Document:

Exhibit

Exhibit 10.2 
CONFIDENTIAL

August 14, 2017

Martin D. Wilson
President and Chief Executive Officer
Armstrong Energy Inc.
7733 Forsyth Boulevard
Suite 1625
St. Louis, MO 63105

Re:  Armstrong Energy Inc.

Dear Mr. Wilson:

The purpose of this letter is to confirm the understanding and agreement (the “Agreement”) between Armstrong Energy Inc. (the “Client” or “Armstrong”) and FTI Consulting, Inc. (“FTI”) concerning the Client’s engagement of FTI to provide certain temporary employees to the Client to act as both Chief Restructuring Officer and as Hourly Temporary Staff in providing services consistent with those roles (the “Engagement”). This Agreement is effective on August 14, 2017 (the “Effective Date”). The FTI Standard Terms and Conditions attached hereto as Exhibit “A” are also incorporated herein and forms part of this Agreement. 

1.     Temporary Officers, Hourly Temporary Employees and Services
 
FTI will provide Alan Boyko to serve as the Client’s Chief Restructuring Officer (the “CRO” or the “Temporary Officer”) reporting to the Chief Executive Officer of the client (“Client Designee”), in connection with the Engagement. The duties of the Temporary Officer, as well as any additional Hourly Temporary Staff (as defined below), shall be consistent with the Services (defined below). Without limiting the foregoing, the Temporary Officer, as well as any Hourly Temporary Staff, shall work with other senior management of the Client, and other professionals, to provide the Services.  

In addition to providing the Temporary Officer, FTI may also provide the Client with additional staff (the “Hourly Temporary Staff” and, together with the Temporary Officer, the “FTI Professionals”), subject to the terms and conditions of this Agreement. The Hourly Temporary Staff may be assisted by or replaced by other FTI professionals reasonably satisfactory to the Board and/or Committee, as required, who shall also become Hourly Temporary Staff for purposes hereof.  The initial schedule of Hourly Temporary Staff is set out on Exhibit “B”.   FTI will keep the Client Designee reasonably informed as to FTI’s staffing and will not add Hourly Temporary Staff to the assignment without first consulting with the Client. 

The services we will provide in connection with the Engagement will encompass only those services that are requested by the Client and that are specified below and which are normally and reasonably associated with this type of engagement and that we are able to provide and that are consistent with our ethical obligations (the “Services”).  With respect to all matters of our Engagement, we will coordinate closely with the Client as to the nature of the Services that we will render and the scope of our engagement. The Services shall include assisting the Client and its management with some or all of the following:

1

CRO Related: 
		
	•
	Reviewing the Company’s operating plan and budgets, providing feedback as appropriate;

		
	•
	Working with management and the Company’s other professionals on key stakeholder  restructuring and related negotiations, including litigation (if any);

		
	•
	Advising the Company on operating plan, liquidity management, and restructuring alternatives; 

		
	•
	Working closely with management and Company counsel to prepare for and execute on a voluntary Chapter 11 process, if necessary; and

		
	•
	Assisting the Company with the preparation and confirmation of a value optimizing chapter 11 plan, and/or a sale of certain or substantially all of Armstrong’s assets pursuant to section 363 of the Bankruptcy Code.

Chapter 11 & Post-Petition Analytical and Reporting Support:
		
	•
	Providing the Company with additional financial modeling resources to provide restructuring related financial analyses and support financial modeling efforts, and modifying existing forecast tools for court reporting purposes;

		
	•
	Developing communications plans for all key stakeholders; 

		
	•
	Preparing schedules, reports, etc., as required by any chapter 11 filing;

		
	•
	Analyzing executory contracts;

		
	•
	Assisting Armstrong with any litigation;

		
	•
	Analyzing and administering any Chapter 11 claims process;

		
	•
	Preparing Monthly Operating Reports, Statement(s) of Financial Affairs, Schedules of Assets and Liabilities, and other similar documents and reports; and, 

		
	•
	Providing the analytical support (including any valuation analyses or testimony) required for any restructuring, whether implemented through a chapter 11 plan or a section 363 sale.

The Services, as outlined, are subject to finalization and/or change as mutually agreed by us.  

As usual, our Engagement is to represent the Company and not its individual directors, officers, employees or shareholders.  However, we anticipate that in the course of that Engagement, we may provide information or advice to directors, officers or employees in their corporate capacities. 

If cases under the Bankruptcy Code are commenced and our retention is approved, our role will include serving as principal bankruptcy crisis and turnaround manager and CRO to the debtors and debtors in possession in those cases under a general retainer (not to exceed $100,000), subject to court approval.  Our role also will encompass all out-of-court planning and negotiations attendant to these tasks.  

The engagement of FTI to perform the Services post any bankruptcy filing(s) shall be subject to the approval of the Bankruptcy Court and shall be substantially as provided in this Agreement as modified by the retention order approved by the Bankruptcy Court. Client agrees, at Client’s expense, to file an application (the “Application”) to employ FTI as crisis and turnaround manager nunc pro tunc to the Effective Date pursuant to § 363 of the Bankruptcy Code. The Client agrees to file all required applications, including the Application, for the employment or retention of FTI at the earliest practical time. 

The Services do not include (i) audit, legal, tax, environmental, accounting, actuarial, employee benefits, insurance advice or similar specialist and other professional services which are typically outsourced and which shall be obtained directly where required by the Client at Client’s expense; or (ii) investment banking, including securities analysis, advising any party or representation of the Client on the purchase, sale or exchange of securities or representation of the Client in securities transactions. FTI is not a 

2

registered broker-dealer in any jurisdiction and will not offer advice or its opinion or any testimony on valuation or exchanges of securities or on any matter for which FTI is not appropriately licensed or accredited. An affiliate of FTI is a broker-dealer but is not being engaged by the Client to provide any investment banking or broker-dealer services. 

The Client agrees to supply office space, and office and support services to FTI as reasonably requested by FTI in connection with the performance of its duties hereunder. 

For the avoidance of doubt, no term in this Agreement or any other agreement, contract, or arrangement between the Client and FTI, including but not limited to any terms regarding confidentiality, restricts the CRO and any Hourly Temporary Staff or other personnel at FTI who have been, are, may become, or will be, involved in this matter, from meeting with or speaking to the Supporting Holders and their Advisors (as such terms are defined in that certain Forbearance Agreement, dated as of July 16, 2017) . 

2.     Compensation to FTI 

For services rendered in connection with this engagement, including the CRO services of Alan Boyko, all professionals will be billed at their current hourly rate (to the nearest tenth of an hour) as defined below.  All fees are considered earned upon payment, and due upon presentment. FTI will submit monthly invoices documenting its reasonable fees and expenses to the Client; provided that FTI’s fees and expenses for services rendered through September 15, 2017 shall not exceed $250,000. 

United States
Per Hour (USD)
Senior Managing Directors            $840-1,050
Directors / Senior Directors / Managing Directors      630-   835
Consultants/Senior Consultants                335-   605
Administrative / Paraprofessionals                135-   265

In addition to the fees outlined above, FTI will bill for reasonable allocated and direct expenses which are likely to be incurred on your behalf during this Engagement.  Direct expenses include reasonable and customary out-of-pocket expenses which are billed directly to the engagement such as certain telephone, overnight mail, messenger, travel, meals, accommodations and other expenses specifically related to the engagement.  Further, if FTI and/or any of its employees are required to testify or provide evidence at or in connection with any judicial or administrative proceeding relating to this matter, FTI will be compensated by you at its regular hourly rates and reimbursed for reasonable allocated and direct expenses (including counsel fees) with respect thereto.

We will send the Company monthly invoices for services rendered and charges and disbursements incurred on the basis discussed above, and in certain circumstances, an invoice may be for estimated fees, charges and disbursements through a date certain.  Each invoice constitutes a request for an interim payment against the fee to be determined at the conclusion of our Services.  Upon transmittal of the invoice, we may immediately draw upon the Initial Cash on Account (as replenished from time to time) up to the lesser of  (a) the amount of the invoice and (b) the Initial Cash on Account.  The Company agrees upon submission of each such invoice to promptly wire the invoice amount to us as replenishment of the Initial Cash on Account (together with any supplemental amount to which we and the Company mutually agree), without prejudice to the Company's right to advise us of any differences it may have with respect to such invoice.  We have the right to apply to any outstanding invoice (including amounts billed prior to the date hereof), up to the remaining balance, if any, of the Initial Cash on Account (as may be 

3

supplemented from time to time) at any time subject to (and without prejudice to) the Company's opportunity to review our statements.

