EXHIBIT 10.1
EXECUTION COPY
H&E EQUIPMENT SERVICES L.L.C.,
and
GREAT NORTHERN EQUIPMENT, INC.,
as Borrowers,
THE OTHER CREDIT PARTIES SIGNATORY HERETO,
as Credit Parties,
THE LENDERS SIGNATORY HERETO
FROM TIME TO TIME,
as Lenders
GENERAL ELECTRIC CAPITAL CORPORATION,
as Arranger
BANK OF AMERICA, N.A.,
as Syndication Agent
FLEET CAPITAL CORPORATION,
as Documentation Agent
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Administrative Agent
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CREDIT AGREEMENT
Dated as of June 17, 2002
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TABLE OF CONTENTS
CLAUSE PAGE
1. AMOUNT AND TERMS OF CREDIT.............................................................................3
1.1 Credit Facilities.............................................................................3
1.2 Letters of Credit.............................................................................7
1.3 Prepayments...................................................................................7
1.4 Use of Proceeds..............................................................................10
1.5 Interest and Applicable Margins...............................................................10
1.6 Eligible Accounts............................................................................13
1.6A Eligible Rolling Stock................................................................................15
1.6B Eligible Rentals......................................................................................16
1.7 Eligible Parts and Tools Inventory............................................................18
1.7A Eligible Equipment Inventory..........................................................................19
1.8 Cash Management Systems......................................................................21
1.9 Fees.........................................................................................21
1.10 Receipt of Payments..........................................................................22
1.11 Application and Allocation of Payments........................................................22
1.12 Loan Account and Accounting..................................................................23
1.13 Indemnity....................................................................................23
1.14 Access.......................................................................................25
1.15 Taxes........................................................................................25
1.16 Capital Adequacy; Increased Costs; Illegality.................................................26
1.17 Single Loan..................................................................................28
2. CONDITIONS PRECEDENT..................................................................................29
2.1 Conditions to the Initial Loans...............................................................29
2.2 Further Conditions to Each Loan...............................................................31
3. REPRESENTATIONS AND WARRANTIES........................................................................32
3.1 Corporate or Limited Liability Company Existence; Compliance with Law.........................32
3.2 Executive Offices; Collateral Locations; FEIN.................................................32
3.3 Corporate or Limited Liability Company Power, Authorization, Enforceable
Obligations..................................................................................32
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TABLE OF CONTENTS
(CONTINUED)
CLAUSE PAGE
3.4 Financial Statements and Projections..........................................................33
3.5 Material Adverse Effect......................................................................34
3.6 Ownership of Property; Liens..................................................................35
3.7 Labor Matters................................................................................36
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness.....................36
3.9 Government Regulation........................................................................37
3.10 Margin Regulations...........................................................................37
3.11 Taxes........................................................................................37
3.12 ERISA........................................................................................38
3.13 No Litigation................................................................................39
3.14 Brokers......................................................................................39
3.15 Intellectual Property........................................................................39
3.16 Full Disclosure..............................................................................39
3.17 Environmental Matters........................................................................40
3.18 Insurance....................................................................................41
3.19 Deposit and Disbursement Accounts.............................................................41
3.20 Government Contracts.........................................................................41
3.21 Customer and Trade Relations.................................................................41
3.22 Agreements and Other Documents................................................................41
3.23 Solvency.....................................................................................42
3.24 Contribution Agreement and Plan of Reorganization.............................................42
3.25 Status of Holdings...........................................................................43
3.26 Senior Debt..................................................................................43
4. FINANCIAL STATEMENTS AND INFORMATION..................................................................43
4.1 Reports and Notices..........................................................................43
4.2 Communication with Accountants...............................................................43
5. AFFIRMATIVE COVENANTS.................................................................................44
5.1 Maintenance of Existence and Conduct of Business..............................................44
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TABLE OF CONTENTS
(CONTINUED)
CLAUSE PAGE
5.2 Payment of Charges...........................................................................44
5.3 Books and Records............................................................................45
5.4 Insurance; Damage to or Destruction of Collateral.............................................45
5.5 Compliance with Laws.........................................................................47
5.6 Supplemental Disclosure......................................................................47
5.7 Intellectual Property........................................................................48
5.8 Environmental Matters........................................................................48
5.9 Landlords' Agreements, Mortgagee Agreements, Bailee Letters, Real Estate
Purchases and Vendor Inter-Creditor Agreements................................................49
5.10 Government Accounts..........................................................................50
5.11 Further Assurances...........................................................................50
6. NEGATIVE COVENANTS....................................................................................51
6.1 Acquisitions, Subsidiaries, Etc...............................................................51
6.2 Investments; Loans and Advances...............................................................54
6.3 Indebtedness.................................................................................54
6.4 Employee Loans and Affiliate Transactions.....................................................56
6.5 Capital Structure and Business................................................................56
6.6 Guaranteed Indebtedness......................................................................57
6.7 Liens........................................................................................57
6.8 Disposition of Stock and Assets...............................................................58
6.9 ERISA........................................................................................59
6.10 Financial Covenants..........................................................................59
6.11 Hazardous Materials..........................................................................59
6.12 Designated Senior Debt.......................................................................59
6.13 Cancellation of Indebtedness.................................................................59
6.14 Restricted Payments..........................................................................59
6.15 Change of Name or Location; Change of Fiscal Year.............................................60
6.16 No Impairment of Intercompany Transfers.......................................................60
6.17 No Speculative Transactions..................................................................60
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TABLE OF CONTENTS
(CONTINUED)
CLAUSE PAGE
6.18 Changes Relating to Senior Debt; Subordinated Debt Designation of Credit Facility.............61
6.19 Changes in Depreciation Schedules.............................................................61
6.20 Credit Parties Other than Borrowers...........................................................62
6.21 Lock Box Remittances; Vendor Payments.........................................................62
7. TERM..................................................................................................62
7.1 Termination..................................................................................62
7.2 Survival of Obligations Upon Termination of Financing Arrangements............................62
7.3 Default Purchase Option......................................................................63
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES................................................................64
8.1 Events of Default............................................................................64
8.2 Remedies.....................................................................................66
8.3 Waivers by Credit Parties....................................................................67
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT....................................................67
9.1 Assignment and Participations................................................................67
9.2 Appointment of Agent.........................................................................70
9.3 Agent's Reliance, Etc........................................................................71
9.4 GE Capital and Affiliates....................................................................71
9.5 Lender Credit Decision.......................................................................72
9.6 Indemnification..............................................................................72
9.7 Successor Agent..............................................................................72
9.8 Co-Agents....................................................................................73
9.9 Setoff and Sharing of Payments................................................................73
9.10 Advances; Payments; Non-Funding Lenders; Information; Actions in Concert......................74
10. SUCCESSORS AND ASSIGNS................................................................................77
10.1 Successors and Assigns.......................................................................77
11. MISCELLANEOUS.........................................................................................77
11.1 Complete Agreement; Modification of Agreement.................................................77
11.2 Amendments and Waivers.......................................................................77
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TABLE OF CONTENTS
(CONTINUED)
CLAUSE PAGE
11.3 Fees and Expenses............................................................................79
11.4 No Waiver....................................................................................81
11.5 Remedies.....................................................................................81
11.6 Severability.................................................................................81
11.7 Conflict of Terms............................................................................82
11.8 Confidentiality..............................................................................82
11.9 Governing Law................................................................................82
11.10 Notices......................................................................................83
11.11 Section Titles...............................................................................84
11.12 Counterparts.................................................................................84
11.13 Waiver of Jury Trial.........................................................................84
11.14 Press Releases and Related Matters............................................................84
11.15 Reinstatement................................................................................85
11.16 Advice of Counsel............................................................................85
11.17 No Strict Construction.......................................................................85
12. CROSS-GUARANTY........................................................................................85
12.1 Cross-Guaranty...............................................................................85
12.2 Waivers by Borrowers.........................................................................86
12.3 Benefit of Guaranty..........................................................................86
12.4 Subordination of Subrogation, Etc.............................................................86
12.5 Election of Remedies.........................................................................87
12.6 Limitation...................................................................................87
12.7 Contribution with Respect to Guaranty Obligations.............................................88
12.8 Liability Cumulative.........................................................................89
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INDEX OF APPENDICES
Exhibit 1.1(a)(i) - Form of Notice of Revolving Credit Advance
Exhibit 1.1(a)(ii) - Form of Revolving Note
Exhibit 1.1(b)(ii) - Form of Swing Line Note
Exhibit 1.5(e) - Form of Notice of Conversion/Continuation
Exhibit 1.6B(a) - Form of Lease
Exhibit 4.1(b) - Form of Borrowing Base Certificate
Exhibit 6.7(d)(iii)(A) - Form of Intercreditor Agreement (Floor Plan Inventory)
Exhibit 6.7(d)(iii)(B) - Form of Intercreditor Agreement (Off Balance Sheet Inventory)
Exhibit 9.1(a) - Form of Assignment Agreement
Exhibit B-1(a) Form of Notice of Issuance of Letter of Credit
Schedule 1.1 - Responsible Individual
Schedule 1.4 - Sources and Uses; Funds Flow Memorandum
Schedule 2.1(b) - Terminating Prior Lenders
Schedule 3.2 - Executive Offices; FEIN
Schedule 3.4(A) - Financial Statements
Schedule 3.4(B) - Pro Forma
Schedule 3.4(C) - Projections
Schedule 3.4(D) - Fair Salable Balance Sheet
Schedule 3.4(E) - Financial Statements
Schedule 3.6 - Real Estate and Leases
Schedule 3.7 - Labor Matters
Schedule 3.8 - Ventures, Subsidiaries and Affiliates; Outstanding Stock
Schedule 3.11 - Tax Matters
Schedule 3.12 - ERISA Plans
Schedule 3.13 - Litigation
Schedule 3.15 - Intellectual Property
Schedule 3.17 - Hazardous Materials
Schedule 3.18 - Insurance
Schedule 3.19 - Deposit and Disbursement Accounts
Schedule 3.20 - Government Contracts
Schedule 3.22 - Material Agreements
Schedule 5.1 - Trade Names
Schedule 5.9 - Real Estate Liens
Schedule 6.2 - Investments
Schedule 6.3 - Indebtedness
Schedule 6.4(a) - Extraordinary Transactions
Schedule 6.4(b) - Transactions with Affiliates
Schedule 6.6 - Guaranteed Indebtedness
Schedule 6.7 - Existing Liens
Annex A (Recitals) - Definitions
Annex B (Section 1.2) - Letters of Credit
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Annex C (Section 1.8) - Cash Management Systems
Annex D (Section 2.1(a)) - Closing Checklist
Annex E (Section 4.1(a)) - Financial Statements and Projections -- Reporting
Annex F (Section 4.1(b)) - Collateral Reports
Annex G (Section 6.10) - Financial Covenants
Annex H (Section 9.9(a)) - Lenders' Wire Transfer Information
Annex I (Section 11.10) - Notice Addresses
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CREDIT AGREEMENT, dated as of June 17, 2002 (this "
CREDIT AGREEMENT"), among
GREAT NORTHERN EQUIPMENT, INC., a Montana corporation ("GREAT NORTHERN"), H&E
EQUIPMENT SERVICES L.L.C., a Louisiana limited liability company (f/k/a/ Gulf
Wide Industries, L.L.C., a Louisiana limited liability company ("GULF WIDE"))
("H&E" and together with Great Northern, each individually, a "BORROWER", and
collectively and jointly and severally, the "BORROWERS"), the other Credit
Parties signatory hereto, GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation (in its individual capacity, "GE CAPITAL"), for itself as Lender, as
Administrative Agent for the Lenders and the other Lenders signatory hereto from
time to time, GENERAL ELECTRIC CAPITAL CORPORATION, as Arranger ("ARRANGER"),
BANK OF AMERICA, N.A., as Syndication Agent ("SYNDICATION AGENT") and FLEET
CAPITAL CORPORATION, as Documentation Agent ("DOCUMENTATION AGENT").
