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Exhibit 4.6(ii)
LOAN AND SECURITY AGREEMENT
Dated as of August 17, 2004
$275,000,000
by and among
NES Rentals Holdings, Inc., as Borrower
The Subsidiaries of NES Rentals
Holdings, Inc. From Time to Time Party Hereto,
The Financial Institutions From
Time to Time Party Hereto,
Bear, Stearns & Co. Inc.,
and
Bank of America, N.A.,
Banc of America Securities LLC
and Bear, Stearns & Co. Inc.,
TABLE OF CONTENTS
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made as of this 17th day of August, 2004 by and among BANK OF AMERICA, N.A. ( “BofA” ), a national banking association, as administrative agent ( “Administrative Agent” ) for any financial institution or other entity which is or becomes a party hereto (each such financial institution or other entity is referred to hereinafter individually as a “Lender” and collectively as the “Lenders” ), the LENDERS party hereto from time to time, BEAR, STEARNS & CO. INC. , as syndication agent ( “Syndication Agent” ), NES RENTALS HOLDINGS, INC. , a Delaware corporation ( “Borrower” ), and each subsidiary of Borrower which is or becomes a party hereto (each individually a “Subsidiary Guarantor” and collectively “Subsidiary Guarantors” ). Capitalized terms used in this Agreement have the meanings assigned to them in Appendix A, General Definitions. As more fully set forth in Appendix A, accounting terms not otherwise specifically defined herein shall be construed in accordance with GAAP consistently applied.
SECTION 1. CREDIT FAC ILITY
Subject to the terms and conditions of, and in reliance upon the representations and warranties made in, this Agreement and the other Loan Documents, Lenders agree to make a Total Credit Facility of up to $275,000,000 available upon Borrower’s request therefor, as follows:
1.1 Loans .
1.1.1 Term Loan . Each Lender, severally and not jointly, agrees to make a term loan (collectively, the “Term Loans” ) to Borrower on the Closing Date, in the aggregate principal amount of such Lender’s Term Loan Commitment, which shall be repayable in accordance with the terms hereof and of the Term Notes and shall be secured by all of the Collateral.
1.1.2 Use of Proceeds . The proceeds of Term Loans shall be used solely for (i) the satisfaction of the Prior Indebtedness and fees and expenses related to such satisfaction and (ii) for Borrower’s and the Subsidiary Guarantors’ general corporate purposes, including, without limitation, operating capital needs in a manner consistent with the provisions of this Agreement and all applicable laws.
SECTION 2. INTEREST , FEES AND CHARGES
2.1 Interest .
2.1.1 Rates of Interest . Interest shall accrue on the principal amount of the Base Rate Portions outstanding at the end of each day at a fluctuating rate per annum equal to the Applicable Margin then in effect plus the Base Rate. Said rate of interest shall increase or decrease by an amount equal to any increase or decrease in the Base Rate, effective as of the opening of business on the day that any such change in the Base Rate occurs. If Borrower exercises the LIBOR Option as provided in subsection 3.1 , interest shall accrue on the principal amount of the LIBOR Portions outstanding at the
end of each day at a rate per annum equal to the Applicable Margin then in effect plus the LIBOR applicable to each LIBOR Portion for the corresponding Interest Period.
2.1.2 Default Rate of Interest . If so directed by the Majority Lenders, upon and after the occurrence of an Event of Default, and during the continuation thereof upon notice to Borrower, all of the Obligations shall bear interest at a rate per annum equal to 2.0% plus the interest rate otherwise applicable thereto (the “Default Rate” ); provided , that (i) the Default Rate of interest shall apply to all of the Obligations automatically without notice to Borrower or any other Person and without further action by any Person upon the occurrence of an Event of Default as described in subsection 10.1.6 and (ii) in the event no applicable interest rate is otherwise expressly stated herein with respect to any such Obligation, the Default Rate in respect thereof shall be the sum of the Base Rate, plus the Applicable Margin then in effect for Base Rate Portions, plus 2.0%.
2.1.3 Maximum Interest . In no event whatsoever shall the aggregate of all amounts deemed interest hereunder or under the Term Notes and charged or collected pursuant to the terms of this Agreement or pursuant to the Term Notes exceed the highest rate permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto (the “Maximum Rate” ). If any provisions of this Agreement or the Term Notes are in contravention of any such law, such provisions shall be deemed amended to conform thereto. If at any time, the amount of interest paid hereunder is limited by the Maximum Rate, and the amount at which interest accrues hereunder is subsequently below the Maximum Rate, the rate at which interest accrues hereunder shall remain at the Maximum Rate, until such time as the aggregate interest paid hereunder equals the amount of interest that would have been paid had the Maximum Rate not applied.
2.2 Computation of Interest and Fees . Interest hereunder shall be calculated daily and shall be computed on the actual number of days elapsed over a year of 360 days, provided that interest on Base Rate Portions bearing interest based on the Prime Rate shall be computed on the actual number of days elapsed over a year of 365 or 366 days, as applicable.
2.3 Fee Letter . Borrower shall pay to Administrative Agent certain fees and other amounts in accordance with the terms of the fee letter between Borrower and Administrative Agent, dated August 17, 2004, as amended, restated or otherwise modified from time to time (the “Fee Letter” ).
2.4 [Intentionally Omitted] .
2.5 [Intentionally Omitted] .
2.6 [Intentionally Omitted] .
2.7 Reimbursement of Expenses . If, at any time or times regardless of whether or not an Event of Default then exists, (i) Administrative Agent or the Joint Lead Arrangers incur reasonable legal or accounting expenses or any other reasonable costs or out-of-
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pocket expenses in connection with the negotiation and preparation of this Agreement or any of the other Loan Documents, or any syndication or attempted syndication of the Obligations (including, without limitation, printing and distribution of materials to prospective Lenders and all costs associated with bank meetings, but excluding any closing fees paid to Lenders in connection therewith); or (ii) Administrative Agent incurs reasonable legal or accounting expenses or any other reasonable costs or out-of-pocket expenses in connection with any (1) amendment of or modification of this Agreement or any of the other Loan Documents, the administration of this Agreement or any of the other Loan Documents and the transactions contemplated hereby and thereby; or (2) any attempt to inspect or verify the Collateral; or (iii) Administrative Agent incurs legal or accounting expenses or other costs or out-of-pocket expenses in connection with (1) any litigation, contest, dispute, suit, proceeding or action (whether instituted by Administrative Agent, any Lender, Borrower, any of its Subsidiaries or any other Person) relating to the Collateral, this Agreement or any of the other Loan Documents or any of Borrower’s or any of its Subsidiaries’ affairs; (2) any attempt to enforce any rights of Administrative Agent or any Lender against Borrower, any of its Subsidiaries or any other Person which may be obligated to Administrative Agent or any Lender by virtue of this Agreement or any of the other Loan Documents, including, without limitation, the Account Debtors; or (3) any attempt to protect, preserve, restore, collect, sell, liquidate or otherwise dispose of or realize upon the Collateral; then all such legal and accounting expenses and other costs and out-of-pocket expenses of Administrative Agent or the Joint Lead Arrangers (as applicable) shall be charged to Borrower; provided , that Borrower shall not be responsible for any such legal and accounting and other costs and out-of-pocket expenses (x) to the extent incurred because of the gross negligence or willful misconduct of Administrative Agent or such Joint Lead Arrangers (as applicable) as determined by a final non-appealable (or the time to appeal for which has run) judgment of a court of competent jurisdiction or (y) to the extent such costs and expenses result from a claim brought by Borrower against Administrative Agent or such Joint Lead Arranger (as applicable) for breach in bad faith of such Person’s obligations hereunder, if Borrower has obtained a final non-appealable (or the time to appeal for which has run) judgment in its favor on such claim as determined by a court of competent jurisdiction. All amounts chargeable to Borrower under this subsection 2.7 shall be Obligations secured by all of the Collateral, shall be payable on demand to Administrative Agent or the applicable Joint Lead Arranger, as the case may be, and shall bear interest from the date such demand is made until paid in full at the rate applicable to Base Rate Portions from time to time. Borrower shall also reimburse Administrative Agent for expenses incurred by Administrative Agent in its administration of the Collateral to the extent and in the manner provided in subsections 2.8 and 2.9 hereof.
2.8 Bank Charges . Borrower shall pay to Administrative Agent, for the benefit of itself or the applicable Lenders, on demand, any and all reasonable fees, costs or expenses which Administrative Agent or any Lender pays to a bank or other similar institution arising out of or in connection with (i) the forwarding to Borrower, any of its Subsidiaries or any other Person on behalf of Borrower, by Administrative Agent or any Lender, of proceeds of Term Loans made to Borrower pursuant to this Agreement and (ii) the depositing for collection by Administrative Agent or any Lender of any check or
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item of payment received or delivered to Administrative Agent or any Lender on account of the Obligations.
2.9 Collateral Protection Expenses; Appraisals . All reasonable out-of-pocket expenses incurred in protecting, storing, warehousing, insuring, handling, maintaining and shipping the Collateral, and any and all excise, property, sales, and use taxes imposed by any state, federal, or local authority on any of the Collateral or in respect of the sale thereof shall be borne and paid by Borrower. All such expenses shall be payable upon demand, and if Borrower fails to promptly pay any portion thereof when due, Administrative Agent may, at its option, but shall not be required to, pay the same and charge Borrower therefor. Additionally, if a Default or Event of Default shall have occurred and be continuing, Borrower shall bear the cost and expense of appraisals from appraisers engaged by Administrative Agent from time to time (who may be personnel of Administrative Agent), stating the then current fair market value of all or any portion of the real estate or personal property of any Credit Party or any of its Subsidiaries, including without limitation the Inventory of any Credit Party and its Subsidiaries.
2.10 Payment of Charges . All amounts chargeable to Borrower under this Agreement shall be Obligations secured by all of the Collateral, shall be, unless specifically otherwise provided, payable on demand and shall bear interest from the date demand was made or such amount is due, as applicable, until paid in full at the Default Rate.
2.11 No Deductions .
2.11.1 Any and all payments or reimbursements made hereunder or under any other Loan Document shall be made free and clear of and without deduction for any and all taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto; excluding, however, the following: (x) taxes imposed on or measured by the net income of Administrative Agent or any Lender or franchise taxes by the United States or by the jurisdiction under the laws of which Administrative Agent or any Lender is organized or doing business or any political subdivision thereof and (y) taxes imposed on or measured by its net income by the jurisdiction of Administrative Agent’s or such Lender’s applicable lending office or any political subdivision thereof or franchise taxes (all such taxes, levies, imposts, deductions, charges or withholdings and all liabilities with respect thereto, excluding such taxes imposed on net income, herein “Tax Liabilities” ). If Borrower or any Subsidiary Guarantor shall be required by law to deduct any such Tax Liabilities from or in respect of any sum payable or reimbursable hereunder or under any other Loan Document to Administrative Agent or any Lender, then (x) the sum so payable or reimbursable shall be increased as may be necessary so that, after all required deductions are made, Administrative Agent or such Lender receives an amount equal to the sum it would have received had no such deductions been made, (y) Borrower or such Subsidiary Guarantor shall make such deductions and pay the full amount deducted to the relevant taxing authority or other authority in accordance with applicable law and (z) Borrower or such Subsidiary Guarantor shall deliver to Administrative Agent evidence of such payment.
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2.11.2 In addition Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies of the United States or any political subdivision thereof or any applicable foreign jurisdiction, and all liabilities with respect thereto, which arise from any payment made under any Loan Document or from the execution, delivery or registration of, or otherwise with respect to, any Loan Document (collectively, “Other Taxes” ).
2.11.3 Borrower shall indemnify Administrative Agent and each Lender for the amount of Tax Liabilities and Other Taxes (including any Tax Liabilities or Other Taxes imposed by any jurisdiction on amounts payable under this subsection 2.11 ) paid by Administrative Agent or such Lender (as the case may be) and any liability (including for penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Tax Liabilities or Other Taxes were correctly or legally asserted. This indemnification payment shall be made within 30 days from the date Administrative Agent or such Lender (as the case may be) makes written demand therefor.
2.11.4 Each Lender that is organized under the laws of any jurisdiction other than the United States or any state or political subdivision thereof agrees (i) to furnish to Administrative Agent and Borrower (x) either IRS Form W-8BEN or IRS Form W-8ECI, in each case certifying such Lender’s entitlement to a complete exemption from, or a reduced rate of, United States federal withholding tax on all payments made hereunder or under any other Loan Document, (y) to the extent that such Lender does not act or ceases to act for its own account with respect to any portion of any amounts paid or payable to such Lender hereunder or under any other Loan Document, IRS Form W-8IMY together with any information such Lender chooses to transmit with such form, and any other certificate or statement required under applicable United States laws and regulations, to establish that such Lender is not acting for its own account with respect to a portion of any such amounts paid or payable to such Lender or (z) any other form, certificate or document prescribed by the IRS certifying as to such Lender’s entitlement to complete exemption from, or a reduced rate of, United States federal withholding tax on all payments made hereunder or under any other Loan Document, (ii) to provide to Administrative Agent and Borrower new forms upon the obsolescence of any previously delivered forms and comparable statements in accordance with applicable United States laws and regulations and amendments, duly executed and completed by such Lender, and (iii) to comply from time to time with all applicable United States laws and regulations with regard to such withholding tax exemption or reduction in withholding tax rate. Notwithstanding any other provision of this subsection 2.11.4 , no Lender that is organized under the laws of any jurisdiction other than the United States or any state or political subdivision thereof shall be required to deliver after the date such Lender became a party to this Agreement any form, certificate, document or statement pursuant to this subsection 2.11.4 that such Lender is not legally entitled to deliver.