The Company agrees to promptly notify FTI if the Company or any of its subsidiaries or affiliates extends (or solicits the possible interest in receiving) an offer of employment to a principal or employee of FTI involved in this Engagement and agrees that FTI has earned and is entitled to a cash fee, upon hiring, equal to 150% of the aggregate first year’s annualized compensation, including any guaranteed or target bonus and equity award, to be paid to FTI’s former principal or employee that the Company or any of its subsidiaries or affiliates hires at any time up to one year subsequent to the date of the final invoice rendered by FTI with respect to this Engagement.

Cash on Account: 

Initially, the Company will forward to us the amount of $100,000 which funds will be held "on account" to be applied to our professional fees, charges and disbursements for the Engagement (the "Initial Cash on Account").  To the extent that this amount exceeds our fees, charges and disbursements upon the completion of the Engagement, we will refund any unused portion.  The Company agrees to increase or supplement the Initial Cash on Account from time to time during the course of the Engagement in such amounts as the Company and we mutually shall agree are reasonably necessary to increase the Initial Cash on Account to a level that will be sufficient to fund Engagement fees, charges, and disbursements to be incurred.

In a case under the Bankruptcy Code, fees and expenses may not be paid without the express prior approval of the bankruptcy court.  In most cases of this size and complexity, on request of a party in interest, the bankruptcy court permits the payment of interim fees during the case.  The Company agrees that, if asked to do so by us, the Company will request the bankruptcy court to establish a procedure for the payment of interim fees during the case that would permit payment of interim fees.  If the bankruptcy court approves such a procedure, we will submit invoices on account against our final fee.  These interim invoices will be based on such percentage as the bankruptcy court allows of our internal time charges and costs and expenses for the work performed during the relevant period and will constitute a request for an interim payment against the reasonable fee to be determined at the conclusion of our representation.

In preparation for the filing of any cases under the Bankruptcy Code, we also may require an additional on account payment to supplement the Initial Cash on Account to cover fees, charges and disbursements to be incurred during the initial phase of the chapter 11 cases (the "Additional Cash on Account").  We will hold the Additional Cash on Account, as we have the Initial Cash on Account.  Of course, the reasonableness of the Additional Cash on Account remains subject to review by the court in any ensuing case.

If any of the Company's entities become a debtor in one or more cases under the Bankruptcy Code, some fees, charges, and disbursements (whether or not billed) incurred before the filing of bankruptcy petitions (voluntary or involuntary) might remain unpaid as of the date of the filing.  The unused portion, if any, of the Initial Cash on Account and the Additional Cash on Account will be applied to any such unpaid pre-petition fees, charges and disbursements.  Any requisite court permission will be obtained in advance.  We will then hold any portion of the Initial Cash on Account and the Additional Cash on Account not otherwise properly applied for the payment of any such unpaid pre-filing fees, charges and disbursements (whether or not billed) as on account cash to be applied to our final invoice in any case under the Bankruptcy Code.

4

Post-petition fees, charges and disbursements will be due and payable immediately upon entry of an order containing such court approval or at such time thereafter as instructed by the court.  The Company understands that while the arrangement in this paragraph may be altered in whole or in part by the bankruptcy court, the Company shall nevertheless remain liable for payment of court approved post-petition fees and expenses.  Such items are afforded administrative priority under 11 U.S.C. § 503(b)(l).  The Bankruptcy Code provides in pertinent part, at 11 U.S.C. § 1l29(a)(9)(A), that a plan cannot be confirmed unless these priority claims are paid in full in cash on the effective date of any plan (unless the holders of such claims agree to different treatment).  It is agreed and understood that the unused portion, if any, of the Initial Cash on Account (as may be supplemented from time to time) and the Additional Cash on Account shall be held by us and applied against the final fee application filed and approved by the court. 

Additional Provisions Regarding Fees: 

		
	a)
	FTI may stop work or terminate the Agreement immediately upon the giving of written notice to the Client (i) if payments are not made in accordance with this Agreement, (ii) if the Application is not approved by the Bankruptcy Court, (iii) if the Chapter 11 case is dismissed or converted to a Chapter 7 proceeding, or (iv) if a Chapter 11 Trustee or other responsible person is appointed.  

		
	b)
	If, and only if, local Bankruptcy rules or the order approving the Application so require, FTI shall file with and serve on creditors entitled to notice thereof, a statement of staffing, professional services, compensation or expenses, on a quarterly basis, or as the Bankruptcy Court or rules may direct, and creditors and other parties in interest shall have an opportunity to object thereto and request a hearing thereon. In the event that FTI is employed post-petition as a “professional person” pursuant to § 327 of the Bankruptcy Code, Bankruptcy Court approval will generally be required to pay FTI’s fees and expenses for Post-petition Services.

		
	c)
	Client agrees that FTI is not an employee of the Client and the FTI employees and independent FTI contractors who perform the Services are not employees of the Client, and they shall not receive a W-2 from the Client for any fees earned under this engagement, and such fees are not subject to any form of withholding by the Client. The Client shall provide FTI a standard form 1099 on request for fees earned under this Engagement.

		
	d)
	Copies of Invoices shall be sent by facsimile or email as follows: 

To the Client at: 
Armstrong Energy Inc.
7733 Forsyth Boulevard
Suite 1625
St. Louis, MO 63105

Attention: Martin D. Wilson

3.     Availability of Information 
 
In connection with FTI’s activities on the Client’s behalf, the Client agrees (i) to furnish FTI with all information and data concerning the business and operations of the Client which FTI reasonably requests, and (ii) to provide FTI with reasonable access to the Client’s officers, directors, partners, employees, 

5

retained consultants, independent accountants, and legal counsel. FTI shall not be responsible for the truth or accuracy of materials and information received by FTI under this agreement. 

4.     Notices  

Notices under this Agreement to the Client shall be provided as set forth in paragraph 2(d). 

Notices to FTI shall be to: 
FTI Consulting Inc.
Attn: Alan Boyko
Phone: 303-689-8892
Fax: 303-689-8802 
Email: alan.boyko@fticonsulting.com
 
Notices shall be provided by (a) fax and email, (b) hand delivery, or (c) overnight delivery. If provided by fax and email or hand delivery, they shall be deemed effective the date given. If provided by overnight delivery, they shall be deemed effective on the date of actual receipt. 

5.     Miscellaneous 
 
This Agreement: represents the entire understanding of the parties hereto and supersedes any and all other prior agreements among the parties regarding the subject matter hereof; shall be binding upon and inure to the benefit of the parties and their respective heirs, representatives, successors and assigns; may be executed by facsimile (followed by originals sent via regular mail), and in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument; and may not be waived, modified or amended unless in writing and signed by a representative of the Client and FTI. The provisions of this Agreement shall be severable. No failure to delay in exercising any right, power or privilege related hereto, or any single or partial exercise thereof, shall operate as a waiver thereof. 

Based on our understanding of the parties involved in this matter, we have compiled a list of interested parties (the “Potentially Interested Parties”) and have undertaken a limited review of our records to determine FTI’s professional relationships with the Company and such Potentially Interested Parties.  From the results of such review, we are not aware of any conflicts of interest or relationships that we believe would preclude us from performing the Services.

As you know, however, we are a large consulting firm with numerous offices throughout the world.  We are regularly engaged by new clients, which may include one or more of the Potentially Interested Parties.  
The FTI professionals providing services hereunder will not accept an engagement that directly conflicts with this Engagement without your prior written consent.

6

If this letter correctly sets forth our understanding, please so acknowledge by signing below and returning a signed copy of this letter to us. 

Very truly yours, 

FTI CONSULTING, INC. 

By: /s/ Alan Boyko     
Name: Alan Boyko
Title: Senior Managing Director

ACCEPTED AND AGREED this 14th day of August, 2017.

On behalf of Armstrong Energy Inc.

By: /s/ Martin D. Wilson     
Name: Martin D. Wilson
Title: President and Chief Executive Officer    
    

Date: August 14, 2017         

7

EXHIBIT A 

FTI CONSULTING, INC.

STANDARD TERMS AND CONDITIONS

The following are the Standard Terms and Conditions on which we will provide the Services to you set forth within the attached letter of engagement with Armstrong Energy Inc. dated as of August 14, 2017 (the “Engagement Letter”). The Engagement Letter and these Standard Terms and Conditions annexed thereto (collectively, the “Engagement Contract”) form the entire agreement between us relating to the Services and replace and supersede any previous proposals, letters of engagement, undertakings, agreements, understandings, correspondence and other communications, whether written or oral, regarding the Services.  The headings and titles in the Engagement Contract are included to make it easier to read but do not form part of the Engagement Contract.  

		
	1.
	Reports and Advice

		
	1.1
	Use and purpose of advice and reports— Any advice given or report issued by us is provided solely for your use and benefit and only in connection with the purpose in respect of which the Services are provided. Unless required by law, you shall not provide any advice given or report issued by us to any third party, or refer to us or the Services, without our prior written consent, which shall be conditioned on the execution of a third party release letter in the form provided by FTI; provided that you may share any advice or reports issued by us to a party bound by an obligation of confidentiality to you. In no event, regardless of whether consent has been provided, shall we assume any responsibility to any third party to which any advice or report is disclosed or otherwise made available.

