant to this Agreement; (iii) no payment will be received with
respect to any Account, and no credit, discount, or extension, or any agreement
therefor, will be granted on any Account, except as reported to the Agents in
Borrowing Base Certificates delivered in accordance with this Agreement; (iv) each
copy of an invoice delivered to either of the Agents by such Obligated Party
will be a genuine copy of the original invoice sent to the Account Debtor named
therein; and (v) all goods described in any invoice representing a sale or
lease of goods will have been delivered to the Account Debtor and all services
of such Obligated Party described in each invoice will have been performed.

 

(b)                                 Dating Terms.  No Obligated Party will re-date any invoice
or sale or lease or make sales or leases on extended dating beyond that
customary in such Obligated Party’s business or extend or modify any Account
except in the ordinary course of business. 
If any Obligated Party becomes aware of any matter materially adversely
affecting the collectibility of any Account or the Account Debtor therefor,
including information regarding the Account Debtor’s creditworthiness, such
Obligated Party will exclude such Account from Eligible Accounts and, with
respect to any such Account Debtor that is obligated on Accounts owing to any
Obligated Party, in an aggregate amount greater than $250,000, promptly so advise the Agents.

 

(c)                                  Notes and
Instruments.  Without the prior
written consent of the Agents, (i) during the existence of any Default or
Event of Default, no Obligated Party will accept any note or other instrument
(except a check or other instrument for the immediate payment of money) with
respect to any Account and (ii) at any time other than as provided in clause (i) preceding
no Obligated Party will accept notes or other instruments in any Fiscal Year in
excess of $100,000 for all
Accounts or accept notes or other instruments in excess of $250,000 in the aggregate at any time
outstanding during the term of this Agreement. 
Any such instrument accepted by any Obligated Party with respect to any
Account shall be considered as evidence of the Account and not payment thereof
and such Obligated Party will promptly deliver such instrument to the
Collateral Agent, endorsed by such Obligated Party to the Collateral Agent in a
manner satisfactory in form and substance to the Agents.  Regardless of the form of presentment,
demand, or notice of protest with respect thereto, delivery of any such note or
other instrument to the Collateral Agent does not constitute payment of the
Obligations.

 

(d)                                 Disputes and Claims.  Each Obligated Party shall notify the Agents
promptly of all disputes and claims in excess of $250,000 with any Account Debtor, and agrees to settle, contest,
or adjust such dispute or claim at no expense to either of the Agents or any
other Credit Provider.  No discount,
credit, or allowance shall be granted to any such Account Debtor without the
Agents’ prior written consent, except for discounts, credits, and allowances
made or given in the ordinary course of the applicable Obligated Party’s
business when no Event of Default exists. 
Upon either of the Agent’s request, each Obligated Party shall send the
Agents a copy of credit memoranda. Notwithstanding the foregoing, each
Obligated Party that is a Borrower shall promptly report that credit on 

 

110

 

Borrowing Base Certificates submitted by the Obligated Parties.  Each of the Agents may at all times when an
Event of Default exists, settle or adjust disputes and claims directly with
Account Debtors for amounts and upon terms that such Agent shall consider
advisable and, in all cases, the applicable Agent will credit the Loan Account
with the net amounts received by such Agent in payment of any Accounts.

 

(e)                                  Returned Inventory.  If an Account Debtor returns any Inventory to
any Obligated Party for any reason when no Event of Default exists (other than
Inventory leased by an Obligated Party in the ordinary course of its business
that is returned to such Obligated Party by the applicable lessee), then such
Obligated Party shall promptly determine the reason for such return and shall
issue a credit memorandum to the Account Debtor in the appropriate amount.  Each Obligated Party shall promptly report to
the Agents any such return involving an amount in excess of $250,000.  Each such report shall indicate the reasons
for the return and the location and condition of the returned Inventory.  In the event any Account Debtor returns
Inventory to any Obligated Party for any reason when an Event of Default exists
(other than Inventory leased by an Obligated Party in the ordinary course of
its business that is returned to such Obligated Party by the applicable
lessee), such Obligated Party, upon the request of either of the Agents,
shall:  (i) hold the returned
Inventory in trust for the Agents; (ii) segregate all such returned
Inventory from all of such Obligated Party’s other property; (iii) dispose
of the returned Inventory solely according to the Agents’ written instructions;
and (iv) to the extent lawfully permitted, not issue any credits or
allowances with respect thereto without the Agents’ prior written consent.  All returned Inventory shall be subject to
the Agent’s Liens thereon.  Whenever any
Inventory is returned (other than Inventory leased by an Obligated Party in the
ordinary course of its business that is returned to such Obligated Party by the
applicable lessee), the related Account shall be deemed ineligible to the
extent of the amount owing by the Account Debtor with respect to such returned
Inventory and such returned Inventory shall not be Eligible Inventory, in each
instance, except to the extent such returned Inventory is Inventory (other than
spare parts Inventory) held for lease in the ordinary course of an Obligated
Party’s business that is marked with an identifiable serial number or is
Inventory held for sale that was returned for reasons other than the quality of
the Inventory and is still readily marketable to other Persons.

 

(f)                                    Leases.  Each lease of Inventory by an Obligated Party
to one of its customers is entered into in the ordinary course of business of
such Obligated Party and constitutes the legal, valid and binding obligation of
such Obligated Party and, to the best of each Obligated Party’s knowledge, the
customer party thereto.  No such lease (i) contravenes
any laws, rules or regulations applicable thereto (including, without
limitation, to the extent applicable, laws, rules and regulations relating
to consumer protection, fair credit billing, fair credit reporting, truth in
lending, equal credit opportunity, fair debt collection practices and
privacy) and the Obligated Party that is party thereto is not in violation
of any such law, rule or regulation with respect thereto, (ii) requires
the customer party thereto to consent to the transfer, assignment or pledge of
any of the rights of such Obligated Party under such lease or (iii) contains
or is otherwise subject to a confidentiality provision that purports to
restrict the ability of the Collateral Agent or the Administrative Agent to
exercise its rights under this Agreement with respect to such 

 

111

 

lease, including, without limitation, its rights to review such lease
or to enforce such lease.  No Obligated
Party shall, without the prior written consent of the Agents, (i) amend,
modify or supplement in any material respect its forms of leases of Inventory
from that in effect on the Original Closing Date except for those amendments,
modifications or supplements made in order to comply with changes in applicable
law or (ii) enter into a lease of Inventory which is materially different
from one of its forms of lease in existence on the Original Closing Date (as
such form may be amended, modified or supplemented in compliance with clause (i) above).

 

Section 10.6                                Collection
of Accounts; Payments.

 

(a)                                  [Intentionally
Omitted].

 

(b)                                 Collections.  Each Obligated Party shall collect its
Accounts and other Collateral in the ordinary course of its business consistent
with past practice.  Each Obligated Party
shall promptly (in any event within one Business Day of receipt thereof)
deposit all such payments (except as permitted in clause (c) below)
and receipts, and all other proceeds of Collateral received by it, in their
original form, duly endorsed in blank (if applicable) into a Clearing
Account or deliver such payments and receipts to the Collateral Agent in their
original form, duly endorsed in blank (if applicable), as either of the Agents
may direct.  Each Obligated Party shall
receive any and all proceeds of Accounts and other Collateral as the Collateral
Agent’s trustee.  All collections
received directly by any Obligated Party or either Agent, and all funds in any
Clearing Account or other account to which such collections are deposited shall
be subject to the Collateral Agent’s sole control, and withdrawals by any
Obligated Party shall not be permitted.

 

(c)                                  Accounts.  Each Clearing Account of any Obligated Party
shall be established with BofA or a Clearing Bank reasonably acceptable to the
Agents and, except as set forth in the next sentence, subject to a Deposit
Account Control Agreement.  No Obligated
Party shall maintain any Clearing Account or Deposit Account except with BofA
or subject to a Deposit Account Control Agreement, except those Clearing
Accounts and Deposit Accounts existing on the Closing Date and listed on Schedule 7.23
that are not maintained with BofA; provided that with respect to any
such account, the Obligated Parties shall deliver a Deposit Account Control
Agreement with respect to any such account within 45 days of a request therefor
by the Administrative Agent.  No Obligated
Party shall maintain any lockbox except with BofA or Wachovia.

 

(d)                                 Cash Sales or
Rentals.  If sales or rentals of
Inventory are made or services are rendered for cash, the applicable Obligated
Party shall, within one Business Day of receipt, deliver to the Collateral
Agent or deposit into a Clearing Account the cash that such Obligated Party
receives; provided that the foregoing shall not apply to cash in an amount not
to exceed $10,000 in the aggregate for all Obligated Parties at any time.

 

(e)                                  Payments.  All payments received by either of the Agents
at a bank account designated by any of them will be the Collateral Agent’s sole
property for the benefit of the Credit Providers and will be credited to the
Loan Account (conditional upon final collection) after allowing one (1) Business
Day for collection, including immediately 

 

112

 

available funds, as required by Section 4.3; provided
that, except during the existence of an Event of Default, such payments shall
be deemed to be credited to the Loan Account immediately upon receipt for
purposes of (i) determining the Unused Availability, (ii) calculating
the Unused Line Fee, and (iii) calculating the amount of interest accrued
thereon solely for purposes of determining the amount of interest to be
distributed by the Administrative Agent to the Lenders (but not the amount of
interest payable by the Borrowers). 
During the existence of any Event of Default, either of the Agents may,
in its sole discretion, require that only payments representing final
collections be credited to the Loan Account for the purposes set forth in clause (i),
clause (ii), and clause (iii) preceding.

 

Section 10.7                                Inventory;
Perpetual Inventory.  Each Obligated
Party represents and warrants and agrees that all of the Inventory owned by
such Obligated Party that is included in Eligible Inventory is and will be held
for sale or lease, or is to be furnished in connection with the rendition of
services or held as spare parts Inventory, in each case, in the ordinary course
of such Obligated Party’s business, and is and will be fit for such
purposes.  Each Obligated Party will keep
its Inventory in good and marketable condition, except for damaged, obsolete or
defective goods arising in the ordinary course of such Obligated Party’s
business.  No Obligated Party will,
without the prior written consent of the Agents, acquire or accept any
Inventory on consignment or approval, except that Ahern may accept inventory on
consignment from Kubota Tractor Corporation and other vendors, so long as (i) the
aggregate amount of such consigned inventory held by all of the Obligated
Parties does not exceed $2,000,000 at any one time and (ii) none of such
consigned inventory is rented by any Obligated Party to any of its customers.  Each Obligated Party agrees that all
Inventory produced by such Obligated Party in the U.S. will be produced in
accordance with the Federal Fair Labor Standards Act of 1938, as amended, and
all rules, regulations, and orders thereunder. 
Each Obligated Party will conduct cycle counts of its Inventory such
that all of its Inventory shall be counted (though at varying times) at least
once per Fiscal Year and, during the existence of an Event of Default, at such
other times as either of the Agents requests. 
Each Obligated Party will maintain a perpetual inventory reporting
system at all times.  Each Obligated
Party, at its own expense, shall make available to the Agents upon request the
results of each physical verification, if any, which such Obligated Party may
in its discretion have made, or caused any other Person to have made on its
behalf, of all or any portion of its Inventory. 
No Obligated Party will, without the Agents’ written consent, sell any
Inventory on a bill-and-hold, guaranteed sale, sale and return, sale on
approval, consignment, or other repurchase or return basis.  No Obligated Party will permit any of its
Inventory to become a fixture with respect to Real Estate or (except for spare
parts Inventory other than Eligible Spare Parts Inventory) to become an
accession with respect to other personal property with respect to which Real
Estate or personal property the Collateral Agent does not have a Lien.  No Obligated Party will, without the Agents’
prior written consent, alter or remove any identifying symbol or number on any
of such Obligated Party’s Inventory constituting Collateral.

 

Section 10.8                                Equipment.

 

(a)                                  Changes to
Equipment.  Each Obligated Party
shall promptly inform the Agents of any material additions to or deletions from
such Obligated Party’s Equipment and shall indicate if any such material
additions include any Equipment that is subject to any certificate of title law
of the U.S. or any state.  No Obligated
Party will permit any of 

 

113

 

its Equipment to become a fixture with respect to Real Estate or to
become an accession with respect to other personal property with respect to
which Real Estate or personal property the Collateral Agent does not have a
Lien.  No Obligated Party will, without
the Agents’ prior written consent, alter or remove any identifying symbol or
number on any of such Obligated Party’s Equipment constituting Collateral.  Except as set forth in Section 8.9,
no Obligated Party shall, without the Majority Lenders’ prior written consent,
sell, license, lease as a lessor, or otherwise dispose of any of such Obligated
Party’s Equipment.

 

(b)                                 Certificates of
Title.  Each Obligated Party shall (i) as
soon as practicable after the date hereof, in the case of Equipment now owned
in which a security interest is perfected by a notation on the certificate of
title or similar evidence of the ownership of such goods and (ii) within
30 days of acquiring any other similar Equipment, in each case, cause the
Collateral Agent, for the benefit of the Credit Providers, to be named as
lienholder on any such certificate of title or other evidence of ownership and
deliver to the Collateral Agent any and all certificates of title of such
Equipment reflecting such lien.

 

Section 10.9                                Assigned
Contracts.  Each Obligated Party
shall fully perform all of its obligations under each of the Assigned
Contracts, and shall enforce all of its rights and remedies thereunder, in each
case, as it deems appropriate in its business judgment; provided that no
Obligated Party shall take any action or fail to take any action with respect
to its Assigned Contracts that would cause the termination of a material
Assigned Contract.  Without limiting the
generality of the foregoing, each Obligated Party shall take all action
necessary or appropriate to permit, and shall not take any action that would
have any materially adverse effect upon, the full enforcement of all
indemnification rights under its Assigned Contracts.  Each Obligated Party shall notify the Agents
in writing, promptly after such Obligated Party becomes aware thereof, of any
event or fact that could give rise to a material claim by it for
indemnification under any of its Assigned Contracts, and shall diligently
pursue such right and report to the Agents on all further developments with
respect thereto.  Each Obligated Party
shall deposit into a Clearing Account or remit directly to the Administrative
Agent, for application to the Obligations in such order as the Majority Lenders
shall determine (unless such order is otherwise expressly provided herein, in
which case in the order so provided), all amounts received by such Obligated
Party as indemnification or otherwise pursuant to its Assigned Contracts.  If any Obligated Party shall fail after either
of the Agent’s demand to pursue diligently any right under such Obligated Party’s
Assigned Contracts, or if an Event of Default then exists, either of the Agents
may, and at the direction of the Majority Lenders shall, directly enforce such
right in the name of such Agent or in such Obligated Party’s name and may enter
into such settlements or other agreements with respect thereto as either of the
Agents or the Majority Lenders, as applicable, shall determine.  In any suit, proceeding, or action brought by
either of the Agents under any Assigned Contract for any sum owing thereunder
or to enforce any provision thereof, each Obligated Party shall indemnify and
hold the Agents and the other Credit Providers harmless from and against all
expense, loss, or damage suffered by reason of any defense, setoff,
counterclaims, recoupment, or reduction of liability whatsoever of the obligor
thereunder arising out of a breach by any Obligated Party of any obligation
thereunder or arising out of any other agreement, indebtedness, or liability at
any time owing from any Obligated Party to or in favor of such obligor or its
successors.  All such obligations of any 

 

114

 

Obligated Party shall be
and remain enforceable only against such Obligated Party and shall not be
enforceable against the Agents or any of the other Credit Providers.  Notwithstanding any provision hereof to the
contrary, each Obligated Party shall at all times remain liable to observe and
perform all of its duties and obligations under its Assigned Contracts, and the
Collateral Agent’s, the Administrative Agent’s or any Credit Provider’s
exercise of any of their respective rights with respect to the Collateral shall
not release any Obligated Party from any of such duties and obligations.  None of the Collateral Agent, the
Administrative Agent or any other Credit Provider shall be obligated to perform
or fulfill any Obligated Party’s duties or obligations under its Assigned
Contracts or to make any payment thereunder, or to make any inquiry as to the
nature or sufficiency of any payment or property received by it thereunder or
the sufficiency of performance by any party thereunder, or to present or file
any claim, or to take any action to collect or enforce any performance, any
payment of any amounts, or any delivery of any property.

 

Section 10.10                          Documents,
Instruments, and Chattel Paper.  Each Obligated Party represents
and warrants that (a) all Documents, Instruments, and Chattel Paper
describing, evidencing, or constituting Collateral, and all signatures and
endorsements thereon, are and will be complete, valid, and genuine, and (b) all
goods evidenced by Documents, Instruments, Letter-of-Credit Rights, and Chattel
Paper are and will be owned by the applicable Obligated Party, free and clear
of all Liens other than Permitted Liens. 
If any Obligated Party retains possession of any Chattel Paper or
Instruments, such Chattel Paper and Instruments shall be marked with the
following legend:  “This writing and the
obligations evidenced or secured hereby are subject to the security interest of
Wachovia Bank, National Association, as Collateral Agent, for the benefit of
the Agents and the other Credit Providers pursuant to that certain Amended and
Restated Loan and Security Agreement, dated as of August 18, 2005, among
Ahern Rentals, Inc. and certain of its affiliates, the Collateral Agent,
the Administrative Agent, and the lending institutions party thereto.”  No Obligated Party will, without the prior
written consent of the Agents, modify, amend or alter in any respect the terms
and conditions of any material Instrument included in the Collateral
(including, without limitation and in any event, the note pledged to the
Collateral Agent referred to in clause (i) of the defined term
“Permitted Investments”), nor forgive any indebtedness evidenced by any such
Instrument.

 

Section 10.11                          Right
to Cure.  Either of the Agents may,
in its discretion, and the Agents shall, at the direction of the Majority
Lenders, pay any amount or do any act required of any Obligated Party hereunder
or under any other Loan Document in order to preserve, protect, maintain, or
enforce the Obligations, the Collateral, or the Agent’s Liens, and that any
Obligated Party fails to pay or do, including payment of any judgment against
any Obligated Party, any insurance premium, any warehouse charge, any finishing
or processing charge, any landlord’s, bailee’s or consignee’s claim, and any
other Lien upon or with respect to the Collateral.  All payments that either of the Agents make
under this Section 10.11 and all out-of-pocket costs and expenses
that either of the Agents pay or incur in connection with any action taken by
it hereunder shall be payable by the Borrowers in accordance with Section 15.7
and shall be charged to the Borrowers’ Loan Account as a Revolving Loan.  Any payment made or other action taken by
either of the Agents under this Section 10.11 shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
thereafter as herein provided.

 

115

 

Section 10.12                          Power
of Attorney.  Each Obligated Party
hereby appoints the Administrative Agent and the Collateral Agent and the
Administrative Agent’s and the Collateral Agent’s designees as such Obligated
Party’s attorney, with power:  (a) to
endorse or sign such Obligated Party’s name on any checks, notes, acceptances,
money orders, or other forms of payment or security that come into the
Collateral Agent’s, the Administrative Agent’s or any Lender’s possession; (b) to
sign such Obligated Party’s name on any invoice, bill of lading, warehouse
receipt, or other negotiable or non-negotiable Document constituting
Collateral, on drafts against customers, on assignments of Accounts, on notices
of assignment, financing statements and other public records and to file any
such financing statements by electronic means with or without a signature as
authorized or required by applicable law or filing procedure; (c) during
the existence of any Event of Default, to notify the post office authorities to
give the Collateral Agent access to any post office or mailboxes into which
mail addressed to such Obligated Party is delivered and to receive, open, and
dispose of all mail addressed to such Obligated Party; (d) to send
requests for verification of Accounts to customers or Account Debtors; (e) during
the existence of any Event of Default, to complete in such Obligated Party’s
name, the Administrative Agent’s name or the Collateral Agent’s name, any
order, sale, lease or transaction, obtain the necessary Documents in connection
therewith, and collect the proceeds thereof; (f) to clear Inventory
through customs in such Obligated Party’s name, the Administrative Agent’s
name, the Collateral Agent’s name, or the name of the Administrative Agent’s
designee or the Collateral Agent’s designee, and to sign and deliver to customs
officials powers of attorney in such Obligated Party’s name for such purpose; (g) to
the extent, if any, that such Obligated Party’s authorization given in Section 10.2(h) is
not sufficient, and without otherwise limiting such authorization, to file such
financing statements with respect to this Agreement, with or without such
Obligated Party’s signature, as either of the Agents may deem appropriate and
to execute in such Obligated Party’s name such financing statements and
amendments thereto and continuation statements that may require such Obligated
Party’s signature; (h) during the existence of any Event of Default, to endorse
such Obligated Party’s name on all applications, documents, papers, and
instruments necessary or reasonably desirable for either of the Agents in the
use of such Obligated Party’s Proprietary Rights; (i) during the existence
of any Event of Default, to grant or issue any exclusive or non-exclusive
license under such Obligated Party’s Proprietary Rights to any Person;
(j) during the existence of an Event of Default, to assign, convey, or
otherwise transfer title in or Dispose of any of such Obligated Party’s
Proprietary rights to any Person; and (k) to do all other things
reasonably necessary to carry out the terms of this Agreement.  Each Obligated Party ratifies and approves
all acts of such attorney.  None of the
Administrative Agent, the Collateral Agent or any other Credit Provider will be
liable for any acts or omissions or for any error of judgment or mistake of
fact or law except for their gross negligence or willful misconduct.  This power, being coupled with an interest,
is irrevocable until this Agreement has been terminated and the Obligations
have been fully and irrevocably satisfied.