WHEREAS:
(A) ICM Equipment Company, L.L.C., a Delaware limited liability company
("ICM"), owns all of the outstanding shares of capital stock of GNE
Investments, Inc., a Washington corporation ("GNE INVESTMENTS");
(B) GNE Investments owns all of the outstanding shares of capital stock of
Great Northern;
(C) H&E, owns all of the outstanding membership interests of Head & Xxxxxxxx
Equipment L.L.C, a Louisiana limited liability company ("HEAD & XXXXXXXX
EQUIPMENT");
(D) Pursuant to that certain Contribution Agreement and Plan of
Reorganization dated as of June 14, 2002 (the "CONTRIBUTION AGREEMENT AND
PLAN OF REORGANIZATION") among H&E Holdings L.L.C., a Delaware limited
liability company ("H&E HOLDINGS"), H&E, Head & Xxxxxxxx Equipment, ICM
and the equity holders of ICM and H&E, all common and preferred equity of
ICM and H&E will be contributed to H&E Holdings (the "H&E CONTRIBUTION")
in exchange for membership interests in H&E Holdings so that H&E Holdings
will own all of the outstanding membership interests of ICM and H&E;
(E) As provided in the Contribution Agreement and Plan of Reorganization,
immediately following the H&E Contribution, H&E Holdings will contribute
all of the membership interests in ICM to H&E so that H&E will own all of
the outstanding membership interests of ICM, and immediately prior to the
execution of this
Credit Agreement, Head & Xxxxxxxx Equipment and ICM
will merge with and into H&E (the "MERGERS");
(F) Upon consummation of the Mergers, H&E will own all of the outstanding
shares of capital stock of (i) GNE Investments, which will hold all of
the outstanding shares of capital stock of Great Northern and (ii) H&E
Finance Corp., a Delaware corporation ("H&E FINANCE"), which is being
organized prior to the execution of this
Credit Agreement for the purpose
of entering into and consummating the transactions under the Senior Note
Indenture and Senior Subordinated Note Indenture (as each such term is
defined below);
(G) Borrowers have requested that Lenders extend a revolving credit facility
to Borrowers of up to One Hundred Fifty Million Dollars ($150,000,000) in
aggregate principal amount for the purpose of refinancing certain
indebtedness of Borrowers and to provide (a) working capital financing
for Borrowers, (b) funds for other general corporate purposes of
Borrowers and (c) funds for other purposes permitted hereunder, and for
these purposes, Lenders are willing to make certain loans and other
extensions of credit to Borrowers of up to such amount upon the terms and
conditions set forth herein;
(H) H&E and H&E Finance have agreed to finance certain of its indebtedness
through the issuance of (i) $200,000,000 of senior secured notes
(together with any other senior notes issued pursuant to the Senior Note
Indenture, as amended, modified or supplemented from time to time in
accordance with their terms and the terms hereof, the "SENIOR NOTES")
pursuant to an Indenture dated as of the date hereof (as amended,
modified or supplemented from time to time in accordance with its terms
and the terms hereof, the "SENIOR NOTE INDENTURE") among H&E, H&E Finance
and Bank of
New York, as trustee and (ii) $50,000,000 of senior unsecured
subordinated notes (together with any other senior unsecured subordinated
notes issued pursuant to the Senior Subordinated Note Indenture, as
amended, modified or supplemented from time to time in accordance with
their terms and the terms hereof, the "SENIOR SUBORDINATED NOTES")
pursuant to an Indenture dated as of the date hereof (as amended,
modified or supplemented from time to time in accordance with its terms
and the terms hereof, the "SENIOR SUBORDINATED NOTE INDENTURE") among
H&E, H&E Finance and Bank of
New York, as trustee;
(I) Borrowers have agreed to secure all of their obligations under the Loan
Documents by granting to Agent, for the benefit of Agent and Lenders, a
security interest in and lien upon all of their existing and
after-acquired personal and real property;
(J) GNE Investments, H&E Holdings and H&E Finance are willing to guarantee
all of the obligations of Borrowers to Agent and Lenders under the Loan
Documents and (i) H&E Holdings is willing to pledge to Agent, for the
benefit of Agent and Lenders, all of the membership interests of H&E to
secure such guaranty and all Obligations (as defined in Annex A), (ii)
H&E is willing to pledge to Agent, for the benefit of Agent and Lenders,
all of the Stock of H&E Finance and GNE Investments to secure such
guaranty and all Obligations, and (iii) GNE Investments is willing to
pledge to Agent, for the benefit of Agent and Lenders, all of the Stock
of Great Northern to secure the Obligations; and
(K) Capitalized terms used in this Agreement have the meanings ascribed to
them in Annex A and, for purposes of this Agreement and the other Loan
Documents, the rules of construction set forth in Annex A shall govern.
All Annexes, Disclosures Schedules, Exhibits and other attachments
(collectively, "APPENDICES") hereto, or expressly identified to this
Agreement, are incorporated herein by reference, and taken together with
this Agreement, shall constitute but a single agreement. These Recitals
shall be construed as part of the Agreement.
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NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND THE MUTUAL COVENANTS
HEREINAFTER CONTAINED, AND FOR OTHER GOOD AND VALUABLE CONSIDERATION, THE
PARTIES HERETO AGREE AS FOLLOWS:
1. AMOUNT AND TERMS OF CREDIT
1.1 Credit Facilities
(a) Revolving Credit Facility
(i) Subject to the terms and conditions hereof and to the last
sentence of Section 1.1(c), each Revolving Lender agrees to
make available to Borrowers from time to time until the
Commitment Termination Date its Pro Rata Share of advances
(each, a "REVOLVING CREDIT ADVANCE"). The Pro Rata Share of
the Revolving Loan of any Revolving Lender shall not at any
time exceed its separate Revolving Loan Commitment. The
obligations of each Revolving Lender hereunder shall be
several and not joint. Until the Commitment Termination Date,
Borrowers may borrow, repay and reborrow under this Section
1.1(a); PROVIDED, that the amount of any Revolving Credit
Advance to be made to any Borrower at any time shall not
exceed Borrowing Availability of such Borrower at such time
or, cause the Borrowing Availability of all Borrowers to be
exceeded. Moreover, the sum of the Revolving Loan and Swing
Line Loan outstanding to any Borrower shall not exceed at any
time that Borrower's separate Borrowing Base, PROVIDED, that
in the case of any Revolving Advances or Swingline Advances
that constitute H&E/Great Northern Advances included in such
sum, "that Borrower's separate Borrowing Base" shall mean the
Great Northern Borrowing Base. Each Revolving Credit Advance
shall be made on notice by Borrower Representative on behalf
of the applicable Borrower to the representative of Agent
identified in Schedule 1.1 at the address specified therein.
Any such notice must be given no later than (1) noon (
New
York time) on the Business Day of the proposed Revolving
Credit Advance, in the case of an Index Rate Loan, or (2)
noon (
New York time) on the date which is three (3) Business
Days prior to the proposed Revolving Credit Advance, in the
case of a LIBOR Loan. Each such notice (a "NOTICE OF
REVOLVING CREDIT ADVANCE") must be given in writing (by
telecopy or overnight courier) substantially in the form of
Exhibit 1.1(a)(i), and shall include the information required
in such Exhibit and such other administrative information as
may be reasonably required by Agent. If any Borrower desires
to have the Revolving Credit Advances bear interest by
reference to a LIBOR Rate, Borrower Representative must
comply with Section 1.5(e).