		
	2.
	Information and Assistance

		
	2.1
	Provision of information and assistance – Our performance of the Services is dependent upon you and the Company providing us with such information and assistance as we may reasonably require from time to time.

		
	2.2
	Punctual and accurate information – You and Company personnel shall use reasonable skill, care and attention to ensure that all information we may reasonably require is provided on a timely basis and is accurate and complete and relevant for the purpose for which it is required.  You and the Company shall also notify us if you subsequently learn that the information provided is incorrect or inaccurate or otherwise should not be relied upon.

		
	2.3
	No assurance on financial data – While our work may include an analysis of financial and accounting data, the Services will not include an audit, compilation or review of any kind of any financial statements or components thereof.  Company management will be responsible for any and all financial information they provide to us during the course of this Engagement, and we will not examine or compile or verify any such financial information.  Moreover, the circumstances of the Engagement may cause our advice to be limited in certain respects based upon, among other matters, the extent of sufficient and available data and the opportunity for supporting investigations in the time period.  Accordingly, as part of this Engagement, we will not express any opinion or other form of assurance on financial statements of the Company. 

		
	2.4
	Prospective financial information - In the event the Services involve prospective financial information, our work will not constitute an examination or compilation, or apply agreed-upon procedures, in accordance with standards established by the American Institute of Certified Public Accountants or otherwise, and we will express no assurance of any kind on such information.  There will usually be differences between estimated and actual results, because events and circumstances frequently do not occur as expected, and those differences may be material.  We will take no responsibility for the achievability of results or events projected or anticipated by the management of the Company.

		
	3.
	Additional Services

		
	3.1
	Responsibility for other parties— You and the Company shall be solely responsible for the work and fees of any other party engaged by you or the Company to provide services in connection with the Engagement regardless of whether such party was introduced to you by us.  Except as provided in this Engagement Contract (including section 2 of the Engagement Letter with respect to the retention of certain agents and independent contractors), we shall not be responsible for providing or reviewing the advice or services of any such third party, including advice as to legal, regulatory, accounting or taxation matters.  Further, we acknowledge that we are not authorized under our Engagement Contract to engage any third party to provide services or advice to you or the Company, other than our agents or independent contractors engaged to provide Services, without your or the Company’s written authorization.

		
	4.
	Confidentiality

		
	4.1
	Restrictions on confidential information— All parties to this Engagement Contract agree that any confidential information received from the other parties shall only be used for the purposes of providing or receiving Services under this or any other contract between us. Except as provided below, no party will disclose the other contracting party’s confidential information to any third party without such party’s consent. Confidential information shall not include information that:

		
	4.1.1
	is or becomes generally available to the public other than as a result of a breach of an obligation under this Clause 4.1;

		
	4.1.2
	is acquired from a third party who, to the recipient party’s knowledge, owes no obligation of confidence in respect of the information;

		
	4.1.3
	is or has been independently developed by the recipient (without the use of confidential information); or

		
	4.1.4
	has been delivered any third parties who are bound by a confidentiality agreement executed between those third parties and the Company.

		
	4.2
	Disclosing confidential information – Notwithstanding Clause 1.1 or 4.1 above, all parties will be entitled to disclose confidential information to a third party to the extent that this is required by valid legal process, provided that (and without breaching any legal or regulatory requirement) where reasonably practicable not less than 2 business days’ notice in writing is first given to the other parties.

		
	4.3
	Citation of engagement – Without prejudice to Clause 4.1 and Clause 4.2 above, to the extent our engagement is or becomes known to the public, we may cite the performance of the Services to our clients and prospective clients as an indication of our experience, unless we and you specifically agree otherwise in writing.

		
	4.4
	Internal quality reviews – Notwithstanding the above, we may disclose any information referred to in this Clause 4 to any other FTI entity or use it for internal quality reviews; provided, that we shall cause such persons to keep such information confidential in accordance with the terms of this Engagement Contract.

		
	4.5
	Maintenance of workpapers – Notwithstanding the above, we may keep one archival set of our working papers from the Engagement, including working papers containing or reflecting confidential information, in accordance with our internal policies; provided, that we shall keep such materials confidential in accordance with the terms of this Engagement Contract.

		
	5.
	Termination

		
	5.1
	Termination of Engagement with notice— Termination of Engagement with notice –This Agreement is terminable by the Client or by FTI at any time upon the giving of thirty (30) days written notice. Upon such termination by the Client (the “Termination Date"), FTI shall cease work and the Client shall have no further obligation for fees and expenses of FTI arising or incurred after the Termination Date, provided, however, that, notwithstanding any termination by the Client or by FTI in the circumstances described in paragraph (a) under “Additional Provisions Regarding Fees” in the Engagement Letter. 

The Client shall reimburse FTI for its out-of-pocket expenses (the "Termination Expenses") incurred in connection with commitments made by FTI prior to the Termination Date with respect to advance travel arrangements reasonably incurred, to the extent FTI is unable to obtain refunds of such expenses. FTI shall provide the Client with reasonable documentation to substantiate all Termination Expenses for which payment is requested; and

    

		
	5.2
	Continuation of terms— The terms of the Engagement that by their context are intended to be performed after termination or expiration of this Engagement Contract, including but not limited to, Clause 4 of the Engagement letter, and Clauses 1.1, 4, 6 and 7 of the Standard Terms and Conditions, are intended to survive such termination or expiration and shall continue to bind all parties. 

		
	6.
	Indemnification, Insurance and Liability Limitation 

		
	6.1
	Indemnification – The Company agrees to indemnify and hold harmless FTI and any of its subsidiaries and affiliates, officers, directors, principals, shareholders, agents, independent contractors and employees (collectively “Indemnified Persons”) from and against any and all claims, liabilities, damages, obligations, costs and expenses (including reasonable attorneys’ fees and expenses and costs of investigation) arising out of or relating to your retention of FTI, the execution and delivery of this Engagement Contract, the provision of Services or other matters relating to or arising from this Engagement Contract, except to the extent that any such claim, liability, obligation, damage, cost or expense shall have been determined by final non-appealable order of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the Indemnified Person or Persons in respect of whom such liability is asserted  (an “Adverse Determination”).  In the event of an Adverse Determination, the Indemnified Parties shall indemnify and hold harmless Company for any and all claims, liabilities, damages, obligations, costs and expenses (including reasonable attorneys’s fees and expenses and costs of investigation) incurred by or against Company arising from such Adverse Determination or the facts and circumstances arising therefrom.  The Company shall pay damages and expenses, including reasonable legal fees and disbursements of counsel as incurred in advance.  FTI agrees that it will reimburse any amounts paid in advance to the extent they relate directly to an Adverse Determination.  

Subject to any limitation post-petition required by the Bankruptcy Court, the Client agrees to indemnify and hold harmless FTI and its shareholders, directors, officers, managers, employees, contractors, agents and controlling persons (each, an “Indemnified Party”) from and against any losses, claims, damages or expenses, or if same was or is or becomes a party to or witness or other participant in, or is threatened to be made a party to or witness or other participant in, any threatened, pending or completed action, suit, proceeding or alternative dispute resolution mechanism, or any hearing, inquiry or investigation, in each case by reason of (or arising in part out of) any event or occurrence related to this agreement or any predecessor agreement for services or the fact that any Indemnified Party is or was an agent, officer director, employee or fiduciary of the Client, or by reason of any action or inaction on the part of any Indemnified Party while serving in such capacity (an “Indemnifiable Event”) against expenses (including reasonable attorneys’ fees and disbursements), judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any Indemnifiable Event. The Application shall include the assumption by the Client of FTI’s right to indemnification in respect of its actions under this Agreement prior to the Petition Date. The Indemnified Party shall promptly forward to the Client all written notifications and other matter communications regarding any claim that could trigger the Client’s 