 

Section 10.13                          The
Collateral Agent’s, the Administrative Agent’s and the Lenders’ Rights, Duties,
and Liabilities.

 

(a)                                  The Obligated
Parties’ Liability for the Collateral. 
Each Obligated Party assumes all responsibility and liability arising
from or relating to the use, sale, lease, license, or other disposition of the
Collateral.  The Obligations shall not be
affected by any failure of either of the Agents or any other Credit Provider to
take any steps to 

 

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perfect the Agent’s Liens or to collect or realize upon any of the
Collateral, nor shall loss of or damage to any of the Collateral release any
Obligated Party from any of the Obligations. 
During the existence of any Event of Default, the Collateral Agent may
(but shall not be required to), and at the direction of the Majority Lenders
shall, without notice to or consent from any Obligated Party, sue upon or
otherwise collect, extend the time for payment of, modify or amend the terms
of, compromise or settle for cash, credit, or otherwise upon any terms, grant
other indulgences, extensions, renewals, compositions, or releases, and take or
omit to take any other action with respect to the Collateral, any security
therefor, any agreement relating thereto, any insurance applicable thereto, or
any Person liable directly or indirectly in connection with any of the
foregoing, without discharging or otherwise affecting the liability of any
Obligated Party for the Obligations or under this Agreement or any other
agreement now or hereafter existing between the Collateral Agent, the
Administrative Agent and/or any other Credit Provider and such Obligated Party.

 

(b)                                 The Obligated
Parties’ Liability Under Contracts and Licenses.  It is expressly agreed by each Obligated
Party that, anything herein to the contrary notwithstanding, such Obligated
Party shall remain liable under each of its contracts and each of its licenses
to observe and perform all the conditions and obligations to be observed and
performed by it thereunder.  None of the
Collateral Agent, the Administrative Agent or any other Credit Provider shall
have any obligation or liability under any contract or license by reason of or
arising out of this Agreement or the granting herein of a Lien thereon or the
receipt by the Collateral Agent, the Administrative Agent or any other Credit
Provider of any payment relating to any contract or license pursuant hereto.  None of the Collateral Agent, the
Administrative Agent or any other Credit Provider shall be required or
obligated in any manner to perform or fulfill any of the obligations of any
Obligated Party under or pursuant to any contract or license, or to make any
payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by it or the sufficiency of any performance by any party under
any contract or license, or to present or file any claims, or to take any
action to collect or enforce any performance or the payment of any amounts that
may have been assigned to it or to which it may be entitled at any time or
times.

 

(c)                                  Notification of
Account Debtors.  Without limiting Section 11.2,
at any time during the existence of an Event of Default (or if any rights of
setoff (other than setoffs against an Account arising under the contract giving
rise to the same Account) or contra accounts may be asserted with respect
to the following), the Collateral Agent may, without prior notice to any Obligated
Party, and upon the request of either of the Agents each Obligated Party shall,
notify Account Debtors and other Persons obligated on the Collateral that the
Collateral Agent has a security interest therein, and that payments shall be
made directly to the Collateral Agent, for the benefit of the Collateral Agent
and the other Credit Providers.  Once any
such notice has been given to any Account Debtor or other Person obligated on
the Collateral, no Obligated Party shall give any contrary instructions to such
Account Debtor or other Person without the Agents’ prior written consent.

 

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(d)                                 Information
Regarding Accounts and Account Debtors. 
The Collateral Agent and the Administrative Agent may at any time in the
name of the Collateral Agent or the Administrative Agent, as applicable, or in
the name of any Obligated Party, or in the name of the Collateral Agent’s or
the Administrative Agent’s nominee or designee, communicate with each Obligated
Party’s Account Debtors, parties to contracts, and obligors in respect of
Instruments to verify with such Persons, to the Collateral Agent’s or the
Administrative Agent’s, as applicable, satisfaction, the existence, amount, and
terms of Accounts, payment intangibles, Instruments, or Chattel Paper.  If an Event of Default exists, each Obligated
Party, at its own expense, shall cause the independent certified public
accountants then engaged by such Obligated Party to prepare and deliver to each
of the Agents (with sufficient copies to the Administrative Agent for
distribution to each Lender) at any time and from time to time promptly
upon either of the Agent’s request the following reports with respect to such
Obligated Party:  (i) a
reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial
balances; and (iv) a test verification of such Accounts as such Agent may
request.

 

(e)                                  No Obligation of
the Agents.  Notwithstanding anything
in this Agreement to the contrary, each Obligated Party agrees that neither of
the Agents shall have any obligation to take any steps necessary to preserve
rights in any of the Proprietary Rights of any Obligated Party against any
other Person, provided that each of the Agents may do so at its option
during the existence of any Event of Default in accordance with Section 10.14(f).

 

Section 10.14                          Patent,
Trademark, and Copyright Collateral.

 

(a)                                  Representations.  This Agreement is effective to create a valid
and continuing Lien on and, upon filing of appropriate financing statements
pursuant to the UCC, perfected Liens in favor of the Collateral Agent, on the
Proprietary Rights of each Obligated Party and such perfected Liens are
enforceable as against any and all creditors of such Obligated Party.  Upon filing of all such appropriate financing
statements pursuant to the UCC, all action necessary to protect and perfect the
Collateral Agent’s Lien on each Obligated Party’s Proprietary Rights under
Requirements of Law shall have been duly taken. 
Upon filing the Proprietary Rights Security Agreements with the United
States Copyright Office or Unites States Patent and Trademark Office, as
applicable, the Agent’s Liens will be enforceable against any purchaser of the
Proprietary Rights covered thereby.

 

(b)                                 Notices to the
Agents.  Each Obligated Party shall
notify the Collateral Agent and the Administrative Agent promptly upon such
Obligated Party obtaining knowledge that any application or registration
relating to any patent, trademark, or copyright (now or hereafter existing) may
become abandoned or dedicated, or of any adverse determination or development
(including the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, the United States
Copyright Office, or any court) regarding such Obligated Party’s ownership
of any patent, trademark, or copyright, its right to register the same, or to
keep and maintain the same.

 

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(c)                                  Additional
Agreements.  In no event shall any
Obligated Party, either directly or through any agent, employee, licensee, or
designee, file an application for the registration of any patent, trademark, or
copyright with the United States Patent and Trademark Office, the United States
Copyright Office, or any similar Governmental Authority, or enter into any new
license as licensor with respect to any patent, trademark, or copyright,
without giving the Agents prior written notice thereof, and, upon request of
either of the Agents, such Obligated Party shall execute and deliver such
Proprietary Rights Security Agreements or other documents as either of the
Agents may request to evidence the Agent’s Liens on such patent, trademark, or
copyright, and the General Intangibles of such Obligated Party relating thereto
or represented thereby.

 

(d)                                 Further Actions.  Each Obligated Party shall take all actions
necessary or requested by either of the Agents to maintain and pursue each
application, to obtain the relevant registration and to maintain the registration
of each of such Obligated Party’s material Proprietary Rights (now or hereafter
existing), including the filing of applications for renewal, affidavits of use,
affidavits of noncontestability and opposition and interference and
cancellation proceedings.

 

(e)                                  Notices of
Infringement.  In the event that any
of the Proprietary Rights that are Collateral are infringed upon, or
misappropriated or diluted by a third party, each Obligated Party shall notify
the Agents promptly after such Obligated Party learns thereof.  Each Obligated Party shall, unless it shall
reasonably determine that such Proprietary Rights that are Collateral are in no
way material to the conduct of its business or operations, promptly sue for
infringement, misappropriation, or dilution and to recover any and all damages
for such infringement, misappropriation, or dilution, and shall take such other
actions as either of the Agents shall deem appropriate under the circumstances
to protect such Proprietary Rights that are Collateral.

 

(f)                                    Suits by the
Agents.  Without limiting Section 11.2,
during the existence of any Event of Default, each of the Agents shall have the
right, but shall not be obligated, to bring suit in the name of the Collateral
Agent or the Administrative Agent, as applicable, to enforce the Proprietary
Rights and, if either of the Agents shall commence any such suit, each
Obligated Party shall, at the request of such Agent, do any and all lawful acts
and execute any and all proper documents reasonably required by such Agent in
aid of such enforcement.  Each Obligated
Party shall, upon demand, promptly reimburse each of the Agents for all costs
and expenses incurred by such Person in the exercise of its rights under this Section 10.14(f) (including
Attorney Costs and other fees and expenses of other professionals).

 

Section 10.15                          Indemnification.  In any suit, proceeding, or action brought by
the Collateral Agent, the Administrative Agent or any other Credit Provider
relating to any Collateral for any sum owing with respect thereto or to enforce
any rights or claims with respect thereto, each Obligated Party will save,
indemnify, and keep the Agents and the other Credit Providers harmless from and
against all expense (including Attorney Costs and other reasonable attorneys’
fees and expenses), loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment, or reduction of liability whatsoever of the Account
Debtor or other Person obligated on the Collateral, arising out of a breach by
any Obligated Party of any 

 

119

 

obligation thereunder or arising out of any other
agreement, indebtedness, or liability at any time owing to, or in favor of,
such obligor or its successors from any Obligated Party, provided that no
Obligated Party shall be liable to any Credit Provider for the payment of any
portion of such amount to the extent determined in a final, nonappealable
judgment by a court of competent jurisdiction to have resulted from such Credit
Provider’s own gross negligence or willful misconduct.  All such obligations of each Obligated Party
shall be and remain enforceable against and only against such Obligated Party
and shall not be enforceable against the Collateral Agent, the Administrative
Agent, any Lender or any other Credit Provider.

 

Section 10.16                          Grant
of License to Use Proprietary Rights. 
For the purpose of enabling the Collateral Agent to exercise rights and
remedies under Section 11.2 or under any other Loan Document or
applicable Requirement of Law (including in order to take possession of, hold,
preserve, process, assemble, prepare for sale, market for sale, sell, or
otherwise dispose of Collateral) at such time as the Collateral Agent shall be
lawfully entitled to exercise such rights and remedies, each Obligated Party
hereby grants to the Collateral Agent, for the benefit of the Agents and the
other Credit Providers, an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to such Obligated Party) to
use, license, or sublicense any Proprietary Rights now owned or hereafter
acquired by such Obligated Party, and wherever the same may be located, and
including in such license access to all media in which any of the licensed
items may be recorded or stored and to all computer software and programs used
for the compilation or printout thereof.

 

Section 10.17                          Limitation
on the Agents’ and the Lenders’ Duty in Respect of the Collateral.  The Collateral Agent, the Administrative
Agent and each other Credit Provider shall use reasonable care with respect to
the Collateral in its possession or under its control.  None of the Collateral Agent, the
Administrative Agent or any other Credit Provider shall have any other duty as
to any Collateral in its possession or control or in the possession or control
of any agent or nominee of the Collateral Agent, the Administrative Agent or
such other Credit Provider, or any income thereon or as to the preservation of
rights against prior parties or any other rights pertaining thereto.

 

Section 10.18                          Miscellaneous.

 

(a)                                  Reinstatement.  The Agent’s Liens on the Collateral granted
pursuant to this Agreement shall remain in full force and effect and continue
to be effective should any petition be filed by or against any Obligated Party
for liquidation or reorganization, should any Obligated Party become insolvent
or make an assignment for the benefit of any creditor or creditors or should a
receiver or trustee be appointed for all or any significant part of any
Obligated Party’s assets, and shall continue to be effective or be reinstated,
as the case may be, if at any time payment and performance of the Obligations,
or any part thereof, is, pursuant to any Requirement of Law, rescinded or
reduced in amount, or must otherwise be restored or returned by any obligee of
the Obligations, whether as a “voidable preference,” “fraudulent conveyance,”
or otherwise, all as though such payment or performance had not been made.  In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations shall be
reinstated and deemed reduced only by such amount paid and not so rescinded,
reduced, restored or returned.

 

120

 

(b)                                 Benefit.  All Liens granted or contemplated hereby
shall be for the benefit of the Collateral Agent, the Administrative Agent and
the other Credit Providers, and all proceeds or payments realized from
Collateral in accordance herewith shall be applied to the Obligations in
accordance with the terms of Section 4.6.

 

(c)                                  Limitations.  The Liens granted pursuant to Section 10.1
in each Obligated Party’s, other than Ahern’s, Collateral shall secure a
maximum aggregate amount equal to the largest amount that would not render its
obligations hereunder and the Liens granted hereby subject to avoidance as a
fraudulent transfer or conveyance under any Requirement of Law, in each case
after giving effect to all other liabilities and obligations of such Obligated
Party, contingent or otherwise, that are relevant under such laws, and after
giving effect to the value, as assets (as determined under the applicable
provisions of such laws), of any rights of such Obligated Party to
contribution, indemnity, and/or subrogation from any other Obligated Party or
other Person pursuant to any Requirement of Law or any agreement providing for
an equitable allocation among such Obligated Party, any other Obligated Party,
and any other such Person of their respective obligations hereunder.

 

ARTICLE 11

 

DEFAULT;
REMEDIES

 

Section 11.1                                Events
of Default.  It shall constitute an
event of default (“Event of Default”) if any one or more of the
following shall occur for any reason:

 

(a)                                  any failure by the
Borrowers to pay the principal of or interest or premium on any of the
Obligations or any fee or other amount owing under any Loan Document when due,
whether upon demand or otherwise;

 

(b)                                 any representation or
warranty made or deemed made by any Obligated Party in any Loan Document, any
Financial Statement, or any certificate furnished by any Obligated Party at any
time to either of the Agents or any Lender shall prove to be untrue in any
material respect as of the date on which made, deemed made, or furnished;

 

(c)                                  any default shall
occur in the observance or performance of

 

(i)                                     any of the
covenants and agreements contained in Section 6.2, clauses (a) through
(e), and (k), Section 8.1(c), Section 8.2,
Section 8.5, Sections 8.9 through 8.24, Sections 8.26
through 8.28, Section 8.31 or Article 10;

 

(ii)                                  any of the covenants
and agreements contained in Section 6.2 (except as specified in clause (i) preceding),
Section 6.3 or Section 8.1, clauses (a) and
(b), and such default shall continue for three (3) Business Days or
more after the earlier of any Obligated Party acquiring actual knowledge of
such default and any Obligated Party receiving notice from any Agent, any
Lender or any Affiliate of any Lender of such default; or

 

121

 

(iii)                               any of the other
covenants or agreements contained in this Agreement other than as referenced in
Section 11.1(a), Section 11.1(b), and clause (i) and
clause (ii) preceding, any other Loan Document, or any other
agreement entered into at any time to which any Obligated Party and either of
the Agents or any Lender are party (including in respect of any Bank Products)
and such default shall continue for 20 days or more after the earlier of any
Obligated Party acquiring actual knowledge of such default and any Obligated
Party receiving notice from any Agent, any Lender or any Affiliate of any
Lender of such default;

 

(d)                                 any default shall
occur with respect to (i) the Second Lien Debt or (ii) any Debt
(other than the Obligations) of any one or more of the Obligated Parties
in an outstanding principal amount that, individually or in the aggregate,
exceeds $500,000, or under any
agreement or instrument under or pursuant to which any such Debt (under clause (i) or
(ii) above) may have been issued, created, assumed, or guaranteed
by any Obligated Party, and such default shall continue for more than the
period of grace, if any, therein specified, if the effect thereof (with or
without the giving of notice or further lapse of time or both) is to accelerate
or to permit the holders of any such Debt to accelerate, the maturity of any
such Debt, or any such Debt shall be declared due and payable or be required to
be prepaid (other than by a regularly scheduled required prepayment) prior to
the stated maturity thereof, or any such Debt shall not be paid on the stated
maturity date thereof;

 

(e)                                  any Obligated Party
or DFA LLC shall (i) 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 Bankruptcy Code 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, (ii) 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, (iii) make an assignment for the benefit of
its creditors, or (iv) be unable generally to pay its debts as they become
due;

 

(f)                                    an involuntary
petition or proposal shall be filed or an action or proceeding otherwise
commenced seeking reorganization, arrangement, consolidation, or readjustment
of the debts of any Obligated Party or DFA LLC or for any other relief under
the Bankruptcy Code 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 60 days after the filing or commencement
thereof or an order of relief (or comparable order under any other Requirement
of Law) against any Obligated Party or DFA LLC shall be entered with respect
thereto;

 

(g)                                 a receiver, assignee,
liquidator, sequestrator, custodian, monitor, trustee, or similar officer for
any Obligated Party or DFA LLC 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 Obligated Party or DFA LLC;

 

122

 

(h)                                 any Obligated Party
shall file a certificate of dissolution under any Requirement of Law or shall
be liquidated, dissolved, or wound-up (except in a transaction allowed under Section 8.9)
or shall commence or have commenced against it any action or proceeding for
dissolution, winding-up, or liquidation, or shall take any action in
furtherance thereof (except in connection with a transaction allowed under Section 8.9);

 

(i)                                     all or any
material part of the property of any Obligated Party is nationalized,
expropriated, condemned, recalled, seized, or otherwise appropriated, or
custody or control of such property or of any Obligated Party is assumed by any
Governmental Authority or any court of competent jurisdiction at the instance
of any Governmental Authority, except where contested in good faith by proper
proceedings diligently pursued where a stay of enforcement is in effect;

 

(j)                                     one or more
judgments, orders, decrees (including out-of-court settlements), or arbitration
or mediation awards is entered against any Obligated Party involving liability
in the aggregate for any or all of the Obligated Parties as to any single,
related, or unrelated series of transactions, incidents, or conditions, of $500,000 or more, and any such
judgment, order, or decree remains unsatisfied, unvacated, and unstayed pending
appeal for a period of 30 days after the entry thereof;

 

(k)                                  any loss, theft,
damage, or destruction of any item or items of Collateral or other property of
any Obligated Party occurs that is not adequately covered by insurance and
could reasonably be expected to result in a Material Adverse Effect;

 

(l)                                     there is filed
against any Obligated Party any action, suit, or proceeding under any federal
or state racketeering statute (including the Racketeer Influenced and Corrupt
Organization Act of 1970), which action, suit, or proceeding (i) is not
dismissed within 120 days and (ii) could reasonably be expected to result
in the confiscation or forfeiture of any material portion of the Collateral;

 

(m)                               for any reason any Loan
Document ceases to be in full force and effect (other than in accordance with
its terms or the terms hereof or with the written consent of the Agents and the
Majority Lenders) or any Lien with respect to any material portion of the
Collateral intended to be secured thereby ceases to be, or is not, valid,
perfected, and prior to all other Liens (other than Permitted Liens that are
expressly permitted to have priority over the Agent’s Liens) or is terminated, revoked
or declared void (other than in accordance with its terms or the terms thereof
or with the written consent of the Agents and the Majority Lenders) or for any
reason any Loan Document is terminated, revoked, or declared void (other than
in accordance with its terms or the terms hereof or with the written consent of
the Agents and the Majority Lenders) or is challenged by any Obligated Party or
any other party thereto;

 

(n)                                 (i) an ERISA
Event shall occur with respect to any Pension Plan or Multiemployer Plan that
has resulted in, or could reasonably be expected to result in, liability of any
Obligated Party under Title IV of ERISA to such Pension Plan, such
Multiemployer Plan, or the PBGC in an aggregate amount in excess of $500,000; (ii) the

 

123

 

aggregate amount of Unfunded Pension Liability among all Pension Plans
at any time exceeds $500,000; or (iii) any Obligated Party 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 in an aggregate
amount in excess of $100,000;

 

(o)                                 there occurs a Change
of Control;

 

(p)                                 there occurs any event
or events that, individually or in the aggregate, results in a Material Adverse
Effect;

 

(q)                                 any “Default” shall
occur under and as defined in the GE Sale and Leaseback Agreement; or

 

(r)                                    any default shall
occur with respect to any Debt of DFA LLC in an outstanding principal amount
that, individually or in the aggregate, exceeds $3,000,000, or under any agreement or instrument under or pursuant
to which any such Debt may have been issued, created, assumed, or guaranteed by
DFA LLC or any Obligated Party, and such default is a payment default and such
payment default shall continue for more than the period of grace, if any,
therein specified, or the holders of any such Debt shall have accelerated the
maturity of such Debt or have declared such Debt due and payable or required to
be prepaid (other than by a regularly scheduled payment) prior to the stated
maturity thereof, or any such Debt shall not be paid on the stated maturity
date thereof; or

 

(s)                                  failure
by the Second Lien Agent under the Second Lien Debt Agreement or any lender,
agent or trustee under any of the Refinancing Second Lien Debt Documents to
comply in any material respect with, or any breach in any material respect by
any such Person of, any terms or conditions of the Intercreditor Agreement or,
in the case of the lenders and agents under any of the Refinancing Second Lien
Debt Documents, any intercreditor agreement entered into by any such lenders
and agents with either of the Agents.