2.11.5 Notwithstanding anything to the contrary contained in subsection 2.11.1 , (i) Borrower shall be entitled, to the extent it is required to do so by law, to deduct or withhold Tax Liabilities imposed by the United States (or any political subdivision or taxing authority thereof or therein) from interest, fees or other amounts payable
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hereunder for the account of any Lender that is organized under the laws of any jurisdiction other than the United States or any state or political subdivision thereof to the extent that such Lender has not provided to Borrower IRS forms that establish entitlement to a complete exemption from, or a reduced rate of, United States federal withholding tax (and Borrower hereby agrees to give Administrative Agent prompt written notice in the event that it is required to so deduct or withhold) and (ii) Borrower shall not be obligated pursuant to subsection 2.11.1 hereof to pay additional amounts to any Lender that is organized under the laws of any jurisdiction other than the United States or any state or political subdivision thereof in respect of Tax Liabilities imposed by the United States to the extent that (x) the obligation to pay such additional amounts would not have arisen but for the failure of such Lender to comply with the requirements of subsection 2.11.4 or (y) the obligation to pay such additional amounts does not result from a change in applicable laws (including applicable statutes, regulations, administrative interpretations, judicial decisions and treaties) occurring after the date on which such Lender became a party to this Agreement.
2.11.6 Within 30 days after the date of any payment of Tax Liabilities or Other Taxes, Borrower shall furnish to Administrative Agent the original or a certified copy of a receipt (or any other form, certificate or document reasonably acceptable to Administrative Agent) evidencing payment thereof.
2.11.7 Without prejudice to the survival of any other agreement of Borrower hereunder, the agreements and obligations of Borrower contained in this subsection 2.11 shall survive the termination of this Agreement and the payment in full of the Obligations.
2.11.8 If any Lender determines, in its sole discretion, that it has actually received a refund in respect of any Tax Liabilities with respect to which Borrower has paid additional amounts to such Lender pursuant to subsection 2.11.1 , such Lender shall promptly notify Administrative Agent and pay such refund over to Borrower (but only to the extent of additional amounts paid by Borrower under subsection 2.11.1 with respect to Tax Liabilities giving rise to such refund), on an after-tax basis, net of all expenses incurred by such Lender in connection with obtaining such refund and without interest; provided , that Borrower, upon the request of such Lender, shall repay to such Lender the amount previously paid over to Borrower (plus any penalties, interest or other charges imposed by the relevant taxing authority) in the event that such Lender is required to repay such refund to such taxing authority. Nothing in this subsection 2.11.8 shall interfere with the right of any Lender to arrange its tax affairs in whatever manner it deems fit or require any Lender to disclose to Borrower, any of its Subsidiaries or any other Person any information or any computations relating to its tax affairs.
2.11.9 (a) If Administrative Agent or any Lender claims reimbursement or compensation under this subsection 2.11 , Administrative Agent shall determine the amount thereof and shall deliver to Borrower (with, if applicable, a copy to the affected Lender) a statement setting forth in reasonable detail the amount payable to Administrative Agent or the affected Lender, and such statement shall be conclusive and binding on Borrower in the absence of manifest error. Failure or delay on the part of
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Administrative Agent or any Lender to demand compensation pursuant to this subsection 2.11 shall not constitute a waiver of Administrative Agent’s or such Lender’s right to demand such compensation; provided that Borrower shall not be required to compensate Administrative Agent or a Lender pursuant to this subsection 2.11 for any Tax Liabilities, Other Taxes or additional amounts incurred more than 180 days prior to the date that Administrative Agent or such Lender, as the case may be, notifies Borrower of its intention to claim compensation under this subsection; provided further that, if the circumstances giving rise to such claim are retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
(b) If a Lender claims any compensation pursuant to this subsection 2.11 , then (a) such Lender shall use reasonable efforts (consistent with legal and regulatory restrictions) to designate a different lending office or to file any statement or document reasonably requested by Borrower if the making of such designation or filing would avoid the need for, or reduce the amount of, any such amounts and would not, in the sole discretion of such Lender, be otherwise disadvantageous to such Lender and (b) at Borrower’s request, Administrative Agent or an Eligible Assignee reasonably acceptable to Administrative Agent and Borrower shall have the right (but not the obligation) to purchase from such Lender, and each such Lender shall, upon such request, sell and assign to Administrative Agent or such Eligible Assignee, all of such Lender’s outstanding Term Loans hereunder. Such sale and assignment shall be consummated promptly after Administrative Agent has arranged for a purchase by Administrative Agent or an Eligible Assignee pursuant to an Assignment and Acceptance Agreement, at a price equal to the outstanding principal balance of such Lender’s Term Loan, plus accrued interest and fees, without premium or discount.
SECTION 3. LOAN ADMINISTRATION
3.1 Manner of Borrowing/LIBOR Option . Borrowings under the credit facility established pursuant to Section 1 hereof shall be as follows:
3.1.1 Term Loan Request . Borrower shall give Administrative Agent notice of its intention to borrow the Term Loans (such notice to be in the form of Exhibit 3.1.1 hereto), in which notice Borrower shall specify the amount of the proposed borrowing of Term Loans and the proposed borrowing date (which shall be the Closing Date), no later than 11:00 a.m. (New York City time) one Business Day prior to the Closing Date. All borrowings made on the Closing Date and during the period ending five (5) Business Days thereafter must be made as Base Rate Portions.
3.1.2 Disbursement . The proceeds of Term Loans requested under subsection 3.1.1 shall be disbursed by Administrative Agent in lawful money of the United States of America in immediately available funds by wire transfer to such bank account as may be agreed upon by Borrower and Administrative Agent.
3.1.3 [Intentionally Omitted] .
3.1.4 [Intentionally Omitted] .
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3.1.5 [Intentionally Omitted] .
3.1.6 Electronic Communications . As an accommodation to Borrower, unless a Default or an Event of Default has occurred and is continuing, Administrative Agent may, in Administrative Agent’s sole discretion, permit electronic transmittal of instructions, authorizations, agreements or reports to Administrative Agent. Unless Borrower specifically directs Administrative Agent in writing not to accept or act upon telephonic or electronic communications from Borrower, Administrative Agent shall not have any liability to Borrower or any of its Subsidiaries for any loss or damage suffered by Borrower or any of its Subsidiaries as a result of Administrative Agent’s honoring of any requests, execution of any instructions, authorizations or agreements or reliance on any reports communicated to it telephonically or electronically and purporting to have been sent to Administrative Agent by Borrower, and Administrative Agent shall not have any duty to verify the origin of any such communication or the authority of the Person sending it.
3.1.7 LIBOR Portions . Each LIBOR Request shall be irrevocable and binding on Borrower. In no event shall Borrower be permitted to have outstanding at any one time LIBOR Portions with more than seven (7) different Interest Periods.
3.1.8 Conversion of Base Rate Portions . Provided that as of both the date of the LIBOR Request and the first day of the Interest Period, no Default or Event of Default has occurred and is continuing, Borrower may, on any Business Day more than five (5) Business Days after the Closing Date, convert any Base Rate Portion into a LIBOR Portion. If Borrower desires to convert a Base Rate Portion, it shall give Administrative Agent a LIBOR Request no later than 11:00 a.m. (New York City time) on the third Business Day prior to the requested conversion date. After giving effect to any conversion of Base Rate Portions to LIBOR Portions, Borrower shall not be permitted to have outstanding at any one time LIBOR Portions with more than seven (7) different Interest Periods.
3.1.9 Continuation of LIBOR Portions . Provided that, as of both the date of the LIBOR Request and the first day of the Interest Period, no Default or Event of Default has occurred and is continuing, Borrower may, on any Business Day, continue any LIBOR Portions into a subsequent Interest Period of the same or a different permitted duration. If Borrower desires to continue a LIBOR Portion, Borrower shall give Administrative Agent a LIBOR Request no later than 11:00 a.m. (New York City time) on the third Business Day prior to the requested continuation date. After giving effect to any continuation of LIBOR Portions, Borrower shall not be permitted to have outstanding at any one time LIBOR Portions with more than seven (7) different Interest Periods. If Borrower shall fail to give timely notice of its election to continue any LIBOR Portion or portion thereof as provided above, or if such continuation shall not be permitted, such LIBOR Portion or portion thereof, unless such LIBOR Portion shall be repaid, shall automatically be converted into a Base Rate Portion at the end of the Interest Period then in effect with respect to such LIBOR Portion.
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3.1.10 Inability to Make LIBOR Portions . Notwithstanding any other provision hereof, if any applicable law, treaty, regulation or directive, or any change therein or in the interpretation or application thereof, shall make it unlawful for any Lender (for purposes of this subsection 3.1.10 , the term “Lender” shall include the office or branch where such Lender or any Person then controlling such Lender makes or maintains any LIBOR Portions) to make or maintain its LIBOR Portions, or if with respect to any Interest Period, Administrative Agent is unable to determine the LIBOR relating thereto, or adverse or unusual conditions in, or changes in applicable law relating to, the London interbank market make it, in the reasonable judgment of Administrative Agent, impracticable to fund therein any of the LIBOR Portions, or make the projected LIBOR unreflective of the actual costs of funds therefor to any Lender, then, on notice thereof by such Lender or Administrative Agent (as applicable) to Borrower (with a copy to Administrative Agent, if applicable), the obligation of Administrative Agent and Lenders to make or continue LIBOR Portions or convert Base Rate Portions to LIBOR Portions hereunder shall forthwith be suspended until such Lender or Administrative Agent notifies Borrower (with a copy to Administrative Agent, if applicable) that such circumstances no longer exist and, Borrower shall, if any affected LIBOR Portions are then outstanding, promptly upon request from Administrative Agent, convert such affected LIBOR Portions into Base Rate Portions. Administrative Agent or the relevant Lender (as applicable) will endeavor to give Borrower prompt notice of the cessation of the circumstance giving rise to the suspension of LIBOR availability, provided that the failure to give any such notice shall not result in any liability of Administrative Agent or any Lender hereunder or in the modification, alteration, impairment, or waiver of the rights of Administrative Agent or any Lender hereunder.
3.1.11 Funding by Lenders; Presumption of Administrative Agent . Unless Administrative Agent shall have received notice from a Lender prior to the proposed date of any borrowing that such Lender will not make available to Administrative Agent such Lender’s share of such borrowing, Administrative Agent may assume that such Lender has made such share available on such date and may, in reliance upon such assumption, make available to Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable borrowing available to Administrative Agent, then the applicable Lender and Borrower severally agree to pay to Administrative Agent forthwith on demand such corresponding amount in immediately available funds with interest thereon, for each day from and including the date such amount is made available to Borrower to but excluding the date of payment to Administrative Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Fed Funds Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (B) in the case of a payment to be made by Borrower, the interest rate applicable (or that would be applicable) to any Base Rate Portion. If Borrower and such Lender shall pay such interest to Administrative Agent for the same or an overlapping period, Administrative Agent shall promptly remit to Borrower the amount of such interest paid by Borrower for such period. If such Lender pays its share of the applicable borrowing to Administrative Agent, then the amount so paid shall constitute such Lender’s Term Loan included in such borrowing. Any payment by Borrower shall be without prejudice to any claim Borrower may have against a Lender that shall have failed to make such payment to Administrative Agent.
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3.2 Payments .
3.2.1 Principal .
(i) [Intentionally Omitted] .
(ii) Term Loan . Principal payable on account of the Term Loan shall be payable by Borrower in twenty-one (21) quarterly installments. Each of the first twenty (20) installments of principal shall be in an amount equal to $687,500 and shall be payable on the first day of each quarter, commencing on September 30, 2004 and ending on June 30, 2009. The final installment of principal shall be in the amount of $261,250,000 or otherwise in an amount equal to the then remaining principal balance of the Term Loans, and shall be payable on the last day of the Term. Each such installment shall be payable to Administrative Agent for the account of the applicable Lender. The Term Loans shall be payable in full on the last day of the Term. Payments or prepayments of the Term Loans may not be reborrowed.
3.2.2 Interest .
(i) Base Rate Portion . Interest accrued on the Base Rate Portion shall be due and payable on the earliest of (1) the first calendar day of each fiscal quarter (for the immediately preceding fiscal quarter), computed through the last calendar day of the preceding fiscal quarter, (2) the occurrence of an Event of Default in consequence of which Administrative Agent or Majority Lenders elect to accelerate the maturity and payment of the Obligations (or in consequence of which payment of the Obligations is automatically accelerated) or (3) termination of this Agreement pursuant to Section 4 hereof.
(ii) LIBOR Portion . Interest accrued on each LIBOR Portion shall be due and payable on each LIBOR Interest Payment Date and on the earlier of (1) the occurrence of an Event of Default in consequence of which Administrative Agent or Majority Lenders elect to accelerate the maturity and payment of the Obligations (or in consequence of which payment of the Obligations is automatically accelerated) or (2) termination of this Agreement pursuant to Section 4 hereof.