indemnification obligations under this Section 6. If the Client so elects or is requested by an Indemnified Party, the Client will assume the defense of such action or proceeding, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of the reasonable fees and disbursements of such counsel. In the event, however, such Indemnified Party is advised by counsel that having common counsel would present such counsel with a conflict of interest or if the defendants in, or targets of, any such action or proceeding include both an Indemnified Party and the Client, and such Indemnified Party is advised by counsel that there may be legal defenses available to it or other Indemnified Parties that are different from or in addition to those available to the Client, or if the Client fails to assume the defense of the action or proceeding or to employ counsel reasonably satisfactory to such Indemnified Party, in either case in a timely manner, then such Indemnified Party may employ separate counsel to represent or defend it in any such action or proceeding and the Client will pay the reasonable fees and disbursements of such counsel; provided, however, that the Client will not be required to pay the fees and disbursements of more than one separate counsel (in addition to local counsel) for an Indemnified Party in any jurisdiction in any single action or proceeding. In any action or proceeding the defense of which the Client assumes, the Indemnified Party will have the right to participate in such litigation and to retain its own counsel at such Indemnified Party's own expense. The Client further agrees that the Client will not, without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld or delayed), settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the Indemnified Party or any other Indemnified Party is an actual or potential party to such claim, action, suit or proceeding) unless (i) to the extent that such settlement, compromise or consent purports directly or indirectly to cover the Indemnified Party or any other Indemnified Party, such settlement, compromise or consent includes an unconditional release of the Indemnified Party and each other Indemnified Party from all liability arising out of such claim, action, suit or proceeding, or (ii) to the extent that such settlement, compromise or consent does not purport directly or indirectly to cover the Indemnified Party or any other Indemnified Party, the Client has given the Indemnified Party reasonable prior written notice thereof and used all reasonable efforts, after consultation with the Indemnified Party, to obtain an unconditional release of the other Indemnified Parties hereunder from all liability arising from all liability arising out of such claim, action, suit or proceeding. The Indemnified Party shall not enter into any closing agreement or final settlement that could trigger the Client’s indemnification obligations under this Section 6 without the written consent of the Client, which shall not unreasonably be withheld or delayed or conditioned. The Client will not be liable for any settlement of any action, claim, suit or proceeding affected without the Client’s prior written consent, which consent shall not be unreasonably withheld or delayed or conditioned, but if settled with the consent of the Client or if there be a final judgment for the plaintiff, the Client agrees to indemnify and hold harmless the Indemnified Party from and against any loss or liability by reason of such settlement or judgment, as the case may be. 

		
	6.2
	Insurance –In addition to the above indemnification and provision regarding advancement of fees/expenses, FTI employees serving as directors or officers of the Company or its affiliates will receive the benefit of the most favorable indemnification and advancement provisions provided by the Company to its directors, officers and any equivalently placed employees, whether under the Company’s charter or by-laws, by contract or otherwise.  The Company shall specifically include and cover employees and agents serving as directors and officers of the Company or affiliates from time to time with direct coverage under the Company’s policy for liability insurance covering its directors, officers and any equivalently placed employees.  Prior to FTI accepting any director or officer position, the Company shall, at the request of FTI, provide FTI a copy of its current D&O policy, a certificate of insurance evidencing the policy is in full force and effect, and a copy of the signed board resolutions and any other document that FTI may reasonably request evidencing the appointment and coverage of the indemnitees.  The Company shall maintain such D&O insurance for the period through which claims can be made against such persons.  In the event the Company is unable to include FTI employees and agents under the Company’s policy or does not have first dollar coverage acceptable to FTI in effect for at least $10 million, FTI may, subject to the prior written consent of the Company, attempt to purchase a separate D&O insurance  policy that will cover the FTI employees and agents only.  The cost of the policy shall be invoiced to the Company as an out-of-

pocket expense.  Notwithstanding anything to the contrary, the Company’s indemnification obligations in this Section 6 shall be primary to (and without allocation against) any similar indemnification and advancement obligations of FTI, its affiliates and insurers to the indemnitees (which shall be secondary), and the Company’s D&O insurance coverage for the indemnitees shall be specifically primary to (and without allocation against) any other valid and collectible insurance coverage that may apply to the indemnitees (whether provided by FTI or otherwise).

This indemnity shall not apply to any portion of any such losses, claims, damages, liabilities and expenses to the extent it is found in a final judgment by a court of competent jurisdiction to have resulted primarily from the bad faith, gross negligence, willful misconduct or violation of law of any such Indemnified Party. The Client agrees to use commercially reasonable best efforts to (i) include Alan Boyko and any other FTI personnel who assume officer or director positions with the Client or who perform Services hereunder, FTI and its agents, employees, officers, subcontractors, directors, joint venture partners and members, as insureds under the Client’s directors and officers insurance; and (ii) unless it is unable to do so at a commercially reasonable cost, purchase a three-year directors and officers insurance “tail” or runoff policy (or such a policy for such shorter period as Client has the right to or is otherwise able to purchase) covering the period of FTI’s service.  In connection with this engagement Client represents to FTI that Client hereby represents that (i) it has timely remitted and will continue to timely remit to the appropriate beneficiaries all employee source deductions, payroll and other taxes, benefits deductions, and contribution to employee benefit programs, and has timely collected and remitted sales and use and other similar taxes to appropriate collecting authorities and will continue timely to do so; (ii) there is no litigation or other proceeding pending, or to knowledge of Client, threatened (nor is Client aware of facts that could give rise to such), in each case that seeks or could give rise to personal liability of officers and directors of Client; and (iii) Client has been in continuing compliance with all applicable laws and regulations concerning the discharge, treatment, storage, transportation or use of hazardous materials and is aware of no facts or circumstances that could give rise to Client responsibility or liability under such laws and regulations.

		
	6.3
	Limitation of liability –

You and the Company agree that no Indemnified Person shall have any liability as a result of your retention of FTI, the execution and delivery of this Engagement Contract, the provision of Services or other matters relating to or arising from this Engagement Contract, other than liabilities that shall have been determined by final non-appealable order of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of an Indemnified Person or Persons.  Without limiting the generality of the foregoing, in no event shall any Indemnified Person be liable for consequential, indirect or punitive damages, damages for lost profits or opportunities or other like damages or claims of any kind.

		
	7.
	Governing Law, Jurisdiction and WAIVER OF JURY TRIAL — The Engagement Contract shall be governed by and interpreted in accordance with the laws of the State of New York, without giving effect to the choice of law provisions thereof. The Bankruptcy Court having jurisdiction over the Client’s Bankruptcy case shall have exclusive jurisdiction in relation to any claim, dispute or difference concerning the Engagement Contract and any matter arising from it. The parties submit to the jurisdiction of such Courts and irrevocably waive any right they may have to object to any action being brought in these Courts, to claim that the action has been brought in an inconvenient forum or to claim that those Courts do not have jurisdiction.  TO FACILITATE JUDICIAL RESOLUTION AND SAVE TIME AND EXPENSE, YOU, THE COMPANY AND FTI IRREVOCABLY AND UNCONDITIONALLY AGREE NOT TO DEMAND A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THE SERVICES OR ANY SUCH OTHER MATTER.

Confirmation of Standard Terms and Conditions

Subject to the terms and conditions of the Engagement Letter, we agree that FTI Consulting, Inc. is engaged upon the terms set forth in these Standard Terms and Conditions as outlined above.

On behalf of Armstrong Energy Inc.

By: /s/ Martin D. Wilson    
Name: Martin D. Wilson
Title: President and Chief Executive Officer    

Date: August 14, 2017         

EXHIBIT B 

INITIAL SCHEDULE OF HOURLY TEMPORARY STAFF

Staff    Level                Hourly Rate

Brian Martin    Director                 $665

Christopher Marshall    Senior Consultant            $455Exhibit 10.1

 

EXECUTION VERSION

 

EXCHANGE AND TERMINATION AGREEMENT

 

This Exchange and Termination Agreement (this “Agreement”), is entered into as of August 16, 2017 (immediately following the occurrence of the H&E Termination (as defined below)), by and among United Rentals (North America), Inc., a Delaware corporation (“Parent”), Wayzata Opportunities Fund II, L.P. (“Opportunities Fund”), Wayzata Opportunities Fund Offshore II, L.P. (“Opportunities Fund Offshore” and, together with Opportunities Fund, the “Stockholders” and each individually, a “Stockholder”), Neff Corporation (“Company”), and Neff Holdings LLC (“Holdings”). The parties to this Agreement are referred to herein as the “Parties” or, each individually, a “Party.” Any capitalized terms used but not defined herein shall have the meanings set forth in the Agreement and Plan of Merger (the “Merger Agreement”), dated as of the date hereof, by and among Parent, Company, and UR Merger Sub III Corporation, a Delaware corporation and wholly owned subsidiary of Parent (“Merger Sub”), as the Merger Agreement is in effect on the date hereof.