 

Section 11.2                                Remedies.

 

(a)                                  During the existence
of any Default or Event of Default, either of the Agents may, in its
discretion, and the Agents shall, at the direction of the Majority Lenders, do
one or more of the following at any time or times and in any order, without
notice to or demand on any Obligated Party: 
(i) reduce the Maximum Revolver Amount, or the advance rates
against the Net Amount of Eligible Accounts, Eligible Transportation Equipment
and/or Eligible Inventory used in computing the Borrowing Base and/or any other
advance rates or amounts used in computing the Borrowing Base (including
increasing the amount of any Reserve); (ii) restrict the amount of or
refuse to make Revolving Loans; and (iii) instruct the Letter of Credit
Issuer to restrict or refuse to provide Letters of Credit.

 

(b)                                 During the existence
of any Event of Default, the Administrative Agent or the Collateral Agent, as
applicable, shall, at the direction of the Majority Lenders, do one or more of
the following:  (i) take any of the
actions described in clause (a) preceding, at 

 

124

 

any time or times and in any order, without notice to or demand on any
Obligated Party; (ii) terminate the Commitments, the obligation of the
Lenders to make Revolving Loans under this Agreement, and the obligation of the
Agents to cause the Letter of Credit Issuer to issue any Letter of Credit
hereunder; (iii) declare any or all of the Obligations to be immediately
due and payable (except for Obligations under Hedge Agreements, which remedy
shall be governed by the terms and conditions contained in such Hedge
Agreements); provided, however, that upon the occurrence of any
Event of Default described in Section 11.1(e), Section 11.1(f),
Section 11.1(g), or Section 11.1(h), the Commitments
shall automatically and immediately expire and all Obligations shall
automatically become immediately due and payable without notice or demand of
any kind; (iv) require the Obligated Parties to provide cash collateral in
an amount equal to 105% of all Obligations (contingent or
otherwise) outstanding with respect to Letters of Credit; and (v) pursue
its other rights and remedies under the Loan Documents and any Requirement of
Law.

 

(c)                                  During the existence
of any Event of Default:  (i) the
Collateral Agent shall have, for the benefit of the Credit Providers, in
addition to all other rights of the Credit Providers, the rights and remedies
of a secured party under the Loan Documents and the UCC; (ii) the
Collateral Agent may, at any time, take possession of the Collateral and keep
it on any Obligated Party’s premises, at no cost to the Credit Providers, or
remove any part of the Collateral to such other place or places as the
Collateral Agent may desire, or any Obligated Party shall, upon the Collateral
Agent’s demand, at such Obligated Party’s cost, assemble the Collateral and
make it available to the Collateral Agent at a place reasonably convenient to
the Collateral Agent; (iii) the Collateral Agent or the Collateral Agent’s
designee may notify the Obligated Parties’ Account Debtors that the Obligated
Parties’ Accounts have been assigned to the Collateral Agent and of the Agent’s
Lien therein, and may collect such Accounts directly and charge the collection
costs and expenses to the Loan Account as a Revolving Loan:  and (iv) the Collateral Agent may sell
and deliver any Collateral at public or private sales, for cash, upon credit,
or otherwise, at such prices and upon such terms as the Collateral Agent deems
advisable, in its sole discretion, and may, if the Collateral Agent deems it
reasonable, postpone or adjourn any sale of the Collateral by an announcement
at the time and place of sale or of such postponed or adjourned sale without
giving a new notice of sale.  Without in
any way requiring notice to be given in the following manner, each Obligated
Party agrees that any notice by the Collateral Agent of sale, disposition, or
other intended action hereunder or in connection herewith, whether required by
the UCC or otherwise, shall constitute reasonable notice to the Obligated Parties
if such notice is mailed by registered or certified mail, return receipt
requested, postage prepaid, or is delivered personally against receipt, at
least ten days prior to such action to the Obligated Parties’ address specified
in or pursuant to Section 15.8. 
If any Collateral is sold on terms other than payment in full at the
time of sale, no credit shall be given against the Obligations until the
Collateral Agent, Administrative Agent or the Lenders receive payment, and if
the buyer defaults in payment, the Collateral Agent may resell the Collateral
without further notice to any Obligated Party. 
In the event the Collateral Agent seeks to take possession of all or any
portion of the Collateral by judicial process, each Obligated Party irrevocably
waives the posting of any bond, surety, or security with respect thereto that
might otherwise be required, any demand for possession prior to the
commencement of 

 

125

 

any suit or action to recover the Collateral, and any requirement that
the Collateral Agent retains possession and not dispose of any Collateral until
after trial or final judgment.  Each
Obligated Party agrees that the Collateral Agent has no obligation to preserve
rights to the Collateral or marshal any Collateral for the benefit of any
Person.  In addition to any license
granted pursuant to Section 10.16, the Collateral Agent is hereby
granted a license or other right to use, without charge, each Obligated Party’s
labels, patents, copyrights, name, trade secrets, trade names, trademarks, and
advertising matter, or any similar property, in completing production of,
advertising, or selling any Collateral, and each Obligated Party’s rights under
all licenses and all franchise agreements shall inure to the Collateral Agent’s
benefit for such purpose.  The proceeds
of sale shall be applied first to all expenses of sale, including Attorney
Costs, and then to the Obligations as provided in Section 4.6(b).  The Collateral Agent will return any excess
to the Obligated Parties, except as required by the Intercreditor Agreement or
as a court of competent jurisdiction shall otherwise direct, and the Obligated
Parties shall remain liable for any deficiency.

 

(d)                                 Without limiting the
generality of the foregoing, each Obligated Party expressly agrees that, during
the existence of any Event of Default, the Collateral Agent, without demand of
performance or other demand, advertisement, or notice of any kind (except the
notice specified below of time and place of public or private sale) to or
upon any Obligated Party or any other Person (all and each of which demands,
advertisements, and notices are hereby expressly waived to the maximum extent
permitted by the UCC and other applicable law), may forthwith enter upon the
premises of any Obligated Party where any Collateral is located through
self-help, without judicial process, without first obtaining a final judgment
or giving such Obligated Party or any other Person notice and opportunity for a
hearing on the Collateral Agent’s claim or action and may collect, receive,
assemble, process, appropriate, and realize upon the Collateral, or any part
thereof, and may forthwith sell, lease, license, assign, give an option or
options to purchase, or sell or otherwise dispose of and deliver said
Collateral (or contract to do so), or any part thereof, in one or more parcels
at a public or private sale or sales, at any exchange at such prices as the
Collateral Agent may deem acceptable, for cash or on credit or for future
delivery without assumption of any credit risk. 
The Collateral Agent or any other Credit Provider shall have the right
upon any such public sale or sales and, to the extent permitted by law, upon
any such private sale or sales, to purchase for the benefit of the Collateral
Agent and/or one or more of the other Credit Providers, the whole or any part
of said Collateral so sold, free of any right or equity of redemption, which
equity of redemption each Obligated Party hereby releases.  Such sales may be adjourned and continued
from time to time with or without notice. 
The Collateral Agent shall have the right to conduct such sales on any
Obligated Party’s premises or elsewhere and shall have the right to use each
Obligated Party’s premises without charge for such time or times as the
Collateral Agent deems necessary or advisable.

 

(e)                                  Each Obligated Party
further agrees, at the Collateral Agent’s request, to assemble the Collateral
and make it available to the Collateral Agent at a place or places designated
by the Collateral Agent that are reasonably convenient to the Collateral Agent
and such Obligated Party, whether at such Obligated Party’s premises or
elsewhere.  Until the Collateral Agent is
able to effect a sale, lease, or other disposition of the 

 

126

 

Collateral, the Collateral Agent shall have the right to hold or use
the Collateral, or any part thereof, to the extent that it deems appropriate
for the purpose of preserving the Collateral or its value or for any other
purpose deemed appropriate by the Collateral Agent.  The Collateral Agent shall have no obligation
to any Obligated Party to maintain or preserve the rights of such Obligated
Party as against third parties with respect to any Collateral while such Collateral
is in the possession of the Collateral Agent. 
The Collateral Agent may, if it so elects, seek the appointment of a
receiver or keeper to take possession of the Collateral, or any part thereof,
and to enforce any of the Collateral Agent’s remedies (for the benefit of the
Collateral Agent and the other Credit Providers), with respect to such
appointment without prior notice or hearing as to such appointment.  The Collateral Agent shall apply the net
proceeds of any such collection, recovery, receipt, appropriation, realization,
or sale to the Obligations as provided in Section 4.6(b), and only
after so paying over such net proceeds, and after the payment by the Collateral
Agent of any other amount required by any provision of law (and subject to the terms
of the Intercreditor Agreement or a decision, order or ruling of a court of
competent jurisdiction), need the Collateral Agent account for the surplus, if
any, to the applicable Obligated Party. 
To the maximum extent permitted by applicable law, each Obligated Party
waives all claims, damages, and demands against the Collateral Agent or any
other Credit Provider arising out of the repossession, retention, or sale of
the Collateral except to the extent resulting from the gross negligence or
willful misconduct of the Collateral Agent or such other Credit Provider as
determined in a final, nonappealable judgment by a court of competent
jurisdiction.  Each Obligated Party
agrees that ten days prior notice by the Collateral Agent of the time and place
of any public sale or of the time after which a private sale may take place is
reasonable notification of such matters. 
Each Obligated Party shall remain liable for any deficiency if the
proceeds of any sale or disposition of the Collateral are insufficient to pay
all Obligations, including any attorneys’ fees or other expenses incurred by
the Collateral Agent or any other Credit Provider to collect such deficiency.

 

(f)                                    Except as otherwise
specifically provided herein or in the other Loan Documents, each Obligated
Party hereby waives presentment, demand, protest, or any notice (to the maximum
extent permitted by applicable law) of any kind in connection with this
Agreement or any Collateral.

 

(g)                                 To the extent that
applicable law imposes duties on the Collateral Agent to exercise remedies in a
commercially reasonable manner, each Obligated Party acknowledges and agrees
that it is not commercially unreasonable for the Collateral Agent (i) to
fail to incur expenses reasonably deemed significant by the Collateral Agent to
prepare Collateral for disposition or otherwise to complete raw material or
work-in-process into finished goods or other finished products for disposition,
(ii) if not required by other law, to fail to obtain governmental or third
party consents for the collection or disposition of Collateral to be collected
or disposed of, (iii) to fail to exercise collection remedies against
Account Debtors or other Persons obligated on Collateral or to remove Liens on
or any adverse claims against Collateral, (iv) to exercise collection
remedies against Account Debtors and other Persons obligated on Collateral
directly or through the use of collection agencies and other collection
specialists, (v) to advertise dispositions of Collateral through
publications or media of general circulation, whether or not the 

 

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Collateral is of a specialized nature, (vi) to contact other
Persons, whether or not in the same business as such Obligated Party, for
expressions of interest in acquiring all or any portion of such Collateral, (vii) to
hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the Collateral is of a specialized nature, (viii) to
dispose of Collateral by utilizing internet sites that provide for the auction
of assets of the types included in the Collateral or that have the reasonable
capacity of doing so, or that match buyers and sellers of assets, (ix) to
dispose of assets in wholesale rather than retail markets, (x) to disclaim
disposition warranties, such as title, possession, or quiet enjoyment,
(xi) to purchase insurance or credit enhancements to insure the Collateral
Agent against risks of loss, collection, or disposition of Collateral or to
provide to the Collateral Agent a guaranteed return from the collection or
disposition of Collateral, or (xii) to the extent deemed appropriate by
the Collateral Agent, to obtain the services of other brokers, investment
bankers, consultants, and other professionals to assist the Collateral Agent in
the collection or disposition of any of the Collateral.  Each Obligated Party acknowledges that the
purpose of this Section 11.2(g) is to provide non-exhaustive
indications of what actions or omissions by the Collateral Agent would not be
commercially unreasonable in the Collateral Agent’s exercise of remedies
against the Collateral and that other actions or omissions by the Collateral
Agent shall not be deemed commercially unreasonable solely on account of not
being indicated in this Section 11.2(g).  Without limiting the foregoing, nothing
contained in this Section 11.2(g) shall be construed to grant
any rights to any Obligated Party or to impose any duties on the Collateral
Agent that would not have been granted or imposed by this Agreement or by
Requirement of Law in the absence of this Section 11.2(g).

 

(h)                                 Without limiting Section 10.12(c),
during the existence of an Event of Default, each Obligated Party, at the
Collateral Agent’s request, shall execute and deliver to the Collateral Agent
such documents as the Collateral Agent shall require to grant the Collateral
Agent access to any post office box in which collections of Accounts are
received.

 

(i)                                     During the
existence of an Event of Default, the Obligated Parties will, at the Collateral
Agent’s request, with respect to all Inventory financed by Letters of Credit,
instruct all suppliers, carriers, forwarders, customs brokers, warehouses, or
others receiving or holding cash, checks, Inventory, documents, or instruments
in which the Collateral Agent holds a security interest to deliver them to the
Collateral Agent and/or subject to the Collateral Agent’s order, and if they
shall come into any Obligated Party’s possession, to deliver them, upon
request, to the Collateral Agent in their original form.  The Obligated Parties shall also, at the
Collateral Agent’s request, during the existence of an Event of Default,
designate the Collateral Agent as the consignee on all bills of lading and
other negotiable and non-negotiable documents or cause all such documents to
designate the applicable Obligated Party as the consignee subject to the Agent’s
Liens.

 

(j)                                     During the
existence of an Event of Default, each Obligated Party hereby waives all rights
to notice and hearing prior to the exercise by the Collateral Agent of the
Collateral Agent’s rights to repossess the Collateral without judicial process
or to replevy, attach, or levy upon the Collateral without notice or hearing.

 

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ARTICLE 12

TERM AND TERMINATION

 

Section 12.1           Term
and Termination.

 

(a)           The
term of this Agreement shall end on the Stated Termination Date unless sooner
terminated in accordance with the terms hereof. 
Either of the Agents may, and upon direction from the Majority Lenders
the Agents shall, terminate this Agreement, without notice to the Obligated
Parties, during the existence of an Event of Default.  Upon the effective date of termination of
this Agreement for any reason whatsoever, all Obligations (including all unpaid
principal, accrued and unpaid interest, and any early termination or prepayment
fees, but excluding indemnification obligations to the extent no claim with
respect thereto has been asserted and remains unsatisfied) shall become
immediately due and payable, the Lenders shall have no obligation to make any
Loans, the Agents shall have no obligation to cause the Letter of Credit Issuer
to issue any Letter of Credit, and the Borrowers shall immediately arrange for
the cancellation and return of all Letters of Credit then outstanding or
delivery to the Collateral Agent of a Supporting Cash Deposit or a Supporting
Letter of Credit in accordance with Section 2.4(g).  Notwithstanding the termination of this
Agreement, until all Obligations are indefeasibly paid and performed in full,
the Obligated Parties shall remain bound by the terms of this Agreement and the
other Loan Documents and shall not be relieved of any of their Obligations
hereunder or thereunder, and the Agents and the Lenders shall retain all their
rights and remedies hereunder and thereunder (including the Agent’s Liens in
and all rights and remedies with respect to all then existing and
after-acquired or after-arising Collateral).

 

(b)           Notwithstanding
the payment in full of the Obligations, the Agents shall not be required to
terminate the Agent’s Liens in any of the Collateral unless, with respect to
any loss or damage either of the Agents or any Lender may incur as a result of
the dishonor or return of any payment items applied to the Obligations, the
Agents shall have received either (i) a written agreement, executed by the
Obligated Parties and any other Person deemed financially responsible by the
Agents and whose loans or other advances to the Borrowers, or any of them, are
used in whole or in part to satisfy the Obligations, indemnifying the Agents
and the other Credit Providers  from any
such loss or damage or (ii) such monetary reserves and Liens on the
Collateral for such period of time as the Agents, in their reasonable credit
judgment, may deem necessary to protect the Agents and the other Credit
Providers from any such loss or damage. 
The provisions of Section 2.4(f), Section 2.5, Section 4.7,
Article 5, this Section 12.1(b), Section 14.7,
Section 14.16(d), Section 15.7, Section 15.11,
and all indemnification obligations of any of the Obligated Parties shall in
all events survive any termination of the Commitments or this Agreement.

 

129

 

ARTICLE 13

AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS

 

Section 13.1           Amendments
and Waivers.

 

(a)           Except
as specified in clause (b) following, no amendment or waiver
of any provision of this Agreement or any other Loan Document (other than Hedge
Agreements), and no consent with respect to any departure by any Obligated
Party therefrom, shall be effective unless such amendment, modification, or
consent is in writing, signed by the Majority Lenders or, in the case of any
amendment or waiver of, or any consent with respect to, any provision of Section 8.21
or any provision of the Intercreditor Agreement or the GE Intercreditor
Agreement, the Majority Lenders and both Agents, and, in each case, the
Obligated Parties that are party thereto, and then any such amendment, waiver,
or consent shall be effective only in the specific instance and for the
specific purpose for which given.