(iii) Default Interest . Interest accrued on the Obligations at the Default Rate shall be due and payable on demand by Administrative Agent.
3.2.3 Costs, Fees and Charges . Costs, fees and charges payable pursuant to this Agreement shall be payable by Borrower, as and when provided in Section 2 or Section 3 hereof, as applicable, to Administrative Agent or a Lender, as applicable, or to any other Person designated by Administrative Agent or such Lender in writing.
3.2.4 Other Obligations . The balance of the Obligations requiring the payment of money, if any, shall be payable by Borrower to Administrative Agent for distribution to Lenders, as appropriate, as and when provided in this Agreement, the Other Agreements or the Security Documents, or if not so provided, on demand.
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3.2.5 Prepayment of/Failure to Borrow LIBOR Portions . Borrower may prepay a LIBOR Portion only upon three (3) Business Days’ prior written notice to Administrative Agent (which notice shall be irrevocable). In the event of (i) the payment of any principal of any LIBOR Portion other than on the last day of the Interest Period applicable thereto (including as a result of an Event of Default), (ii) the conversion of any LIBOR Portion other than on the last day of the Interest Period applicable thereto, or (iii) the failure to borrow, convert, continue or prepay any LIBOR Portion on the date specified in any notice delivered pursuant hereto, then, in any such event, Borrower shall compensate each Lender for the loss, cost and expense attributable to such event, as determined by such Lender in a manner consistent with its customs and practices. If any Lender claims compensation under this subsection 3.2.5 , such Lender shall determine the amount thereof and shall deliver to Borrower, within 30 days of the occurrence of the Breakage Event giving rise to a claim for compensation, a statement setting forth in reasonable detail the amount payable to such Lender, and such statement shall be conclusive and binding on Borrower in the absence of manifest error. Amounts payable pursuant to this subsection 3.2.5 shall be due and payable by Borrower within 10 days of receipt of such statement from such Lender.
3.2.6 Payments by Borrower; Presumptions by Administrative Agent . Unless Administrative Agent shall have received notice from Borrower prior to the date on which any payment is due to Administrative Agent for the account of the Lenders hereunder that Borrower will not make such payment, Administrative Agent may assume that Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay to Administrative Agent forthwith on demand the amount so distributed to such Lender, in immediately available funds with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by Administrative Agent in accordance with banking industry rules on interbank compensation. A notice of Administrative Agent to any Lender with respect to any amount owing under this subsection 3.2.6 shall be conclusive, absent manifest error.
3.3 Mandatory and Optional Prepayments .
3.3.1 Proceeds of Sale, Loss, Destruction or Condemnation of Collateral . Except with respect to sales or dispositions permitted by subsection 8.2.8 (unless subsection 8.2.8 specifically provides for a prepayment of the Term Loans and other Obligations), if (a) Borrower or any of its Subsidiaries sells any of its Property or if any Property of Borrower or any of its Subsidiaries is lost or destroyed or taken by condemnation, and (b) at the time that a prepayment of Term Loans or other Obligations would otherwise be required under this subsection 3.3.1 , the Available Liquidity is greater than or equal to $50,000,000 after giving effect to such prepayment, then Borrower shall, unless otherwise agreed to by the Majority Lenders and, in any event, only to the extent Borrower does not apply such Net Cash Proceeds to the obligations under the First Lien Debt Documents through the optional or mandatory prepayment of
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the principal amount of such obligations (and, if such prepayment is in respect of an amount that can, by its terms, be reborrowed, a corresponding permanent reduction of commitments) pursuant to the terms thereof, pay to Administrative Agent for the ratable benefit of Lenders as and when received by Borrower or any such Subsidiary as a mandatory prepayment of the Term Loans and other Obligations, as herein provided, a sum equal to the Net Cash Proceeds received by Borrower or such Subsidiary from such sale, loss, destruction or condemnation, to be applied to the Term Loans as follows:
(i) except as provided in clause (ii) below, the applicable prepayments of Term Loans pursuant to this subsection 3.3.1 (or pursuant to subsection 3.3.2 or 3.3.4 ) shall be applied to the installments of principal payable in respect of the Term Loans, in the inverse order of maturity (beginning with the payment due on the last day of the Term), ratably amongst any Base Rate Portion and all LIBOR Portions (and amongst all Interest Periods thereof) and ratably amongst the Lenders until paid in full;
(ii) notwithstanding clause (i) above, unless an Event of Default has occurred and is continuing on the date such Net Cash Proceeds are recovered by Borrower or its applicable Subsidiary, Administrative Agent shall remit any Net Cash Proceeds with respect to any loss or destruction of Nonrental Equipment or real Property received by Administrative Agent to Borrower or its applicable Subsidiary (so long as such Subsidiary is not a Foreign Subsidiary) for use in replacing or repairing the damaged Collateral or purchasing assets used or useful in the business of Borrower or such applicable Subsidiary. Pending such use such amounts shall not be required to so prepay the Term Loans until the expiration of 180 days from such receipt at which point that portion of such amount which has not been so used during such 180-day period shall be applied to the Term Loans and other Obligations in the manner specified in clause (i) of this subsection 3.3.1 until payment thereof in full.
3.3.2 Proceeds from Issuance of Additional Indebtedness or Equity . If (a) Borrower or any of its Subsidiaries issues any additional Indebtedness (other than Permitted Indebtedness) or issues any additional equity (other than any issuance of Securities permitted by clauses (i), (ii), (iii) or (iv) of subsection 8.2.9), and (b) at the time that a prepayment of Term Loans or other Obligations would otherwise be required under this subsection 3.3.2 , the Available Liquidity is greater than or equal to $50,000,000 after giving effect to such prepayment, then Borrower shall, to the extent it does not apply such Net Cash Proceeds to the obligations under the First Lien Debt Documents through the optional or mandatory prepayment of the principal amount of such obligations (and, if such prepayment is in respect of an amount that can, by its terms, be reborrowed, a corresponding permanent reduction of commitments) pursuant to the terms thereof, pay to Administrative Agent for the ratable benefit of Lenders, when and as received by Borrower or such Subsidiary and as a mandatory prepayment of the Obligations, a sum equal to, in the case of such an issuance of Indebtedness, 100%, or, in the case of such an issuance of equity, 50% of the Net Cash Proceeds to Borrower or such Subsidiary of the issuance of such Indebtedness or equity, as applicable. Any such prepayment shall be applied to the Term Loans in the manner specified in clause (i) of subsection 3.3.1 .
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3.3.3 [Intentionally Omitted] .
3.3.4 Excess Cash Flow . No later than the earlier of (i) 100 days after the end of the period beginning July 1, 2004 and ending December 31, 2005 and each fiscal year of Borrower thereafter and (ii) 10 days following the date on which the financial statements with respect to such period are delivered pursuant to subsection 8.1.3(ii)(A) , if, and to the extent that, at the time that a prepayment of Term Loans or other Obligations would be otherwise required under this subsection 3.3.4 , the Available Liquidity is greater than or equal to $50,000,000 after giving effect to such prepayment, then Borrower shall, to the extent it does not apply such Excess Cash Flow to the obligations under the First Lien Debt Documents through the optional or mandatory prepayment of the principal amount of such obligations (and, if such prepayment is in respect of an amount that can, by its terms, be reborrowed, a corresponding permanent reduction of commitments) pursuant to the terms thereof, pay to Administrative Agent for the ratable benefit of Lenders an amount equal to 50% of Excess Cash Flow for the period or fiscal year, as applicable, then ended; provided that any Lender may elect, by notice to Administrative Agent at least five (5) Business Days prior to the applicable prepayment date, to decline all or any portion of any prepayment of its Term Loans pursuant to this subsection 3.3.4 with respect to the prepayment to be made for the period ending December 31, 2005, in which case the amount of such prepayment that would have been applied to prepay Term Loans but was so declined may be retained by Borrower to be used for any other purpose permitted by this Agreement. Borrower agrees to notify Administrative Agent of the amount of any prepayment to be offered to the Lenders pursuant to this subsection 3.3.4 at least seven (7) Business Days prior to the applicable prepayment date. Any such prepayment shall be applied to the Term Loans in the manner specified in clause (i) of subsection 3.3.1 until the payment thereof in full.
3.3.5 Optional Prepayments . Borrower may, at its option from time to time upon not less than one (1) Business Day’s prior written notice in the case of a Base Rate Portion or three (3) Business Days’ prior written notice in the case of a LIBOR Portion to Administrative Agent (such notice to be in the form of Exhibit 3.3.5 ), prepay installments of the Term Loans, provided that the amount of any such prepayment is at least $500,000 and in integral multiples of $100,000 above $500,000, and that such prepayments are made ratably amongst Lenders with respect to all Term Loans. Each optional prepayment of Term Loans shall be applied to ratably reduce each scheduled installment of principal thereof set forth in subsection 3.2.1(ii) .
3.3.6 Call Premiums . In addition to charges under subsection 3.2.5 applicable to prepayments of LIBOR Portions, if applicable, in the event that the Term Loans are prepaid under subsections 3.3.1 , 3.3.2 or 3.3.5 in whole or in part prior to the second anniversary of the Closing Date, Borrower shall pay to the Lenders a prepayment premium on the amount so prepaid as follows:
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3.4 Application of Payments and Collections .
3.4.1 Collections . All items of payment received by Administrative Agent by 12:00 noon, New York City time, on any Business Day shall be deemed received on that Business Day. All items of payment received after 12:00 noon, New York City time, on any Business Day shall be deemed received on the following Business Day. Except as otherwise expressly provided herein, all payments by Credit Parties hereunder shall be made to Administrative Agent for the account of the respective Lenders to which such payment is owed, at Administrative Agent’s office in dollars and United States dollars. Administrative Agent will promptly distribute to each Lender its Aggregate Percentage (or other applicable share as provided herein) of such payment in like funds as received by wire transfer to such Lender’s lending office.
3.4.2 Apportionment, Application and Reversal of Payments . Principal and interest payments shall be apportioned ratably among Lenders (according to the unpaid principal balance of the Term Loans to which such payments relate held by each Lender). All payments shall be remitted to Administrative Agent and all such payments not relating to principal or interest in respect of specific Term Loans, or not constituting payment of specific fees, and all proceeds of Accounts and Inventory, or, except as provided in subsection 3.3.1 , other Collateral received by Administrative Agent, shall be applied, ratably, subject to the provisions of this Agreement, first , to pay any fees, indemnities, or expense reimbursements then due to Administrative Agent or Lenders from Borrower; second , to pay interest due from Borrower in respect of all Term Loans; third , to pay or prepay principal of all Term Loans; and fourth , to the payment of any other Obligation due to Administrative Agent or any Lender by Borrower. After the occurrence and during the continuance of an Event of Default, Administrative Agent shall have the continuing exclusive right to apply and reapply any and all such payments and collections received at any time or times hereafter by Administrative Agent or its agent against the Obligations, in such manner as Administrative Agent may deem advisable, notwithstanding any entry by Administrative Agent or any Lender upon any of its books and records, provided that such application or reapplication shall be consistent with the terms of this subsection 3.4.2 .
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3.5 All Term Loans to Constitute One Obligation . The Term Loans shall constitute one general Obligation of Borrower and shall be secured by Administrative Agent’s Lien upon all of the Collateral.
3.6 Loan Account . Administrative Agent shall enter all Term Loans as debits to a loan account (the “Loan Account” ) and shall also record in the Loan Account all payments made by Borrower on any Obligations and all proceeds of Collateral which are finally paid to Administrative Agent, and may record therein, in accordance with customary accounting practice, other debits and credits, including interest and all charges and expenses properly chargeable to Borrower pursuant to this Agreement or any other Loan Document.