 

RECITALS

 

WHEREAS, Company and the Stockholders are parties to that certain Second Amended and Restated Limited Liability Company Agreement of Holdings, dated as of November 26, 2014 (as amended, the “Holdings LLC Agreement”), pursuant to which, among other things, the parties thereto provided for Holdings to redeem, upon notice therefor by a Stockholder, Common Units of Holdings (“LLC Units”) owned by such Stockholder in exchange for shares of Company Class A Common Stock or for cash (a “Redemption”);

 

WHEREAS, in the event that a holder of LLC Units exercises its right to require Holdings to effect a Redemption, Company has the right to elect to require that such holder exchange its LLC Units subject to such Redemption directly with Company for an equal number of shares of Company Class A Common Stock or for cash (any such exchange, an “Exchange”);

 

WHEREAS, the Company Certificate provides that, simultaneous with an Exchange or a Redemption, Company shall cancel a number of shares of Company Class B Common Stock owned by the applicable Stockholder equal to the number of LLC Units so exchanged or redeemed;

 

WHEREAS, Company, the Stockholders, the holders of LLC Options (the “LLC Optionholders”), Mark Irion, as “Management Representative” thereunder (the “Management Representative”), and other members of Holdings from time to time are parties to (a) that certain Tax Receivable Agreement, dated as of November 26, 2014 (as amended, the “Tax Receivable Agreement”), pursuant to which Company is obligated to make payments to certain parties thereto based on the reduction of Company’s liability for U.S. federal, state and local income and franchise taxes arising from adjustments to Holdings’ basis in its assets and imputed interest and (b) that certain Registration Rights Agreement, dated as of November 26, 2014 (as amended, the “Registration Rights Agreement”), pursuant to which such parties are entitled to certain rights with respect to the registration of shares of Company Class A Common Stock issuable in an Exchange or a Redemption;

 

WHEREAS, on the date hereof (prior to the time at which the parties hereto executed and delivered this Agreement), the Company terminated that Agreement and Plan of Merger, dated as of July 14, 2017, by and among H&E Equipment Services, Inc. (“H&E”), the Company and Yellow Iron Merger Co. in accordance with its terms (such termination, the “H&E Termination”);

 

WHEREAS, upon the occurrence of the H&E Termination, the Exchange and Termination Agreement, dated as of July 14, 2017, by and among H&E, the Stockholders, Company and Holdings automatically terminated without further action by any of its parties;

 

 

WHEREAS, simultaneous with the execution and delivery of this Agreement, Company, Parent and Merger Sub are entering into the Merger Agreement, pursuant to which Merger Sub will be merged with and into Company, with Company surviving that merger (the “Merger”); and

 

WHEREAS, immediately prior to the effective time of the Merger, the Parties intend for (a) the Tax Receivable Agreement to be terminated by the parties thereto, (b) the Registration Rights Agreement to be terminated by the parties thereto, and (c) (i) the Stockholders to effect an Exchange of all of the LLC Units owned by them directly with Company for an equal number of shares of Company Class A Common Stock and (ii) simultaneous with such Exchange, Company to cancel all of the shares of Company Class B Common Stock owned by the Stockholders pursuant to the Company Certificate.

 

NOW, THEREFORE, in consideration of the foregoing and of the representations, warranties, covenants and agreements contained in this Agreement, the Parties, intending to be legally bound, agree as follows:

 

1.                                      Exchange.

 

(a)                                 Immediately prior to the Effective Time and pursuant to Sections 11.01 through 11.03 of the Holdings LLC Agreement, all of the LLC Units owned by each of the Stockholders (as set forth next to such Stockholder’s name on Exhibit A) shall be exchanged directly with Company for the number of shares of Company Class A Common Stock set forth next to such Stockholder’s name on Exhibit A. Simultaneous with the consummation of each Exchange described in the immediately preceding sentence (each such Exchange shall be collectively referred to herein as the “Specified Exchange”), without the requirement for any further action by any of the Parties, all of the Stockholders’ shares of Company Class B Common Stock will be cancelled by Company pursuant to the Company Certificate for no consideration. The Stockholders acknowledge and agree that the shares of Company Class A Common Stock received by the Stockholders in the Specified Exchange shall be “Stockholder Owned Shares” under the Support Agreement. Upon the effectiveness of any Permitted Transfer (as defined in the Support Agreement), Parent shall amend Exhibit A to reflect such Permitted Transfer.

 

(b)                                 Immediately prior to the Effective Time and simultaneous with the consummation of the Specified Exchange, Company shall (i) issue to each of the Stockholders the number of shares of Company Class A Common Stock set forth next to such Stockholder’s name on Exhibit A, and (ii) duly deliver to each Stockholder a certificate issued in the name of such Stockholder representing the number of shares of Company Class A Common Stock set forth next to such Stockholder’s name on Exhibit A, duly executed by the appropriate officers of Company and duly recorded on the books of Company or its transfer agent in the name of such Stockholder. Company covenants that all shares of Company Class A Common Stock issuable to the Stockholders in the Specified Exchange will, upon issuance, be validly issued, fully paid and non-assessable, free and clear of all taxes and Liens of any kind (except for proxies and restrictions in favor of Parent and its designees expressly arising pursuant to the Support Agreement, transfer restrictions imposed by the Support Agreement and transfer restrictions of general applicability as may be provided under the Securities Act and state securities laws).

 

(c)                                  The Stockholders, Holdings and Company hereby (i) agree that this Agreement shall constitute the Redemption Notice, the Contribution Notice and the Exchange Election Notice for a Share Settlement pursuant to the Holdings LLC Agreement and (ii) irrevocably waive any notice periods required or permitted by the Holdings LLC Agreement in connection with the Specified Exchange and any obligation to deliver any other notices or elections thereunder. Subject to Section 7(a) hereof, the Stockholders, Holdings and Company hereby irrevocably waive the right to, as applicable, deliver a Retraction Notice or otherwise revoke the Redemption Notice, Contribution Notice or Exchange Election Notice. Company irrevocably agrees that the Specified Exchange will be a Direct Exchange made by

 

2

 

means of a Share Settlement. Any capitalized terms used but not defined in this Section 1(c) shall have the meanings set forth in the Holdings LLC Agreement. For the avoidance of doubt, if this Agreement is terminated, any elections hereunder shall be null and void ab initio, and neither the Stockholders nor Company will be required to consummate any Exchange or Redemption.

 

2.                                      Terminations.

 

(a)                                 Effective immediately prior to the Effective Time, without the requirement for any further action by any of the Parties, the Tax Receivable Agreement shall be irrevocably terminated at no cost to the Stockholders, Company, the Surviving Corporation, Parent or any of their respective Subsidiaries and shall be of no further force or effect, and all liabilities of the Stockholders, the Management Representative, the LLC Optionholders, Company, the Surviving Corporation, Parent and their respective Subsidiaries relating thereto shall be irrevocably cancelled, extinguished and waived. Notwithstanding anything to the contrary in the Tax Receivable Agreement (including Sections 4.1(b) and 4.3 thereof), none of the Stockholders, the Management Representative, the LLC Optionholders, Company, the Surviving Corporation, Holdings, Parent or any of their respective Subsidiaries shall have any payment or other obligations under the Tax Receivable Agreement resulting from the consummation of the transactions contemplated by this Agreement, the Merger Agreement or otherwise. Each of the Stockholders hereby acknowledges and agrees that it is foregoing substantial economic, financial and pecuniary benefits from terminating the Tax Receivable Agreement pursuant hereto and it is doing so voluntarily and with a full understanding that it is foregoing such benefits without receipt of any payments or other consideration therefor. Each of Company and Parent hereby acknowledges and agrees that the substantial economic, financial and pecuniary benefits that the Stockholders are foregoing as a result of the termination of the Tax Receivable Agreement pursuant hereto is conferring substantial economic, financial and pecuniary benefits to Company and its stockholders.

 

(b)                                 Effective immediately prior to the Effective Time, without the requirement for any further action by any of the Parties, the Registration Rights Agreement shall be irrevocably terminated at no cost to the Stockholders, the Management Representative, the LLC Optionholders, Company, the Surviving Corporation, Parent or any of their respective Subsidiaries and shall be of no further force or effect, and all liabilities of the Stockholders, the Management Representative, the LLC Optionholders, Company, the Surviving Corporation, Parent and their respective Subsidiaries relating thereto shall be irrevocably cancelled, extinguished and waived.

 

(c)                                  Effective immediately prior to the Effective Time, without the requirement for any further action by any of the Parties, all agreements (other than (i) the Holdings LLC Agreement, (ii) the Support Agreement, (iii) this Agreement, (iv) the Indemnity Agreements set forth in Section 6.5 of the Company Disclosure Schedule, (v) the Company Certificate and the Company Bylaws, and (vi) arrangements providing for the payment or reimbursement of costs and expenses incurred by any director of Company in his or her capacity as such, which director is also an affiliate of a Stockholder (the agreements and arrangements referred to in this parenthetical being referred to herein as the “Excepted Agreements”)) between the Stockholders or their affiliates, on the one hand, and Company and any of its Subsidiaries, on the other hand (such agreements, the “Related Party Agreements”), shall be irrevocably terminated at no cost to the Stockholders, Company, the Surviving Corporation, Parent or any of their respective Subsidiaries and shall be of no further force or effect, and all liabilities of the Stockholders, Company and the Surviving Corporation and their respective Subsidiaries relating thereto shall be irrevocably cancelled, extinguished and waived. Schedule 1 to this Agreement sets forth a true and complete list of all Related Party Agreements (which, for the avoidance of doubt, shall not include the Excepted Agreements).