 

(b)           Unless
it is in writing and signed by all of the Lenders and the Obligated Parties
that are party thereto and acknowledged by the Agents, no amendment, waiver, or
consent shall do any of the following:

 

(i)            increase
(other than pursuant to an Incremental Commitment Agreement or an assignment
under Section 13.2) or extend the Commitment of any Lender;

 

(ii)           amend
the second sentence of Section 2.2(a);

 

(iii)          increase
the Maximum Revolver Amount, the Letter of Credit Subfacility or the Dollar
amount set forth in the first sentence of Section 2.2(j), in each
instance, in excess of the respective amount set forth on the Closing Date,
except as permitted in accordance with the terms of this Agreement;

 

(iv)          postpone
or delay any date fixed by this Agreement or any other Loan Document for any
payment of principal, interest, fees (other than fees payable to BofA,
Wachovia, the Administrative Agent or the Collateral Agent solely for such
Person’s benefit), or other amounts due to the Lenders (or any of them)
hereunder or under any other Loan Document;

 

(v)           reduce
the principal of, or the rate of interest specified herein on any Loan, or any
fees or other amounts payable hereunder or under any other Loan Document;

 

(vi)          change
the percentage of the Commitments or of the aggregate unpaid principal amount
of the Loans that is required for the Lenders, or any of them, to take any
action hereunder;

 

(vii)         change
the definition of Borrowing Base, Blocked Availability Amount, Eligible
Accounts, Eligible Inventory, Eligible Rental and Sale

 

130

 

Equipment, Eligible Spare Parts Inventory, Eligible Transportation
Equipment or Unused Availability in a manner that would result in an increase
in Unused Availability;

 

(viii)        change
the definition of Majority Lenders;

 

(ix)           amend
this Section 13.1 or any provision of this Agreement providing for
consent or other action by all of the Lenders;

 

(x)            other
than as permitted by Section 14.11, release any Guaranties of the
Obligations or release Collateral;

 

(xi)           amend
Section 4.6(b); or

 

(xii)          expressly
subordinate the payment of any Obligation to any other Debt;

 

provided that (A) no
amendment, waiver, or consent shall, unless in writing and signed by the
Administrative Agent, affect the rights or duties of the Administrative Agent
under this Agreement or any other Loan Document, (B) no amendment, waiver,
or consent shall, unless in writing and signed by BofA and Wachovia, acting in
their respective capacities as the Letter of Credit Issuer, affect the rights
or duties of the Letter of Credit Issuer under this Agreement or any other Loan
Document related to any Letter of Credit issued or to be issued by it, (C) no
amendment, waiver, or consent shall, unless in writing and signed by the
Collateral Agent, affect the rights or duties of the Collateral Agent under
this Agreement or any other Loan Document, (D) Schedule 1.1(A) may
be amended from time to time by the Agents alone to reflect assignments of
Commitments in accordance with this Agreement and as contemplated by Section 2.1(c),
(E) any Loan Document relating to Bank Products may be amended by the
applicable Obligated Parties and the Person providing such Bank Products
without the approval or consent of any other Lender, the Administrative Agent
or the Collateral Agent, (F) except as specified for in clause (i) preceding,
no Defaulting Lender shall have any right to approve or disapprove any
amendment, waiver, or consent hereunder and (G) amendments and
modifications to the Collateral Documents in connection with the provision of
any Incremental Commitments by Incremental Lenders may be made as contemplated
in Section 2.1(c)(ii) (with the consent of the Administrative
Agent and/or the Collateral Agent, as appropriate).

 

(c)           If
any fees are paid to the Lenders as consideration for amendments, waivers, or
consents with respect to this Agreement, at the Agents’ election, such fees may
be paid only to those Lenders that agree to such amendments, waivers, or
consents within the time specified for submission thereof.

 

(d)           If,
in connection with any proposed amendment, waiver, or consent requiring the
consent of all of the Lenders, the consent of the Majority Lenders is obtained
but the consent of the other Lenders is not obtained (any such Lender whose
consent is not obtained being referred to as a “Non-Consenting Lender”),
then, if neither BofA nor Wachovia (in its individual capacity

 

131

 

as a Lender) is a Non-Consenting Lender, at the Obligated Parties’
request either or both of BofA or Wachovia (in its individual capacity as a
Lender) or an Eligible Assignee shall, subject to the requirements of Section 13.2(a),
have the right (but not the obligation) to purchase from each Non-Consenting
Lender, and each Non-Consenting Lender agrees that it shall sell, such
Non-Consenting Lender’s Loans and Commitments for an amount equal to the
aggregate outstanding principal balances thereof plus all accrued interest and fees with respect thereto
through the date of sale pursuant to one or more Assignment and Acceptances,
without premium or discount.

 

Section 13.2           Assignments;
Participations.

 

(a)           Any
Lender (the “assigning Lender”) may, with the written consent of the
Agents (which consent shall not be unreasonably withheld or delayed) and if no
Default or Event of Default exists with the written consent of the Borrowers
(which consent shall not be unreasonably withheld or delayed), assign and
delegate to one or more Eligible Assignees (provided that no consent of
the Agents or the Borrowers shall be required in connection with any assignment
and delegation by an assigning Lender to an Affiliate of the assigning Lender
or to another Lender) (each, an “Assignee”) all or part of the
Commitment of the assigning Lender hereunder, in a minimum amount of
$10,000,000 and integral amounts of $5,000,000 in excess thereof, together with
a ratable part of the assigning Lender’s outstanding Loans and the other rights
and obligations of the assigning Lender hereunder (provided that, unless
the assigning Lender has assigned and delegated all of its Loans and
Commitments, no such assignment and/or delegation shall be permitted unless,
after giving effect thereto, the assigning Lender retains a Commitment in a
minimum amount of $10,000,000 and a ratable part of the outstanding Loans and
the other rights and obligations hereunder); provided, further,
that the Obligated Parties and the Agents may continue to deal solely and
directly with the assigning Lender in connection with the interest so assigned
to an Assignee until (i) written notice of such assignment, together with
payment instructions, addresses, and related information with respect to the Assignee,
shall have been given to Ahern and the Agents by the assigning Lender and the
Assignee, (ii) the assigning Lender and the Assignee shall have delivered
to Ahern and the Agents an Assignment and Acceptance substantially in the form
of Exhibit F (an “Assignment and Acceptance”), and (iii) the
assigning Lender or the Assignee has paid to each of the Agents a processing
fee in the amount of Three Thousand Five Hundred Dollars ($3,500).

 

(b)           From
and after the date that the Agents notify the assigning Lender that they have
received an executed Assignment and Acceptance and payment of the
above-referenced processing fee, if applicable, (i) the Assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations, including, but not limited to, the obligation to participate in
Letters of Credit, have been assigned to the Assignee pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Lender
under the Loan Documents and (ii) the assigning Lender shall, to the
extent that rights and obligations hereunder and under the other Loan Documents
have been assigned by the assigning Lender pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and in the case of an Assignment and Acceptance covering all or
the remaining portion of the assigning Lender’s rights and obligations under
this Agreement, the assigning Lender shall cease to be a party hereto).

 

132

 

(c)                                  By executing and
delivering an Assignment and Acceptance, the assigning Lender thereunder and
the Assignee thereunder confirm to and agree with each other and the other
parties hereto as follows:  (i) other
than as provided in such Assignment and Acceptance, the assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties, or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency, or value of this Agreement or any other Loan Document furnished
pursuant hereto or the attachment, perfection, or priority of any Lien granted
by the Obligated Parties to the Collateral Agent or any Lender in the
Collateral; (ii) the assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the
Obligated Parties or the performance or observance by the Obligated Parties of
any of their respective obligations under this Agreement or any other Loan
Document furnished pursuant hereto; (iii) such Assignee confirms that it
has received a copy of this Agreement, together with such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such Assignee
will, independently and without reliance upon either of the Agents, the
assigning Lender, or any other Lender, and based on such documents and
information as such Assignee shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (v) such Assignee appoints and authorizes the Administrative
Agent and the Collateral Agent to take such action as administrative agent or
collateral agent, as applicable, on its behalf and to exercise such powers
under this Agreement as are delegated to the Administrative Agent or the
Collateral Agent, as applicable, by the terms hereof, together with such
powers, including the discretionary rights and incidental powers, as are
reasonably incidental thereto; and (vi) such Assignee agrees that it will
perform in accordance with their terms all of the obligations that by the terms
of this Agreement are required to be performed by it as a Lender.

 

(d)                                 Immediately upon
satisfaction of the requirements of Section 13.2(a), this Agreement
shall be deemed to be amended to the extent, but only to the extent, necessary
to reflect the addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom.  The Commitment
allocated to each Assignee shall reduce the Commitment of the assigning Lender
pro tanto.

 

(e)                                  Any Lender (the “originating
Lender”) may at any time sell to one or more Participants participating
interests in any Loans, the Commitment of the originating Lender, and the other
interests of the originating Lender hereunder and under the other Loan
Documents; provided that (i) the originating Lender’s obligations
under this Agreement shall remain unchanged, (ii) the originating Lender
shall remain solely responsible for the performance of such obligations, (iii) the
Obligated Parties and the Agents 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, (iv) no
Lender shall transfer or grant any participating interest under which the
Participant has rights to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document except for the
matters set forth in Section 13.1(b)(i), Section 13.1(b)(ii),
and Section 13.1(b)(iii), and (v) all amounts payable by the
Borrowers hereunder shall be determined as if the

 

133

 

originating Lender had not sold such participation, except that, if
amounts outstanding under this Agreement are due and unpaid, or shall have
become due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of setoff in respect of its participating
interest in amounts owing under this Agreement to the same extent and subject
to the same limitation as if the amount of its participating interest were
owing directly to it as a Lender under this Agreement.

 

(f)                                    Notwithstanding any
other provision in this Agreement, 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 Federal Reserve Board or U.S. Treasury Regulation 31 C.F.R.
§203.14, and such Federal Reserve Bank may enforce such pledge or security
interest in any manner permitted under applicable law.

 

ARTICLE 14

THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT

 

Section 14.1                                Appointment and
Authorization.

 

(a)                                  Each Lender hereby
irrevocably appoints and designates each of BofA, acting in its capacity as the
Administrative Agent, and Wachovia, acting in its capacity as the Collateral
Agent, as its agent under this Agreement and the other Loan Documents, and each
Lender hereby irrevocably authorizes the Collateral Agent and the
Administrative Agent to take such action on such Lender’s behalf under the
provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to the Collateral
Agent or the Administrative Agent, as applicable, by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto.  Each of
the Collateral Agent and the Administrative Agent agrees to act as such on the
express conditions contained in this Article 14.  Other than as expressly provided in Section 14.10
and Section 14.11, the provisions of this Article 14
are solely for the benefit of the Collateral Agent, the Administrative Agent
and the other Credit Providers, and no Obligated Party shall have any rights as
a third party beneficiary of any of the provisions contained herein.  Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the Agents
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall either of the Agents have or be deemed to have any fiduciary
relationship with any Lender or Participant, and no implied covenants,
functions, responsibilities, duties, obligations, or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against either
of the Agents.  Without limiting the
generality of the foregoing sentence, the use of the term “agent” in this
Agreement or any other Loan Document with reference to the Collateral Agent or
the Administrative Agent is not intended to connote any fiduciary or other
implied (or express) obligations arising under agency doctrine of any
applicable law.  Instead, such term is
used merely as a matter of market custom, and is intended to create or reflect
only an administrative relationship between independent contracting
parties.  Except as expressly otherwise
provided in this Agreement, each of the Collateral Agent

 

134

 

and the Administrative Agent shall have and may use its sole discretion
with respect to exercising or refraining from exercising any discretionary
rights or taking or refraining from taking any actions that the Collateral
Agent or the Administrative Agent is expressly entitled to take or assert under
this Agreement and the other Loan Documents, including (as applicable) (i) the
determination of the applicability of ineligibility criteria with respect to
the calculation of the Borrowing Base, (ii) the making of Agent Advances
pursuant to Section 2.2(j), and (iii) the exercise of remedies
pursuant to Section 11.2, and any action so taken or not taken
shall be deemed consented to by the Lenders.

 

(b)                                 The Letter of Credit
Issuer shall act on behalf of the Lenders with respect to any Letters of Credit
issued hereunder and the agreements and documents associated therewith.  The Letter of Credit Issuer shall have all of
the benefits and immunities (i) provided to the Agents in this Article 14
with respect to any acts taken or omissions suffered by the Letter of Credit
Issuer in connection with Letters of Credit issued by it, or proposed to be
issued by it, and the applications and agreements for letters of credit
pertaining to such Letters of Credit as fully as if the term “Administrative
Agent”, “Collateral Agent” or “Agent”, as the case may be, as used in this Article 14
included the Letter of Credit Issuer with respect to such acts or omissions,
and (ii) as additionally provided herein with respect to the Letter of
Credit Issuer.

 

Section 14.2                                Delegation of Duties.  Each of the Collateral Agent and the Administrative
Agent may execute any of its duties under this Agreement or any other Loan
Document by or through agents, employees, or attorneys-in-fact and shall be
entitled to advice of counsel and other consultants or experts concerning all
matters pertaining to such duties. 
Neither Agent shall be responsible for the negligence or misconduct of
any agent or attorney-in-fact that it selects as long as such selection was
made without gross negligence or willful misconduct.

 

Section 14.3                                Liability of the Agents.  None of the Agent-Related Persons shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct
in connection with its duties expressly set forth herein), or (b) be
responsible in any manner to any Credit Provider or Participant for any
recital, statement, representation, or warranty made by any Obligated Party or
any Affiliate of any Obligated Party, or any officer thereof, contained in this
Agreement or in any other Loan Document, or in any certificate, report,
statement, or other document referred to or provided for in, or received by the
Collateral Agent or the Administrative Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability, or sufficiency of this Agreement or any other Loan
Document, or for any failure of any Obligated Party or any other party to any
Loan Document to perform its obligations hereunder or thereunder.  No Agent-Related Person shall be under any
obligation to any Lender or Participant to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the properties,
books, or records of any Obligated Party or any Obligated Party’s Affiliates.

 

Section 14.4                                Reliance by the
Agents.  Each of the Agents shall be entitled
to rely, and shall be fully protected in relying, upon any writing,
communication, signature, resolution,

 

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representation, notice,
consent, certificate, affidavit, letter, telegram, facsimile, telex, or
telephone message, electronic mail message, statement, or other document or
conversation believed by the Collateral Agent or the Administrative Agent to be
genuine and correct and to have been signed, sent, or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to any Obligated Party or any of their respective Affiliates), independent
accountants and other experts selected by the Collateral Agent or the
Administrative Agent.  Each of the Agents
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Majority Lenders as the Collateral Agent or the
Administrative Agent deems appropriate and, if it so requests, it shall first
be indemnified to its satisfaction by the Lenders against any and all liability
and expense that may be incurred by it by reason of taking or continuing to
take any such action.  The Collateral
Agent and the Administrative Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of the Majority Lenders (or
all Lenders if so required by Section 13.1) and such request and
any action taken or failure to act pursuant thereto shall be binding upon all
of the Lenders.  For purposes of
determining compliance with the conditions specified in Section 9.1,
each Lender that has executed and delivered 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, a Lender unless each Agent shall have received
written notice from such Lender prior to the proposed Closing Date specifying
its objection thereto.

 

Section 14.5                                Notice of Default.  Neither Agent shall be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, other
than the failure of the Borrowers to make any payment of principal, interest,
fees, or expenses required to be paid to it for the benefit of the Credit
Providers, unless the Collateral Agent or the Administrative Agent, as
applicable, shall have received written notice from an Obligated Party or a
Lender referring to this Agreement, describing such Default or Event of Default
and stating that such notice is a “notice of default.”  The Collateral Agent or the Administrative
Agent, as applicable, will notify the Lenders of its receipt of any such
notice.  The Collateral Agent and/or the
Administrative Agent, as applicable, shall take such action with respect to
such Default or Event of Default as may be directed by the Majority Lenders in
accordance with Article 11; provided that unless and until
the Collateral Agent or the Administrative Agent, as applicable, has received
any such direction, the Collateral Agent or the Administrative Agent, as
applicable, may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable or in the best interest of the Credit Providers.

 

Section 14.6                                Credit Decision.  Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to such Lender,
and that no act by the Collateral Agent or the Administrative Agent hereafter
taken, including any consent to and acceptance of any assignment or review of
the affairs of the Obligated Parties and their Affiliates (or any of them),
shall be deemed to constitute any representation or warranty by any
Agent-Related Person to any Lender as to any matter, including whether any
Agent-Related Person has disclosed material information in its possession.  Each Lender represents to the Agents that
such Lender has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as such Lender has deemed
appropriate, made its own appraisal of and investigation into the business,
prospects, operations, property, financial and other

 

136

 

condition, and creditworthiness
of the Obligated Parties and their Affiliates, and any Requirement of Law
relating to the transactions contemplated hereby, and such Lender has made its
own decision to enter into this Agreement and to extend credit to the Borrowers
hereunder.  Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as such Lender shall deem
appropriate at the time, continue to make its own credit analysis, appraisals,
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigations as it deems necessary to inform
itself as to the business, prospects, operations, property, financial and other
condition, and creditworthiness of the Obligated Parties and their
Affiliates.  Except for notices, reports,
and other documents expressly herein required to be furnished to the Lenders by
either of the Agents (as applicable), neither Agent shall have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other condition,
or creditworthiness of any Obligated Party or any of their Affiliates that may
come into the possession of any of the Agent-Related Persons.

 

Section 14.7                                Indemnification.  WHETHER OR NOT THE TRANSACTIONS CONTEMPLATED
HEREBY ARE CONSUMMATED, THE LENDERS SHALL, UPON DEMAND, INDEMNIFY THE
AGENT-RELATED PERSONS (TO THE EXTENT NOT REIMBURSED BY OR ON BEHALF OF THE
OBLIGATED PARTIES AND WITHOUT LIMITING THE OBLIGATION OF THE OBLIGATED PARTIES
TO DO SO), IN ACCORDANCE WITH THEIR PRO RATA SHARES, AND HOLD HARMLESS EACH
AGENT-RELATED PERSON FROM AND AGAINST ANY AND ALL INDEMNIFIED LIABILITIES (AS
SUCH TERM IS DEFINED IN SECTION 15.11(a)); PROVIDED THAT NO
LENDER SHALL BE LIABLE FOR THE PAYMENT TO ANY AGENT-RELATED PERSON OF ANY PORTION
OF SUCH INDEMNIFIED LIABILITIES TO THE EXTENT DETERMINED IN A FINAL,
NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED
FROM SUCH AGENT-RELATED PERSON’S OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT; PROVIDED,
FURTHER, THAT NO ACTION TAKEN IN ACCORDANCE WITH THE DIRECTIONS OF THE
MAJORITY LENDERS OR ALL LENDERS (IF REQUIRED BY THE TERMS OF THIS AGREEMENT)
SHALL BE DEEMED TO CONSTITUTE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT FOR
PURPOSES OF THIS SECTION.  Without
limitation of the foregoing, each Lender shall reimburse the Collateral Agent
and the Administrative Agent upon demand for its Pro Rata Share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the
Collateral Agent or the Administrative Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings, or
otherwise) of, or legal advice in respect of rights or responsibilities
under, this Agreement, any other Loan Document, or any document contemplated by
or referred to herein, to the extent that the Collateral Agent or the
Administrative Agent is not reimbursed for such expenses by or on behalf of the
Borrowers.  The undertaking in this Section 14.7
shall survive the termination of the Commitments, payment of all Obligations
hereunder, and the resignation or replacement of the Collateral Agent or the
Administrative Agent.

 

Section 14.8                                The Collateral Agent
and the Administrative Agent in their Individual Capacity.  Each of BofA and Wachovia and their
respective Affiliates may make loans to, issue

 

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letters of credit for the
account of, accept deposits from, acquire equity interests in, and generally
engage in any kind of banking, trust, financial advisory, underwriting, or
other business with any Obligated Party and its Affiliates as though such
Person were not the Administrative Agent, the Letter of Credit Issuer or the
Collateral Agent hereunder, as applicable, and without notice to or consent of
the Lenders.  The Lenders acknowledge
that, pursuant to such activities, each of BofA and Wachovia and its respective
Affiliates may receive information regarding any Obligated Party, its
Affiliates, and Account Debtors (including information that may be subject to
confidentiality obligations in favor of any such Obligated Party or Affiliate),
and the Lenders acknowledge that BofA and Wachovia shall be under no obligation
to provide such information to the Lenders. 
With respect to its Loans, each of BofA and Wachovia as a Lender shall
have the same rights and powers under this Agreement as any other Lender and
may exercise the same as though it were not the Administrative Agent, the
Letter of Credit Issuer or the Collateral Agent, as applicable, and the terms “Lender”
and “Lenders” include each of BofA and Wachovia in its individual capacity.