(ii) Upon the request of any Revolving Lender, each Borrower shall
execute and deliver to such Revolving Lender a note to
evidence the Revolving Loan Commitment of that Revolving
Lender. Each such note shall be in the maximum
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principal amount of the Revolving Loan Commitment of the
applicable Revolving Lender, dated the Closing Date and
substantially in the form of Exhibit 1.1(a)(ii) (each as
amended or replaced from time to time, a "REVOLVING NOTE"
and, collectively, the "REVOLVING NOTES"). Each Revolving
Note shall represent the obligation of the applicable
Borrower to pay the amount of the applicable Revolving
Lender's Revolving Loan Commitment or, if less, such
Revolving Lender's Pro Rata Share of the aggregate unpaid
principal amount of all Revolving Credit Advances to such
Borrower together with interest thereon as prescribed in
Section 1.5. The entire unpaid balance of the aggregate
Revolving Loan and all other noncontingent Obligations shall
be immediately due and payable in full in immediately
available funds on the Commitment Termination Date.
(b) Swing Line Facility
(i) Agent shall notify the Swing Line Lender upon Agent's receipt
of any Notice of Revolving Credit Advance. Subject to the
terms and conditions hereof, the Swing Line Lender may, in
its discretion, make available from time to time until the
Commitment Termination Date advances (each, a "SWING LINE
ADVANCE") in accordance with any such notice. The provisions
of this Section 1.1(b) shall not relieve Revolving Lenders of
their obligations to make Revolving Credit Advances under
Section 1.1(a); PROVIDED, that if the Swing Line Lender makes
a Swing Line Advance pursuant to any such notice, such Swing
Line Advance shall be in lieu of any Revolving Credit Advance
that otherwise may be made by Revolving Credit Lenders
pursuant to such notice. The aggregate amount of Swing Line
Advances outstanding shall not exceed at any time the lesser
of (A) the Swing Line Commitment and (B) the lesser of (x)
the Maximum Amount and (y) the Aggregate Borrowing Base in
each case, less the outstanding balance of the Revolving Loan
at such time ("SWING LINE AVAILABILITY"). Moreover, the Swing
Line Loan outstanding to any Borrower shall not exceed at any
time such Borrower's separate Borrowing Base less the
Revolving Loan outstanding to such Borrower, PROVIDED, that
in the case of any H&E/Great Northern Advance, "such
Borrower's separate Borrowing Base" shall mean the Great
Northern Borrowing Base. Until the Commitment Termination
Date, Borrowers may from time to time borrow, repay and
reborrow under this Section 1.1(b). Each Swing Line Advance
shall be made on the day requested pursuant to a Notice of
Revolving Credit Advance delivered to Agent by Borrower
Representative on behalf of the applicable Borrower
requesting a Swing Line Advance in accordance with Section
1.1(a). Any such notice must be given no later than noon (
New
York time) on the Business Day of the proposed Swing Line
Advance. Unless the Swing Line Lender has received at least
one Business Day's prior written notice from Majority
Revolving Lenders instructing it not to make a Swing Line
Advance, the Swing Line Lender shall, notwithstanding the
failure of any
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condition precedent set forth in Section 2.2, except in the
case of a Prohibited Swing Line Advance, be entitled to fund
that Swing Line Advance, and to have each Revolving Lender
make Revolving Credit Advances in accordance with Section
1.1(b)(iii) or purchase participating interests in accordance
with Section 1.1(b)(iv). Notwithstanding any other provision
of this Agreement or the other Loan Documents, the Swing Line
Loan shall constitute an Index Rate Loan. Borrowers shall
repay the aggregate outstanding principal amount of the Swing
Line Loan upon demand therefor by Agent.
(ii) Upon the request of the Swing Line Lender, each Borrower
shall execute and deliver to the Swing Line Lender a
promissory note to evidence the Swing Line Commitment. If a
promissory note is requested, each such note shall be in the
principal amount of the Swing Line Commitment of the Swing
Line Lender, dated the Closing Date and substantially in the
form of Exhibit 1.1(b)(ii) (each as amended or replaced from
time to time, a "SWING LINE NOTE" and, collectively, the
"SWING LINE NOTES"). Each Swing Line Note shall represent the
obligation of the applicable Borrower to pay the amount of
the Swing Line Commitment or, if less, the aggregate unpaid
principal amount of all Swing Line Advances made to such
Borrower together with interest thereon as prescribed in
Section 1.5. The entire unpaid balance of the Swing Line Loan
and all other non contingent Obligations shall be immediately
due and payable in full in immediately available funds on the
Commitment Termination Date if not sooner paid in full.
(iii) The Swing Line Lender shall at any time and from time to time
in its sole and absolute discretion, but not less frequently
than on each Settlement Date on behalf of any Borrower (and
each Borrower hereby irrevocably authorizes the Swing Line
Lender to so act on its behalf), request each Revolving
Lender (including the Swing Line Lender) to make a Revolving
Credit Advance to such Borrower (which shall be an Index Rate
Loan) in an amount equal to such Revolving Lender's Pro Rata
Share of the principal amount of such Borrower's Swing Line
Loan (the "REFUNDED SWING LINE LOAN") outstanding on the date
such notice is given. Unless any of the events described in
Sections 8.1(h) or (i) has occurred (in which event the
procedures of Section 1.1(b)(iv) shall apply) and regardless
of whether the conditions precedent set forth in this
Agreement to the making of a Revolving Credit Advance are
then satisfied, each Revolving Lender shall disburse directly
to Agent, its Pro Rata Share of a Revolving Credit Advance on
behalf of the Swing Line Lender, prior to 3:00 p.m. (
New York
time), in immediately available funds on the Business Day
next succeeding the date such notice is given. The proceeds
of such Revolving Credit Advances shall be immediately paid
to the Swing Line Lender and applied to repay the Refunded
Swing Line Loan of the applicable Borrower.
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(iv) If, prior to refunding a Swing Line Loan with a Revolving
Credit Advance pursuant to Section 1.1(b)(iii), one of the
events described in Sections 8.1(h) or (i) has occurred,
then, subject to the provisions of Section 1.1(b)(v) below,
each Revolving Lender shall, on the date such Revolving
Credit Advance was to have been made for the benefit of the
applicable Borrower, purchase from the Swing Line Lender an
undivided participation interest in the Swing Line Loan to
such Borrower in an amount equal to its Pro Rata Share of
such Swing Line Loan. Upon request, each Revolving Lender
shall promptly transfer to the Swing Line Lender, in
immediately available funds, the amount of its participation
interest.
(v) Each Revolving Lender's obligation to make Revolving Credit
Advances in accordance with Section 1.1(b)(iii) and to
purchase participation interests in accordance with Section
1.1(b)(iv) shall be absolute and unconditional and shall not
be affected by any circumstance, including (A) any setoff,
counterclaim, recoupment, defense or other right that such
Revolving Lender may have against the Swing Line Lender, any
Borrower or any other Person for any reason whatsoever; (B)
the occurrence or continuance of any Default or Event of
Default; (C) any inability of any Borrower to satisfy the
conditions precedent to borrowing set forth in this Agreement
at any time; or (D) any other circumstance, happening or
event whatsoever, whether or not similar to any of the
foregoing. If any Revolving Lender does not make available to
Agent or the Swing Line Lender, as applicable, the amount
required pursuant to Section 1.1(b)(iii) or 1.1(b)(iv), as
the case may be, the Swing Line Lender shall be entitled to
recover such amount on demand from such Revolving Lender,
together with interest thereon for each day from the date of
non-payment until such amount is paid in full at the Federal
Funds Rate for the first two Business Days and at the Index
Rate thereafter.
(c) Reliance on Notices; Appointment of Borrower Representative
Agent shall be entitled to rely upon, and shall be fully protected
in relying upon, any Notice of Revolving Credit Advance, Notice of
Conversion/Continuation or similar notice believed by Agent to be
genuine. Agent may assume that each Person executing and delivering
any such notice in accordance herewith was duly authorized, unless
the responsible individual acting thereon for Agent has actual
knowledge to the contrary. Each Borrower, and to the extent
applicable, each other Credit Party, hereby designates H&E as its
representative and agent on its behalf for the purposes of issuing
Notices of Revolving Credit Advances and Notices of
Conversion/Continuation, giving instructions with respect to the
disbursement of the proceeds of the Loans, selecting interest rate
options, requesting Letters of Credit, giving and receiving all
other notices and consents hereunder or under any of the other Loan
Documents and taking all other actions (including in respect of
compliance with covenants) on behalf of any Credit Party or Credit
Parties under the Loan Documents. Borrower Representative hereby
accepts such
6
appointment. Agent and each Lender may regard any notice or other
communication pursuant to any Loan Document from Borrower
Representative as a notice or communication from all Credit Parties,
and may give any notice or communication required or permitted to be
given to any Credit Party or Credit Parties hereunder to Borrower
Representative on behalf of such Credit Party or Credit Parties.
Each Credit Party agrees that each notice, election, representation
and warranty, covenant, agreement and undertaking made on its behalf
by Borrower Representative shall be deemed for all purposes to have
been made by such Credit Party and shall be binding upon and
enforceable against such Credit Party to the same extent as if the
same had been made directly by such Credit Party. Notwithstanding
anything to the contrary contained herein, unless the Requisite
Lenders shall otherwise agree in writing, the Borrower
Representative shall not make any request for an Advance on behalf
of Great Northern and Great Northern shall not be entitled to borrow
from Lenders hereunder, PROVIDED, that subject to the terms hereof,
H&E may make requests for and Lenders shall make H&E/Great Northern
Advances.
1.2 Letters of Credit
Subject to and in accordance with the terms and conditions contained
herein and in Annex B, Borrower Representative, on behalf of any
Borrower, shall have the right to request, and Revolving Lenders agree to
incur, or purchase participations in, Letter of Credit Obligations in
respect of such Borrower.