 

(d)                                 In consideration of the mutual agreements herein contained, effective as of the Effective

 

3

 

Time, each of the Stockholders, on behalf of itself, its affiliates (excluding for this purpose Company and its Subsidiaries), its Subsidiaries and their respective Releasing Representatives, fully, finally and forever releases, discharges and waives any and all civil actions, causes of action, claims, costs of suit, counterclaims, debts, demands, judgments, liabilities, obligations and actions for legal fees, in law or in equity, known or unknown, asserted or not, existing or not, of whatever kind or nature, in any jurisdiction, including in arbitration proceedings or any other forum, which have arisen or may arise in the future under the Tax Receivable Agreement, the Registration Rights Agreement or the Holdings LLC Agreement against Company, the Surviving Corporation, Holdings, Parent and their respective Subsidiaries and Releasing Representatives; provided, however, that nothing contained herein shall operate to release any claims, liabilities or obligations related to, or amend, modify or terminate, (A) any term or provision of the Holdings LLC Agreement (as in effect as of immediately prior to the date hereof) that provides any officer or manager of Holdings, or any officer or manager of Holdings that was serving at the request of Holdings as a manager, officer, director, principal, member, employee or agent of any direct or indirect Subsidiary of Holdings, with rights of indemnification or reimbursement or advancement of expenses, including, without limitation, any term or provision set forth in Section 7.04 of the Holdings LLC Agreement (as in effect on the date hereof) to the extent applicable to any such officer or manager of Holdings, (B) any term or provision of the Holdings LLC Agreement (as in effect as of immediately prior to the Effective Time) that provides the Company, any Stockholder, the Management Representative, any LLC Optionholder or any of their respective affiliates, Subsidiaries or Releasing Representatives with rights of exculpation and/or limitation of liability (but expressly excluding any rights to indemnification, reimbursement or advancement of expenses other than as set forth in clause (A)), including, without limitation, any term or provision set forth in any of Sections 3.01(c), 3.07, 6.09(a), 7.01(a) and 7.01(c) of the Holdings LLC Agreement (as in effect on the date hereof), (C) the Surviving Reporting Obligation (as defined below), and (D) any term or provision of the Holdings LLC Agreement (as in effect on the date hereof) that provides for the maintenance of capital accounts or the allocation of items of income, gain, loss, deduction or credit, including, without limitation, any term or provision set forth in Article V of the Holdings LLC Agreement (as in effect on the date hereof) (in the case of this clause (D), solely with respect to any taxable period ending on or before the Closing Date, or any taxable period beginning before the Closing Date and ending after the Closing Date). The terms, provisions and obligations described in clauses (A), (B), (C) and (D) of the proviso of the immediately preceding sentence shall be collectively referred to herein as the “Continuing Provisions”. The term “Releasing Representatives” means the affiliates, agents, assigns, attorneys, directors, employees, officers, owners, parents, partners, representatives, members, shareholders, heirs, auditors, consultants, predecessors, divisions, managers, trustees and advisors (including past, present and future of any and all of the foregoing) of any Party or person.

 

3.                                      Representations and Warranties of the Stockholders. Each Stockholder hereby represents and warrants to each other Party as follows:

 

(a)                                 Authority; Binding Nature. Such Stockholder has full limited partnership power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby to be consummated by such Stockholder. The execution and delivery of this Agreement by such Stockholder, the performance of such Stockholder’s obligations hereunder and the consummation by such Stockholder of the transactions contemplated hereby to be consummated by such Stockholder have been duly and validly authorized by all necessary limited partnership action on the part of such Stockholder. No other proceedings on the part of such Stockholder are necessary to approve this Agreement by such Stockholder or to consummate the transactions contemplated hereby to be consummated by such Stockholder. This Agreement has been duly and validly executed and delivered by such Stockholder and (assuming due authorization, execution and delivery by other Parties) constitutes a valid and binding obligation of such Stockholder, enforceable against such Stockholder in accordance with its terms (except in all cases as such enforceability may be limited by the

 

4

 

Enforceability Exceptions).

 

(b)                                 Ownership of Shares. As of the date hereof (after giving effect to the occurrence of the H&E Termination), such Stockholder beneficially owns the number of shares of Company Class B Common Stock and LLC Units set forth opposite the name of such Stockholder on Exhibit A hereto free and clear of any proxy, voting or transfer restriction, adverse claim or other Lien (except for proxies and restrictions in favor of Parent and its designees expressly arising pursuant to the Support Agreement, transfer restrictions imposed by Holdings LLC Agreement and transfer restrictions of general applicability as may be provided under the Securities Act and state securities laws). Such Stockholder has the sole power to vote (or cause to be voted) such shares of Company Class B Common Stock and LLC Units, the sole power to dispose of such shares of Company Class B Common Stock and LLC Units and good and valid title to such shares of Company Class B Common Stock and LLC Units. As of the date hereof, such Stockholder does not own, beneficially or of record, any securities of Holdings other than such LLC Units.

 

(c)                                  No Conflicts. Neither the execution and delivery of this Agreement by such Stockholder, nor the performance by such Stockholder of its obligations under this Agreement, will (i) conflict with or violate any provision of the organizational documents of such Stockholder or (ii) (A) violate any Law applicable to such Stockholder or any of its properties or assets, (B) result in the creation by such Stockholder of any Lien upon its shares of Company Class B Common Stock or LLC Units or (C) violate, conflict with, result in the loss of any material benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, or accelerate the performance required by such Stockholder under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, permit, lease, agreement or other instrument or obligation to which such Stockholder is a party, or by which such Stockholder or any of its properties or assets may be bound or affected, except for, in the case of clause (ii)(C), any such violations, conflicts, losses, defaults, terminations, cancellations or accelerations that would not reasonably be expected to prevent the performance by such Stockholder of its obligations under this Agreement.

 

(d)                                 Absence of Litigation. As of the date hereof, there is no suit, action, investigation, claim or proceeding pending or, to such Stockholder’s knowledge, threatened against or involving or affecting, such Stockholder, its shares of Company Class B Common Stock or its LLC Units that would reasonably be expected to impair the ability of such Stockholder to perform fully its obligations hereunder or to consummate on a timely basis the transactions contemplated hereby to be consummated by such Stockholder.

 

(e)                                  Brokers. No broker, investment banker, financial advisor or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission that is payable by Company, the Surviving Corporation, Parent or any of their respective Subsidiaries in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of such Stockholder (excluding, for the avoidance of doubt, any such broker, investment banker, financial advisor or other Person retained or engaged by Company).

 

5

 

4.                                      [Intentionally Deleted.]

 

5.                                      Representations and Warranties of Parent, Company and Holdings. Parent, Company and Holdings hereby represent and warrant, severally and not jointly, to each other Party as follows (provided, that (x) the representation and warranty made in Section 5(d) shall only be made by Parent, and (y) the representations and warranties made in Sections 5(e) and 5(f) shall only be made by Company and Holdings):

 

(a)                                 Authority; Binding Nature. Such Party has full power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby to be consummated by such Party. The execution and delivery of this Agreement by such Party, the performance of such Party’s obligations hereunder and the consummation by such Party of the transactions contemplated hereby to be consummated by such Party have been duly and validly authorized by all necessary action on the part of such Party. No other proceedings on the part of such Party are necessary to approve this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by such Party and constitutes a valid and binding obligation of such Party, enforceable against such Party in accordance with its terms (except in all cases as such enforceability may be limited by the Enforceability Exceptions).

 

(b)                                 No Conflicts. Neither the execution and delivery of this Agreement by such Party, nor the performance by such Party of its obligations under this Agreement, will (i) violate any Law applicable to such Party or any of its properties or assets, or (ii) violate, conflict with, result in the loss of any material benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, or accelerate the performance required by such Party under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, permit, lease, agreement or other instrument or obligation to which such Party is a party, or by which such Party or its respective properties or assets may be bound or affected.

 

(c)                                  Absence of Litigation. As of the date hereof, there is no suit, action, investigation, claim or proceeding pending or, to such Party’s knowledge, threatened against or involving or affecting, such Party that would reasonably be expected to impair the ability of such Party to perform fully its obligations hereunder or to consummate on a timely basis the transactions contemplated hereby to be consummated by such Party.

 

(d)                                 Ownership of Equity Interests. Parent does not own, beneficially or of record, any securities of Company or Holdings.