 

Section 14.9                                Successor Agents.  Each Agent may resign as an Agent (the “resigning
Agent”) upon at least 30 days’ prior notice to the other Agent, the Lenders
and the Obligated Parties (and any such resignation by BofA or Wachovia shall
also constitute its resignation as the Letter of Credit Issuer hereunder (the “resigning
Letter of Credit Issuer”)).  In the
event BofA or Wachovia sells all of its Commitment and Loans, such Person shall
resign as an Agent; provided that if such sale by BofA or Wachovia is as
part of a sale, transfer, or other disposition by such Person of substantially
all of its loan portfolio, such Person shall resign as an Agent and such
purchaser or transferee shall become its successor Administrative Agent and/or
Collateral Agent, as applicable, hereunder. 
Subject to the foregoing, if either Agent resigns under this Agreement,
then (i) effective upon the effective date of the resignation of the
resigning Agent, the remaining Agent shall act (and hereby agrees to act) as
the sole Administrative Agent and Collateral Agent for the Lenders or (ii) if
there is no remaining Agent at such time, the Majority Lenders shall appoint
from among the Lenders the successor sole Administrative Agent and Collateral
Agent (any Person being appointed pursuant to this clause (ii) as
successor to the resigning Agent being referred to in this Section as the “successor
Agent,” and any such appointment shall also constitute appointment of such
successor Agent as the Letter of Credit Issuer hereunder (the “successor
Letter of Credit Issuer”)) for the Lenders that shall be consented to by
the Borrowers at all times other than during the existence of a Default or an
Event of Default (such consent not to be unreasonably withheld or
delayed).  If no successor Agent has
accepted appointment as the Administrative Agent and Collateral Agent for the
Lenders prior to the effective date of the resignation of the resigning Agent
at a time when there is no other Agent, the resigning Agent’s resignation shall
nevertheless thereupon become effective and the Lenders shall perform all the
duties of the Agents hereunder until such time, if any, as the Majority Lenders
appoint the successor sole Administrative Agent and Collateral Agent as
provided for in this Section 14.9. 
Upon the remaining Agent becoming the Administrative Agent and
Collateral Agent for the Lenders (as provided in clause (i) of
the second preceding sentence) or the acceptance by the successor Agent of its
appointment as the successor Agent hereunder (as provided in clause (ii) of
the second preceding sentence), (a) the remaining Agent or such successor
Agent, as applicable, shall succeed to all the rights, powers, and duties of
each of the Administrative Agent, the Collateral Agent and the resigning Letter
of Credit Issuer, (b) the respective terms “Administrative Agent”, “Collateral
Agent” and “Letter of Credit Issuer” shall mean the remaining Agent or such
successor Agent (as applicable) and such successor Letter of Credit

 

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Issuer, (c) the resigning
Agent’s appointment, rights, powers, and duties as an Agent shall be terminated,
and (d) the resigning Letter of Credit Issuer’s appointment, rights,
powers, and duties as the Letter of Credit Issuer shall be terminated without
any other or further act or deed on the part of the resigning Letter of Credit
Issuer, the remaining Agent or any Lender, other than the obligation of the
remaining Agent or the successor Letter of Credit Issuer, as applicable, to
issue Letters of Credit in substitution for the Letters of Credit, if any,
issued by the resigning Letter of Credit Issuer outstanding at the time of such
succession or to make other arrangements satisfactory to the resigning Letter
of Credit Issuer to effectively assume the obligations of the resigning Letter
of Credit Issuer with respect to its Letters of Credit.  After any resigning Agent’s resignation
hereunder as an Agent, the provisions of this Article 14, Section 15.7,
and Section 15.11 shall continue to inure to its benefit as to any
actions taken or omitted to be taken by it while it was an Agent under this
Agreement.

 

Section 14.10                          Withholding Tax.

 

(a)                                  If any Lender is a “foreign
corporation, partnership, or trust” within the meaning of the Code and such
Lender claims exemption from, or a reduction of, U.S. withholding tax under
Sections 1441 or 1442 of the Code, such Lender agrees with and in favor of the
Agents, to deliver to the Agents and Ahern:

 

(i)                                     if such Lender
claims an exemption from, or a reduction of, withholding tax under a U.S. tax
treaty, two properly completed and executed IRS Form W-8BEN before the
payment of any interest in the first calendar year during which interest may be
paid under this Agreement (and thereafter as reasonably requested by the
Administrative Agent, the Collateral Agent or Ahern, but only if such Lender is
then lawfully permitted to do so);

 

(ii)                                  if such Lender claims
that interest paid under this Agreement is exempt from U.S. withholding tax
because it is effectively connected with a U.S. trade or business of such
Lender, two properly completed and executed copies of IRS Form W-8ECI
before the payment of any interest is due in the first taxable year of such
Lender during which interest may be paid under this Agreement (and thereafter
as reasonably requested by the Administrative Agent, the Collateral Agent or
Ahern, but only if such Lender is then lawfully permitted to do so), and IRS Form W-9;
and

 

(iii)                               such other form or forms
as may be required under the Code or other laws of the U.S. as a condition to
exemption from, or reduction of, U.S. withholding tax.

 

Such Lender
agrees to promptly notify the Agents and Ahern of any change in circumstances
that would modify or render invalid any claimed exemption or reduction.

 

(b)                                 If any Lender claims
exemption from, or reduction of, withholding tax under a U.S. tax treaty by
providing IRS Form W-8BEN and such Lender sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations owing
to such Lender, such Lender agrees to notify the Agents and Ahern of the
percentage amount in

 

139

 

which it is no longer the beneficial owner of Obligations owing to such
Lender.  To the extent of such percentage
amount, the Agents and the Borrowers will treat such Lender’s IRS Form W-8BEN
as no longer valid.

 

(c)                                  If any Lender
claiming exemption from U.S. withholding tax by filing IRS Form W-8ECI
with the Agents sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations owing to such Lender, such Lender
agrees to undertake sole responsibility for complying with the withholding tax
requirements imposed by Sections 1441 and 1442 of the Code.

 

(d)                                 If any Lender is
entitled to a reduction in the applicable withholding tax, the Administrative
Agent, the Collateral Agent or any Borrower, as appropriate, may withhold from
any interest payment to such Lender an amount equivalent to the applicable
withholding tax after taking into account such reduction.  If the forms or other documentation required
by clause (a) preceding are not delivered to the Agents and
Ahern, then the applicable Agent or any Borrower, as appropriate, may withhold
from any interest payment to such Lender not providing such forms or other
documentation an amount equivalent to the applicable withholding tax.

 

(e)                                  If the IRS or any
other Governmental Authority of the U.S. or other jurisdiction asserts a claim
that an Agent or any Borrower did not properly withhold tax from amounts paid
to or for the account of any Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender failed to notify
the Agents or any Borrower of a change in circumstances that rendered the
exemption from, or reduction of, withholding tax ineffective, or for any other
reason) such Lender shall indemnify each of the Agents and any Borrower
fully for all amounts paid, directly or indirectly, by any of them as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to either of the Agents or the
Borrowers under this Section 14.10, together with all costs and
expenses (including Attorney Costs).  The
obligation of the Lenders under this clause (e) shall survive
the payment of all Obligations and the resignation or replacement of either
Agent.

 

Section 14.11                          Collateral Matters.

 

(a)                                  The Credit Providers
hereby irrevocably authorize the Collateral Agent to release any Guarantor that
is permitted to wind-up, dissolve, liquidate, or merge out of existence under Section 8.9,
and to release any Agent’s Liens upon any Collateral (i) upon (A) termination
of the Commitments, (B) termination or collateralization as provided in Section 2.4(g) of
all outstanding Letters of Credit (whether or not any of such obligations are
due), and (C) the Borrowers’ payment and satisfaction in full of all Loans
and other Obligations (other than indemnification obligations to the extent no
claim with respect thereto has been asserted and remains unsatisfied), (ii) constituting
property being sold or disposed of if the Obligated Party disposing of such
property certifies to the Agents that the sale or disposition is made in
compliance with Section 8.9 (and the Agents may rely conclusively
on any such certification, without further inquiry), (iii) constituting
property in which no Obligated Party owned any interest at the time the Lien
was granted or at any time thereafter, or (iv) constituting property
leased to an

 

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Obligated Party under a lease that has expired or been terminated in a
transaction permitted under this Agreement. 
Except as provided above, the Collateral Agent will not release any of
the Agent’s Liens without the prior written authorization of the Majority
Lenders; provided that the Collateral Agent may, in its discretion with
the prior written authorization of the Administrative Agent, release the Agent’s
Liens on Collateral valued in the aggregate not in excess of $1,000,000 during
each Fiscal Year without the prior written authorization of any Lender and the
Collateral Agent may release the Agent’s Liens on Collateral valued in the
aggregate not in excess of $5,000,000 during each Fiscal Year with the prior
written authorization of the Majority Lenders and the Administrative
Agent.  Upon request by either of the
Agents or the Obligated Parties at any time, the Credit Providers will confirm
in writing the Collateral Agent’s authority to release any Guarantor and any of
the Agent’s Liens upon particular types or items of Collateral in accordance
with the terms of this Section 14.11.

 

(b)                                 Upon receipt by the
Collateral Agent of any authorization required pursuant to Section 14.11(a) from
the Majority Lenders and/or the Administrative Agent, as appropriate, of the
Collateral Agent’s authority to release any Agent’s Liens upon particular types
or items of Collateral, and upon at least five Business Days prior written
request by the Obligated Parties, the Collateral Agent shall (and is hereby
irrevocably authorized by the Lenders to) execute such documents as may be
necessary to evidence the release of the Agent’s Liens upon such Collateral; provided
that (i) the Collateral Agent shall not be required to execute any such
document on terms that, in the Collateral Agent’s opinion, would expose the
Collateral Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect, or impair
the Obligations or any Liens (other than those expressly being released) upon
(or obligations of the Obligated Parties in respect of) all interests retained
by the Obligated Parties, including the proceeds of any sale, all of which
shall continue to constitute part of the Collateral.

 

(c)                                  Neither of the Agents
shall have any obligation whatsoever to any of the Credit Providers to assure
that the Collateral exists or is owned by any of the Obligated Parties or is
cared for, protected, or insured or has been encumbered, or that the Agent’s
Liens 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 the rights,
authorities, and powers granted or available to either of the Agents pursuant
to any of the Loan Documents, it being understood and agreed that in respect of
the Collateral, or any act, omission, or event related thereto, each of the
Agents may act in any manner it may deem appropriate, in its sole discretion,
given such Agent’s own interest in the Collateral in its capacity as one of the
Lenders and that neither of the Agents shall have any other duty or liability
whatsoever to any Credit Provider as to any of the foregoing.

 

(d)                                 Upon receipt by the
Collateral Agent of any proceeds of Collateral, the Collateral Agent shall
promptly turn all such proceeds over to the Administrative Agent for
application in accordance with Section 4.6(b).

 

141

 

Section 14.12                          Restrictions on Actions by
Lenders; Sharing of Payments.

 

(a)                                  Each of the Credit
Providers agrees that it shall not, without the express consent of the Majority
Lenders, and that it shall, to the extent it is lawfully entitled to do so,
upon the request of the Majority Lenders, setoff against the Obligations, any
amounts owing by such Credit Provider to any Obligated Party or any accounts of
any Obligated Party now or hereafter maintained with such Credit Provider.  Each of the Credit Providers further agrees
that it shall not, unless specifically requested to do so by the Agents, take
or cause to be taken any action to enforce its rights under this Agreement or
any other Loan Document or against any Obligated Party, including the
commencement of any legal or equitable proceedings, to foreclose any Lien on,
or otherwise enforce any security interest in, any of the Collateral.

 

(b)                                 If at any time or
times any Credit Provider shall receive (i) by payment, foreclosure,
setoff, or otherwise, any proceeds of Collateral or any payments with respect
to the Obligations owing to such Credit Provider arising under, or relating to,
this Agreement or the other Loan Documents, except for any such proceeds or
payments received by such Credit Provider from either of the Agents pursuant to
the terms of this Agreement, or (ii) payments from either of the Agents in
excess of such Credit Provider’s ratable portion of all such distributions by
the Agents, such Credit Provider shall promptly (A) turn the same over to
the Administrative Agent, in kind, and with such endorsements as may be
required to negotiate the same to the Administrative Agent, or in same day
funds, as applicable, for the account of all of the Credit Providers and for
application to the Obligations in accordance with the applicable provisions of
this Agreement, or (B) purchase, without recourse or warranty, an
undivided interest and participation in the Obligations owed to the other
Lenders so that such excess payment received shall be applied among the Credit
Providers in accordance with the terms of this Agreement; provided that
if all or part of such excess payment received by the purchasing party is
thereafter recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable portion of the
purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.

 

Section 14.13                          Agency for Perfection.  Each Credit Provider hereby appoints each
other Credit Provider as agent for the purpose of perfecting Liens, for the
benefit of the Credit Providers, in assets that, in accordance with Article 9
of the UCC or any other Requirement of Law can be perfected only by
possession.  Should any Credit Provider
(other than the Collateral Agent) obtain possession of any such Collateral,
such Credit Provider shall notify the Collateral Agent thereof, and, promptly
upon the Collateral Agent’s request therefor, shall deliver such Collateral to
the Collateral Agent or otherwise deal with such Collateral in accordance with
the Collateral Agent’s instructions.

 

Section 14.14                          Payments by Agents to the
Lenders.  All payments to be made by
either of the Agents to the Credit Providers shall be made by bank wire
transfer or internal transfer of immediately available funds to each Credit
Provider pursuant to transfer instructions delivered in writing to the Agents
on or prior to the Closing Date (or if such Credit Provider is an Assignee,

 

142

 

delivered with or in the
applicable Assignment and Acceptance), or pursuant to such other transfer
instructions as each party may designate for itself by written notice to the
Agents.  Concurrently with each such
payment, the applicable Agent shall identify whether such payment (or any
portion thereof) represents principal, premium, interest, or fees on the
Revolving Loans, the Letters of Credit, or otherwise.  Unless the Agents receive notice from the
Borrowers prior to the date on which any payment is due to any Credit Provider
that the Borrowers will not make such payment in full as and when required,
each of the Agents may assume that the Borrowers have made such payment in full
to the applicable Agent on such date in immediately available funds and the
applicable Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Credit Provider on such due date an amount equal
to the amount then due such Credit Provider. 
If and to the extent the Borrowers have not made such payment in full to
the applicable Agent, each Credit Provider shall repay to such Agent on demand
such amount distributed to such Credit Provider, together with interest thereon
at the Federal Funds Rate for each day from the date such amount is distributed
to such Credit Provider until the date repaid.

 

Section 14.15                          Settlement.

 

(a)                                  Each Lender’s funded
portion of the Revolving Loans is intended by the Lenders to be equal at all
times to such Lender’s Pro Rata Share of the outstanding Revolving Loans.  Notwithstanding such agreement, the Agents,
BofA, Wachovia, and the Lenders agree (which agreement shall not be for the
benefit of or enforceable by the Obligated Parties) that in order to facilitate
the administration of this Agreement and the other Loan Documents, settlement
among them as to the Revolving Loans, including the Non-Ratable Loans and the
Agent Advances, shall take place on a periodic basis in accordance with the
following provisions:

 

(i)                                     The Administrative
Agent shall request settlement (a “Settlement”) with the Lenders on at
least a weekly basis, or on a more frequent basis at its election, (A) on
behalf of BofA, with respect to each outstanding Non-Ratable Loan, (B) for
itself, with respect to each Agent Advance, and (C) with respect to
collections received, in each case, by notifying the Lenders of such requested
Settlement by telecopy, telephone, or other similar form of transmission, of
such requested Settlement, no later than 1:30p.m. (New York time) on the date
of such requested Settlement (the “Settlement Date”).  In its discretion, the Administrative Agent
may on any Settlement Date permit Non-Ratable Loans in an aggregate principal
amount not to exceed One Million Dollars ($1,000,000) to remain outstanding,
while requiring Settlement of the other outstanding Non-Ratable Loans.  Each Lender (other than BofA, in the case of
the Non-Ratable Loans, and the Administrative Agent, in the case of the Agent
Advances) shall transfer the amount of such Lender’s Pro Rata Share of the
outstanding principal amount of the Non-Ratable Loans and Agent Advances with
respect to which Settlement is requested to the Administrative Agent to such
account of the Administrative Agent as the Administrative Agent may designate,
not later than 4:00p.m. (New York time), on the Settlement Date applicable
thereto.  Settlements shall occur during
the continuation of a Default or an Event of Default and whether or not the
applicable conditions precedent set forth in Article 9 have then
been satisfied.

 

143

 

Such amounts transferred to the Administrative Agent shall be applied
against the amounts of the applicable Non-Ratable Loan or Agent Advance for
which the Administrative Agent has requested Settlement and, together with the
portion of such Non-Ratable Loan or Agent Advance representing BofA’s (in its
individual capacity or as the Administrative Agent, as appropriate) Pro Rata
Share thereof, shall constitute Revolving Loans of such Lenders,
respectively.  If any such amount is not
transferred to the Administrative Agent by any Lender on the Settlement Date
applicable thereto, the Administrative Agent shall be entitled to recover such
amount on demand from such Lender together with interest thereon at the Federal
Funds Rate for the first three days from and after the Settlement Date and
thereafter at the Interest Rate then applicable to Base Rate Revolving Loans
(Y) on behalf of BofA, with respect to each outstanding Non-Ratable Loan
and (Z) for itself, with respect to each Agent Advance.

 

(ii)                                  Notwithstanding the
foregoing, not more than one Business Day after demand is made by the Administrative
Agent (whether before or after the occurrence of a Default or an Event of
Default and regardless of whether it has requested a Settlement with respect to
a Non-Ratable Loan or Agent Advance), each other Lender (A) shall
irrevocably and unconditionally purchase and receive from BofA or the
Administrative Agent, as applicable, without recourse or warranty, an undivided
interest and participation in such Non-Ratable Loan or Agent Advance equal to
such Lender’s Pro Rata Share of such Non-Ratable Loan or Agent Advance, and (B) if
Settlement has not previously occurred with respect to such Non-Ratable Loans
or Agent Advances, upon demand by BofA or the Administrative Agent, as
applicable, shall pay to BofA or the Administrative Agent, as applicable, as the
purchase price of such participation an amount equal to 100% of such Lender’s
Pro Rata Share of such Non-Ratable Loans or Agent Advances.  If such amount is not in fact transferred to
BofA or the Administrative Agent, as applicable, by any Lender, BofA or the
Administrative Agent, as applicable, shall be entitled to recover such amount
on demand from such Lender together with interest thereon at the Federal Funds
Rate for the first three days from and after such demand and thereafter at the
Interest Rate then applicable to Base Rate Revolving Loans.

 

(iii)                               From and after the date,
if any, on which any Lender purchases an undivided interest and participation
in any Non-Ratable Loan or Agent Advance pursuant to clause (ii) preceding,
the Administrative Agent shall promptly distribute to such Lender, such Lender’s
Pro Rata Share of all payments of principal and interest and all proceeds of
Collateral received by the Administrative Agent in respect of such Non-Ratable
Loan or Agent Advance.

 

(iv)                              Between Settlement Dates,
to the extent no Agent Advances are outstanding, the Administrative Agent may
pay over to BofA any payments received by the Administrative Agent which in
accordance with the terms of this Agreement would be applied to the reduction
of the Revolving Loans, for application to the Revolving Loans of BofA,
including Non-Ratable Loans.  If, as of
any Settlement Date, collections received since the then immediately preceding

 

144

 

Settlement Date have been applied to the Revolving Loans of BofA (other
than to Non-Ratable Loans or Agent Advances in which a Lender has not yet
funded its purchase of a participation pursuant to clause (ii) preceding),
as provided for in the previous sentence, BofA shall pay to the Administrative
Agent, for the accounts of the Lenders, to be applied to the outstanding
Revolving Loans of such Lenders, an amount such that each Lender shall, upon
receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of
the Revolving Loans.  During the period
between Settlement Dates, BofA with respect to Non-Ratable Loans, the
Administrative Agent with respect to Agent Advances, and each Lender with
respect to the Revolving Loans other than Non-Ratable Loans and Agent Advances,
shall be entitled to interest at the applicable rate or rates payable under
this Agreement on the actual average daily amount of funds employed by BofA,
the Administrative Agent and the other Lenders.

 

(v)                                 Unless the
Administrative Agent has received written notice from a Lender to the contrary,
the Administrative Agent may assume that the applicable conditions precedent
set forth in Article 9 have been satisfied on any Funding Date for
a Revolving Loan or Non-Ratable Loan. 
Unless the Administrative Agent has received written notice from a
Lender to the contrary or the Administrative Agent has actual knowledge to the
contrary (based solely on the Borrowing Base Certificate most recently
delivered to it), the Administrative Agent may assume that the requested
Borrowing will not exceed the Unused Availability on any Funding Date for a
Revolving Loan or Non-Ratable Loan.

 

(b)                                 The Lenders’
Failure to Perform.  All Revolving
Loans (other than Non-Ratable Loans and Agent Advances) shall be made by the
Lenders simultaneously and in accordance with their Pro Rata Shares.  It is understood that (i) no Lender
shall be responsible for any failure by any other Lender to perform its
obligation to make any Revolving Loans hereunder, nor shall any Commitment of
any Lender be increased or decreased as a result of any failure by any other
Lender to perform its obligation to make any Revolving Loans hereunder, (ii) no
failure by any Lender to perform its obligation to make any Revolving Loans
hereunder shall excuse any other Lender from its obligation to make any
Revolving Loans hereunder, and (iii) the obligations of each Lender
hereunder shall be several, not joint and several.