3.7 [Intentionally Omitted]
3.8 Increased Costs . If any law or any governmental or quasi-governmental rule, regulation, policy, guideline or directive (whether or not having the force of law) adopted or implemented after the date of this Agreement and having general applicability to all banks or finance companies within the jurisdiction in which any Lender operates (excluding, for the avoidance of doubt, the effect of and phasing in of capital requirements or other regulations or guidelines passed prior to the date of this Agreement), or any interpretation or application thereof by any governmental authority charged with the interpretation or application thereof, or the compliance of such Lender therewith, shall:
(i) (1) subject such Lender to any tax with respect to this Agreement (other than (a) any tax based on or measured by net income or otherwise in the nature of a net income tax, including, without limitation, any franchise tax or any similar tax based on capital, net worth or comparable basis for measurement and (b) any tax collected by a withholding on payments and which neither is computed by reference to the net income of the payee nor is in the nature of an advance collection of a tax based on or measured by the net income of the payee) or (2) change the basis of taxation of payments to such Lender of principal, fees, interest or any other amount payable hereunder or under any Loan Documents (other than in respect of (a) any tax based on or measured by net income or otherwise in the nature of a net income tax, including, without limitation, any franchise tax or any similar tax based on capital, net worth or comparable basis for measurement and (b) any tax collected by a withholding on payments and which neither is computed by reference to the net income of the payee nor is in the nature of an advance collection of a tax based on or measured by the net income of the payee);
(ii) impose, modify or hold applicable any reserve (except any reserve taken into account in the determination of the applicable LIBOR), special deposit, assessment or similar requirement against assets held by, or deposits in or for the account of, loans by, or other credit extended by, any office of such Lender, including (without limitation) pursuant to Regulation D of the Board of Governors of the Federal Reserve System; or
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(iii) impose on such Lender or the London interbank market any other condition with respect to any Loan Document;
and the result of any of the foregoing is to increase the cost to such Lender of making, renewing or maintaining Term Loans hereunder or the result of any of the foregoing is to reduce the rate of return on such Lender’s capital as a consequence of its obligations hereunder, or the result of any of the foregoing is to reduce the amount of any payment (whether of principal, interest or otherwise) in respect of any of the Term Loans, then, in any such case, Borrower shall pay such Lender, upon written demand therefor not later than thirty (30) days following its receipt of notice of the imposition of such increased costs, such additional amount as will compensate such Lender for such additional cost or such reduction, as the case may be, to the extent such Lender has not otherwise been compensated, with respect to a particular Term Loan, for such increased cost as a result of an increase in the Base Rate or the LIBOR. An officer of the applicable Lender shall determine the amount of such additional cost or reduced amount using reasonable averaging and attribution methods and deliver to Borrower a written statement setting forth the amount of such additional cost or reduced amount, including an explanation of such additional cost or reduction. Such written statement shall be conclusive absent demonstrable error. Failure or delay on the part of any Lender to demand compensation pursuant to this subsection 3.8 shall not constitute a waiver of such Lender’s right to demand such compensation; provided that Borrower shall not be required to compensate a Lender pursuant to this subsection 3.8 for any increased costs or reductions incurred more than 180 days prior to the date that such Lender notifies Borrower of its intention to claim compensation under this subsection; provided , further that, if the circumstances giving rise to such claim are retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof. If a Lender claims any additional cost or reduced amount pursuant to this subsection 3.8 , then (a) such Lender shall use reasonable efforts (consistent with legal and regulatory restrictions) to designate a different lending office or to file any statement or document reasonably requested by Borrower if the making of such designation or filing would avoid the need for, or reduce the amount of, any such additional cost or reduced amount and would not, in the sole discretion of such Lender, be otherwise disadvantageous to such Lender and (b) at Borrower’s request, Administrative Agent or an Eligible Assignee reasonably acceptable to Administrative Agent and Borrower shall have the right (but not the obligation) to purchase from such Lender, and each such Lender shall, upon such request, sell and assign to Administrative Agent or such Eligible Assignee, all of such Lender’s outstanding Term Loans hereunder. Such sale and assignment shall be consummated promptly after Administrative Agent has arranged for a purchase by Administrative Agent or an Eligible Assignee pursuant to an Assignment and Acceptance Agreement, at a price equal to the outstanding principal balance of such Lender’s Term Loans, plus accrued interest and fees, without premium or discount.
3.9 Basis for Determining Interest Rate Inadequate . In the event that Administrative Agent or any Lender shall have determined that:
(i) reasonable means do not exist for ascertaining the LIBOR for any Interest Period; or
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(ii) Dollar deposits in the relevant amount and for the relevant maturity are not available in the London interbank market with respect to a proposed LIBOR Portion, or a proposed conversion of a Base Rate Portion into a LIBOR Portion; then
Administrative Agent or such Lender shall give Borrower prompt written, telephonic or electronic notice of the determination of such effect. If such notice is given and until Administrative Agent or such Lender shall notify Borrower that the circumstance giving rise to such notice no longer exists, (i) any such requested LIBOR Portion shall be made as a Base Rate Portion, unless Borrower shall notify Administrative Agent no later than 10:00 a.m. (New York City time) three (3) Business Days’ prior to the date of such proposed borrowing that the request for such borrowing shall be canceled or made as an unaffected type of LIBOR Portion, and (ii) any Base Rate Portion which was to have been converted to an affected type of LIBOR Portion shall be continued as or converted into a Base Rate Portion, or, if Borrower shall notify Administrative Agent, no later than 10:00 a.m. (New York City time) three (3) Business Days prior to the proposed conversion, shall be maintained as an unaffected type of LIBOR Portion. Administrative Agent or the relevant Lender (as applicable) will endeavor to give Borrower prompt notice of the cessation of the circumstances giving rise to the suspension of LIBOR availability, provided that the failure to give any such notice shall not result in any liability of Administrative Agent or any Lender hereunder or in the modification, alteration, impairment, or waiver of the rights of Administrative Agent or any Lender hereunder.
3.10 Sharing of Payments, Etc . If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of setoff, or otherwise) on account of any Term Loan made by it (other than any payment (x) pursuant to subsection 2.11 or subsection 3.8 , (y) in connection with an assignment of its interest hereunder pursuant to subsection 11.9 or (z) in connection with any amendment or waiver as contemplated by the last sentence of subsection 11.10 ) in excess of its ratable share of payments on account of Term Loans made by all Lenders, such Lender shall forthwith purchase from each other Lender such participation in such Term Loan as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each other Lender; provided , that, if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lenders the purchase price to the extent of such recovery, together with an amount equal to such Lender’s ratable share (according to the proportion of (i) the amount of such Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this subsection 3.10 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of setoff) with respect to such participation as fully as if such Lender were the direct creditor of Borrower in the amount of such participation. Notwithstanding anything to the contrary contained herein, all purchases and repayments to be made under this subsection 3.10 shall be made through Administrative Agent.
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SECTION 4. TERM AND TERMIN ATION
4.1 Term of Agreement . This Agreement shall be in effect for a period of 6 years from the date hereof, through and including August 17, 2010 (the “Term” ), unless terminated as provided in subsection 4.2 hereof.
4.2 Termination .
4.2.1 Termination by Lenders . Administrative Agent may, and at the direction of Majority Lenders shall, accelerate the Obligations, all without notice upon or after the occurrence and during the continuance of an Event of Default in accordance with subsection 10.2 .
4.2.2 Termination by Borrower . Upon at least three (3) Business Days prior written notice to Administrative Agent and Lenders, Borrower may, at its option, terminate this Agreement; provided, however, that (i) no such termination shall be effective until Borrower has paid to Administrative Agent’s satisfaction all of the Obligations (other than unasserted contingent indemnification obligations that are not then due and payable, whether by acceleration, termination or otherwise), in immediately available funds, and (ii) any such termination occurring prior to the second anniversary of the date hereof shall be accompanied by the prepayment premium on the amount prepaid set forth in subsection 3.3.6 . Any notice of termination given by Borrower shall be irrevocable unless all Lenders otherwise agree in writing (provided that a notice of a refinancing of the entirety of the Term Loans delivered by Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by Borrower (by notice to Administrative Agent on or prior to the effective date) if such condition is not satisfied). Borrower may elect to terminate this Agreement in its entirety only. No section of this Agreement may be terminated singly.
4.2.3 Effect of Termination . All of the Obligations (other than unasserted contingent indemnification obligations that are not then due and payable, whether by acceleration, termination or otherwise) shall be immediately due and payable upon the termination date stated in any notice of termination of this Agreement. All undertakings, agreements, covenants, warranties and representations of any Credit Party contained in the Loan Documents shall survive any such termination and the payment in full of the Obligations, and Administrative Agent shall retain its Liens in the Collateral and Administrative Agent and each Lender shall retain all of its rights and remedies under the Loan Documents notwithstanding such termination until all Obligations (other than unasserted contingent indemnification obligations that are not then due and payable, whether by acceleration, termination or otherwise) have been discharged or paid, in full, in immediately available funds, including, without limitation, all Obligations under subsection 3.2.5 or subsection 3.3.6 , if any, resulting from such termination. Notwithstanding the foregoing or the payment in full of the Obligations, (i) Administrative Agent shall not be required to terminate its Liens in the Collateral unless, with respect to any loss or damage Administrative Agent or any Lender may incur as a result of dishonored checks or other items of payment received by Administrative Agent from Borrower or any Account Debtor and applied to the Obligations, Administrative
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Agent shall, at its option, (A) have received a written agreement reasonably satisfactory to Administrative Agent, executed by Borrower and by any Person whose loans or other advances to Borrower are used in whole or in part to satisfy the Obligations, indemnifying Administrative Agent or such Lender (as applicable) from any such loss or damage or (B) have retained cash Collateral or other Collateral for such period of time as Administrative Agent or such Lender (as applicable), in its reasonable discretion, may deem necessary to protect Administrative Agent or such Lender (as applicable) from any such loss or damage and (ii) the indemnification obligations of each Credit Party under subsection 13.2 shall survive the payment in full of the Obligations and the termination of this Agreement.
SECTION 5. SECURITY INTER ESTS
5.1 Security Interest in Collateral
5.1.1 Grant of Security Interest . To secure the prompt payment and performance to Administrative Agent and each Lender of the Obligations, each Credit Party hereby grants to Administrative Agent for the benefit of itself and each Lender a continuing Lien upon all of the following Property and interests in Property of such Credit Party, whether now owned or existing or hereafter created, acquired or arising and wheresoever located:
(i) Accounts;
(ii) Certificated Securities;
(iii) Chattel Paper;
(iv) Computer Hardware and Software and all rights with respect thereto, including, any and all licenses, options, warranties, service contracts, program services, test rights, maintenance rights, support rights, improvement rights, renewal rights and indemnifications, and any substitutions, replacements, additions or model conversions of any of the foregoing;
(v) Deposit Accounts;
(vi) Documents;
(vii) Equipment;
(viii) Financial Assets;
(ix) Fixtures;
(x) General Intangibles, including Payment Intangibles and Software;
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(xi) Goods (including all of its Equipment, Fixtures and Inventory), and all accessions, additions, attachments, improvements, substitutions and replacements thereto and therefor;
(xii) Instruments;
(xiii) Intellectual Property;
(xiv) Inventory;
(xv) Investment Property;
(xvi) Money;
(xvii) Letter-of-Credit Rights;
(xviii) Payment Intangibles;
(xix) Security Entitlements;
(xx) Software;
(xxi) Supporting Obligations;
(xxii) Uncertificated Securities; and
(xxiii) To the extent not included in the foregoing, all other personal property of any kind or description;
together with all books, records, writings, data bases, information and other property relating to, used or useful in connection with, or evidencing, embodying, incorporating or referring to any of the foregoing, and all Proceeds, products, offspring, rents, issues, profits and returns of and from any of the foregoing; provided , however , that in no event shall Collateral include Investment Property or General Intangibles consisting of equity securities of an issuer that is a Subsidiary of a Credit Party organized under the laws of a jurisdiction other than the United States or a state thereof (a “Foreign Subsidiary” ) in excess of 65% of the total combined voting power of all equity securities of such Foreign Subsidiary; provided , further , that Collateral shall not include any lease, license or permit if, to the extent that and for as long as (a) the grant of a security interest therein constitutes or would result in the termination of, breach of or a default under the lease, instrument or agreement by which such lease, license or permit is governed and (b) such termination, breach or default is not rendered ineffective pursuant to Sections 9-406, 9-407, 9 408 or 9-409 of the UCC, provided , that (1) such lease, license or permit will be excluded from the Collateral only to the extent and for as long as the conditions set forth in the foregoing clauses (a) and (b) are and remain satisfied and to the extent such assets otherwise constitute Collateral, will cease to be excluded, and will become subject to the Liens hereunder, immediately and automatically at such time as such conditions cease to exist, including by reason of any waiver or consent under the applicable lease, instrument
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or agreement, and (2) the Proceeds of any sale, lease or other disposition of any such lease, license or permit shall not be excluded from the Collateral and shall at all times be and remain subject to the Liens hereunder.
5.1.2 Second Lien . Notwithstanding anything herein to the contrary, the lien and security interest granted to Administrative Agent pursuant to this Agreement and the exercise of any right or remedy in respect of the Collateral by Administrative Agent hereunder are subject to the provisions of the Intercreditor Agreement, including the rights of the First Lien Debt Agent to exercise control with respect to such Collateral as and to the extent set forth in the Intercreditor Agreement. In the event of any conflict between the terms of the Intercreditor Agreement and the provisions of Section 5 or 6 of this Agreement relating to the Collateral, the terms of the Intercreditor Agreement shall govern.
5.2 Other Collateral .
5.2.1 Commercial Tort Claims . Each Credit Party shall promptly notify Administrative Agent in writing upon any Credit Party obtaining knowledge that it has incurred or otherwise obtained a Commercial Tort Claim after the Closing Date against any third party and, upon request of Administrative Agent, promptly enter into an amendment to this Agreement and do such other acts or things deemed appropriate by Administrative Agent to grant to Administrative Agent a security interest in any such Commercial Tort Claim. Each Credit Party represents and warrants that as of the date of this Agreement, to their knowledge, no Credit Party possesses any Commercial Tort Claims.