 

(e)                                  LLC Units and LLC Options. As of the date hereof, the LLC Units owned by the Stockholders (as set forth on Exhibit A) constitute all of the issued and outstanding LLC Units. As of the date hereof, there are no other Equity Interests of Holdings outstanding other than such LLC Units and LLC Options held by the LLC Optionholders.

 

(f)                                   H&E Termination.   Prior to the execution and delivery of this Agreement by the Parties, the H&E Termination occurred and became effective.

 

6.                                      Tax Matters.

 

(a)                                 The Parties agree to treat the Specified Exchange as (i) a taxable transaction for U.S. federal income Tax purposes (and state, local, and foreign income Tax purposes, where applicable) that is treated in the manner set forth in Revenue Ruling 99-6, 1999-1 C.B. 432 (Situation 1); and (ii) permitting

 

6

 

an adjustment to the basis in Holdings’ assets under Section 1012 of the Code (or any corresponding or similar provision of state, local or foreign Tax Law).

 

(b)                                 The Parties agree that, within thirty (30) days of the date hereof and no later than ten (10) days prior to the Closing Date, with prior written notification to Parent and the Stockholders, Company (or its agent) will determine the allocation of (i) the fair market value of the shares of Company Class A Common Stock to be received in the Specified Exchange (based upon the dollar amount of the Merger Consideration), and (ii) any other amounts treated as consideration for U.S. federal income Tax purposes, among the assets of Holdings in accordance with Section 1060 of the Code (the “Allocation”). The Allocation shall be part of this Agreement. Following the Closing Date, neither Parent, Company nor Holdings shall amend or otherwise modify the Allocation without the prior written consent of the Stockholders.

 

(c)                                  Following the Effective Time, Parent shall prepare or cause to be prepared and, subject to the remaining provisions of this Section 6(c), file or cause to be filed prior to the due date therefor, all Tax Returns for Holdings and its Subsidiaries for any taxable period ending on or before the Closing Date, or any taxable period beginning before the Closing Date and ending after the Closing Date, in either such case that are filed after the Closing Date, and the appropriate officer of Holdings or such Subsidiary shall sign and timely file same. All Tax Returns to be prepared by Parent pursuant to this Section 6(c) shall be prepared in a manner consistent with the pre-Closing practices of Holdings and its Subsidiaries. With respect to all Tax Returns to be prepared by Parent pursuant to this Section 6(c), (i) Parent shall provide the Stockholders with drafts of such Tax Returns at least forty-five (45) days prior to the due date for filing such Tax Returns, (ii) at least fifteen (15) days prior to the due date for the filing of such Tax Returns, the Stockholders shall notify Parent of the existence of any objection the Stockholders may have to any items, calculations or other matters set forth on such draft Tax Returns, and (iii) if, after consulting in good faith, Parent and the Stockholders are unable to resolve such objection(s) in a mutually agreeable manner, such objection(s) shall be referred to an independent accounting firm mutually acceptable to Parent and the Stockholders for resolution on a basis consistent with the pre-Closing practices of Holdings and its Subsidiaries with respect to such items, calculations or other matters.

 

(d)                                 The Parties acknowledge and agree that any deductions or other Tax benefits attributable to Holdings and/or any of its Subsidiaries and related to the transactions contemplated by the Merger Agreement (including any deductions or other Tax benefits attributable to the payment of any amounts to employees or other service providers, lenders or otherwise, whether or not any such amounts are actually paid on the Closing Date) will be reported on Holdings’ final partnership Tax Return for its taxable period ending on the Closing Date.

 

(e)                                  Parent and Company shall not initiate any claim for refund or amend any Tax Return in a manner which could adversely affect any of the Stockholders without the prior written consent of the Stockholders.

 

(f)                                   If (i) there shall be any inquiry, claim, assessment, audit, administrative or judicial proceeding, or similar event with respect to the Allocation or Taxes or any Tax matter relating, or with respect to, any taxable period of Holdings or any of its Subsidiaries ending on or before the Closing Date, or any taxable period of Holdings or any of its Subsidiaries beginning before the Closing Date and ending after the Closing Date (any of the foregoing, a “Tax Matter”), and (ii) any such Tax Matter (or the resolution thereof) could adversely affect any of the Stockholders, then Parent shall (x) keep the Stockholders reasonably and timely informed with respect to such Tax Matter, (y) in good faith, allow the Stockholders to make comments to Parent regarding the conduct of or positions taken in any such Tax Matter and (z) not enter into any settlement or compromise with respect to such Tax Matter without the prior written consent of the Stockholders.

 

7

 

(g)                                  Company shall and, following the Merger, Parent will cause Company and the Surviving Corporation to, comply with the obligations of Company under (i) Section 8.03 of the Holdings LLC Agreement as in effect as of the date hereof and (ii) the second and third sentences of Section 9.01 of the Holdings LLC Agreement as in effect as of the date hereof (such obligations, collectively, the “Surviving Reporting Obligation”). Effective immediately following the Effective Time, Company, the Surviving Corporation and Holdings shall have no further obligations or liabilities (other than obligations and/or liabilities under or with respect to the Continuing Provisions) to the Stockholders pursuant to or in respect of the Holdings LLC Agreement and the Surviving Company may amend, restate or terminate the Holdings LLC Agreement in its sole discretion; provided, however, that the Continuing Provisions shall continue in full force and effect, and the Stockholders and their respective Releasing Representatives, shall continue to have the benefits thereof, notwithstanding any such amendment, restatement or termination.

 

(h)                                 The Parties agree to file all Tax Returns (including IRS Form 8594 or any other applicable form) consistently with this Section 6.

 

(i)                                     The Parties acknowledge and agree that the fair market value of the shares of Company Class A Common Stock to be received in the Specified Exchange shall be determined based upon the dollar amount of the Merger Consideration and that the “Common Unit Redemption Price” (as defined in the Holdings LLC Agreement) is inapplicable to a Share Settlement (as defined in the Holdings LLC Agreement).

 

7.                                      Miscellaneous.

 

(a)                                 Term. This Agreement shall remain in full force and effect unless and until the Support Agreement is terminated in accordance with its terms (except for a termination of the Support Agreement on account of the consummation of the Merger). In the event that the Merger Agreement is terminated in accordance with its terms, (i) this Agreement shall automatically and immediately terminate and be of no further force and effect, all without the need for any further action of the part of (or notice to) any person and (ii) there shall be no liability or obligation hereunder on the part of any Party or any of their respective affiliates, or any of their respective managers, directors, stockholders, members, partners, officers, employees, agents, consultants, accountants, attorneys, investment bankers, financial advisors, representatives, successors or assigns. Without limiting the immediately preceding sentence, if this Agreement is terminated then the Stockholders shall not be required to consummate the Specified Exchange. None of the representations or warranties made by any Party in Section 3 or Section 5 hereof, as applicable, shall survive the termination of this Agreement or the Effective Time.

 

(b)                                 Further Actions. Following the date hereof, the Parties shall take all actions reasonably necessary and execute and deliver all documents and instruments to each other and third parties (including Company’s stock transfer agent) reasonably requested by a Party to give effect to the transactions contemplated hereby immediately prior to the Effective Time. The Parties agree that the Effective Time shall not occur until such time as all of the transactions contemplated by Sections 1 and 2 have become effective.

 

(c)                                  Amendments and Waivers. Except for amendments to Exhibit A as contemplated by Section 1(a), this Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each of the Parties. No failure on the part of any Party to exercise any power, right, privilege or remedy under this Agreement, and no delay on the part of any Party in exercising any power, right, privilege or remedy under this Agreement, shall operate as a waiver of such power, right, privilege or remedy; and no single or partial exercise of any such power, right, privilege or

 

8

 

remedy shall preclude any other or further exercise thereof or of any other power, right, privilege or remedy. Any agreement on the part of a Party to any such waiver shall be valid only if set forth in a written instrument signed on behalf of such Party, but such waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.

 

(d)                                 Counterparts. This Agreement may be executed in two or more counterparts (including by facsimile or other electronic means, including signatures received as a .pdf attachment to electronic mail), all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each of the Parties and delivered to the other Parties, it being understood that all Parties need not sign the same counterpart.

 

(e)                                  Applicable Law; Jurisdiction; Waiver of Jury Trial. This Agreement, and any Action, dispute or other controversy arising out of or relating hereto shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without regard to any applicable conflicts of law principles thereof. Each Party agrees that any action or proceeding in respect of any claim arising out of or related to this Agreement or the transactions contemplated hereby shall be brought, heard, tried and determined exclusively in the Chosen Courts, and, solely in connection with claims arising under this Agreement or the transactions that are the subject of this Agreement, (i) irrevocably and unconditionally submits to the exclusive jurisdiction of the Chosen Courts, (ii) irrevocably and unconditionally waives any objection to laying venue in any such action or proceeding in the Chosen Courts, (iii) irrevocably and unconditionally waives any objection that the Chosen Courts are an inconvenient forum or do not have jurisdiction over any Party and (iv) agrees that service of process upon such Party in any such action or proceeding that is given in accordance with Section 7(f) or in such other manner as may be permitted by applicable Law, shall be valid, effective and sufficient service thereof. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR OTHER PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT:  (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY SUCH ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH PARTY UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7(e).