 

(c)                                  Defaulting Lenders.  Unless the Administrative Agent receives
notice from a Lender on or prior to the Closing Date or, with respect to any
Borrowing after the Closing Date, at least one Business Day prior to the date
of such Borrowing, that such Lender will not make available as and when
required hereunder to the Administrative Agent such Lender’s Pro Rata Share of
such Borrowing, the Administrative Agent may assume that each Lender has made
such amount available to it in immediately available funds on the Funding
Date.  Furthermore, the Administrative
Agent may, in reliance upon such assumption, make available to the Borrowers on
such date a corresponding amount.  If any
Lender has not transferred its full Pro Rata Share to the Administrative Agent
in immediately available funds and if the Administrative Agent has transferred
a corresponding amount to the Borrowers on the Business Day following such
Funding Date, the applicable Lender shall make such amount available to the
Administrative

 

145

 

Agent, together with interest at the Federal Funds Rate for that
day.  A notice by the Administrative
Agent submitted to any Lender with respect to amounts owing shall be
conclusive, absent manifest error.  If
each Lender’s full Pro Rata Share is transferred to the Administrative Agent as
required, the amount transferred to the Administrative Agent shall constitute
such Lender’s Revolving Loan for all purposes of this Agreement.  If any such amount is not transferred to the
Administrative Agent on the Business Day following the Funding Date, the
Administrative Agent will notify the Borrowers of such failure to fund and,
upon demand by the Administrative Agent, the Borrowers shall pay such amount to
the Administrative Agent for its 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 Loans comprising that
particular Borrowing.  The failure of any
Lender to make any Revolving Loan on any Funding Date (any such Lender, prior
to the cure of such failure, being referred to herein as a “Defaulting
Lender”) shall not relieve any other Lender of its obligation hereunder to
make a Revolving Loan on such Funding Date. 
No Lender shall be responsible for any other Lender’s failure to advance
such other Lenders’ Pro Rata Share of any Borrowing.

 

(d)                                 Retention of
Defaulting Lender’s Payments. 
Neither of the Agents shall be obligated to transfer to a Defaulting
Lender any payments made by any Borrower to such 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 the
Administrative Agent.  In its discretion,
the Administrative Agent may loan the Borrowers the amount of all such payments
received or retained by it for the account of such Defaulting Lender.  Any amounts so loaned to the Borrowers shall
bear interest at the rate applicable to Base Rate Revolving Loans and for all
other purposes of this Agreement shall be treated as if they were Revolving
Loans, provided, however, that for purposes of voting or
consenting to matters with respect to the Loan Documents and determining Pro
Rata Shares, such Defaulting Lender shall be deemed not to be a “Lender.”  Until a Defaulting Lender cures its failure
to fund its Pro Rata Share of any Borrowing (i) such Defaulting Lender
shall not be entitled to any portion of the Unused Line Fee and (ii) the
Unused Line Fee shall accrue in favor of the Lenders that have funded their
respective Pro Rata Shares of such requested Borrowing and shall be allocated
among such performing Lenders ratably based upon their relative
Commitments.  This Section 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 Section shall
not be construed to increase or otherwise affect the Commitment of any Lender,
or relieve or excuse the performance by any Borrower of its duties and
obligations hereunder.

 

(e)                                  Removal of
Defaulting Lender.  At the Borrowers’
request, each Agent (acting in its individual capacity as a Lender) or an
Eligible Assignee reasonably acceptable to the Agents and the Borrowers shall
have the right (but not the obligation) to purchase from any Defaulting Lender,
and each Defaulting Lender shall, upon such request, sell and assign to such
Agent (acting in its individual capacity as a Lender) or such Eligible Assignee
(as applicable), all of the Defaulting Lender’s outstanding Loans and
Commitments hereunder.  Such sale shall
be consummated promptly after the applicable Agent or one or more of the
Borrowers, as applicable, has arranged for a

 

146

 

purchase by such Agent (acting in its individual capacity as a Lender)
or an Eligible Assignee (as applicable) pursuant to an Assignment and
Acceptance, and at a price equal to the outstanding principal balance of the
Defaulting Lender’s Loans, plus
accrued interest and fees (excluding the Unused Line Fee to the extent not
required to be paid to the Defaulting Lender pursuant to Section 14.15(d)),
without premium or discount.

 

Section 14.16                          Letters of Credit;
Intra-Lender Issues.

 

(a)                                  Notice of Letter
of Credit Balance.  On each
Settlement Date, either or both of the Agents shall notify each Lender of the
issuance of any Letters of Credit since the prior Settlement Date.

 

(b)                                 Participations in
Letters of Credit.

 

(i)                                     Purchase of
Participations.  Immediately upon
issuance of any Letter of Credit in accordance with Section 2.4(d),
each Lender shall be deemed to have irrevocably and unconditionally purchased
and received without recourse or warranty, an undivided interest and
participation equal to such Lender’s Pro Rata Share of the face amount of such
Letter of Credit in connection with the issuance of such Letter of Credit
(including all obligations of the Borrower for whose account such Letter of
Credit was issued, and any security therefor or guaranty pertaining thereto).

 

(ii)                                  Sharing of
Reimbursement Obligation Payments. 
Whenever the Administrative Agent receives a payment from a Borrower on
account of reimbursement obligations in respect of a Letter of Credit as to
which the Administrative Agent has previously received for its account or the
account of the Letter of Credit Issuer payment from a Lender, the
Administrative Agent shall pay to such Lender such Lender’s Pro Rata Share of
such payment from such Borrower.  Each
such payment shall be made by the Administrative Agent on the next Settlement
Date.

 

(iii)                               Documentation.  Upon the request of any Lender, the Letter of
Credit Issuer shall furnish to either of the Agents and such Agent shall
furnish to such Lender copies of any Letter of Credit, reimbursement agreements
executed in connection therewith, applications for any Letter of Credit, and
such other documentation relating to such Letter of Credit as may reasonably be
requested by such Lender.

 

(iv)                              Obligations
Irrevocable.  The obligation of each
Lender to make payments to the Administrative Agent with respect to any Letter
of Credit or with respect to its participation therein or with respect to the
Revolving Loans made as a result of a drawing under a Letter of Credit and the
obligation of the Borrowers to make payments to the Administrative Agent, for
the account of the Lenders, with respect to any Letter of Credit shall be
irrevocable and shall not be subject to any qualification or exception
whatsoever, including any of the following circumstances:

 

147

 

(A)                              any lack of validity or
enforceability of this Agreement or any of the other Loan Documents;

 

(B)                                the existence of any
claim, setoff, defense, or other right that any Borrower may have at any time against
a beneficiary named in a Letter of Credit or any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), any Lender,
either Agent, the Letter of Credit Issuer, or any other Person, whether in
connection with this Agreement, any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any underlying
transactions between such Borrower or any other Person and the beneficiary
named in any Letter of Credit);

 

(C)                                any draft, certificate,
or other document presented under any Letter of Credit proving to be forged,
fraudulent, invalid, or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect;

 

(D)                               the surrender or
impairment of any security for the performance or observance of any of the
terms of any of the Loan Documents;

 

(E)                                 the occurrence of any
Default or Event of Default; or

 

(F)                                 the failure of the
Borrowers to satisfy the applicable conditions precedent set forth in Article 9.

 

(v)                                 Claims Against
Letter of Credit Issuer.  Nothing in
this Section 14.16 shall prohibit a Lender from seeking to recover
any payment made by such Lender to or for the benefit of the Letter of Credit
Issuer that constituted reimbursement of (or the funding of its Pro Rata Share
of) a drawing under a Letter of Credit, the honor of which drawing constitutes
the gross negligence or willful misconduct of the Letter of Credit Issuer as
determined by a court of competent jurisdiction in a final nonappealable
judgment.

 

(c)                                  Recovery or
Avoidance of Payments; Refund of Payments in Error.  In the event any payment by or on behalf of
any Borrower received by the Administrative Agent with respect to any Letter of
Credit and distributed by the Administrative Agent to the Lenders on account of
their respective participations therein is thereafter set aside, avoided, or
recovered from the Administrative Agent or the Letter of Credit Issuer in
connection with any receivership, liquidation, or bankruptcy proceeding, the
Lenders shall, upon demand by the Administrative Agent, pay to the
Administrative Agent their respective Pro Rata Shares of such amount set aside,
avoided, or recovered, together with interest at the rate required to be paid
by the Administrative Agent or the Letter of Credit Issuer upon the amount
required to be repaid by it.  Unless the
Administrative Agent receives notice from the Borrowers prior to the date on
which any payment is due to the Lenders that the Borrowers will not make such
payment in full as and when required, the

 

148

 

Administrative Agent may assume that the Borrowers have made such
payment in full to it on such date in immediately available funds and the
Administrative Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Lender on such due date an amount equal to the
amount then due such Lender.  If and to
the extent the Borrowers have not made such payment in full to the
Administrative Agent, each Lender shall repay to the Administrative Agent on
demand such amount distributed to such Lender, together with interest thereon
at the Federal Funds Rate for each day from the date such amount is distributed
to such Lender until the date repaid.

 

(d)                                 Indemnification by
the Lenders.  To the extent not
reimbursed by the Borrowers and without limiting the obligations of the
Borrowers hereunder, the Lenders agree to indemnify the Letter of Credit Issuer
ratably in accordance with their respective Pro Rata Shares for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including attorneys’ fees) or disbursements of any kind
and nature whatsoever that may be imposed on, incurred by or asserted against
the Letter of Credit Issuer in any way relating to or arising out of any Letter
of Credit or the transactions contemplated thereby or any action taken or
omitted by the Letter of Credit Issuer under any Letter of Credit or any Loan
Document in connection therewith; provided that no Lender shall be
liable for any of the foregoing to the extent determined in a final,
nonappealable judgment by a court of competent jurisdiction to have resulted
from the Letter of Credit Issuer’s own gross negligence or willful
misconduct.  Without limiting the
foregoing, each Lender agrees to reimburse the Letter of Credit Issuer promptly
upon demand for its Pro Rata Share of any costs or expenses payable by any
Borrower to the Letter of Credit Issuer to the extent that the Letter of Credit
Issuer is not promptly reimbursed for such costs and expenses by a
Borrower.  The agreement contained in
this Section shall survive payment in full of all other Obligations.

 

Section 14.17                          Concerning the Collateral
and the Related Loan Documents.  Each
Lender authorizes and directs the Collateral Agent and the Administrative
Agent, as applicable, to enter into the other Loan Documents, for the benefit
and obligation of the Credit Providers. 
Each Lender agrees that any action taken by the Collateral Agent, the Administrative
Agent or the Majority Lenders, as applicable, in accordance with the terms of
this Agreement or the other Loan Documents, and the exercise by the Collateral
Agent, the Administrative Agent or the Majority Lenders, as applicable, of
their respective powers set forth therein or herein, together with such other
powers that are reasonably incidental thereto, shall be binding upon all of the
Lenders.  The Lenders acknowledge that
the Revolving Loans (including the Agent Advances and the Non-Ratable Loans),
Bank Products, and all interest, fees, and expenses hereunder constitute one
Debt, secured pari passu by all of the Collateral, subject to the order of
distribution of payments set forth in Section 4.6.

 

Section 14.18                          Field Audit and
Examination Reports; Disclaimer by Lenders. 
By signing this Agreement, each Lender:

 

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

 

149

 

(b)                                 expressly agrees and
acknowledges that none of BofA, Wachovia or either of the Agents (i) makes
any representation or warranty as to the accuracy of any Report or (ii) shall
be liable for any information contained in any Report;

 

(c)                                  expressly agrees and
acknowledges that the Reports are not comprehensive audits or examinations,
that the applicable Agent, BofA or Wachovia, or any other Person performing any
audit or examination will inspect only specific information regarding the
Obligated Parties and will rely significantly upon the Obligated Parties’ books
and records, as well as on representations of the Obligated Parties’ personnel;

 

(d)                                 agrees to keep all
Reports confidential and strictly for its internal use, and not to distribute
except to its Participants, or use any Report in any other manner; and

 

(e)                                  without limiting the
generality of any other indemnification provision contained in this Agreement,
agrees:  (i) to hold each of the
Agents and any such other Person 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 the
Obligated Parties, or the indemnifying Lender’s participation in, or the
indemnifying Lender’s purchase of, a loan or loans to the Obligated Parties;
and (ii) to pay and protect, and indemnify, defend, and hold each of the
Agents and any such other Person preparing a Report harmless from and against,
the claims, actions, proceedings, damages, costs, expenses, and other amounts
(including Attorney Costs) incurred by such Agent and any such other Person
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.

 

Section 14.19                          Relation Among the Lenders.  The Lenders are not partners or co-venturers,
and no Lender shall be liable for the acts or omissions of, or (except as
otherwise set forth herein in the case of the Collateral Agent and the
Administrative Agent) authorized to act for, any other Lender.

 

Section 14.20                          Administrative Agent May File
Proofs of Claim.  In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition, or other judicial
proceeding relative to any Obligated Party, or any other Person party to any
Loan Document, the Administrative Agent (irrespective of whether the principal
of any Loan or Obligation relating to Letters of Credit shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether either of the Agents shall have made any demand on the Obligated
Parties or such other Person) shall be entitled and empowered, by intervention
in such proceeding or otherwise:

 

(a)                                  to file and prove a
claim for the whole amount of the principal and interest owing and unpaid in
respect of the Loans, Obligations relating to Letters of Credit, and all other
Obligations that are owing and unpaid and to file such other documents as may
be necessary or advisable in order to have the claims of the Agents and the
Lenders (including any claim for the reasonable compensation, expenses,
disbursements, and advances of the Administrative Agent, the Collateral Agent
and the Lenders, and their respective agents and counsel, and all other amounts
due the Administrative Agent, the

 

150

 

Collateral Agent and the Lenders under Section 3.4 through Section 3.7
and Section 15.7) allowed in such judicial proceeding; and

 

(b)                                 to collect and receive
any monies or other property payable or deliverable on any such claims and to
distribute the same;

 

and any
custodian, receiver, assignee, trustee, liquidator, sequestrator, or other
similar official in any such judicial proceeding is hereby authorized by each
Lender to make such payments to the Administrative Agent and, in the event that
the Administrative Agent shall consent to the making of such payments directly
to the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements, and advances of the
Administrative Agent and its agents and counsel (including Attorney Costs), and
any other amounts due to the Administrative Agent under Section 3.4
through Section 3.7 and Section 15.7.  Nothing contained in this Section shall
be deemed to authorize the Administrative Agent to authorize or consent to or
accept or adopt on behalf of any Lender any plan of reorganization,
arrangement, adjustment, or composition affecting the Obligations or the rights
of any Lender, or to authorize the Administrative Agent to vote in respect of
the claim of any Lender in any such proceeding.

 

Section 14.21                          Co-Lead Arrangers and
Syndication Agent.  Each of the
Co-Lead Arrangers and the Syndication Agent, solely in its capacity as such,
shall have no obligations, liabilities, responsibilities or duties under this
Agreement or any other Loan Document. 
Without limiting the foregoing, the Co-Lead Arrangers and the
Syndication Agent shall have no fiduciary relationship with any Credit Provider
and each Credit Provider acknowledges that it has not relied, and will not
rely, on either of the Co-Lead Arrangers or the Syndication Agent in deciding
to enter into this Agreement or any other Loan Document or in taking or not
taking action hereunder or thereunder.

 

ARTICLE 15

MISCELLANEOUS

 

Section 15.1                                No Waivers;
Cumulative Remedies.  No failure by
the Collateral Agent, the Administrative Agent or any Lender to exercise any
right, remedy, or option under this Agreement, any other Loan Document, or any
present or future supplement hereto or thereto, or in any other agreement
between or among any Obligated Party and the Collateral Agent, the
Administrative Agent and/or any Lender, or delay by the Collateral Agent, the
Administrative Agent or any Lender in exercising the same, will operate as a
waiver thereof, nor shall any single or partial exercise of any right, remedy,
or option hereunder or thereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, or option.  Subject to Section 13.1, no
waiver by the Collateral Agent, the Administrative Agent or any Lender will be
effective unless it is in writing, and then only to the extent specifically
stated.  No waiver by the Collateral
Agent, the Administrative Agent or the Lenders on any occasion shall affect or
diminish the Collateral Agent’s, the Administrative Agent’s and each Lender’s
rights thereafter to require strict performance by the Obligated Parties of any
provision of this Agreement.  The
Administrative Agent, the Collateral Agent and the Lenders may proceed directly
to collect the Obligations without any prior recourse to the Collateral.  The Collateral Agent’s, the Administrative
Agent’s and each Lender’s rights under this Agreement will be cumulative and

 

151

 

not exclusive of any other
right or remedy that the Collateral Agent, the Administrative Agent or any
Lender may have.

 

Section 15.2                                Severability.  The illegality or unenforceability of any
provision of this Agreement, any other Loan Document, or any instrument or
agreement required hereunder shall not in any way affect or impair the legality
or enforceability of the remaining provisions of this Agreement, any other Loan
Document, or any instrument or agreement required hereunder.

 

Section 15.3                                Governing Law;
Choice of Forum; Service of Process.

 

(a)                                  THIS AGREEMENT SHALL
BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED
IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS
PROVISIONS, PROVIDED THAT PERFECTION ISSUES WITH RESPECT TO ARTICLE 9
OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT OF LAW RULES
SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF NEW YORK; PROVIDED
THAT THE PARTIES HERETO SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

(b)                                 ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE U.S. LOCATED IN THE
SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,
EACH OF THE OBLIGATED PARTIES, THE COLLATERAL AGENT, THE ADMINISTRATIVE AGENT,
AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. 
EACH OF THE OBLIGATED PARTIES, THE COLLATERAL AGENT, THE ADMINISTRATIVE
AGENT, AND THE LENDERS IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY
OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT, ANY
OTHER LOAN DOCUMENT, OR ANY OTHER AGREEMENT, DOCUMENT, OR INSTRUMENT RELATED
HERETO OR THERETO.  NOTWITHSTANDING THE
FOREGOING (i) THE COLLATERAL AGENT, THE ADMINISTRATIVE AGENT AND THE
LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY
OBLIGATED PARTY OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE
COLLATERAL AGENT, THE ADMINISTRATIVE AGENT OR THE LENDERS DEEM NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE
OBLIGATIONS AND (ii) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY
APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE
TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.

 

152

 

(c)                                  EACH OBLIGATED PARTY
HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT
ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT
REQUESTED) DIRECTED TO SUCH OBLIGATED PARTY AT ITS ADDRESS SET FORTH IN SECTION 15.8
AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE DAYS AFTER THE SAME
SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE PREPAID.  NOTHING CONTAINED HEREIN SHALL AFFECT THE
RIGHT OF THE COLLATERAL AGENT, THE ADMINISTRATIVE AGENT OR THE LENDERS TO SERVE
LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.

 

Section 15.4                                Waiver of Jury Trial.  EACH OBLIGATED PARTY, THE COLLATERAL AGENT,
THE ADMINISTRATIVE AGENT, AND EACH OTHER CREDIT PROVIDER IRREVOCABLY WAIVES ITS
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY ACTION, PROCEEDING, OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
ANY AGENT-RELATED PERSON, PARTICIPANT, OR ASSIGNEE, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. 
EACH OF THE OBLIGATED PARTIES, THE COLLATERAL AGENT, THE ADMINISTRATIVE
AGENT, AND EACH OTHER CREDIT PROVIDER AGREES THAT ANY SUCH CLAIM OR CAUSE OF
ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.  WITHOUT LIMITING THE FOREGOING, EACH OF THE
PARTIES FURTHER AGREES THAT ITS RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION 15.4 AS TO ANY ACTION, COUNTERCLAIM,
OR OTHER PROCEEDING THAT SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY
OR ENFORCEABILITY OF THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR ANY PROVISION
HEREOF OR THEREOF.  THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS, OR MODIFICATIONS TO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

 

Section 15.5                                Survival of
Representations and Warranties.  All
representations and warranties of the Obligated Parties contained in this
Agreement and the other Loan Documents shall survive the execution, delivery,
and acceptance thereof by the parties, notwithstanding any investigation by the
Collateral Agent, the Administrative Agent or the Lenders or their respective
agents.