5.2.2 Motor Vehicles . Upon the acquisition after Closing Date by any Credit Party of any Motor Vehicle, such Credit Party shall promptly notify Administrative Agent of such acquisition in writing, setting forth a description of the Motor Vehicle acquired and a good faith estimate of the current value of such Motor Vehicle. In addition, each Credit Party shall (a) cause all Motor Vehicles, now owned or hereafter acquired by any Credit Party, which under applicable law are required to be registered, to be properly registered in the name of such Credit Party, (b) cause all Motor Vehicles, now owned or hereafter acquired by any Credit Party, to be properly titled in the name of such Credit Party and (c) cause Administrative Agent’s Lien in such Motor Vehicles to be a perfected security interest by noting Administrative Agent’s Lien therein on such certificates or through any other security arrangement acceptable to Administrative Agent in its sole discretion, and deliver to Administrative Agent evidence of their compliance with the foregoing provisions of this subsection 5.2.2 , including, without limitation, if requested by Administrative Agent, originals of all such certificates of title or ownership for such Motor Vehicles, subject in terms of priority only to the Lien of the First Lien Debt Agent for so long as any First Lien Debt remains outstanding, and thereafter a first priority Lien. Notwithstanding the foregoing, Credit Parties shall have until the date that is 180 days after the Closing Date (as such date may be extended by the First Lien Debt Agent in its sole discretion up to 270 days after the Closing Date) to complete the actions in the foregoing clause (c) with respect to Motor Vehicles owned by any Credit Party as of the Closing Date. Any certificates of title or ownership delivered
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pursuant to the terms hereof shall be accompanied by odometer statements for each Motor Vehicle covered thereby.
5.2.3 Other Collateral . Each Credit Party shall: (i) notify Administrative Agent in writing promptly upon (or in the case of Deposit Accounts prior to) acquiring or otherwise obtaining any Collateral after the date hereof consisting of Deposit Accounts, Investment Property, Letter-of-Credit Rights or Electronic Chattel Paper; (ii) except with regard to Excluded Deposit Accounts (unless otherwise requested by the First Lien Debt Agent) promptly execute such other documents, and do such other acts or things necessary to perfect the Lien of Administrative Agent with respect to such Collateral by “control” (within the meaning of the applicable section of the UCC), subject to the rights of the First Lien Debt Agent to exercise control with respect to such Collateral to the extent required by the Intercreditor Agreement; (iii) promptly notify Administrative Agent in writing upon acquiring or otherwise obtaining any Collateral after the date hereof consisting of Documents or Instruments and will promptly execute such other documents, and do such other acts or things necessary to perfect the Lien of Administrative Agent by possession (within the meaning of Section 9-313 of the UCC) of such Documents which are negotiable and Instruments, and, with respect to nonnegotiable Documents, subject to the terms of the Intercreditor Agreement, to have such nonnegotiable Documents issued in the name of Administrative Agent; and (iv) with respect to Collateral in the possession of a third party, other than Certificated Securities and Goods covered by a Document, obtain an acknowledgement from the third party that it is holding the Collateral for the benefit of Administrative Agent.
5.3 Lien Perfection; Further Assurances . Each Credit Party shall execute such instruments, assignments or documents as are necessary to perfect Administrative Agent’s Lien upon any of the Collateral and shall take such other action as may be required to perfect or to continue the perfection of Administrative Agent’s Lien upon the Collateral and shall take such other actions as may be reasonably requested by Administrative Agent to ensure priority (subject to the Lien of the First Lien Debt Agent) of such Lien. Each Credit Party hereby authorizes Administrative Agent to file financing statements that indicate the Collateral (i) as “all assets” of such Credit Party or words of similar effect, or (ii) as being of an equal or lesser scope, or with greater or lesser detail, than as set forth in subsection 5.1 , on such Credit Party’s behalf. Each Credit Party also hereby ratifies its authorization for Administrative Agent to have filed in any jurisdiction any like financing statements or amendments thereto if filed prior to the date hereof. In addition, each Credit Party hereby appoints Administrative Agent as its attorney-in-fact, effective the date hereof and terminating upon the termination of this Agreement, for the purpose of (A) executing on behalf of such Credit Party title or ownership applications for filing with appropriate state agencies to enable Motor Vehicles now owned or hereafter acquired by such Credit Party to be re-titled and Administrative Agent listed as lienholder thereof, and (B) filing such applications with such state agencies. This appointment as attorney-in-fact is coupled with an interest and is irrevocable until the date on which all of the Obligations have been paid in full in cash. At Administrative Agent’s request, each Credit Party shall also promptly execute or cause to be executed and shall deliver to Administrative Agent any and all documents, instruments and
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agreements deemed necessary by Administrative Agent, to give effect to or carry out the terms or intent of the Loan Documents.
5.4 Lien on Realty . The due and punctual payment and performance of the Obligations shall also be secured by the Lien created by the Mortgages upon all owned real Property of Credit Parties described therein. If any Credit Party shall acquire at any time or times hereafter any fee simple interest or leasehold interest in other real Property (other than leasehold interests in sales offices or warehouses), such Credit Party agrees promptly to execute and deliver to Administrative Agent, for its benefit and the ratable benefit of Lenders, as additional security and Collateral for the Obligations, deeds of trust, security deeds, mortgages or other collateral assignments reasonably satisfactory in form and substance to Administrative Agent and its counsel (herein collectively referred to as “New Mortgages” ) covering such real Property. The Mortgages and each New Mortgage shall be duly recorded (at Borrower’s expense) in each office where such recording is required to constitute a valid Lien on the owned real Property covered thereby. With respect to any Mortgage or any New Mortgage, the relevant Credit Parties shall deliver to Administrative Agent, at such Credit Party’s expense, mortgagee title insurance policies issued by a title insurance company reasonably satisfactory to Administrative Agent, which policies shall be in form and substance reasonably satisfactory to Administrative Agent and shall insure a valid Lien in favor of Administrative Agent for the benefit of itself and each Lender on the Property covered thereby, subject only to Permitted Liens and those other exceptions reasonably acceptable to Administrative Agent and its counsel. The relevant Credit Party shall also deliver to Administrative Agent Phase I Environmental Site Assessments by a consultant satisfactory to Administrative Agent reasonably necessary to determine compliance with or liabilities under Environmental Laws of the Property subject to such New Mortgage and such other usual and customary documents, including, without limitation, ALTA Surveys of the real Property described in the Mortgages or any New Mortgage, as Administrative Agent and its counsel may reasonably request relating to the real Property subject to the Mortgages or the New Mortgages.
SECTION 6. COLLATERAL ADMINISTRATION
6.1 General .
6.1.1 Location of Collateral . All Collateral, other than (a) Inventory being leased or rented to third parties by Credit Parties in the ordinary course of business, (b) Inventory in transit, (c) Inventory in the possession of a third party for the purpose of repair or maintenance and (d) Motor Vehicles, will at all times be kept by Credit Parties and their Subsidiaries at one or more of the business locations set forth in Exhibit 6.1.1 hereto, as updated by Borrower from time to time, and if any such locations are locations of third parties, such Exhibit so indicates.
6.1.2 Insurance of Collateral . Each Credit Party shall maintain and pay for insurance upon all Collateral wherever located and with respect to the business of such Credit Party and each of its Subsidiaries, covering casualty, hazard, public liability, workers’ compensation and such other risks in such amounts as is customary for
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companies similarly situated and with the insurance companies used by Credit Parties on the Closing Date or such other insurance companies as are reasonably satisfactory to Administrative Agent. Borrower shall deliver certified copies of such policies to Administrative Agent as promptly as practicable, with reasonably satisfactory lender’s loss payable endorsements, naming the First Lien Debt Agent for so long as any First Lien Debt remains outstanding and thereafter naming Administrative Agent and Lenders as loss payees, assignees or additional insureds, as appropriate, as its interest may appear, and showing only such other loss payees, assignees and additional insureds as are reasonably satisfactory to Administrative Agent. Each policy of insurance or endorsement shall contain a clause requiring the insurer to give not less than 10 days’ prior written notice to Administrative Agent in the event of cancellation of the policy for nonpayment of premium and not less than 30 days’ prior written notice to Administrative Agent in the event of cancellation of the policy for any other reason whatsoever and a clause specifying that the interest of Administrative Agent shall not be impaired or invalidated by any act or neglect of any Credit Party, any of its Subsidiaries or the owner of the Property or by the occupation of the premises for purposes more hazardous than are permitted by said policy. Borrower agrees to deliver to Administrative Agent, promptly as rendered, true copies of all reports made in any reporting forms to insurance companies. All proceeds of business interruption insurance (if any) of each Credit Party and its Subsidiaries shall be remitted to Administrative Agent for application to the outstanding balance of the Term Loans unless required to be applied to the obligations under the First Lien Debt Documents.
Unless Borrower provides Administrative Agent with evidence of the insurance coverage required by this Agreement, Administrative Agent may purchase insurance at Borrower’s expense to protect Administrative Agent’s interests in the Properties of Credit Parties and their Subsidiaries. This insurance may, but need not, protect the interests of Credit Parties and their Subsidiaries. The coverage that Administrative Agent purchases may not pay any claim that any Credit Party or any of its Subsidiaries makes or any claim that is made against any Credit Party or any such Subsidiary in connection with said Property. Credit Parties may later cancel any insurance purchased by Administrative Agent, but only after providing Administrative Agent with evidence that Credit Parties and their Subsidiaries have obtained insurance as required by this Agreement. If Administrative Agent purchases insurance, Borrower will be responsible for the reasonable costs of that insurance, including interest and any other charges Administrative Agent may impose in connection with the placement of insurance, until the effective date of the cancellation or expiration of the insurance. The costs of the insurance may be added to the Obligations. The costs of the insurance may be more than the cost of insurance that Credit Parties and their Subsidiaries may be able to obtain on their own.
6.1.3 Protection of Collateral . Neither Administrative Agent nor any Lender shall be liable or responsible in any way for the safekeeping of any of the Collateral or for any loss or damage thereto (except for reasonable care in the custody thereof while any Collateral is in Administrative Agent’s or any Lender’s actual possession) or for any diminution in the value thereof, or for any act or default of any
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warehouseman, carrier, forwarding agency or other person whomsoever, but the same shall be at Credit Parties’ sole risk.
6.2 Administration of Accounts .
6.2.1 Records, Schedules and Assignments of Accounts . Each Credit Party shall keep accurate and complete records of its Accounts and all payments and collections thereon and shall submit to Administrative Agent on such periodic basis as Administrative Agent shall reasonably request at any time that an Event of Default shall have occurred and be continuing a sales and collections report for the preceding period, in form reasonably acceptable to Administrative Agent.
6.2.2 [Intentionally Omitted] .
6.2.3 Account Verification . Any of Administrative Agent’s officers, employees or agents shall have the right, at any time or times hereafter that an Event of Default shall have occurred and be continuing, in the name of Administrative Agent, any designee of Administrative Agent or any Credit Party, to verify the validity, amount or any other matter relating to any Accounts by mail, telephone, electronic communication or otherwise. Credit Parties shall cooperate with Administrative Agent in an effort to facilitate and promptly conclude any such verification process.
6.2.4 Collection Accounts . Each deposit account (other than Excluded Deposit Accounts, unless otherwise requested by the First Lien Debt Agent) which receives any proceeds of Collateral shall be maintained by Credit Parties pursuant to lockbox and blocked account arrangements acceptable to Administrative Agent (each such account, a “Collection Account” and collectively, the “Collection Accounts” ) with BofA or such other banks as may be selected by Credit Parties and be acceptable to Administrative Agent (each bank maintaining a Collection Account, a “Collection Bank” and collectively, the “Collection Banks” ). Subject to the terms of the Intercreditor Agreement, all such blocked account arrangements shall provide for the Administrative Agent’s and the First Lien Debt’s Agent’s “control” (within the meaning of the Uniform Commercial Code) of the relevant Collection Accounts, and if an Event of Default occurs and is continuing, dominion by Administrative Agent and the First Lien Debt Agent over all cash or other assets deposited into such accounts. Subject to the terms of the Intercreditor Agreement, upon the occurrence of an Event of Default, Administrative Agent shall be entitled to deliver notice to each Collection Bank instructing such Collection Bank to comply only with the instructions of Administrative Agent relating to each Collection Account maintained by such Collection Bank (each such notice, a “Dominion Notice” ). On or prior to the date hereof, Borrower shall deliver to Administrative Agent a control agreement for each Collection Account maintained as of the Closing Date to provide for control and springing dominion by Administrative Agent over all assets deposited therein as described above, each such control agreement to be in form and substance acceptable to Administrative Agent. Subject to the terms of the Intercreditor Agreement, after the occurrence and during the continuance of an Event of Default, all funds deposited in any Collection Account shall immediately become the property of Administrative Agent, for the ratable benefit of
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Lenders, and Borrower shall obtain the agreement by each Collection Bank in favor of Administrative Agent to waive any recoupment, setoff rights, and any security interest in, or against, the funds so deposited. Administrative Agent assumes no responsibility for lockbox and blocked account arrangements, including, without limitation, any claim of accord and satisfaction or release with respect to deposits accepted by any bank thereunder.