 

(f)                                   Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given or received (i) when personally delivered, (ii) on the date sent by email of a “portable document format” (.pdf) document (so long as written notice of such transmission is sent within two (2) business days thereafter by another delivery method hereunder) or (iii) one (1) business day following the date sent if such notice is sent by FedEx or another nationally recognized overnight delivery service. All notices hereunder shall be delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the Party to receive such notice:

 

9

 

(i)                                     if to either Stockholder, to:

 

c/o Wayzata Investment Partners LLC

701 East Lake Street, Suite 300

Wayzata, MN 55391

Attention:  Ray Wallander, Esq.

Email:  rwallander@wayzpartners.com

 

With a copy (which shall not constitute notice) to:

 

Stroock & Stroock & Lavan LLP

180 Maiden Lane

New York, NY 10038-4982

Attention:  Matthew A. Schwartz, Esq.

Email:  mschwartz@stroock.com

 

(ii)                                  if to Company or Holdings, to:

 

Neff Corporation

3750 NW 87th Avenue

Suite 400

Miami, Florida 33178-2433
 Attention:  Mark Irion

Email:  MIrion@Neffcorp.com

 

With a copy (which shall not constitute notice) to:

 

Akin Gump Strauss Hauer & Feld LLP
 One Bryant Park

Bank of America Tower

New York, New York 10036-6745

Attention:                             Daniel I. Fisher

Zachary N. Wittenberg
 Email:                                            dfisher@akingump.com

zwittenberg@akingump.com

 

(iii)                               if to Parent, to:

 

United Rentals (North America), Inc.

100 First Stamford Place, Suite 700

Stamford, CT  06902

Attention:             Michael J. Kneeland

Craig A. Pintoff

Email:                                mkneelan@ur.com

cpintoff@ur.com

 

With a copy (which shall not constitute notice) to:

 

Sullivan & Cromwell LLP
 125 Broad Street
 New York, New York  10004

Attention:                         Francis J. Aquila

Scott B. Crofton

Email:                                              aquilaf@sullcrom.com

croftons@sullcrom.com

 

10

 

(g)                                  Entire Agreement. This Agreement (including the documents and the instruments referred to herein) constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior agreements and undertakings.

 

(h)                                 Assignment; Third Party Beneficiaries; Transferees. Neither this Agreement nor any of the rights, interests or obligations shall be assigned by any of the Parties (whether by operation of Law or otherwise) without the prior written consent of the other Parties; provided that Parent may assign this Agreement to one or more of its direct or indirect wholly-owned subsidiaries. No assignment shall relieve the assigning party of any of its obligations hereunder. Any purported assignment in contravention hereof shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the Parties and their respective successors and permitted assigns and any transferee of LLC Units owned by either of the Stockholders. Any transferee in a Permitted Transfer (as defined in the Support Agreement) of LLC Units owned by either of the Stockholders shall execute and deliver to Parent a written agreement, in form and substance reasonably acceptable to Parent, obligating such transferee to be bound by the terms of this Agreement with respect to such LLC Units. This Agreement (including the documents and instruments referred to herein) is not intended to and does not confer upon any Person (other than the Parties and, solely with respect to Section 7(k) hereof, the No Recourse Parties (as defined below)) any rights or remedies hereunder, including the right to rely upon the representations and warranties set forth herein.

 

(i)                                     Severability. The provisions of this Agreement shall be deemed severable. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction or the application of that provision, in any other jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction such that a suitable and equitable provision shall be substituted for that provision in order to carry out, so far as may be valid and enforceable, the intent and purpose of the invalid or unenforceable provision.

 

(j)                                    Enforcement. The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with its specific terms or were otherwise breached and that the Parties may not have an adequate remedy at Law in the event that any of the obligations of this Agreement were not performed in accordance with its specific terms or otherwise breached. Accordingly, the Parties shall be entitled to specific performance of the terms hereof, including an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof, in addition to any other remedy to which they are entitled at Law or in equity, including monetary damages. Each of the Parties hereby further waives (i) any defense in any action for specific performance that a remedy at Law would be adequate, (ii) an award of performance is not an appropriate remedy for any reason at Law or equity, and (iii) any requirement under any Law to post security or a bond or similar undertaking as a prerequisite to obtaining equitable relief.

 

(k)                                 Non-Recourse. Notwithstanding anything that may be expressed or implied in this Agreement, and notwithstanding the fact that the Stockholders may be partnerships, the Parties covenant, agree and acknowledge that no recourse under this Agreement shall be had against any former, current or future directors, officers, agents, affiliates, limited partners, general partners, members, managers, employees, stockholders or equity holders of any Stockholder, or any former, current or future directors, officers, agents, affiliates, employees, general or limited partners, members, managers, employees,

 

11

 

stockholders or equity holders of any of the foregoing, as such (any such Person, a “No Recourse Party”), whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable Law, it being expressly agreed and acknowledged that no liability whatsoever shall attach to, be imposed on or otherwise be incurred by any No Recourse Party for any obligation of any Stockholder under this Agreement for any claim based on, in respect of or by reason of such obligations or their creation.

 

(l)                                     Obligations Several. The obligations of the Stockholders under this Agreement shall be several and not joint and several.

 

(m)                             Certain Acknowledgments. Parent, Holdings and Company hereby irrevocably acknowledge and agree that:

 

(i)                                     the consummation of the Specified Exchange by each of the Stockholders shall be exempt from the operation of Section 16(b) of the Exchange Act; and

 

(ii)                                  the fair market value of each of the LLC Units owned by each of the Stockholders that are exchanged for shares of Company Class A Common Stock pursuant to the Specified Exchange is equal to the Merger Consideration and, as such, there is no profit or gain realized by any of the Stockholders upon the sale or other disposition of any such shares of Company Class A Common Stock pursuant to the Merger.

 

[SIGNATURE PAGE FOLLOWS]

 

12

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

 

 

	
 
    	
UNITED RENTALS (NORTH   AMERICA), INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael J. Kneeland
    
	
 
    	
Name:
    	
Michael J. Kneeland
    
	
 
    	
Title:
    	
President & CEO
    

 

[Signature Page for Exchange and Termination Agreement]

 

 

	
 
    	
NEFF CORPORATION
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Mark Irion
    
	
 
    	
Name:
    	
Mark Irion
    
	
 
    	
Title:
    	
Chief Financial Officer
    

 

[Signature Page for Exchange and Termination Agreement]

 

 

	
 
    	
NEFF HOLDINGS, LLC
    
	
 
    	
By: Neff Corporation, its   managing member
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Mark Irion
    
	
 
    	
Name:
    	
Mark Irion
    
	
 
    	
Title:
    	
Chief Financial Officer
    

 

[Signature Page for Exchange and Termination Agreement]

 

 

	
 
    	
STOCKHOLDERS:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
WAYZATA OPPORTUNITIES FUND II,   L.P.
    
	
 
    	
By: WOF II GP, L.P., its General   Partner
    
	
 
    	
By: WOF II GP, LLC, its General   Partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick J. Halloran
    
	
 
    	
Name:
    	
Patrick J. Halloran
    
	
 
    	
Title:
    	
Authorized Signatory
    

 

[Signature Page for Exchange and Termination Agreement]

 

 

	
 
    	
WAYZATA OPPORTUNITIES FUND   OFFSHORE II, L.P.
    
	
 
    	
By: Wayzata Offshore GP, II,   LLC, its General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Patrick J. Halloran
    
	
 
    	
Name:
    	
Patrick J. Halloran
    
	
 
    	
Title:
    	
Authorized Signatory
    

 

[Signature Page for Exchange and Termination Agreement]

 

 

 

Exhibit A

 

	
Stockholder
    	
 
    	
Number of LLC
   Units
    	
 
    	
Number of shares
   of Class B Common
   Stock
    	
 
    	
Number of shares
   of Class A Common
   Stock
    	
 
    
	
Wayzata Opportunities Fund II,   L.P.
    	
 
    	
14,585,304
    	
 
    	
14,585,304
    	
 
    	
14,585,304
    	
 
    
	
Wayzata Opportunities Fund   Offshore II, L.P.
    	
 
    	
366,321
    	
 
    	
366,321
    	
 
    	
366,321
    	
 
    

 

 

Schedule 1

 

Related Party Agreements

 

None.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00274-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00274-of-00352.parquet"}]]