 

Section 15.6                                Other Security and
Guaranties. Each of the Collateral Agent and the Administrative Agent may,
without notice or demand and without affecting the Obligated Parties’
obligations hereunder, from time to time (a) take from any Person and hold
collateral (other than the Collateral) for the payment of all or any part
of the Obligations and exchange, enforce, or release such collateral or any
part thereof and (b) accept and hold any endorsement or guaranty of
payment of all or any part of the Obligations and release or substitute any
such endorser or guarantor (other than any Guarantor), or any Person who has
given any Lien in any other collateral as security for the payment of all or
any part of the Obligations, or any other Person in any way obligated to pay
all or any part of the Obligations.

 

153

 

Section 15.7                                Fees and Expenses.  Each Borrower agrees to pay to each of the
Collateral Agent and the Administrative Agent, for its account, on demand, all
reasonable costs and expenses that the Collateral Agent or the Administrative
Agent pays or incurs in connection with the negotiation, preparation,
syndication, consummation, administration, enforcement, and termination of this
Agreement or any of the other Loan Documents, including:  (a) Attorney Costs; (b) costs and
expenses (including Attorney Costs) for any amendment, supplement, waiver,
consent, or subsequent closing in connection with the Loan Documents and the
transactions contemplated thereby; (c) costs and expenses of lien and
title searches, title insurance, and
environmental audits; (d) taxes, fees, and other charges for recording the Mortgages and the Aircraft
Mortgage, filing financing statements and continuations, and other actions
to perfect, protect, and continue the Agent’s Liens (including costs and
expenses paid or incurred by the Collateral Agent or the Administrative Agent
in connection with the consummation of this Agreement); (e) sums paid or
incurred to pay any amount or take any action required of any Obligated Party
under the Loan Documents that such Obligated Party fails to pay or take; (f) costs
of all Inventory Appraisals, Equipment Appraisals and other appraisals (in each
case, whether conducted by an internal or external appraiser), and costs of two
field examinations and two environmental audits per year (except that after the
occurrence and during the continuation of an Event of Default, the Borrowers
shall pay the costs of all field examinations and environmental audits),
inspections, and verifications of the Collateral and other due diligence,
including travel, lodging, and meals for field examinations and inspections of
the Collateral and the Obligated Parties’ operations by such Agent, plus such Agent’s then customary
charge for field examinations and audits and the preparation of reports thereof
(such charge for each Agent is currently $850 per day (or portion thereof) for each Person retained or
employed by such Agent with respect to each field examination or
audit) performed or prepared at any time; and (g) costs and expenses
of forwarding loan proceeds, collecting checks and other items of payment, and
establishing and maintaining Clearing Accounts, and costs and expenses of
preserving and protecting the Collateral. 
In addition, the Borrowers agree to pay (i) to the Collateral Agent
and the Administrative Agent, for its benefit, on demand, all costs and
expenses incurred by the Collateral Agent or the Administrative Agent
(including Attorney Costs), and (ii) to the Lenders, for their benefit, on
demand, all reasonable and actual fees, expenses, and disbursements incurred by
the Lenders for one law firm retained by the Lenders, in each case, paid or
incurred during the existence of an Event of Default to obtain payment of the
Obligations, enforce the Agent’s Liens, sell or otherwise realize upon the
Collateral, and otherwise enforce the provisions of the Loan Documents, or to
defend any claims made or threatened against the Collateral Agent, the
Administrative Agent or any Lender arising out of the transactions contemplated
hereby (including preparations for and consultations concerning any such
matters).  The foregoing shall not be
construed to limit any other provisions of the Loan Documents regarding costs
and expenses to be paid by the Borrowers. 
All of the foregoing costs and expenses shall be charged to the Loan
Account as Revolving Loans as described in Section 4.5.  The agreements in this Section 15.7
shall survive payment of all other Obligations.

 

Section 15.8                                Notices and
Information.

 

(a)                                  Except as otherwise
provided herein, all notices, demands, and requests that any party is required
or elects to give to any other party shall be in writing, or by a
telecommunications device capable of creating a written record, and any such
notice shall become effective (i) upon personal delivery thereof,
including, but not limited to,

 

154

 

delivery by overnight mail or courier service, (ii) four days
after it shall have been mailed by U.S. mail, first class, certified or
registered, with postage prepaid, or (iii) in the case of notice by such a
telecommunications device, when properly transmitted and confirmed, in each
case addressed to the party to be notified as follows:

 

If to the
Administrative Agent:

 

Bank of
America, N.A.

335 Madison Avenue

New York, NY  10017

Attention:  Business Capital/URGENT

Telecopy No.:  (212) 503-7330

 

If to the
Collateral Agent:

 

Wachovia Bank,
National Association

One Wachovia Center

301 S. College Street

Charlotte, NC  28202

Mail Code: NC0479

Attention:  John Trainor

Telecopy No.:  (704) 374-2703

 

If to any
Obligated Party:

 

c/o Ahern
Rentals, Inc.

4241 S. Arville Street

Las Vegas, Nevada  89103

Attention:  Chief Financial Officer

Telecopy No.:  (702) 367-7652

 

If to any
Lender:

 

to the address
of such Lender set forth on the signature pages of this Agreement or on
the most recent Assignment and Acceptance to which such Lender is a party,

 

or to such other address as each party may
designate for itself by like notice.

 

(b)                                 The Obligated Parties
hereby agree that any notice required or permitted to be given by the Agents
hereunder may be given by either of the Agents.

 

(c)                                  Loan Documents may be
transmitted and/or signed by facsimile. 
The effectiveness of any such Loan Documents and signatures shall,
subject to Requirements of Law, have the same force and effect as manually
signed originals and shall be binding on the Obligated Parties, the Agents, the
Lenders, and all other parties to the Loan Documents.  Either of the Agents may also require that
any such documents and signatures be confirmed by a manually signed original
thereof, provided that the failure to

 

155

 

request or deliver the same shall not limit the effectiveness of any
facsimile document or signature.

 

(d)                                 The Agents and the
Lenders shall be entitled to rely and act upon any notices (including
telephonic notices in lieu of written Notices of Borrowing and Notices of
Continuation/Conversion) purportedly given by or on behalf of any Obligated
Party even if (i) such notices were not made in a manner specified herein,
(ii) such notices were incomplete or were not preceded or followed by any
other form of notice specified herein, or (iii) the terms thereof, as
understood by the recipient, varied from any confirmation thereof.  The Obligated Parties shall indemnify each
Credit Provider from all losses, costs, expenses, and liabilities resulting
from the reliance by such Person on each notice purportedly given by or on
behalf of an Obligated Party.  All
telephonic notices to and other communications with the Collateral Agent or the
Administrative Agent may be recorded by such Agent, and each of the parties
hereto hereby consents to such recording.

 

(e)                                  Notwithstanding
anything in this Agreement or any other Loan Document to the contrary, each
Obligated Party agrees to use its best efforts to provide all Communications
(as defined below) to each of the Agents in an electronic/soft medium in a
format acceptable to the Collateral Agent or the Administrative Agent, as
applicable, to the e-mail addresses specified by it to Ahern from time to
time.  As used in this Section 15.8
“Communications” means all information, documents and other materials that any
Obligated Party is obligated to furnish to the Collateral Agent or the
Administrative Agent pursuant to this Agreement or any other Loan Document,
including all notices, requests, Financial Statements, financial and other
reports, certificates, and other information materials, but excluding
any such information, documents, or materials that (i) relate to any
request for a Borrowing or a continuation or a conversion of any existing Loan
(including any election of an interest rate or the duration of an Interest
Period), (ii) relate to the payment of any principal or other amount due
under this Agreement or any other Loan Document prior to the scheduled date
therefor, (iii) provide notice of any Default or Event of Default; or (iv) are
required to be delivered to satisfy any condition set forth in Section 9.1
or Section 9.2.  The
Collateral Agent and the Administrative Agent may, in its sole discretion,
require that the Obligated Parties provide any of the information provided in
electronic/soft medium also in written or printed form.

 

(f)                                    Each Obligated
Party and each Credit Provider agrees that each of the Agents may make the Loan
Documents and the Communications, together with other information relating to
the Obligated Parties and their business and assets, including Borrowing Base
Certificates, appraisals, and Reports, (all such other information being
referred to collectively in this Section 15.8 as the “Other
Information”), available to the Credit Providers by posting on Intralinks
or a substantially similar electronic transmission system (each such system
being referred to in this Section 15.8 as a “Platform”).  Each Obligated Party (i) acknowledges
that the distribution of material through an electronic medium is not
necessarily secure and that there are confidentiality and other risks
associated with such distribution and (ii) agrees that posting of the
Communications and

 

156

 

Other Information to a Platform will not in any event constitute a
breach of the confidentiality provisions of Section 15.16.

 

(g)                                 EACH PLATFORM IS
PROVIDED “AS IS” AND “AS AVAILABLE.”  THE
AGENT-RELATED PERSONS DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF ANY LOAN
DOCUMENTS, COMMUNICATIONS, OR OTHER INFORMATION POSTED BY ANY AGENT-RELATED
PERSON TO ANY PLATFORM, OR THE ADEQUACY OF ANY PLATFORM, AND THE AGENT-RELATED
PERSONS AND THE OTHER CREDIT PROVIDERS EXPRESSLY DISCLAIM ANY LIABILITY FOR
ERRORS OR OMISSIONS IN ANY LOAN DOCUMENTS, COMMUNICATIONS, OR OTHER INFORMATION
AS POSTED ON ANY PLATFORM.  NO WARRANTY
OF ANY KIND, EXPRESS, IMPLIED, OR STATUTORY (INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS, OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS) IS MADE BY THE
AGENT-RELATED PERSONS OR ANY OTHER CREDIT PROVIDER IN CONNECTION WITH THE LOAN
DOCUMENTS, COMMUNICATIONS, OR OTHER INFORMATION OR ANY PLATFORM.  IN NO EVENT SHALL ANY AGENT-RELATED PERSON OR
ANY OTHER CREDIT PROVIDER HAVE ANY LIABILITY TO ANY OBLIGATED PARTY OR ANY
OTHER PERSON FOR DAMAGES OF ANY KIND (INCLUDING DIRECT OR INDIRECT DAMAGES,
SPECIAL DAMAGES, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES
(WHETHER IN CONTRACT, TORT OR OTHERWISE)) ARISING OUT OF ANY PERSON’S
TRANSMISSION OF LOAN DOCUMENTS, COMMUNICATIONS, OR OTHER INFORMATION THROUGH
THE INTERNET, OR POSTING OR FAILURE TO POST ANY LOAN DOCUMENTS, COMMUNICATIONS,
OR OTHER INFORMATION ON ANY PLATFORM, EXCEPT TO THE EXTENT DETERMINED IN A
FINAL, NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE
RESULTED FROM SUCH PERSON’S OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

 

(h)                                 Subject to the last
sentence of clause (e) preceding, the Collateral Agent and the
Administrative Agent each agrees that the receipt of the Communications by it
at its e-mail address specified to the Obligated Parties from time to time
shall constitute effective delivery of the Communications to the Collateral
Agent or the Administrative Agent, as the case may be, for purposes of this
Agreement.  Each Lender agrees that
notice to it (as provided in the following sentence) specifying that the
Communications and the Other Information have been posted to a Platform shall
constitute effective delivery of the Communications and the Other Information
to such Lender for purposes of this Agreement. 
Each Lender agrees (i) to notify the Collateral Agent and the
Administrative Agent in writing (including by electronic
communication) from time to time of such Lender’s e-mail addresses to
which the foregoing notice may be sent by electronic transmission and (ii) that
the foregoing notice may be sent to such e-mail address.

 

157

 

(i)                                     Notwithstanding
anything in this Agreement or any other Loan Document to the contrary, each Agent
agrees that any notice of a Default delivered by such Agent to any Obligated
Party shall be effected through personal delivery (including, but not limited
to, delivery by overnight mail or courier service), registered mail or by a
telecommunications device.

 

Section 15.9                                Waiver of Notices.  Unless otherwise expressly provided herein,
each Obligated Party waives presentment, notice of demand or dishonor, protest
as to any instrument, notice of intent to accelerate the Obligations, and
notice of acceleration of the Obligations, as well as any and all other notices
to which it might otherwise be entitled. 
No notice to or demand on any Obligated Party that the Collateral Agent,
the Administrative Agent or any Lender may elect to give shall entitle any Obligated
Party to any or further notice or demand in the same, similar, or other
circumstances.

 

Section 15.10                          Binding Effect.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the respective representatives,
successors, and assigns of the parties hereto; provided that no interest
herein may be assigned by any Obligated Party without the prior written consent
of the Agents and the Lenders.

 

Section 15.11                          Indemnity of the Credit
Providers by the Obligated Parties.

 

(a)                                  EACH OBLIGATED PARTY
AGREES TO DEFEND, INDEMNIFY, AND HOLD THE AGENT-RELATED PERSONS, EACH CREDIT
PROVIDER, AND EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, COUNSEL,
REPRESENTATIVES, AGENTS, AND ATTORNEYS-IN-FACT (EACH, AN “INDEMNIFIED PERSON”)
HARMLESS FROM AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, CHARGES, EXPENSES, AND
DISBURSEMENTS (INCLUDING ATTORNEY COSTS AND REASONABLE LEGAL COSTS AND EXPENSES
OF THE OTHER CREDIT PROVIDERS) OF ANY KIND OR NATURE WHATSOEVER THAT MAY AT
ANY TIME (INCLUDING AT ANY TIME FOLLOWING REPAYMENT OF THE LOANS AND THE
TERMINATION, RESIGNATION, OR REPLACEMENT OF THE COLLATERAL AGENT OR THE
ADMINISTRATIVE AGENT OR REPLACEMENT OF ANY OTHER CREDIT PROVIDER) BE
IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST ANY SUCH PERSON IN ANY WAY
RELATING TO OR ARISING OUT OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, OR ANY
OTHER AGREEMENT, INSTRUMENT, OR DOCUMENT CONTEMPLATED BY OR REFERRED TO HEREIN
OR THEREIN, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, OR ANY ACTION
TAKEN OR OMITTED BY ANY INDEMNIFIED PERSON UNDER OR IN CONNECTION WITH ANY OF
THE FOREGOING, INCLUDING WITH RESPECT TO ANY INVESTIGATION, LITIGATION, OR
PROCEEDING (INCLUDING ANY BANKRUPTCY, INSOLVENCY, OR OTHER PROCEEDING, AND ANY
APPELLATE PROCEEDING) RELATED TO OR ARISING OUT OF THIS AGREEMENT, ANY OTHER
LOAN DOCUMENT, THE LOANS, OR THE USE OF THE PROCEEDS OF THE LOANS, WHETHER OR
NOT ANY INDEMNIFIED PERSON IS A PARTY THERETO (ALL THE FOREGOING,

 

158

 

COLLECTIVELY, THE “INDEMNIFIED LIABILITIES”); PROVIDED
THAT NO OBLIGATED PARTY SHALL HAVE ANY OBLIGATION HEREUNDER TO ANY INDEMNIFIED
PERSON WITH RESPECT TO INDEMNIFIED LIABILITIES TO THE EXTENT DETERMINED IN A
FINAL, NONAPPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE
RESULTED FROM SUCH INDEMNIFIED PERSON’S OWN GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.  THE AGREEMENTS IN THIS SECTION 15.11(a) SHALL
SURVIVE PAYMENT OF ALL OTHER OBLIGATIONS.

 

(b)                                 EACH OBLIGATED PARTY
AGREES TO INDEMNIFY, DEFEND, AND HOLD HARMLESS THE ADMINISTRATIVE AGENT, THE
COLLATERAL AGENT AND THE LENDERS FROM ANY LOSS OR LIABILITY DIRECTLY OR
INDIRECTLY ARISING OUT OF THE USE, GENERATION, MANUFACTURE, PRODUCTION,
STORAGE, RELEASE, THREATENED RELEASE, DISCHARGE, DISPOSAL, OR PRESENCE OF A
HAZARDOUS SUBSTANCE RELATING TO ANY OBLIGATED PARTY’S OPERATIONS, BUSINESS, OR
PROPERTY.  THIS INDEMNITY WILL APPLY
WHETHER THE HAZARDOUS SUBSTANCE IS ON, UNDER, OR ABOUT ANY OBLIGATED PARTY’S PROPERTY
OR OPERATIONS OR PROPERTY LEASED TO ANY OBLIGATED PARTY.  THE INDEMNITY INCLUDES BUT IS NOT LIMITED TO
ATTORNEY COSTS AND REASONABLE LEGAL COSTS AND EXPENSES OF THE CREDIT PROVIDERS
(INCLUDING ENVIRONMENTAL ASSESSMENTS). 
THE INDEMNITY EXTENDS TO THE AGENTS AND THE OTHER CREDIT PROVIDERS,
THEIR AFFILIATES, SUBSIDIARIES, AND ALL OF THEIR DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS, SUCCESSORS, ATTORNEYS, AND ASSIGNS.  AS USED IN THIS CLAUSE (b), “HAZARDOUS
SUBSTANCES” MEANS ANY SUBSTANCE, MATERIAL, OR WASTE THAT IS OR BECOMES
DESIGNATED OR REGULATED AS “TOXIC,” “HAZARDOUS,” “POLLUTANT,” OR “CONTAMINANT”
OR A SIMILAR DESIGNATION OR REGULATION UNDER ANY FEDERAL, STATE, OR LOCAL LAW
(WHETHER UNDER COMMON LAW, STATUTE, REGULATION, OR OTHERWISE) OR JUDICIAL
OR ADMINISTRATIVE INTERPRETATION OF SUCH, INCLUDING PETROLEUM OR NATURAL
GAS.  THIS INDEMNITY WILL SURVIVE
REPAYMENT OF ALL OTHER OBLIGATIONS.

 

Section 15.12                          Limitation of Liability.  NO CLAIM MAY BE MADE BY ANY OBLIGATED
PARTY, THE COLLATERAL AGENT, THE ADMINISTRATIVE AGENT, ANY OTHER CREDIT
PROVIDER, OR ANY OTHER PERSON AGAINST ANY OBLIGATED PARTY, THE COLLATERAL
AGENT, THE ADMINISTRATIVE AGENT, ANY OTHER CREDIT PROVIDER, OR ANY AFFILIATE,
DIRECTOR, OFFICER, EMPLOYEE, COUNSEL, REPRESENTATIVE, AGENT, OR ATTORNEY-IN-FACT
OF ANY OF THEM FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL, OR PUNITIVE DAMAGES IN
RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY
ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION, OR EVENT OCCURRING IN CONNECTION
THEREWITH, AND EACH OBLIGATED PARTY, THE COLLATERAL AGENT, THE ADMINISTRATIVE
AGENT, AND EACH OTHER CREDIT PROVIDER HEREBY

 

159

 

WAIVES, RELEASES, AND AGREES
NOT TO SUE UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER
OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.

 

Section 15.13                          Final Agreement.  This Agreement and the other Loan Documents
are intended by the Obligated Parties, the Agents, and the Lenders to be the
final, complete, and exclusive expression of the agreement between them.  This Agreement and the other Loan Documents
supersede any and all prior oral or written agreements relating to the subject
matter hereof and thereof (including, without limitation, the terms of the
Original Loan and Security Agreement). 
No modification, rescission, waiver, release, or amendment of any
provision of this Agreement or any other Loan Document shall be made, except in
accordance with Section 13.1.

 

Section 15.14                          Counterparts.  This Agreement may be executed in any number
of counterparts, and by the Collateral Agent, the Administrative Agent, each
Lender, and each Obligated Party in separate counterparts, each of which shall
be an original, but all of which shall together constitute one and the same
agreement.  Signature pages to this
Agreement may be detached from multiple separate counterparts and attached to a
single counterpart so that all signature pages are physically attached to
the same document and a telecopy of any such executed signature page shall
be valid as an original.