6.2.5 Collection of Accounts, Proceeds of Collateral . Each Credit Party agrees that all invoices rendered and other requests made by any Credit Party for payment in respect of Accounts shall contain a written statement directing payment in respect of such Accounts to be paid to a lockbox or Collection Account established pursuant to subsection 6.2.4 . To expedite collection, each Credit Party shall endeavor in the first instance to make collection of its Accounts for Administrative Agent. All remittances received by any Credit Party on account of Accounts, together with the proceeds of any other Collateral, shall be held as Administrative Agent’s property, for its benefit and the benefit of Lenders, by such Credit Party as trustee of an express trust for Administrative Agent’s benefit and such Credit Party shall immediately deposit same in kind to a Collection Account. Administrative Agent retains the right at all times after the occurrence and during the continuance of an Event of Default to notify Account Debtors that Credit Parties’ Accounts have been assigned to Administrative Agent and, subject to the terms of the Intercreditor Agreement, to collect Credit Parties’ Accounts directly in its own name, or in the name of Administrative Agent’s agent, and to charge the collection costs and expenses, including attorneys’ fees, to any Credit Party.
6.2.6 Taxes . If an Account includes a charge for any tax payable to any governmental taxing authority, Administrative Agent is authorized, in its sole discretion, to pay the amount thereof to the proper taxing authority for the account of the relevant Credit Party and to charge any Credit Party therefor, except for taxes (i) that are being actively contested in good faith and by appropriate proceedings and with respect to which the relevant Credit Party maintains reasonable reserves on its books therefor and (ii) as to which the imposition of any Lien in respect thereof is stayed during the pendency of such proceedings. In no event shall Administrative Agent or any Lender be liable for any taxes to any governmental taxing authority that may be due by any Credit Party.
6.3 Administration of Inventory . Credit Parties shall keep records of their Inventory (including, without limitation, Rental Equipment Inventory) which records shall be accurate and complete in all material respects. Credit Parties’ records of all Rental Equipment Inventory shall be itemized and describe the kind, type, quality, quantity and book value of such Rental Equipment Inventory and shall list all dispositions made in accordance with subsection 8.2.8 .
6.4 Payment of Charges . All amounts chargeable to any Credit Party under Section 6 hereof shall be Obligations secured by all of the Collateral, shall be payable by any Credit Party on demand and shall bear interest from the date such advance was made until paid in full at the rate applicable to Base Rate Portions from time to time.
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SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties . To induce Administrative Agent and each Lender to enter into this Agreement and to make loans, advances and other extensions of credit hereunder, each Credit Party warrants, represents and covenants to Administrative Agent and each Lender, on a joint and several basis, that:
7.1.1 Qualification . Each Credit Party and each of its Subsidiaries is a corporation, limited partnership or limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization. No Credit Party or any Subsidiary thereof is organized under the laws of more than one jurisdiction. Each Credit Party and each of its Subsidiaries is duly qualified and is authorized to do business and is in good standing as a foreign limited liability company, limited partnership or corporation, as applicable, in each state or jurisdiction listed on Exhibit 7.1.1 hereto and in all other states and jurisdictions in which the failure of any Credit Party or any of its Subsidiaries to be so qualified could reasonably be expected to have a Material Adverse Effect.
7.1.2 Power and Authority . Each Credit Party and each of its Subsidiaries is duly authorized and empowered to enter into, execute, deliver and perform this Agreement and each of the other Loan Documents to which it is a party. The execution, delivery and performance of this Agreement and each of the other Loan Documents have been duly authorized by all necessary corporate, limited partnership or limited liability company action, as applicable, and do not and will not: (i) require any consent or approval of the partners, shareholders or members (as applicable) of any Credit Party or any of the shareholders, partners or members, as the case may be, of any Subsidiary of any Credit Party; (ii) contravene any Credit Party’s or any of its Subsidiaries’ charter, articles or certificate of incorporation, partnership agreement, certificate of formation, by laws, limited liability agreement, operating agreement or other organizational documents (as the case may be); (iii) violate, or cause any Credit Party or any of its Subsidiaries to be in default under, any provision of any law, rule, regulation, order, writ, judgment, injunction, decree, determination or award in effect having applicability to such Credit Party or any of its Subsidiaries, other than any such violation as could not reasonably be expected to have a Material Adverse Effect; (iv) result in a breach of or constitute a default under any indenture or loan or credit agreement or any other agreement, lease or instrument to which any Credit Party or any of its Subsidiaries is a party or by which it or its Properties may be bound or affected, the breach of or default under which could reasonably be expected to have a Material Adverse Effect; or (v) result in, or require, the creation or imposition of any Lien (other than Permitted Liens) upon or with respect to any of the Properties now owned or hereafter acquired by any Credit Party or any of its Subsidiaries.
7.1.3 Legally Enforceable Agreement . This Agreement, and each of the other Loan Documents, has been duly executed and delivered by each Credit Party and each of its Subsidiaries party thereto and is a legal, valid and binding obligation of each such Credit Party and each such Subsidiary, enforceable against it in accordance with its respective terms, except as enforcement may be limited by (i) the effect of any applicable
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bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and (ii) general principles of equity.
7.1.4 Capital Structure . Exhibit 7.1.4 hereto states, as of the date hereof, (i) the correct name of each of the Subsidiaries of each Credit Party, its jurisdiction of incorporation or organization and the percentage of its Voting Stock owned by the applicable Credit Party, (ii) the name of each Credit Party’s and each of its Subsidiaries’ corporate or joint venture relationships and the nature of the relationship, (iii) the number, nature and holder of all outstanding Securities of each Credit Party and the holder of Securities of each Subsidiary of each Credit Party and (iv) the number of authorized, issued and treasury Securities of each Credit Party. Each Subsidiary of Borrower that is not a Foreign Subsidiary as of the Closing Date is party to this Agreement as a Subsidiary Guarantor. Each Credit Party has good title to all of the Securities it purports to own of each of such Subsidiaries, free and clear in each case of any Lien other than Permitted Liens. All such Securities have been duly authorized and issued and are fully paid and non-assessable to the extent such concepts are applicable to such types of Securities. There are no outstanding options to purchase, or any rights or warrants to subscribe for, or any commitments or agreements to issue or sell any Securities or obligations convertible into, or any powers of attorney relating to any Securities of any Credit Party or any of its Subsidiaries. Except as set forth on Exhibit 7.1.4 , there are no outstanding agreements or instruments binding upon any of any Credit Party’s or any of its Subsidiaries’ partners, members or shareholders, as the case may be, relating to the ownership of its Securities.
7.1.5 Names; Organization . Neither any Credit Party nor any of its Subsidiaries has been known as or has used any legal, fictitious or trade names within 5 years prior to the Closing Date, except those listed on Exhibit 7.1.5 hereto. Except as set forth on Exhibit 7.1.5 , within the 5 years prior to the Closing Date, neither any Credit Party nor any of its Subsidiaries has been the surviving entity of a merger or consolidation or has acquired all or substantially all of the assets of any Person. Each of each Credit Party’s and each of its Subsidiaries’ state(s) of incorporation or organization, Type of Organization and Organizational I.D. Number is set forth on Exhibit 7.1.5 . The exact legal name of each Credit Party and each of its Subsidiaries is set forth on Exhibit 7.1.5 .
7.1.6 Business Locations; Administrative Agent for Process . Each of each Credit Party’s and each of its Subsidiaries’ chief executive office, location of books and records and other places of business are as listed on Exhibit 6.1.1 hereto, as updated from time to time by Borrower in accordance with the provisions of subsection 6.1.1 . Except as shown on Exhibit 6.1.1 , as updated from time to time by Borrower in accordance with the provisions of subsection 6.1.1 , no Inventory is stored with a bailee, distributor, warehouseman or similar party, nor is any Inventory consigned to any Person.
7.1.7 Title to Properties; Priority of Liens .
(i) Each Credit Party and each of its Subsidiaries has good, indefeasible and marketable title to and fee simple ownership of, or valid and subsisting
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leasehold interests in, all of its real Property, and good title to all of the Collateral and all of its other Property, in each case, free and clear of all Liens except Permitted Liens. Each Credit Party and each of its Subsidiaries has paid or discharged all lawful claims which, if unpaid, might become a Lien against any of such Credit Party’s or such Subsidiary’s Properties that is not a Permitted Lien. The Liens granted to Administrative Agent under Section 5 hereof are second priority Liens, subject only to Permitted Liens.
(ii) Exhibit 7.1.7 sets forth, as of the Closing Date, a correct and complete list of all real Property owned by each Credit Party and each of its Subsidiaries and all leases (including capitalized leases) and subleases of real or personal property held by each Credit Party and each of its Subsidiaries as lessee or sublessee, or as lessor, or sublessor. Each of such leases and subleases is valid and enforceable in accordance with its terms and is in full force and effect, and no default by any Credit Party or any of its Subsidiaries nor, to any Credit Party’s knowledge, any other party to any such lease or sublease, exists.
7.1.8 Accounts .
With respect to each of Credit Parties’ Accounts, unless otherwise disclosed to Administrative Agent in writing:
(i) It is genuine and in all respects what it purports to be, and it is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale and delivery of goods or rendition of services by a Credit Party, in the ordinary course of its business and in accordance with the terms and conditions of all purchase orders, contracts or other documents relating thereto and forming a part of the contract between a Credit Party and the Account Debtor;
(iii) It is for a liquidated amount maturing as stated in the duplicate invoice covering such sale or rendition of services, a copy of which has been furnished or is available to Administrative Agent;
(iv) To Borrowers’ knowledge, there are no facts, events or occurrences which in any way impair the validity or enforceability of any Accounts or tend to reduce the amount payable thereunder from the face amount of the invoice and statements delivered or made available to Administrative Agent with respect thereto;
(v) To Credit Parties’ knowledge, the Account Debtor thereunder (1) had the capacity to contract at the time any contract or other document giving rise to the Account was executed and (2) such Account Debtor is Solvent; and
(vi) To Credit Parties’ knowledge, there are no proceedings or actions which are threatened or pending against the Account Debtor thereunder which might result in any material adverse change in such Account Debtor’s financial condition or the collectibility of such Account.
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7.1.9 Nonrental Equipment and Rental Equipment Inventory . The Nonrental Equipment and Rental Equipment Inventory of each Credit Party and its Subsidiaries is in good operating condition and repair, and all necessary replacements of and repairs thereto shall be made so that the operating efficiency thereof shall be maintained and preserved, reasonable wear and tear and casualty events excepted. Neither any Credit Party nor any of its Subsidiaries will permit any Nonrental Equipment or Rental Equipment Inventory to become affixed to any real Property leased to any Credit Party or any of its Subsidiaries so that an interest arises therein under the real estate laws of the applicable jurisdiction unless the landlord of such real Property has executed a landlord waiver or leasehold mortgage in favor of and in form reasonably acceptable to Administrative Agent, and no Credit Party will permit any of the Nonrental Equipment or Rental Equipment Inventory of any Credit Party or any of its Subsidiaries to become an accession to any personal Property other than Nonrental Equipment and Rental Equipment Inventory that is subject to second priority (except for Permitted Liens) Liens in favor of Administrative Agent.
7.1.10 Financial Statements; Fiscal Year . The Consolidated and consolidating balance sheets of Borrower and its Subsidiaries (including the accounts of all Subsidiaries of Borrower and their respective Subsidiaries for the respective periods during which a Subsidiary relationship existed) as of March 31, 2004, and the related statements of income, cash flow, changes in shareholder’s equity, and changes in financial position for the periods ended on such dates, have been prepared in accordance with GAAP, and present fairly in all material respects the financial positions of Borrower and such Persons, taken as a whole, at such dates and the results of Borrower’s and such Persons’ operations, taken as a whole, for such periods. Since March 31, 2004, there has been no material adverse change in the business, assets, liabilities (actual or contingent), operations or financial condition of Borrower and such other Persons, taken as a whole, as reflected in the Consolidated balance sheet as of such date. As of the date hereof, the fiscal year of each Credit Party and each of its Subsidiaries ends on December 31 of each year.
7.1.11 Full Disclosure . The financial statements referred to in subsection 7.1.10 hereof do not, nor does this Agreement or any other written statement of any Credit Party to Administrative Agent or any Lender, contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained therein or herein, in light of the circumstances under which they are made, not misleading as of the time made or delivered. There is no fact which any Credit Party has failed to disclose to Administrative Agent or any Lender in writing which could reasonably be expected to have a Material Adverse Effect.
7.1.12 Solvent Financial Condition . Giving effect to subsection 12.2 , each Credit Party and each of its Subsidiaries is, and after giving effect to the Term Loans to be made hereunder and all related transactions will be, Solvent.
7.1.13 Surety Obligations . Except as set forth on Exhibit 7.1.13 , as of the date hereof, neither any Credit Party nor any of its Subsidiaries is obligated as surety or indemnitor under any surety or similar bond or other contract or has issued or entered
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into any agreement to assure payment, performance or completion of performance of any undertaking or obligation of any Person other than payment, performance or completion of performance by itself or any Credit Party.
7.1.14 Taxes . The federal or other applicable tax identification number of each Credit Party and each of its Subsidiaries is shown on Exhibit 7.1.14 hereto. Each Credit Party and each of its Subsidiaries has filed all federal, state, local and foreign income and other material tax returns and other reports relating to taxes it is required by law to file, and has paid, or made provision for the payment of, all federal, state, local and foreign income and other material taxes, assessments, fees, levies and other governmental charges upon it, its income and Properties as and when such taxes, assessments, fees, levies and charges are due and payable, unless and to the extent any thereof are being actively contested in good faith and by appropriate proceedings, and the applicable Credit Party or the relevant Subsidiary maintains reasonable reserves on its books therefor. The provision for taxes on the books of each Credit Party and its Subsidiaries is adequate for all years not closed by applicable statutes, and for the current fiscal year.