1.3 Prepayments
(a) Voluntary Prepayments; Reductions in Revolving Loan Commitments
Any Borrower may at any time voluntarily prepay all or part of the
Revolving Credit Advances made to such Borrower at any time or from
time to time without premium or penalty. Borrowers may at any time
on at least ten (10) days' prior written notice by Borrower
Representative to Agent permanently reduce (but not terminate) the
Revolving Loan Commitment; PROVIDED, that (A) any such reductions
shall be in a minimum amount of $5,000,000 and integral multiples of
$250,000 in excess of such amount, (B) the Revolving Loan Commitment
shall not be reduced to an amount less than the amount of the
Revolving Loan plus the Swingline Loan then outstanding, and (C)
after giving effect to such reductions, Borrowers shall comply with
Section 1.3(b)(i). In addition, Borrowers may at any time on at
least 10 days' prior written notice by Borrower Representative to
Agent terminate the Revolving Loan Commitment; PROVIDED, that upon
such termination, all Loans and other Obligations shall be
immediately due and payable in full and all Letter of Credit
Obligations shall be cash collateralized or otherwise satisfied in
accordance with Annex B. Any such payment resulting from termination
of the Revolving Loan Commitment must be accompanied by payment of
all accrued and unpaid interest on the Loans and other Obligations
and any LIBOR funding breakage costs in accordance with Section
1.13(b). Upon any such reduction or termination of the
7
Revolving Loan Commitment, each Borrower's right to request
Revolving Credit Advances, or request that Letter of Credit
Obligations be incurred on its behalf, or request Swing Line
Advances, shall simultaneously be permanently reduced or terminated,
as the case may be; PROVIDED, that a permanent reduction of the
Revolving Loan Commitment shall not require a corresponding PRO RATA
reduction in the L/C Sublimit. Each notice of partial prepayment
shall designate the Borrower whose Revolving Credit Advances are to
be repaid and identify the particular Revolving Credit Advances to
be repaid.
(b) Mandatory Prepayments
(i) If at any time the aggregate outstanding balances of the
Revolving Loan exceeds the lesser of (A) the Maximum Amount
LESS the aggregate outstanding Swing Line Loan at such time
and (B) the Aggregate Borrowing Base LESS the aggregate
outstanding Swing Line Loan at such time, Borrowers shall
immediately repay the aggregate outstanding Revolving Credit
Advances to the extent required to eliminate such excess. If
any such excess remains after repayment in full of the
aggregate outstanding Revolving Credit Advances, Borrowers
shall provide cash collateral for the Letter of Credit
Obligations in the manner set forth in Annex B to the extent
required to eliminate such excess. Furthermore, if, at any
time, the outstanding balance of the Revolving Loan to any
Borrower exceeds such Borrower's separate Borrowing Base LESS
the outstanding balance of the Swing Line Loan to such
Borrower, the applicable Borrower shall immediately repay its
Revolving Credit Advances in the amount of such excess (and,
to the extent necessary, provide cash collateral for its
Letter of Credit Obligations as described above), PROVIDED,
that as to any Revolving Advances consisting of H&E Great
Northern Advances included in such Revolving Loan balance,
"such Borrower's separate Borrowing Base" shall mean the
Great Northern Borrowing Base.
(ii) Immediately upon receipt by any Credit Party of proceeds of
any asset disposition (excluding proceeds of dispositions of
Equipment Inventory and P&E permitted by Section 6.8 having
an aggregate Net Book Value in any one Fiscal Year, not
exceeding $500,000) or any sale of Stock of any Subsidiary of
such Credit Party, Borrowers shall prepay the Loans in an
amount equal to all such proceeds, net of (A) commissions and
other reasonable and customary transaction costs, fees and
expenses properly attributable to such transaction and
payable by any Credit Party in connection therewith (in each
case, paid to non-Affiliates), (B) amounts payable to holders
of senior Liens (to the extent such Liens constitute
Permitted Encumbrances hereunder), if any, on the assets so
disposed and (C) transfer taxes plus an appropriate reserve
for income taxes in accordance with GAAP in connection
therewith. Any such prepayment shall, subject to Section
1.3(b)(iv), be applied in accordance with Section 1.3(c).
(iii) If any Credit Party issues Stock or any Indebtedness (other
than Indebtedness permitted by Section 6.3) in excess of
$1,000,000 in the aggregate of such Stock
8
and such Indebtedness, no later than the Business Day
following the date of receipt of the cash proceeds thereof,
the issuing Credit Party shall prepay the Loans in an amount
equal to all such proceeds, net of underwriting discounts and
commissions and other reasonable costs paid to non-Affiliates
in connection therewith; PROVIDED, that no such prepayment
shall be required, so long as no Event of Default has
occurred and is continuing, from the proceeds of any issuance
of Stock by a Credit Party (i) to any director, officer or
other employee of such Credit Party, the total proceeds of
which do not exceed $5,000,000 in the aggregate, (ii) in
connection with the Related Transactions, (iii) as
consideration for any Person (other than any Affiliate of a
Credit Party) providing permitted Indebtedness under Section
6.3, (iv) to any other Credit Party or (v) as consideration
to any Person (other than an Affiliate) selling assets in any
Permitted Acquisition. Any such prepayment shall, subject to
Section 1.3(b)(iv), be applied in accordance with Section
1.3(c).
(iv) In the event that Section 1.3(b)(i), (ii) or (iii) shall
require any prepayment to be made on a day other than an
Interest Payment Date, then upon receipt of such prepayment
and to the extent requested by any Borrower, Agent shall hold
such amount as cash collateral (provided that the Borrower
delivering the same shall have executed and delivered such
documents as Agent shall have requested in connection with
such cash collateral) and, so long as no Default or Event of
Default shall have occurred and be continuing, shall not
apply such cash collateral to the prepayment under the
applicable paragraph of this Section 1.3 until the next
succeeding Interest Payment Date. Such cash collateral shall
be invested in Cash Equivalents as directed by such Borrower
in accordance with such documents. Interest earned on such
cash collateral shall accrue for the account of the Borrower
providing the same, shall constitute additional cash
collateral and (assuming no Default or Event of Default shall
be continuing) shall be, to the extent remaining, applied to
such prepayment on such next succeeding Interest Payment
Date.
(c) Application of Certain Mandatory Prepayments
Any prepayments made by any Borrower or Credit Party pursuant to
Section 1.3(b)(ii) or (iii) shall be applied as follows: FIRST, to
Fees and reimbursable expenses of Agent then due and payable
pursuant to any of the Loan Documents; SECOND, to Fees and any other
fees and reimbursable expenses of Lenders then due and payable
pursuant to any of the Loan Documents; THIRD, to interest then due
and payable on the Swing Line Loan; FOURTH, to the principal balance
of the Swing Line Loan until the same has been repaid in full;
FIFTH, to interest then due and payable on the Revolving Credit
Advances; SIXTH, to the outstanding principal balance of the
Revolving Credit Advances until the same has been paid in full;
SEVENTH, to any Letter of Credit Obligations, to provide cash
collateral therefor in the manner set forth in Annex B and LAST to
any other Obligations. So long as
9
no Event of Default is outstanding, the Borrowers may direct that
any such prepayments be applied to Index Rate Loans to the extent
outstanding, rather than LIBOR Loans. Neither the Revolving Loan
Commitment nor the Swing Line Commitment shall be permanently
reduced by the amount of any such prepayments; PROVIDED, that any
prepayment made by any Borrower pursuant to Section 1.3(b)(iii) in
connection with the issuance of Indebtedness shall also permanently
reduce the Revolving Loan Commitment by the amount of such
prepayment.
(d) Application of Prepayments from Insurance and Condemnation Proceeds
Prepayments from insurance or condemnation proceeds in accordance
with Section 5.4 shall be applied first to the Swing Line Loans and
second to the Revolving Credit Advances of the applicable Borrower.
Neither the Revolving Loan Commitment nor the Swing Line Loan
Commitment shall be permanently reduced by the amount of any such
prepayments. So long as no Event of Default is outstanding, the
Borrower Representative may direct that any such prepayments be
applied to Index Rate Loans to the extent outstanding, rather than
LIBOR Loans. If the insurance or condemnation proceeds received as
to a particular Borrower exceed the Loans outstanding to such
Borrower, such excess proceeds shall be applied to the Loans
outstanding to other Borrowers.
(e) No Implied Consent
Nothing in this Section 1.3 shall be construed to constitute Agent's
or any Lender's consent to any transaction referred to in Sections
1.3(b)(ii) and 1.3(b)(iii) which is not permitted by other
provisions of this Agreement or the other Loan Documents.
1.4 Use of Proceeds
Borrowers shall utilize the proceeds of the Revolving Loan and the Swing
Line Loan solely for the Refinancing (and to pay any related transaction
expenses), and for the financing of Borrowers' ordinary working capital
and general corporate needs. Disclosure Schedule (1.4) contains a
description of Borrowers' sources and uses of funds as of the Closing
Date, including Revolving Credit Advances and Letter of Credit
Obligations to be made or incurred on that date, and a funds flow
memorandum detailing how funds from each source are to be transferred to
particular uses.
1.5 Interest and Applicable Margins
(a) Borrowers shall pay interest to Agent, for the ratable benefit of
Lenders in accordance with the various Revolving Credit Advances and
Swing Line Loans being made by each Lender, and in respect of all
unreimbursed Letters of Credit Obligations, in arrears on each
applicable Interest Payment Date, at the following rates: (i) with
respect to the Revolving Credit Advances and unreimbursed Letter of
Credit Obligations and all other Obligations (other than LIBOR Loans
and Swing Line Loans), the Index Rate PLUS the Applicable Revolver
Index Margin per annum or, at the election of Borrower
10
Representative, the applicable LIBOR Rate PLUS the Applicable
Revolver LIBOR Margin per annum, based on the aggregate Revolving
Credit Advances outstanding from time to time; and (ii) with respect
to the Swing Line Loan, the Index Rate PLUS the Applicable Revolver
Index Margin per annum, based on the aggregate amount of the Swing
Line Loan outstanding from time to time.