 

Section 15.15                          Right of Setoff.  In addition to any rights and remedies of the
Lenders provided by law, if an Event of Default exists or the Loans have been
accelerated, each Lender is authorized at any time and from time to time,
without prior notice to any Obligated Party, any such notice being waived by
the Obligated Parties to the fullest extent permitted by law, to setoff and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held by, and other indebtedness at any time owing by,
such Lender or any Affiliate of such Lender to or for the credit or the account
of any Obligated Party against any and all Obligations owing to such Lender,
now or hereafter existing, irrespective of whether or not either Agent or such
Lender shall have made demand under this Agreement or any other Loan Document
and although such Obligations may be contingent or unmatured.  Each Lender agrees promptly to notify the
Obligated Parties and the Agents after any such setoff and application made by
such Lender; provided that the failure to give such notice shall not
affect the validity of such setoff and application.  NOTWITHSTANDING THE FOREGOING, NO LENDER
SHALL EXERCISE ANY RIGHT OF SETOFF, BANKER’S LIEN, OR THE LIKE AGAINST ANY
DEPOSIT ACCOUNT OR PROPERTY OF ANY OBLIGATED PARTY HELD OR MAINTAINED BY SUCH
LENDER WITHOUT THE PRIOR WRITTEN CONSENT OF THE MAJORITY LENDERS.

 

Section 15.16                          Confidentiality.

 

(a)                                  Each Obligated Party
hereby consents that the Collateral Agent, the Administrative Agent and each
Lender may issue and disseminate to the public general information describing
the credit accommodation entered into pursuant to this Agreement, including the
name and address of the Obligated Parties and a general description of the
Obligated Parties’ business and may use each Obligated Party’s name in
advertising and other promotional material.

 

160

 

(b)                                 Each Lender severally
agrees to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information identified as “confidential” or
“secret” by any Obligated Party and provided to the Collateral Agent, the
Administrative Agent or such Lender by or on behalf of any Obligated Party
under this Agreement or any other Loan Document, except to the extent that such
information (i) was or becomes generally available to the public other
than as a result of disclosure by the Collateral Agent, the Administrative
Agent or a Lender or (ii) was or becomes available on a nonconfidential
basis from a source other than an Obligated Party, provided that such
source is not bound by a confidentiality agreement with an Obligated Party
known to the Collateral Agent, the Administrative Agent or such Lender; provided,
however, that the Collateral Agent, the Administrative Agent and any
Lender may disclose such information (A) at the request or pursuant to any
requirement of any Governmental Authority to which the Collateral Agent, the
Administrative Agent or such Lender is subject or in connection with an
examination of the Collateral Agent, the Administrative Agent or such Lender by
any such Governmental Authority, (B) pursuant to subpoena or other court
process, (C) when required to do so in accordance with the provisions of
any applicable Requirement of Law, (D) to the extent reasonably required
in connection with any litigation or proceeding (including any bankruptcy proceeding) to
which the Collateral Agent, the Administrative Agent, any Lender or any of
their respective Affiliates may be party, (E) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Loan Document, (F) to the Collateral Agent’s, the Administrative
Agent’s or such Lender’s independent auditors, accountants, attorneys, and
other professional advisors, (G) to any prospective Participant or
Assignee, actual or potential, provided that such prospective Participant
or Assignee agrees to keep such information confidential to the same extent
required of the Agents and the Lenders hereunder, (H) as expressly
permitted under the terms of any other document or agreement regarding
confidentiality to which any Obligated Party is party or is deemed party with
the Collateral Agent, the Administrative Agent or such Lender, and (I) to
its Affiliates.  Any Person required to
maintain the confidentiality of information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
information as such Person would accord to its own confidential information.

 

Section 15.17                          USA Patriot Act Notice.  Each Lender and each Agent (for itself and
not on behalf of any Lender) hereby notifies the Obligated Parties that
pursuant to the requirements of the Patriot Act, such Credit Provider is
required to obtain, verify, and record information that identifies the
Obligated Parties, which information includes the name and address of the
Obligated Parties and other information that will allow such Credit Provider to
identify the Obligated Parties in accordance with the Patriot Act.

 

Section 15.18                          Joint and Several Liability.  All Loans, upon funding, shall be deemed to
be jointly funded to and received by the Borrowers.  Each Borrower jointly and severally agrees to
pay, and shall be jointly and severally liable under this Agreement for, all
Obligations, regardless of the manner or amount in which proceeds of Loans are
used, allocated, shared, or disbursed by or among the Borrowers themselves, or
the manner in which either Agent and/or any Lender accounts for such Loans or
other extensions of credit on its books and records.  Each Borrower shall be liable for all amounts
due to either of the Agents and/or any Lender under this

 

161

 

Agreement, regardless of which
Borrower actually receives Loans or other extensions of credit hereunder or the
amount of such Loans and extensions of credit received or the manner in which
such Agent and/or such Lender accounts for such Loans or other extensions of
credit on its books and records.  Each Borrower’s
Obligations with respect to Loans and other extensions of credit made to it,
and such Borrower’s Obligations arising as a result of the joint and several
liability of such Borrower hereunder, with respect to Loans made to the other
Borrowers hereunder, shall be separate and distinct obligations, but all such
Obligations shall be primary obligations of such Borrower.  The Borrowers acknowledge and expressly agree
with each Agent and each Lender that the joint and several liability of each
Borrower is required solely as a condition to, and is given solely as
inducement for and in consideration of, credit or accommodations extended or to
be extended under the Loan Documents to any or all of the other Borrowers and
is not required or given as a condition of extensions of credit to such Borrower.  Each Borrower’s obligations under this
Agreement and as an obligor under a Guaranty Agreement shall be separate and
distinct obligations.  Each Borrower’s
obligations under this Agreement shall, to the fullest extent permitted by law,
be unconditional irrespective of (a) the validity or enforceability,
avoidance, or subordination of the Obligations of any other Borrower or of any
promissory note or other document evidencing all or any part of the Obligations
of any other Borrower, (b) the absence of any attempt to collect the
Obligations from any other Borrower, any Guarantor, or any other security
therefor, or the absence of any other action to enforce the same, (c) the
waiver, consent, extension, forbearance, or granting of any indulgence by the
Administrative Agent, the Collateral Agent and/or any Lender with respect to
any provision of any instrument evidencing the Obligations of any other
Borrower or Guarantor, or any part thereof, or any other agreement now or
hereafter executed by any other Borrower or Guarantor and delivered to the
Administrative Agent, the Collateral Agent and/or any Lender, (d) the
failure by the Collateral Agent, the Administrative Agent and/or any Lender to
take any steps to perfect and maintain its security interest in, or to preserve
its rights to, any security or collateral for the Obligations of any other
Borrower or Guarantor, (e) the Administrative Agent’s, the Collateral
Agent’s and/or any Lender’s election, in any proceeding instituted under the
Bankruptcy Code, or the application of Section 1111(b)(2) of the
Bankruptcy Code, (f) any borrowing or grant of a security interest by any
other Borrower, as debtor-in-possession under Section 364 of the
Bankruptcy Code, (g) the disallowance of all or any portion of the
Administrative Agent’s, the Collateral Agent’s and/or any Lender’s
claim(s) for the repayment of the Obligations of any other Borrower under Section 502
of the Bankruptcy Code, or (h) any other circumstances that might
constitute a legal or equitable discharge or defense of a Guarantor or of any
other Borrower.  With respect to any
Borrower’s Obligations arising as a result of the joint and several liability
of the Borrowers hereunder with respect to Loans or other extensions of credit
made to any of the other Borrowers hereunder, such Borrower waives, until the
Obligations shall have been paid in full and this Agreement shall have been
terminated, any right to enforce any right of subrogation or any remedy that
the Collateral Agent, the Administrative Agent and/or any Lender now has or may
hereafter have against any other Borrower, any endorser or any Guarantor of all
or any part of the Obligations, and any benefit of, and any right to
participate in, any security or collateral given to the Administrative Agent, the
Collateral Agent and/or any other Credit Provider to secure payment of the
Obligations or any other liability of any Borrower to any other Credit
Provider.  Upon any Event of Default,
either of the Agents may proceed directly and at once, without notice, against
any Borrower to collect and recover the full amount, or any portion of the
Obligations, without first proceeding against any other Borrower or any

 

162

 

other Person, or against any
security or collateral for the Obligations. 
Each Borrower consents and agrees that neither the Collateral Agent nor
the Administrative Agent shall be under any obligation to marshal any assets in
favor of any Borrower or against or in payment of any or all of the Obligations.

 

Section 15.19                          Contribution and
Indemnification among the Obligated Parties.  Each Borrower is obligated to repay the
Obligations as joint and several obligors under this Agreement.  To the extent that any Borrower shall, under
this Agreement as a joint and several obligor, repay any of the Obligations
constituting Loans made to another Borrower hereunder or other Obligations
incurred directly and primarily by any other Borrower and to the extent any
other Obligated Party makes any transfer (including any payment, grant,
guaranty, or granting of a Lien) pursuant to this Agreement (any such payment
or transfer being referred to herein as an “Accommodation Payment”),
then the Obligated Party making such Accommodation Payment shall be entitled to
contribution and indemnification from, and be reimbursed by, each of the other
Obligated Parties in an amount, for each of such other Obligated Parties, equal
to a fraction of such Accommodation Payment, the numerator of which fraction is
such other Obligated Party’s Allocable Amount and the denominator of which is
the sum of the Allocable Amounts of all of the Obligated Parties.  As of any date of determination, the “Allocable
Amount” of each Obligated Party shall be equal to the maximum amount of
liability for Accommodation Payments that could be asserted against such
Obligated Party hereunder without (a) rendering such Obligated Party “insolvent”
within the meaning of Section 101 (32) of the Bankruptcy Code, Section 2
of the Uniform Fraudulent Transfer Act (“UFTA”) or Section 2 of the
Uniform Fraudulent Conveyance Act (“UFCA”), (b) leaving such
Obligated Party with unreasonably small capital or assets, within the meaning
of Section 548 of the Bankruptcy Code, Section 4 of the UFTA, or Section 5
of the UFCA, or (c) leaving such Obligated Party unable to pay its debts
as they become due within the meaning of Section 548 of the Bankruptcy
Code or Section 4 of the UFTA, or Section 5 of the UFCA.  All rights and claims of contribution,
indemnification, and reimbursement under this Section shall be subordinate
in right of payment to the prior payment in full of the Obligations.  The provisions of this Section shall, to
the extent expressly inconsistent with any provision in any Loan Document,
supersede such inconsistent provision. 
Notwithstanding the foregoing, no provision of this Agreement shall
limit the liability or obligation of any Person (the “subject Person”)
with respect to any indebtedness, liabilities, or obligations of any Subsidiary
of the subject Person.

 

Section 15.20                          Agency of Ahern for Each
Other Obligated Party.  Each of the
Obligated Parties (excluding Ahern) irrevocably appoints Ahern as its agent for
all purposes relevant to this Agreement, including the giving and receipt of
notices and execution and delivery of all documents, instruments, and
certificates contemplated herein (including execution and delivery to the
Agents of Borrowing Base Certificates) and all modifications hereto.  Any acknowledgment, consent, direction,
certification, or other action that might otherwise be valid or effective only
if given or taken by all or any of the Obligated Parties or acting singly,
shall be valid and effective if given or taken only by Ahern, whether or not
any of the other Obligated Parties joins therein, and the Agents and the
Lenders shall have no duty or obligation to make further inquiry with respect
to the authority of Ahern under this Section 15.20, provided
that nothing in this Section 15.20 shall limit the effectiveness
of, or the right of the Agents and the Lenders to rely upon, any notice,
document, instrument, certificate, acknowledgment, consent,

 

163

 

direction, certification, or
other action delivered by any Obligated Party pursuant to this Agreement.

 

Section 15.21                          Additional Borrowers and
Guarantors.  Addition of any Person
as a Borrower or a Guarantor to this Agreement is subject to approval of all of
the Lenders (in the case of a Borrower) or the Majority Lenders (in the case of
a Guarantor), and may be conditioned upon such requirements as they may
determine in their discretion, including (a) the furnishing of such
financial and other information as any such Lender may reasonably request, (b) approval
by all appropriate approval authorities of each such Lender, and (c) execution
and delivery by the Obligated Parties, such Person, the Agents and the Majority
Lenders (as appropriate) of such agreements and other documentation (including
a Guaranty Agreement and an amendment to this Agreement or any other Loan
Document), and the furnishing by such Person or any of the Obligated Parties of
such certificates, opinions, and other documentation, as either of the Agents
or any such Lender may reasonably request. 
No Lender shall have any obligation to approve any such Person for
addition as a party to this Agreement.

 

Section 15.22                          Express Waivers By the
Obligated Parties In Respect of Cross Guaranties and Cross Collateralization.  Each Obligated Party agrees as follows:

 

(a)                                  Each Obligated Party
hereby waives:  (i) notice of
acceptance of this Agreement; (ii) notice of the making of any Loans, the
issuance of any Letter of Credit, or any other financial accommodations made or
extended under the Loan Documents or the creation or existence of any
Obligations; (iii) notice of the amount of the Obligations, subject,
however, to such Obligated Party’s right to make inquiry of the Administrative
Agent to ascertain the amount of the Obligations at any reasonable time; (iv) notice
of any adverse change in the financial condition of any other Obligated Party
or of any other fact that might increase such Obligated Party’s risk with
respect to such other Obligated Party under the Loan Documents; (v) notice
of presentment for payment, demand, protest, and notice thereof as to any
promissory notes or other instruments among the Loan Documents; and (vii) all
other notices (except if such notice is specifically required to be given to
such Obligated Party hereunder or under any of the other Loan Documents to
which such Obligated Party is a party) and demands to which such Obligated
Party might otherwise be entitled.

 

(b)                                 Each Obligated Party
hereby waives the right by statute or otherwise to require any Credit Provider
to institute suit against any other Obligated Party or to exhaust any rights
and remedies that any Credit Provider has or may have against any other
Obligated Party.  Each Obligated Party
further waives any defense arising by reason of any disability or other defense
of any other Obligated Party (other than the defense that the Obligations shall
have been fully and finally performed and indefeasibly paid) or by reason
of the cessation from any cause whatsoever of the liability of any such
Obligated Party in respect thereof.

 

(c)                                  Each Obligated Party
hereby waives and agrees not to assert against any Credit Provider:  (i) any defense (legal or equitable),
setoff, counterclaim, or claim that such Obligated Party may now or at any time
hereafter have against any other Obligated Party or any other party liable
under any of the Loan Documents; (ii) any defense, setoff,

 

164

 

counterclaim, or claim of any kind or nature available to any other
Obligated Party against any Credit Provider, arising directly or indirectly
from the present or future lack of perfection, sufficiency, validity, or
enforceability of any of the Obligations or any security therefor; (iii) any
right or defense arising by reason of any claim or defense based upon an
election of remedies by any Credit Provider under any Requirement of Law; or (iv) the
benefit of any statute of limitations affecting any other Obligated Party’s
liability hereunder.

 

(d)                                 Each Obligated Party
consents and agrees that, without notice to or by such Obligated Party and
without affecting or impairing the obligations of such Obligated Party
hereunder, each of the Agents may (subject to any requirement for consent of
any of the Lenders to the extent required by this Agreement), by action or
inaction:  (i) compromise, settle, extend
the duration or the time for the payment of, or discharge the performance of,
or may refuse to or otherwise not enforce the Loan Documents; (ii) release
all or any one or more parties to any one or more of the Loan Documents or
grant other indulgences to any other Obligated Party in respect thereof; (iii) amend
or modify in any manner and at any time (or from time to time) any of the Loan
Documents; or (iv) release or substitute any Person liable for payment of
any of the Obligations, or enforce, exchange, release, or waive any security
for any of the Obligations or any Guaranty of the Obligations.

 

Each Obligated
Party represents and warrants that such Obligated Party is currently informed
of the financial condition of all other Obligated Parties and all other circumstances
that a diligent inquiry would reveal and that bear upon the risk of nonpayment
of the Obligations.  Each Obligated Party
further represents and warrants that such Obligated Party has read and
understands the terms and conditions of the Loan Documents.  Each Obligated Party agrees that no Credit
Provider has any responsibility to inform any Obligated Party of the financial
condition of any other Obligated Party or of any other circumstances that bear
upon the risk of nonpayment or nonperformance of the Obligations.

 

Section 15.23                          Intercreditor Agreements.  EACH CREDIT PROVIDER HEREBY GRANTS TO THE
COLLATERAL AGENT ALL REQUISITE AUTHORITY TO ENTER INTO OR OTHERWISE BECOME
BOUND BY EACH OF THE INTERCREDITOR AGREEMENT (AND AN INTERCREDITOR AGREEMENT
ENTERED INTO IN CONNECTION WITH ANY REFINANCING SECOND LIEN DEBT) AND THE GE
INTERCREDITOR AGREEMENT AND TO BIND THE CREDIT PROVIDERS THERETO BY THE
COLLATERAL AGENT’S ENTERING INTO OR OTHERWISE BECOMING BOUND THEREBY, AND NO
FURTHER CONSENT OR APPROVAL ON THE PART OF THE CREDIT PROVIDERS IS OR WILL
BE REQUIRED IN CONNECTION WITH THE PERFORMANCE OF EITHER THE INTERCREDITOR
AGREEMENT (OR ANY INTERCREDITOR AGREEMENT ENTERED INTO IN CONNECTION WITH ANY
REFINANCING SECOND LIEN DEBT) OR THE GE INTERCREDITOR AGREEMENT.

 

[Remainder of page intentionally
left blank]

 

165

 

IN WITNESS
WHEREOF, the parties have entered into this Agreement on the date first above
written.

 

 

	
   

  	
  OBLIGATED PARTIES:

  
	
   

  	
   

  
	
   

  	
  AHERN RENTALS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ HOWARD
  BROWN

  	
   

  
	
   

  	
  Name:

  	
  Howard Brown

  	
   

  
	
   

  	
  Title: 

  	
  Chief
  Financial Officer

  	
   

  
						

 

166

 

	
   

  	
  ADMINISTRATIVE AGENT:

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N. A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ ROBERT SCALZITTI

  	
   

  
	
   

  	
  Name:

  	
  Robert
  Scalzitti

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
						

 

167

 

	
   

  	
  COLLATERAL AGENT:

  
	
   

  	
   

  
	
   

  	
  WACHOVIA BANK, NATIONAL

  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN T.
  TRAINOR

  	
   

  
	
   

  	
  Name:

  	
  John T.
  Trainor

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  
						

 

168

 

	
   

  	
  LENDERS:

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ ROBERT
  SCALZITTI

  	
   

  
	
   

  	
  Name:

  	
  Robert
  Scalzitti

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Bank of
  America, N.A.

  335 Madison Avenue

  New York, New York  10017

  Attn:  Business Capital:  URGENT

  Telecopy:  (212) 503-7330

  	
   

  
						

 

169

 

	
   

  	
  WACHOVIA BANK, NATIONAL

  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JOHN T.
  TRAINOR

  	
   

  
	
   

  	
  Name:

  	
  John T.
  Trainor

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Wachovia
  Bank, National Association

  One Wachovia Center

  301 S. College Street

  Charlotte, NC  28202

  Mail Code:  NC0479

  Attn:  John Trainor

  Telecopy:  (704) 374-2703

  	
   

  
						

 

170

 

	
   

  	
  KEYBANK NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ CHRIS
  MOHLER

  	
   

  
	
   

  	
  Name:

  	
  Chris Mohler

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  KeyBank
  National Association

  1675 Broadway, Suite 500

  Denver, Colorado  80202

  Attn:  Chris Mohler

  Telecopy:  (720) 904-4515

  	
   

  
						

 

171

 

 

	
   

  	
  PNC BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  THANWANTIE SOMAR

  	
   

  
	
   

  	
  Name:

  	
  Thanwantie
  Somar

  	
   

  
	
   

  	
  Title:

  	
  AVP

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  PNC Bank,
  National Association

  70 East 55th Street

  New York, New York  10022

  Attn:  Kysha Pierre-Louis

  Telecopy:  (646) 497-0324

  	
   

  
						

 

172

 

	
   

  	
  COMERICA BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MICHAEL
  T. RODGERS

  	
   

  
	
   

  	
  Name:

  	
   Michael T. Rodgers

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Comerica
  Bank

  Construction & Industrial Equipment

  Lending

  1601 Elm Street, 2nd Floor

  Dallas, Texas 75201

  Attn:  Michael T. Rodgers

  Telecopy:  (214) 969-6534

  	
   

  
						

 

173

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