7.1.15 Brokers . Except as shown on Exhibit 7.1.15 hereto and except as may be payable to Administrative Agent or the Joint Lead Arrangers, there are no claims for brokerage commissions, finder’s fees or investment banking fees in connection with the transactions contemplated by this Agreement.
7.1.16 Patents, Trademarks, Copyrights and Licenses . Each Credit Party and each of its Subsidiaries owns, possesses or licenses or has the right to use all the patents, trademarks, service marks, trade names, copyrights, licenses and other Intellectual Property necessary for the present and planned future conduct of its business without any known conflict with the rights of others, except for such conflicts as could not reasonably be expected to have a Material Adverse Effect. All such patents, trademarks, service marks, trade names, copyrights, licenses and other similar rights are listed on Exhibit 7.1.16 hereto. No claim has been asserted to any Credit Party or any Subsidiary of any Credit Party which is currently pending that its use of its Intellectual Property or the conduct of its business does or may infringe upon the Intellectual Property rights of any third party. To the knowledge of each Credit Party and except as set forth on Exhibit 7.1.16 hereto, as of the date hereof, no Person is engaging in any activity that infringes in any material respect upon any Credit Party’s or any of its Subsidiaries’ material Intellectual Property. Except as set forth on Exhibit 7.1.16 , each Credit Party’s and each of its Subsidiaries’ (i) material trademarks, service marks and copyrights are registered with the U.S. Patent and Trademark Office or in the U.S. Copyright Office, as applicable and (ii) material license agreements and similar arrangements relating to its Inventory (1) permit, and do not restrict, the assignment by any Credit Party or any of its Subsidiaries to Administrative Agent, or any other Person designated by Administrative Agent, of all of such Credit Party’s or such Subsidiary’s, as applicable, rights, title and interest pertaining to such license agreement or such similar arrangement and (2) would permit the continued use by such Credit Party or such Subsidiary, or Administrative Agent or its assignee, of such license agreement or such similar arrangement and the right to sell Inventory subject to such license agreement for a period of no less than 6 months after a default or breach of such agreement or
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arrangement. The consummation and performance of the transactions and actions contemplated by this Agreement and the other Loan Documents, including, without limitation, the exercise by Administrative Agent of any of its rights or remedies under Section 10 , will not result in the termination or impairment of any of such Credit Party’s or any of its Subsidiaries’ ownership or rights relating to its Intellectual Property. Except as listed on Exhibit 7.1.16, and except as could not reasonably be expected to have a Material Adverse Effect, (i) neither any Credit Party nor any of its Subsidiaries is in breach of, or default under, any term of any license or sublicense with respect to any of its Intellectual Property and (ii) to the knowledge of each Credit Party, no other party to such license or sublicense is in breach thereof or default thereunder, and such license is valid and enforceable.
7.1.17 Governmental Consents . Each Credit Party and each of its Subsidiaries has, and is in good standing with respect to, all governmental consents, approvals, licenses, authorizations, permits, certificates, inspections and franchises necessary to continue to conduct its business as heretofore or proposed to be conducted by it and to own or lease and operate its Properties as now owned or leased by it, except where the failure to do so could not reasonably be expected to have a Material Adverse Effect.
7.1.18 Compliance with Laws . Each Credit Party and each of its Subsidiaries has duly complied, and its Properties, business operations and leaseholds are in compliance with, the provisions of all federal, state and local laws, rules and regulations applicable to such Credit Party or such Subsidiary, as applicable, its Properties or the conduct of its business, except for such non-compliance as could not reasonably be expected to have a Material Adverse Effect, and there have been no citations, notices or orders of noncompliance issued to any Credit Party or any of its Subsidiaries under any such law, rule or regulation, except where such noncompliance could not reasonably be expected to have a Material Adverse Effect. No Inventory has been produced in violation of the Fair Labor Standards Act (29 U.S.C. §201 et seq .), as amended.
7.1.19 Restrictions . Neither any Credit Party nor any of its Subsidiaries is a party or subject to any contract or agreement which restricts its right or ability to incur Indebtedness, other than as set forth on Exhibit 7.1.19 hereto, none of which prohibit the execution of or compliance with this Agreement or the other Loan Documents by any Credit Party or any of its Subsidiaries, as applicable.
7.1.20 Litigation . Except as set forth on Exhibit 7.1.20 hereto, there are no actions, suits, proceedings or investigations pending, or to the knowledge of any Credit Party, threatened, against or affecting any Credit Party or any of its Subsidiaries, or the business, operations, Properties, prospects, profits or condition of any Credit Party or any of its Subsidiaries which, singly or in the aggregate, could reasonably be expected to have a Material Adverse Effect. Neither any Credit Party nor any of its Subsidiaries is in default with respect to any order, writ, injunction, judgment, decree or rule of any court, governmental authority or arbitration board or tribunal, which, singly or in the aggregate, could reasonably be expected to have a Material Adverse Effect.
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7.1.21 No Defaults . No event has occurred and no condition exists which would, upon or after the execution and delivery of this Agreement or any Credit Party’s performance hereunder, constitute a Default or an Event of Default. Neither any Credit Party nor any of its Subsidiaries is in default (and no event has occurred and no condition exists which constitutes, or which with the passage of time or the giving of notice or both would constitute, a default) under any Material Contract.
7.1.22 Distributions . Except as disclosed on Exhibit 7.1.22 and except for Distributions of cash paid to another Credit Party or pursuant to the Reorganization Plan, as of the Closing Date, no Distribution of cash has been declared, paid, or made upon or in respect of any Securities of any Credit Party or any of its Subsidiaries since February 12, 2004.
7.1.23 ERISA Compliance . Except as specifically disclosed in Exhibit 7.1.23 :
(i) Each Plan and Foreign Plan is in compliance with applicable Requirements of Law including, but not limited to ERISA and the Code, except for such non-compliance as could not reasonably be expected to have a Material Adverse Effect. Each Plan which is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS and to the knowledge of each Credit Party, nothing has occurred which would cause the loss of such qualification. Each Credit Party and each ERISA Affiliate has made all required contributions to any Pension Plan, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Pension Plan.
(ii) There are no pending or, to the knowledge of any Credit Party, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan, Multiemployer Plan or Foreign Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect. There has been no prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan, Multiemployer Plan or Foreign Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect.
(iii) Except as could not reasonably be expected to have a Material Adverse Effect, (A) no ERISA Event has occurred or is reasonably expected to occur; (B) no Pension Plan has any Unfunded Pension Liability; (C) no Credit Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (D) no Credit Party nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; or (E) assets of all Foreign Plans equal or exceed any liabilities accrued thereunder in accordance with applicable Requirements of Law. No Credit Party nor any ERISA
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Affiliate has engaged in a transaction that could reasonably be expected to be subject to Section 4069 or 4212(c) of ERISA.
(iv) No Credit Party nor any ERISA Affiliate sponsors or is otherwise required to contribute to any retiree medical plan, arrangement, contract or policy other than (A) coverage mandated by Requirement of Law, (B) death benefits or retirement benefits under any Pension Plan or (C) benefits, the full direct cost of which is borne by the participating employee or former employee (or beneficiary thereof).
7.1.24 Trade Relations . There exists no actual or, to any Credit Party’s knowledge, threatened termination, cancellation or limitation of, or any modification or change in, the business relationship between any Credit Party or any of its Subsidiaries and any customer or any group of customers whose purchases individually or in the aggregate are material to the business of Credit Parties and their Subsidiaries, or with any material supplier, except, in each case, where the same could not reasonably be expected to have a Material Adverse Effect, and, to any Credit Party’s knowledge, there exists no present condition or state of facts or circumstances which would prevent any Credit Party or any of its Subsidiaries from conducting such business after the consummation of the transactions contemplated by this Agreement in substantially the same manner in which it has heretofore been conducted, which prevention could reasonably be expected to have a Material Adverse Effect.
7.1.25 Labor Relations . Except as described on Exhibit 7.1.25 hereto, as of the date hereof, neither any Credit Party nor any of its Subsidiaries is a party to any collective bargaining agreement. There are no asserted pending demands for collective bargaining by any union or organization of any Credit Party’s or any of its Subsidiaries’ employees, or, to any Credit Party’s knowledge, any material grievances, disputes or controversies with any such union or other organization, or any threats of strikes or work stoppages, except those that could not reasonably be expected to have a Material Adverse Effect.
7.1.26 Related Businesses . As of the Closing Date, Credit Parties are engaged in the businesses of renting general and specialty equipment to industrial and construction end-users, as well as selling used equipment and complementary parts, supplies and merchandise and providing repair and maintenance services to their customers. Borrower has requested the Lenders to make credit available hereunder for the purposes set forth in subsection 1.1.2 . Each Credit Party and each Subsidiary of each Credit Party expects to derive benefit (and the Board of Directors of each Credit Party and each Subsidiary of each Credit Party has determined that such Credit Party or Subsidiary may reasonably be expected to derive benefit), directly or indirectly, from the credit extended by Lenders hereunder to Borrower, both in its separate capacity and as a member of the group of companies, since the successful operation and condition of each Credit Party and each Subsidiary of each Credit Party is dependent on the continued successful performance of the functions of the group as a whole. Each Credit Party acknowledges that, but for the agreement of each of the other Credit Parties to execute and deliver this Agreement, Administrative Agent and Lenders would not have made available the credit facilities established hereby on the terms set forth herein.
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7.1.27 Margin Regulations . No Credit Party nor any Subsidiary of any Credit Party is engaged in the business of purchasing or selling Margin Stock or extending credit for the purpose of purchasing or carrying Margin Stock.
7.1.28 Regulated Entities . No Credit Party, no Person controlling any Credit Party, nor any Subsidiary of any Credit Party, is an “Investment Company” within the meaning of the Investment Company Act of 1940. No Credit Party is subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state public utilities code or law, or any other federal or state statute or regulation limiting its ability to incur indebtedness.
7.1.29 Environmental Laws . Except as otherwise disclosed on Exhibit 7.1.29 and except for any of the following as could not reasonably be expected to have a Material Adverse Effect:
(i) Each Credit Party and its Subsidiaries have complied with all Environmental Laws and neither any Credit Party nor any of its Subsidiaries nor any of its presently owned real property or presently conducted operations, nor its previously owned real property or prior operations, is subject to any pending or threatened Environmental Claim or any enforcement order from or liability agreement with any Governmental Authority or private Person respecting (A) compliance with any Environmental Law or (B) any potential liabilities and costs or remedial action arising from the Release or threatened Release of a Contaminant.
(ii) Each Credit Party and its Subsidiaries have obtained all permits necessary for their current operations under Environmental Laws, and all such permits are in good standing and each Credit Party and its Subsidiaries are in compliance with all material terms and conditions of such permits.
(iii) Neither any Credit Party nor any of its Subsidiaries, nor, to the best of such Credit Party’s knowledge, any of its predecessors in interest, has in violation of applicable law stored, treated or disposed of any hazardous waste.
(iv) Neither any Credit Party nor any of its Subsidiaries has received any summons, complaint, order or similar written notice indicating that it is not currently in compliance with, or that any Governmental Authority is investigating its compliance with, any Environmental Laws or that it is or may be liable to any other Person as a result of a Release or threatened Release of a Contaminant.
(v) To the best of each Credit Party’s knowledge, none of the present or past operations or Properties of any Credit Party or its Subsidiaries is the subject of any investigation by any Governmental Authority evaluating whether any remedial action is needed to respond to a Release or threatened Release of a Contaminant, and to the best of each Credit Party’s knowledge, there are no facts or circumstances at any such Property that would warrant such remedial action.
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(vi) There is not now, nor to the best of any Credit Party’s knowledge has there ever been on or in the real Properties of any Credit Party or its Subsidiaries:
(A) any underground storage tanks or surface impoundments,
(B) any asbestos-containing material, or
(C) any polychlorinated biphenyls (PCBs) used in hydraulic oils, electrical transformers or other equipment.
(vii) Neither any Credit Party nor any of its Subsidiaries has filed any notice under any requirement of Environmental Law reporting a spill or accidental and unpermitted Release or discharge of a Contaminant into the environment.
(viii) Neither any Credit Party nor any of its Subsidiaries has entered into any negotiations or settlement agreements with any Person (including the prior owner of its property) imposing material obligations or liabilities on such Credit Party or any of its Subsidiaries with respect to any remedial action in response to the Release of a Contaminant or environmentally related claim.
(ix) None of the products manufactured, distributed or sold by any Credit Party or any of its Subsidiaries contain asbestos containing material.
(x) No Environmental Lien has attached to any of the real Properties of any Credit Party or its Subsidiaries.
7.1.30 Motor Vehicles . As of the Closing Date, Exhibit 7.1.30 sets forth a complete and accurate list of all Motor Vehicles owned by any Credit Party or any of its Subsidiaries, together with a good faith estimate of the current value of such Motor Vehicles.