The Applicable Margins, on a per annum basis, are as follows:
APPLICABLE MARGIN AMOUNT
----------------- ------
Applicable Revolver Index Margin 1.50%
Applicable Revolver LIBOR Margin 3.00%
Applicable L/C Margin 3.00%
Applicable Unused Line Fee Margin 0.50%
(b) If any payment on any Loan becomes due and payable on a day other
than a Business Day, the maturity thereof will be extended to the
next succeeding Business Day (except as set forth in the definition
of LIBOR Period) and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during
such extension.
(c) All computations of Fees calculated on a per annum basis and
interest shall be made by Agent on the basis of a three hundred
sixty (360) day year, in each case for the actual number of days
occurring in the period for which such interest and Fees are
payable. The Index Rate is a floating rate determined for each day.
Each determination by Agent of an interest rate and Fees hereunder
shall be final, binding and conclusive on Borrowers, absent manifest
error.
(d) So long as an Event of Default has occurred and is continuing, and
at the election of Agent (or upon the written request of Requisite
Lenders) confirmed by written notice from Agent to Borrower
Representative, the interest rates applicable to the Loans and the
Letter of Credit Fees shall be increased by two percentage points
(2%) per annum above the rates of interest or the rate of such Fees
otherwise applicable hereunder ("DEFAULT RATE"), and all outstanding
Obligations shall bear interest at the Default Rate applicable to
such Obligations. Interest and Letter of Credit Fees at the Default
Rate shall accrue from the initial date of such Event of Default
until that Event of Default is cured or waived and shall be payable
upon demand.
(e) So long as no Event of Default has occurred and is continuing,
Borrower Representative shall have the option to (i) request that
any Revolving Credit Advance be made as a LIBOR Loan, (ii) convert
at any time all or any part of outstanding Loans (other than the
Swing Line Loan) from Index Rate Loans to LIBOR Loans, (iii) convert
any LIBOR Loan to an Index Rate Loan, subject to payment of LIBOR
breakage costs in accordance with Section 1.13(b) if such conversion
is made prior to the expiration of the LIBOR
11
Period applicable thereto, or (iv) continue all or any portion of
any Loan (other than the Swing Line Loan) as a LIBOR Loan upon the
expiration of the applicable LIBOR Period and the succeeding LIBOR
Period of that continued Loan shall commence on the first day after
the last day of the LIBOR Period of the Loan to be continued. Any
Loan or group of Loans having the same proposed LIBOR Period to be
made or continued as, or converted into, a LIBOR Loan must be in a
minimum amount of $1,000,000 and integral multiples of $100,000 in
excess of such amount. Any such election must be made by noon (
New
York time) on the third (3rd) Business Day prior to (1) the date of
any proposed Advance which is to bear interest at the LIBOR Rate,
(2) the end of each LIBOR Period with respect to any LIBOR Loans to
be continued as such, or (3) the date on which the applicable
Borrower wishes to convert any Index Rate Loan to a LIBOR Loan for a
LIBOR Period designated by Borrower Representative in such election.
If no election is received with respect to a LIBOR Loan by noon (
New
York time) on the third (3rd) Business Day prior to the end of the
LIBOR Period with respect thereto (or if an Event of Default has
occurred and is continuing), that LIBOR Loan shall be converted to
an Index Rate Loan at the end of its LIBOR Period. Borrower
Representative must make such election by notice to Agent in
writing, by telecopy or overnight courier. In the case of any
conversion or continuation, such election must be made pursuant to a
written notice (a "NOTICE OF CONVERSION/CONTINUATION") in the form
of Exhibit 1.5(e). No Loan may be made as or converted into a LIBOR
Loan until the earlier of (i) forty-five (45) days after the Closing
Date or (ii) completion of primary syndication as determined by
Agent.
(f) Notwithstanding anything to the contrary set forth in this Section
1.5, if a court of competent jurisdiction determines in a final
order that the rate of interest payable hereunder exceeds the
highest rate of interest permissible under law (the "MAXIMUM LAWFUL
RATE"), then so long as the Maximum Lawful Rate would be so
exceeded, the rate of interest payable hereunder shall be equal to
the Maximum Lawful Rate; PROVIDED, that if at any time thereafter
the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrowers shall continue to pay interest hereunder at
the Maximum Lawful Rate until such time as the total interest
received by Agent, on behalf of Lenders, is equal to the total
interest that would have been received had the interest rate payable
hereunder been (but for the operation of this paragraph) the
interest rate payable since the Closing Date as otherwise provided
in this Agreement. Thereafter, interest hereunder shall be paid at
the rate(s) of interest and in the manner provided in Sections
1.5(a) through (e) above, unless and until the rate of interest
again exceeds the Maximum Lawful Rate, and at that time this
paragraph shall again apply. In no event shall the total interest
received by any Lender pursuant to the terms hereof exceed the
amount that such Lender could lawfully have received had the
interest due hereunder been calculated for the full term hereof at
the Maximum Lawful Rate. If the Maximum Lawful Rate is calculated
pursuant to this paragraph, such interest shall be calculated at a
daily rate equal to the Maximum Lawful Rate divided by the number of
days in the year in which such calculation is made. If,
notwithstanding the provisions of this
12
Section 1.5(f), a court of competent jurisdiction shall finally
determine that a Lender has received interest hereunder in excess of
the Maximum Lawful Rate, Agent shall, to the extent permitted by
applicable law, promptly apply such excess in the order specified in
Section 1.11 and thereafter shall refund any excess to Borrowers or
as a court of competent jurisdiction may otherwise order.
1.6 Eligible Accounts
All of the Accounts owned by any Borrower and reflected in the most
recent Borrowing Base Certificate delivered by such Borrower to Agent
shall be "ELIGIBLE ACCOUNTS" for purposes of this Agreement, except any
Account to which any of the exclusionary criteria set forth below
applies. In addition, Agent reserves the right, at any time and from time
to time after the Closing Date, to adjust any of the criteria set forth
below, to establish new criteria and to adjust advance rates with respect
to Eligible Accounts, in its reasonable credit judgment exercised in good
faith; PROVIDED, that (i) any increase of any advance rate above its
Original Advance Rate is subject to the approval of all Lenders and (ii)
any adjustment by Agent to any criterion set forth below that results in
such criterion being less restrictive than as in effect on the Closing
Date shall be subject to approval of Requisite Lenders. Eligible Accounts
shall not include any Account of any Borrower:
(a) which does not arise from the sale of goods or the performance of
services by such Borrower in the ordinary course of its business;
(b) upon which (i) such Borrower's right to receive payment is
contingent upon the fulfillment of any condition by such Borrower or
(ii) such Borrower is not able to bring suit or otherwise enforce
its remedies against the Account Debtor through judicial process;
(c) to the extent that any defense, counterclaim, setoff or dispute is
asserted as to such Account;
(d) if the Account represents a progress billing consisting of an
invoice for goods sold or used or services rendered pursuant to a
contract under which the Account Debtor's obligation to pay that
invoice is subject to such Borrower's completion of further
performance under such contract;
(e) that is not a true and correct statement of bona fide indebtedness
incurred in the amount of the Account for merchandise sold to or
services rendered and accepted by the applicable Account Debtor;
(f) with respect to which an invoice, that is not unacceptable to Agent
(in its reasonable judgment) in form and substance, has not been
sent to the applicable Account Debtor;
13
(g) (i) that is not owned by such Borrower or (ii) to the extent it is
subject to any right, claim, security interest or other interest of
any other Person, other than Liens in favor of Agent, on behalf of
itself and Lenders, and Trustee, on behalf of the holders of Senior
Notes;
(h) that arises from a sale to any director, officer, other employee or
Affiliate of any Credit Party, or to any entity that has any common
officer or director with any Credit Party; PROVIDED, HOWEVER, that a
sale to any Person that is an Affiliate or such an entity shall not
be excluded under this paragraph (h) if such Person is an Affiliate
or such an entity solely because it is controlled by BRS or a fund
managed by BRS;
(i) that is the obligation of an Account Debtor that is the United
States or Canadian government or a political subdivision thereof, or
any state, county, province or municipality or department, agency or
instrumentality thereof unless Agent, in its sole discretion, has
agreed to the contrary in writing and such Borrower, if necessary or
desirable, has complied with the Federal Assignment of Claims Act of
1940, any Canadian equivalent thereof, or any applicable state,
county or municipal law restricting assignment thereof, with respect
to such obligation; PROVIDED, so long as no Default or Event of
Default shall have occurred and be continuing, Accounts described in
this Section 1.6(i) and identified to the Agent pursuant to Section
5.10 shall be deemed Eligible Accounts to the extent such Accounts
in the aggregate outstanding at any time do not exceed $1,500,000
and otherwise meet the eligibility criteria set forth in this
Section 1.6;
(j) that is the obligation of an Account Debtor located in a foreign
country other than Canada (excluding the provinces of Newfoundland,
the Northwest Territories and the Territory of Nunavit), unless
payment thereof is assured by a letter of credit assigned and
delivered to Agent, reasonably satisfactory to Agent as to form,
amount and issuer;
(k) to the extent such Borrower or any Subsidiary thereof is liable for
goods sold or services rendered by the applicable Account Debtor to
such Borrower or any Subsidiary thereof but only to the extent of
the potential offset;
(l) that arises with respect to goods that are delivered on a
xxxx-and-hold, cash-on-delivery basis or placed on consignment,
guaranteed sale or other terms by reason of which the payment by the
Account Debtor is or may be conditional;
(m) that is in default; PROVIDED, that, without limiting the generality
of the foregoing, an Account shall be deemed in default upon the
occurrence of any of the following:
(i) the Account is not paid within the earlier of: sixty (60)
days following its due date or ninety (90) days following its
original invoice date;
(ii) the Account Debtor obligated upon such Account suspends
business, makes a general assignment for the benefit of
creditors or fails to pay its debts generally as they come
due; or
14
(iii) a petition is filed by or against any Account Debtor
obligated upon such Account under any bankruptcy law or any
other federal, state or foreign (including any provincial)
receivership, insolvency relief or other law or laws for the
relief of debtors;
(n) that is the obligation of an Account Debtor if fifty percent (50%)
or more of the Dollar amount of all Accounts owing by that Account
Debtor are ineligible under the other criteria set forth in
paragraph (m) of this Section 1.6;
(o) as to which Agent's Lien thereon, on behalf of itself and Lenders,
is not a first priority perfected Lien;
(p) as to which any of the representations or warranties in the Loan
Documents are untrue;
(q) to the extent such Account is evidenced by a judgment;
(r) to the extent such Account exceeds any credit limit established by
Agent, in its reasonable credit judgment;
(s) that is payable in any currency other than Dollars; or
(t) that is otherwise unacceptable to Agent in its reasonable credit
judgment.
1.6A Eligible Rolling Stock
All of the P&E owned by any Borrower and reflected in the most recent
Borrowing Base Certificate delivered by such Borrower to Agent shall be
"ELIGIBLE ROLLING STOCK" for purposes of this Agreement, except any P&E
to which any of the exclusionary criteria set forth below applies. In
addition, Agent reserves the right, at any time and from time to time
after the Closing Date, to adjust any of the criteria set forth below, to
establish new criteria and to adjust advance rates with respect to
Eligible Rolling Stock in its reasonable credit judgment; PROVIDED, that
(i) any increase of any advance rate above its Original Advance Rate is
subject to the approval of all Lenders and (ii) any adjustment by Agent
to any criterion set forth below that results in such criterion being
less restrictive than as in effect on the Closing Date shall be subject
to approval of Requisite Lenders. Eligible Rolling Stock shall not
include any P&E of any Borrower:
(a) that is not owned by such Borrower free and clear of all Liens and
rights of any other person, except the Liens in favor of Agent, on
behalf of itself and Lenders, and Collateral Agent on behalf of the
holders of Senior Notes, and the rights of a lessee pursuant to any
permitted lease of such P&E or Permitted Encumbrances;
(b) if such P&E (i) is not stored on premises owned, leased or rented by
such Borrower and set forth in Disclosure Schedule (3.2), or (ii)
following thirty (30) days after the Closing Date, is stored at a
leased location in respect of which Agent has requested a landlord
waiver, unless a reasonably satisfactory landlord waiver has been
delivered to Agent, PROVIDED that Agent may, following thirty (30)
days after the Closing Date, treat any such
15
P&E at any such location as Eligible Rolling Stock and, in lieu of
imposing the exclusionary criterion in this paragraph (b) to such
P&E, impose a Reserve (without duplicating any Reserve established
for other eligible collateral at such location as a consequence of
the failure to obtain such landlord's waiver) in an amount not less
than six month's rent for all such P&E stored at such location in
respect of which such a landlord waiver has not been delivered, or
(iii) is stored with a bailee or warehouseman unless a reasonably
satisfactory, acknowledged bailee letter has been received by Agent
and Reserves reasonably satisfactory to Agent have been established
with respect thereto, (iv) is stored at an owned location subject to
a mortgage in favor of a lender other than Agent unless a reasonably
satisfactory mortgagee waiver requested by Agent has been delivered
to Agent or (v) is anything other than automotive equipment, a
trailer, a truck, a forklift, a motor vehicle or other rolling
stock;
(c) that is covered by a certificate of title unless the interest of
Agent in the P&E has been noted on such certificate of title in
accordance with applicable law;
(d) that is excess, obsolete or damaged;
(e) that is held for sale or lease in the ordinary course of such
Borrower's business;
(f) that is not subject to a first priority Lien in favor of Agent on
behalf of itself and Lenders;
(g) as to which any of the representations or warranties pertaining to
P&E set forth in the Loan Documents are untrue;
(h) that is not covered by casualty insurance as to which Agent is
listed as loss payee in accordance with Section 5.4(c); or
(i) that is otherwise unacceptable to Agent in its reasonable credit
judgment.
1.6B Eligible Rentals
All of the Rentals of each Borrower and reflected in the most recent
Borrowing Base Certificate delivered by such Borrower to Agent shall be
"ELIGIBLE RENTALS" for purposes of this Agreement, except any Rental to
which any of the exclusionary criteria set forth below applies. In
addition, Agent reserves the right, at any time and from time to time
after the Closing Date to adjust any such criteria and to establish new
criteria with respect to Eligible Rentals in its reasonable credit
judgment, PROVIDED, that (i) any increase of any advance rate above its
Original Advance Rate is subject to the approval of all Lenders and (ii)
any adjustment by Agent of any criteria set forth below that results in
such criteria being less restrictive than as in effect on the Closing
Date shall be subject to the approval of Requisite Lenders. Eligible
Rentals shall not include any Rental of any Borrower:
(a) not subject to a written lease agreement in the form attached as
Exhibit 1.6B(a) or otherwise in form and substance acceptable to
Agent;
16
(b) not subject to a first priority security interest of Agent on behalf
of Lenders, perfected by possession of all Chattel Paper related to
such Rental by possession or by the stamping of notice of Agent's
security interest thereon;
(c) not due within ninety (90) days of the applicable date of
determination;
(d) upon which such Borrower is not able to bring suit or otherwise
enforce its remedies against the relevant lessee through judicial
process;
(e) that (i) is not owned by such Borrower, (ii) is subject to any
right, claim, security interest or other interest of any other
Person, other than Liens in favor of Agent, on behalf of itself and
Lenders or (iii) is subject to any counterclaim, dispute, offset or
defense;
(f) that is the obligation of a lessee that is the United States or
Canadian government or a political subdivision thereof, or any
state, county, province or municipality or department, agency or
instrumentality thereof unless Agent, in its sole discretion, has
agreed to the contrary in writing and such Borrower, if necessary or
desirable, has complied with the Federal Assignment of Claims Act of
1940, and any amendments thereto, its Canadian equivalent or any
applicable state, county or municipal law restricting assignment
thereof, with respect to such obligation;
(g) that is the obligation of a lessee located in a foreign country
other than Canada (excluding the province of Newfoundland, the
Northwest Territories and the Territory of Nunavit), unless payment
thereof is assured by a letter of credit, reasonably satisfactory to
Agent as to form, amount and issuer;
(h) that is in default, or is due under a lease which is in default;
(i) if any lessee obligated upon such Rental suspends business, makes a
general assignment for the benefit of creditors or fails to pay its
debts generally as they come due;
(j) if any petition is filed by or against any lessee obligated upon
such Rental under any bankruptcy law or any other federal, state or
foreign (including any provincial) receivership, insolvency relief
or other law or laws for the relief of debtors;
(k) that is the obligation of a lessee if fifty percent (50%) or more of
the Dollar amount of all Rentals owing by that lessee are ineligible
under the other criteria set forth in this Section 1.6B;
(l) as to which any of the representations or warranties in the Loan
Documents are untrue;
(m) to the extent such Rental exceeds any credit limit established by
Agent, in its reasonable credit judgment;
(n) that is payable in any currency other than Dollars; or
(o) that is otherwise unacceptable to Agent in its reasonable credit
judgment.
17
1.7 Eligible Parts and Tools Inventory
All of the Parts and Tools Inventory owned by any Borrower and reflected
in the most recent Borrowing Base Certificate delivered by such Borrower
to Agent shall be "ELIGIBLE PARTS AND TOOLS INVENTORY" for purposes of
this Agreement, except any Parts and Tools Inventory to which any of the
exclusionary criteria set forth below applies. In addition, Agent
reserves the right, at any time and from time to time after the Closing
Date, to adjust any of the criteria set forth below, to establish new
criteria and to adjust advance rates with respect to Eligible Parts and
Tools Inventory in its reasonable credit judgment; PROVIDED, that (i) any
increase of any advance rate above its Original Advance Rate is subject
to the approval of all Lenders and (ii) any adjustment by Agent to any
criterion set forth below that results in such criterion being less
restrictive than as in effect on the Closing Date shall be subject to
approval of Requisite Lenders. Eligible Parts and Tools Inventory shall
not include any Parts and Tools Inventory of any Borrower:
(a) that (i) is not owned by such Borrower free and clear of all Liens
and rights of any other Person (including the rights of a purchaser
that has made progress payments and the rights of a surety that has
issued a bond to assure such Borrower's performance with respect to
that Parts and Tools Inventory), except the Liens in favor of Agent,
on behalf of itself and Lenders, and Collateral Agent, on behalf of
the holders of Senior Notes, and Permitted Encumbrances in favor of
landlords and bailees to the extent permitted in Section 5.9 hereof
(subject to Reserves established by Agent in accordance with Section
5.9 hereof);
(b) (i) that is not located on premises owned, leased or rented by such
Borrower and set forth in Disclosure Schedule (3.2), or (ii)
following thirty (30) days after the Closing Date, is stored at a
leased location in respect of which Agent has requested a landlord
waiver, unless a reasonably satisfactory landlord waiver has been
delivered to Agent, PROVIDED that Agent may, following thirty (30)
days after the Closing Date, treat any such Parts and Tools
Inventory at any such location as Eligible Parts and Tools Inventory
and, in lieu of imposing the exclusionary criterion in this
paragraph (b) to such Parts and Tools Inventory, impose a Reserve
(without duplicating any Reserve established for other eligible
collateral at such location as a consequence of the failure to
obtain such landlord's waiver) in an amount not less than six
month's rent for all Parts and Tools Inventory stored at such
location in respect of which such a landlord waiver has not been
delivered, or (iii) is stored with a bailee or warehouseman unless a
reasonably satisfactory, acknowledged bailee letter has been
received by Agent and Reserves reasonably satisfactory to Agent have
been established with respect thereto, or (iv) is located at an
owned location subject to a mortgage in favor of a lender other than
Agent unless a reasonably satisfactory mortgagee waiver requested by
Agent has been delivered to Agent, or (v) is located at any site if
the aggregate book value of Parts and Tools Inventory at any such
location is less than $25,000;
18
(c) that is placed on consignment or is in transit;
(d) that is covered by a negotiable document of title, unless such
document has been delivered to Agent with all necessary
endorsements, free and clear of all Liens except those in favor of
Agent and Lenders;
(e) that is excess, obsolete, unsalable or damaged;
(f) that consists of display items or packing or shipping materials,
manufacturing supplies or work-in-process Inventory;
(g) that is not held for sale in the ordinary course of such Borrower's
business;
(h) that is not subject to a first priority Lien in favor of Agent on
behalf of itself and Lenders;
(i) as to which any of the representations or warranties pertaining to
Parts and Tools Inventory set forth in the Loan Documents are
untrue;
(j) that consists of Hazardous Materials or goods that can be
transported or sold only with licenses that are not readily
available;
(k) that is not covered by casualty insurance as to which Agent is
listed as loss payee in accordance with Section 5.4(c); or
(l) that is otherwise unacceptable to Agent in its reasonable credit
judgment.