7.1.31 Anti-Terrorism Laws .
(i) General . None of the Credit Parties, nor any of their Subsidiaries or Affiliates is in violation of any Anti-Terrorism Law or engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any Anti-Terrorism Law.
(ii) Executive Order No. 13224 . None of the Credit Parties, nor any of their Subsidiaries or Affiliates is any of the following (each a “ Blocked Person ”):
(A) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224;
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(B) a Person or entity with which any bank or other financial institution is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;
(C) a Person or entity that commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224;
(D) a Person or entity that is named as a “specially designed national” on the most current list published by the U.S. Treasury Department Office of Foreign Asset Control at its official website or any replacement website or other replacement official publication of such list; or
(E) a Person or entity who is affiliated with a Person or entity listed above.
None of the Credit Parties, nor any of their Subsidiaries or Affiliates (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person or (ii) deals in, or otherwise engages in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224.
7.1.32 Deposit and Brokerage Accounts . Exhibit 7.1.32 sets forth as of the Closing Date a complete and accurate list of all deposit, checking and other bank accounts, all securities and other accounts maintained with any securities intermediary or broker dealer and all other similar accounts maintained by each Credit Party and its Subsidiaries, together with a description thereof (i.e., the bank, securities intermediary or broker dealer at which such deposit or other account is maintained and the account number and the purpose thereof). No Credit Party or any of its Subsidiaries maintains any other bank, securities or other similar accounts other than those set forth on Exhibit 7.1.32 .
7.2 [Intentionally Omitted] .
7.3 Survival of Representations and Warranties . All representations and warranties of Credit Parties contained in this Agreement or any of the other Loan Documents shall survive the execution, delivery and acceptance thereof by Administrative Agent and each Lender and the parties thereto and the closing of the transactions described therein or related thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants . During the Term, and thereafter for so long as there are any Obligations (other than unasserted contingent indemnification obligations that are not then due and payable, whether by acceleration, termination or otherwise) outstanding, each Credit Party covenants that it shall, and shall cause each of its Subsidiaries to:
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8.1.1 Visits and Inspections; Appraisals of Rental Equipment Inventory; Lender Meeting .
(i) Permit (A) representatives of Administrative Agent, from time to time, as often as may be reasonably requested, but only during normal business hours, to conduct Audits (not to exceed four (4) times per year if such Audit is to be at the expense of Borrower, unless an Event of Default has occurred and is continuing) and (B) appraisers engaged pursuant to subsection 2.9 and clause (ii) of this subsection 8.1.1 (whether or not personnel of Administrative Agent), from time to time, as provided in such subsection and clause, but only during normal business hours, to visit and inspect the Properties of each Credit Party and each of its Subsidiaries, for the purpose of completing appraisals pursuant to subsection 2.9 and clause (ii) of this subsection 8.1.1 . Administrative Agent, if no Default or Event of Default then exists, shall give Credit Parties reasonable prior notice of any such Audit or appraisals. Without limiting the foregoing, upon the request of Administrative Agent, Credit Parties will participate and will cause their key management personnel to participate in meetings with Administrative Agent and Lenders periodically during each year during regular business hours and upon reasonable prior notice, which meeting(s) shall be held at such times and such places as may be reasonably requested by Administrative Agent. All Audits and appraisals conducted pursuant to this clause (i) shall (except as expressly provided above) be at Borrower’s expense.
(ii) On or before the 60th day after the end of each of Borrower’s fiscal quarters, commencing with the fiscal quarter ending September 30, 2004, deliver to Administrative Agent an appraisal of each type of Rental Equipment Inventory (both serialized and non-serialized) performed by an appraiser selected by Borrower (or, if a similar report is then required to be delivered pursuant to the First Lien Loan and Security Agreement, by the First Lien Debt Agent), which appraisal shall state the Gross Orderly Liquidation Value of all such Rental Equipment Inventory. All inventory appraisals conducted pursuant to this clause (ii) shall be at Borrower’s expense.
8.1.2 Notices . Furnish to Administrative Agent,
(i) promptly after the occurrence thereof, written notice of (A) the occurrence of any event or the existence of any fact which renders any representation or warranty in this Agreement or any of the other Loan Documents inaccurate, incomplete or misleading in any material respect as of the date made and (B) any change in the information disclosed in any Exhibit hereto, in each case after giving effect to the materiality limits and Material Adverse Effect qualifications contained therein;
(ii) promptly, and in any event within three (3) Business Days after a Responsible Officer of any Credit Party has knowledge of the occurrence of an Event of Default or Default that is continuing or the occurrence of any event or development that could reasonably be expected have a Material Adverse Effect, the written statement of a Responsible Officer of Borrower setting forth the details of such Event of Default or Default or other event or development having a Material Adverse Effect and the action which the affected Person proposes to take with respect thereto;
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(iii) promptly after the sending or filing thereof, as the case may be, copies of any proxy statements, financial statements or reports which Borrower has made generally available to its Securities holders and copies of any regular, periodic and special reports or registration statements which Borrower or any of its Subsidiaries files with the Securities and Exchange Commission or any Governmental Authority which may be substituted therefor or any national securities exchange;
(iv) promptly after receipt thereof, copies of any material notice or communication received by any Credit Party or any of its Subsidiaries from any Governmental Authority (including the Securities and Exchange Commission), and promptly after the commencement thereof but in any event not later than five (5) Business Days after service of process with respect thereto, or the obtaining of knowledge thereof by, any Credit Party or any of its Subsidiaries, notice of each action, suit or proceeding before any court or other Governmental Authority or other regulatory body or any arbitrator which, if adversely determined, could reasonably be expected to have a Material Adverse Effect;
(v) within five (5) Business Days after any Credit Party or any ERISA Affiliate knows or has reason to know, that an ERISA Event or a non-exempt prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has occurred, notice thereof and, when known, any action taken or threatened by the IRS, the DOL or the PBGC with respect thereto;
(vi) upon request, or, in the event that such filing reflects a significant change with respect to the matters covered thereby, within five (5) Business Days after the filing thereof with the PBGC, the DOL or the IRS, as applicable, copies of the following: (A) each annual report (Form 5500 series), including Schedule B thereto, filed with the PBGC, the DOL or the IRS with respect to each Pension Plan and (B) a copy of each funding waiver request filed with the PBGC, the DOL or the IRS with respect to any Pension Plan and all communications received by any Credit Party or any ERISA Affiliate from the PBGC, the DOL or the IRS with respect to such request;
(vii) upon request, copies of each actuarial report for any Pension Plan; and within five (5) Business Days after receipt thereof by any Credit Party or any ERISA Affiliate, copies of the following: (A) any notices of the PBGC’s intention to terminate a Pension Plan or to have a trustee appointed to administer such Pension Plan; (B) any unfavorable determination letter from the IRS regarding the qualification of a Pension Plan under Section 401(a) of the Code; (C) any notice from a Multiemployer Plan regarding the imposition of withdrawal liability; or (D) any notice from a Governmental Authority regarding the termination, registration or other event affecting a Foreign Plan which could reasonably be expected to have a Material Adverse Effect;
(viii) within five (5) Business Days after the occurrence thereof, notice of: (A) any changes in the benefits or funding of any existing Pension Plan or Foreign Plan which increase any Credit Party’s annual costs with respect thereto by an amount in excess of $250,000; or (B) any failure by any Credit Party or any ERISA
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Affiliate to make a required installment or any other required payment under Section 412 of the Code on or before the due date for such installment or payment;
(ix) within five (5) Business Days after any Credit Party or any ERISA Affiliate knows or has reason to know that any of the following events has or will occur, notice thereof: (A) a Multiemployer Plan has been or will be terminated; (B) the administrator or plan sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan; or (C) the PBGC has instituted or will institute proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan;
(x) promptly after the receipt or delivery thereof, copies of all statements, reports and other information any Credit Party or any of its Subsidiaries sends to or receives from any holder of the First Lien Debt or any agent or other representative in respect thereof;
(xi) promptly after receiving any notice of any violation by any Credit Party or any of its Subsidiaries of any Environmental Law which could reasonably be expected to have a Material Adverse Effect or that any Governmental Authority has asserted in writing that any Credit Party or any Subsidiary is not in compliance with any Environmental Law or is investigating any Credit Party’s or such Subsidiary’s compliance therewith, copies thereof;
(xii) promptly after receiving any written notice that any Credit Party or any of its Subsidiaries is or may be liable to any Person as a result of the Release or threatened Release of any Contaminant or that any Credit Party or any Subsidiary is subject to investigation by any Governmental Authority evaluating whether any remedial action is needed to respond to the Release or threatened Release of any Contaminant which, in either case, could reasonably be expected to have a Material Adverse Effect, copies of such notice;
(xiii) promptly after receiving any written notice of the imposition of any Environmental Lien against any property of any Credit Party or any of its Subsidiaries, copies of such notice;
(xiv) at least 10 days prior to the consummation of any sale or other disposition of any Inventory of any Credit Party or any of its Subsidiaries (or the consummation of any related series of sales or dispositions, including any sale or other disposition at auction or pursuant to a trade package with an original equipment manufacturer) which has an aggregate book value or fair market value (whichever is greater) in excess of $5,000,000, notice thereof, which notice shall identify the Inventory to be sold, the proposed buyer and the details of such transaction; and
(xv) such other data and information (financial and otherwise) as Administrative Agent or any Lender, from time to time, may reasonably request, bearing upon or related to the Collateral or Credit Parties’ or any of their Subsidiaries’ financial condition or results of operations.
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8.1.3 Financial Statements and Financial Information .
(i) Keep and maintain (A) adequate records and books of account with respect to its business activities in which proper entries are made in accordance with customary accounting practices reflecting all its financial transactions so as to provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP; and (B) effective disclosure controls and procedures designed to ensure that material information relating to the Credit Parties and their Subsidiaries is made known to Borrower and its officers in a timely manner; and
(ii) cause to be prepared and furnished to Administrative Agent and each Lender the following, all to be prepared in accordance with GAAP applied on a consistent basis, unless Borrower’s certified public accountants concur in any change therein and such change is disclosed to Administrative Agent and is consistent with GAAP:
(A) not later than 90 days after the close of each fiscal year of Borrower, unqualified (except for a qualification for a change in accounting principles with which the accountant concurs) audited Consolidated and consolidating (on a line of business basis) balance sheets of Borrower and its Subsidiaries (including the accounts of all Subsidiaries of Borrower and their respective Subsidiaries for the respective periods during which a Subsidiary relationship existed) as of the end of such year, together with the related statements of income, cash flow, changes in shareholder’s equity, and changes in financial position for the periods ended on such date, which do not contain any paragraph of emphasis or explanatory note relating to the ability of Borrower and its Subsidiaries to continue business as a going concern, and are certified by KPMG, LLP or another firm of independent certified public accountants of recognized national standing and, within a reasonable time thereafter a copy of any management letter issued in connection therewith;
(B) not later than 45 days after the end of each fiscal quarter of Borrower occurring after the Closing Date, including the last fiscal quarter of Borrower’s fiscal year, unaudited interim Consolidated and consolidating (on a line of business basis) balance sheets of Borrower and its Subsidiaries (including the accounts of all Subsidiaries of Borrower and their respective Subsidiaries for the respective periods during which a Subsidiary relationship existed) as of the end of such quarter, together with the related statements of income, cash flow, changes in shareholder’s equity, and changes in financial position for the periods ended on such date and for the portion of the fiscal year then elapsed, certified by the chief financial officer of Borrower, in such officer’s capacity as such, as prepared in accordance with GAAP applied consistently with the
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audited financial statements required to be delivered pursuant to subsection 8.1.3(ii)(A) and fairly presenting in all material respects the financial position and results of operations of Borrower and its Subsidiaries for such quarter and period subject only to changes from audit and year-end adjustments and except that such statements need not contain notes;
(C) not later than 30 days after the end of each fiscal month of Borrower occurring after the Closing Date, including the last fiscal month of Borrower’s fiscal year, unaudited interim Consolidated balance sheets of Borrower and its Subsidiaries (including the accounts of all Subsidiaries of Borrower and their respective Subsidiaries for the respective periods during which a Subsidiary relationship existed) as of the end of such month, together with the related statements of income and cash flow setting forth, in each case, in comparative form the figures for the corresponding date or period of the immediately preceding fiscal year and of the Projections, certified by the chief financial officer of Borrower, in such officer’s capacity as such, as prepared in accordance with GAAP applied consistently with the audited financial statements required to be delivered pursuant to subsection 8.1.3(ii)(A) and fairly presenting in all material respects the financial position and results of operations of Borrower and its Subsidiaries for such month subject only to changes from audit, quarterly and year-end adjustments and except that such statements need not contain notes;
(D) together with each delivery of financial statements (1) pursuant to the foregoing clauses (A), (B) and (C), a compliance certificate in the form of Exhibit 8.1.3(iv) hereto executed by the chief financial officer of Borrower (a “Compliance Certificate” ); and (2) together with the financial information delivered pursuant to the forgoing clause (B) (or upon Administrative Agent’s request from time to time) a list of all contracts entered into by any Credit Party or any of its Subsidiaries with surety, bonding, indemnity or similar entities since the date that the last Complianc | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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