1.7A Eligible Equipment Inventory
All of the Equipment Inventory owned by any Borrower and reflected in the
most recent Borrowing Base Certificate delivered by such Borrower to
Agent shall be "ELIGIBLE EQUIPMENT INVENTORY" for purposes of this
Agreement, except any Equipment Inventory to which any of the
exclusionary criteria set forth below applies. In addition, Agent
reserves the right, at any time and from time to time after the Closing
Date, to adjust any of the criteria set forth below, to establish new
criteria and to adjust advance rates with respect to Eligible Equipment
Inventory in its reasonable credit judgment; PROVIDED, that (i) any
increase of any advance rate above its Original Advance Rate is subject
to the approval of all Lenders and (ii) any adjustment by Agent to any
criterion set forth below that results in such criterion being less
restrictive than as in effect on the Closing Date shall be subject to
approval of Requisite Lenders. Eligible Equipment Inventory shall not
include any Equipment Inventory of any Borrower:
(a) that is not owned by such Borrower free and clear of all Liens and
rights of any other person (including the rights of a purchaser that
has made progress payments and the rights of a surety that has
issued a bond to assure such Borrower's performance with respect to
that Equipment Inventory), except the Liens in favor of Agent, on
behalf of itself and Lenders, and Collateral Agent, on behalf of the
holders of Senior Notes, and the
19
rights of a lessee pursuant to any permitted lease of such Equipment
Inventory or Permitted Encumbrances;
(b) that (i) is not located on premises owned, leased or rented by such
Borrower and set forth in Disclosure Schedule (3.2), or (ii)
following thirty (30) days after the Closing Date, is stored at a
leased location in respect of which Agent has requested a landlord
waiver, unless a reasonably satisfactory landlord waiver has been
delivered to Agent, PROVIDED that Agent may, following thirty (30)
days after the Closing Date, treat any such Equipment Inventory
stored at any such location as Eligible Equipment Inventory and, in
lieu of imposing the exclusionary criterion in this paragraph (b) to
such Equipment Inventory, impose a Reserve (without duplicating any
Reserve established for other eligible collateral at such location
as a consequence of the failure to obtain such landlord's waiver) in
an amount not less than six month's rent for all Equipment Inventory
stored at such location in respect of which such a landlord waiver
has not been delivered, or (iii) is stored with a bailee or
warehouseman unless a reasonably satisfactory, acknowledged bailee
letter has been received by Agent and Reserves reasonably
satisfactory to Agent have been established with respect thereto, or
(iv) is located at an owned location subject to a mortgage in favor
of a lender other than Agent unless a reasonably satisfactory
mortgagee waiver requested by Agent has been delivered to Agent, or
(v) is leased to a lessee other than pursuant to a lease entered
into in the ordinary course of business of such Equipment Inventory
and is located at a site that is in the United States or Canada
(excluding the provinces of Newfoundland, the Northwest Territories
and the Territory of Nunavit);
(c) that is placed on consignment;
(d) that is covered by a negotiable document of title or a certificate
of title unless such negotiable document has been delivered to Agent
with all necessary endorsements free and clear of all Liens except
those in favor of Agent and Lenders, or where it is required to
perfect the security interest of Agent in the Equipment Inventory
such certificate of title has been noted in such certificate of
title in accordance with applicable law;
(e) that is obsolete, unsalable or damaged beyond repair;
(f) that is not held for sale or lease in the ordinary course of such
Borrower's business;
(g) that is not subject to a first priority Lien in favor of Agent on
behalf of itself and Lenders;
(h) as to which any of the representations or warranties pertaining to
Equipment Inventory set forth in the Loan Documents are untrue;
(i) that is not covered by casualty insurance as to which Agent is
listed as loss payee in accordance with Section 5.4(c); or
(j) that is otherwise unacceptable to Agent in its reasonable credit
judgment.
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1.8 Cash Management Systems
On or prior to the Closing Date, each Borrower will establish and will
maintain until the Termination Date, the cash management systems
described in Annex C (the "CASH MANAGEMENT SYSTEMS").
1.9 Fees
(a) Borrowers shall pay to GE Capital, individually, the Fees specified
in that certain fee letter of even date herewith among Borrowers and
GE Capital (the "GE CAPITAL FEE LETTER"), at the times specified for
payment therein which shall include the annual Administrative
Agent's fee, which will be due and payable on the Closing Date and
on each anniversary thereof.
(b) As additional compensation for the Revolving Lenders, Borrowers
agree to pay to Agent, for the ratable benefit of such Lenders, in
arrears, on the first Business Day of each month prior to the
Commitment Termination Date and on the Commitment Termination Date,
a Fee for Borrowers' non-use of available funds in an amount equal
to the Applicable Unused Line Fee Margin per annum (calculated on
the basis of a 360 day year for actual days elapsed) multiplied by
the difference between (x) the Maximum Amount (as it may be reduced
from time to time) and (y) the average for the period of the daily
closing balances of the aggregate Revolving Loan and the Swing Line
Loan outstanding during the period for which such Fee is due.
(c) As additional compensation for the Agent, Borrowers agrees to pay to
the L/C Issuer with respect to any Letter of Credit, at the time
such Letter of Credit is issued or extended, a fronting fee in an
amount equal to one quarter of one percent (0.25%) of the face
amount of such Letter of Credit.
(d) Borrowers shall pay to Agent, for the ratable benefit of Revolving
Lenders, the Letter of Credit Fee as provided in Annex B.
(e) In addition, and in addition to the costs of Equipment Inventory
Appraisals, P&E Appraisals and Inspections, Borrowers agree to pay
to Agent, which are due and payable as incurred, all out of pocket
costs (including reasonable fees and expenses) paid by Agent to
third party auditors, or a fee of $700 per audit day per in-house
auditor, plus out of pocket expenses; PROVIDED, that Borrowers only
agree to pay such costs and expenses in relation to (unless an Event
of Default has occurred and is continuing) not more than four (4)
audits in the first twelve months following the Closing Date and not
more than three (3) audits in any subsequent year (each such audit
to be conducted, while no Event of Default is continuing, during an
Inspection).
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1.10 Receipt of Payments
Borrowers shall make each payment under this Agreement not later than
2:00 p.m. (
New York time) on the day when due in immediately available
funds in Dollars to the Collection Account. For purposes of computing
interest and Fees and determining Borrowing Availability as of any date,
all payments shall be deemed received on the Business Day on which
immediately available funds therefor are received in the Collection
Account prior to 2:00 p.m.
New York time. Payments received after 2:00
p.m. New York time on any Business Day or on a day that is not a Business
Day shall be deemed to have been received on the following Business Day.
1.11 Application and Allocation of Payments
(a) So long as no Event of Default has occurred and is continuing, (i)
payments consisting of proceeds of Accounts received in the ordinary
course of business shall be applied, first, to the Swing Line Loan
and, second, to the Revolving Loan; (ii) voluntary prepayments shall
be applied as determined by Borrower Representative, subject to the
provisions of Section 1.3(a); and (iii) mandatory prepayments shall
be applied as set forth in Section 1.3. As to any other payment, and
as to all payments made when an Event of Default has occurred and is
continuing or following the Commitment Termination Date, each
Borrower hereby irrevocably waives the right to direct the
application of any and all payments received from or on behalf of
such Borrower, and each Borrower hereby irrevocably agrees that
Agent shall have the continuing exclusive right to apply any and all
such payments against the Obligations as Agent may deem advisable
notwithstanding any previous entry by Agent in the Loan Account or
any other books and records. In the absence of a specific
determination by Agent with respect thereto, payments from any
Borrower shall be applied to amounts then due and payable in the
following order: FIRST, to Fees and reimbursable expenses then due
and payable to Agent pursuant to any of the Loan Documents; SECOND,
to Fees and any other fees and reimbursable expenses of Lenders then
due and payable to Lenders pursuant to any of the Loan Documents;
THIRD, to interest then due and payable on the Swing Line Loan;
FOURTH, to the principal balance of the Swing Line Loan until the
same has been repaid in full; FIFTH, to interest then due and
payable on the Revolving Credit Advances; SIXTH, to the outstanding
principal balance of the Revolving Credit Advances until the same
has been paid in full; SEVENTH, to any Letter of Credit Obligations,
to provide cash collateral therefor in the manner set forth in Annex
B; and LAST to all other Obligations not described in clauses FIRST
through SEVENTH, PRO RATA to the Agent and Lenders. Notwithstanding
the foregoing, if, at the time of any application of any such
payment the Commitment Termination Date has occurred, amounts then
due under Hedging Agreements from any Borrower shall share (i) on a
PRO RATA basis in applications referred to in clauses SIXTH and
SEVENTH, until all Revolving Credit Advances have been paid in full,
all Letter of Credit Obligations have been fully cash collateralized
in the manner set forth in Annex B and all obligations of such
Borrower under its Hedging Agreements have been paid in full.
22
(b) Agent is authorized to, and at its sole election may, charge to the
Revolving Loan balance on behalf of each Borrower and cause to be
paid all Fees, expenses, Charges, costs (including insurance
premiums in accordance with Section 5.4(a)) and interest and
principal, other than principal of the Revolving Credit Advances,
due and owing by Borrowers under this Agreement or any of the other
Loan Documents if and to the extent Borrowers fail to pay promptly
any such amounts as and when due, even if the amount of such charges
would exceed Borrowing Availability at such time or would cause the
aggregate balance of the Revolving Loan and the Swing Line Loan of
any Borrower to exceed such Borrower's separate Borrowing Base after
giving effect to such charges. At Agent's option and to the extent
permitted by law, any charges so made shall constitute part of the
Revolving Loan hereunder.
1.12 Loan Account and Accounting
Agent, as agent of each Borrower solely for purposes of this Section
1.12, shall maintain and update from time to time a loan account (the
"LOAN ACCOUNT") on its books to record: (a) all Advances, including
principal thereof and interest thereon, (b) all payments made by
Borrowers and other Credit Parties, and (c) all other debits and credits
as provided in this Agreement with respect to the Loans or any other
Obligations. All entries in the Loan Account shall be made in accordance
with Agent's customary accounting practices as in effect from time to
time. The balance in the Loan Account, as recorded on Agent's most recent
printout or other written statement, shall, absent manifest error, be
presumptive evidence of the amounts due and owing to Agent and Lenders by
each Borrower; PROVIDED, that any failure to so record or any error in so
recording shall not limit or otherwise affect any Borrower's duty to pay
the Obligations. Agent shall render to Borrower Representative a monthly
accounting of transactions with respect to the Loans setting forth the
balance of the Loan Account (including the principal of each Advance and
interest thereon) as to each Borrower for the immediately preceding
month. Unless Borrower Representative notifies Agent in writing of any
objection to any such accounting (specifically describing the basis for
such objection), within thirty (30) days after the date thereof, each and
every such accounting shall (absent manifest error) be deemed final,
binding and conclusive on Borrowers in all respects as to all matters
reflected therein. Only those items expressly objected to in such notice
shall be deemed to be disputed by Borrowers.
1.13 Indemnity
(a) Each Credit Party shall jointly and severally indemnify and hold
harmless each of Agent, Arranger, Lenders and their respective
Affiliates, and each such Person's respective officers, directors,
employees, attorneys, agents and representatives (each, an
"INDEMNIFIED PERSON"), from and against any and all suits, actions,
proceedings, claims, damages, losses, liabilities and expenses
(including reasonable attorneys' fees and disbursements and other
costs of investigation or defense, including those incurred upon any
appeal) that may be instituted or asserted against or incurred by
any such Indemnified Person as the result of credit having been
extended, suspended or terminated under this Agreement and the other
Loan Documents and the administration of such credit, and in
23
connection with or arising out of the transactions contemplated
hereunder and thereunder and any actions or failures to act in
connection therewith, including any and all Environmental
Liabilities and legal costs and expenses arising out of or incurred
in connection with disputes between or among any parties to any of
the Loan Documents (collectively, "INDEMNIFIED LIABILITIES");
PROVIDED, that no Credit Party shall be liable for any
indemnification to an Indemnified Person to the extent that any such
suit, action, proceeding, claim, damage, loss, liability or expense
results solely from that Indemnified Person's gross negligence or
willful misconduct. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR
LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR,
ASSIGNEE OR THIRD PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER
PERSON ASSERTING CLAIMS DERIVATIVELY THROUGH SUCH PARTY, FOR
INDIRECT, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE
ALLEGED AS A RESULT OF CREDIT HAVING BEEN EXTENDED, SUSPENDED OR
TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY OTHER
TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on the terms
provided herein, if (i) any LIBOR Loans are repaid in whole or in
part prior to the last day of any applicable LIBOR Period (whether
that repayment is made pursuant to any provision of this Agreement
or any other Loan Document or occurs as a the result of
acceleration, by operation of law or otherwise), subject to Section
1.3(b)(iv); (ii) any Borrower shall default in payment when due of
the principal amount of or interest on any LIBOR Loan; (iii) any
Borrower shall refuse to accept any borrowing of, or shall request a
termination of, any borrowing of, conversion into or continuation
of, LIBOR Loans after Borrower has given notice requesting the same
in accordance herewith; or (iv) any Borrower shall fail to make any
prepayment of a LIBOR Loan after Borrower has given a notice thereof
in accordance herewith, then Borrowers shall jointly and severally
indemnify and hold harmless each Lender from and against all losses,
costs and expenses resulting from or arising from any of the
foregoing. Such indemnification shall include any loss (including
loss of margin) or expense arising from the reemployment of funds
obtained by it or from fees payable to terminate deposits from which
such funds were obtained. For the purpose of calculating amounts
payable to a Lender under this subsection, each Lender shall be
deemed to have actually funded its relevant LIBOR Loan through the
purchase of a deposit bearing interest at the LIBOR Rate in an
amount equal to the amount of that LIBOR Loan and having a maturity
comparable to the relevant LIBOR Period; PROVIDED, that each Lender
may fund each of its LIBOR Loans in any manner it sees fit, and the
foregoing assumption shall be utilized only for the calculation of
amounts payable under this subsection. This covenant shall survive
the termination of this Agreement and the payment of the Notes and
all other amounts payable hereunder. As promptly as practicable
under the circumstances, each Lender shall provide the applicable
Borrower with its written calculation of all amounts payable
pursuant to this Section 1.13(b), and such calculation shall be
binding on the parties hereto unless Borrower Representative
24
shall object in writing within 10 Business Days of receipt thereof,
specifying the basis for such objection in detail.
1.14 Access
Each Credit Party shall, during normal business hours, from time to time
upon reasonable advance notice as frequently as Agent reasonably
determines to be appropriate: (a) provide Agent and any of its officers,
employees and agents access to its properties, facilities, advisors and
employees (including officers) of such Credit Party and to the
Collateral, (b) permit Agent, and any of its officers, employees and
agents, to inspect, audit and make extracts from such Credit Party's
books and records, and (c) permit Agent, and its officers, employees and
agents, to inspect, review, evaluate and make test verifications and
counts of the Accounts, Inventory and other Collateral of such Credit
Party (clauses (a), (b) and (c) collectively, "INSPECTIONS"). Borrower
agrees to pay to Agent, which are due and payable as incurred, all out of
pocket costs (including fees and expenses) incurred by Agent in relation
to any Inspections; PROVIDED, that in addition to paying for Equipment
Inventory Appraisals and P&E Appraisals, Borrowers only agree to pay such
costs and expenses in relation to (unless an Event of Default has
occurred and is continuing) not more than four (4) Inspections in the
first twelve months following the Closing Date and not more than three
(3) Inspections in any subsequent year. If an Event of Default has
occurred and is continuing or if action is necessary to preserve or
protect the Collateral as determined by Agent, each Credit Party shall
provide such access to Agent and to each Lender at all times and without
advance notice. Furthermore, so long as any Event of Default has occurred
and is continuing, each Borrower shall provide Agent and each Lender with
access to its suppliers and customers. Each Credit Party shall make
available to Agent and its counsel, as quickly as is possible under the
circumstances, originals or copies of all books and records that Agent
may reasonably request. Each Credit Party shall deliver any document or
instrument necessary for Agent, as it may from time to time reasonably
request, to obtain records from any service bureau or other Person that
maintains records for such Credit Party, and shall maintain duplicate
records or supporting documentation on media consistent with reasonable
commercial standards, including computer tapes and discs owned by such
Credit Party. Agent will give Lenders at least five (5) days' prior
written notice of regularly scheduled Inspections. Representatives of
other Lenders may accompany Agent's representatives on regularly
scheduled audits at no charge to any Credit Party.
1.15 Taxes
(a) Any and all payments by each Credit Party hereunder (including any
payments made pursuant to Section 12) or under the Notes shall be
made, in accordance with this Section 1.15, free and clear of and
without deduction for any and all present or future Taxes, unless
required by law. If any Credit Party shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder
(including any sum payable pursuant to Section 12) or under the
Notes, (i) the sum payable shall be increased as much as shall be
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section
1.15) Agent or
25
Lenders, as applicable, receive an amount equal to the sum they
would have received had no such deductions been made, (ii) such
Credit Party shall make such deductions, and (iii) such Credit Party
shall pay the full amount deducted to the relevant taxing or other
authority in accordance with applicable law. Within thirty (30) days
after the date of any payment of Taxes, Borrower Representative
shall furnish to Agent the original or a certified copy of a receipt
evidencing payment thereof. Agent and Lenders shall not be obligated
to return or refund any amounts received pursuant to this Section,
except that in the event a Lender or Agent receives a refund of, or
credit with respect to, any Taxes paid (directly or indirectly) by a
Credit Party pursuant to Section 1.15(a) or Section 1.15(b), such
Lender or Agent, as applicable, shall pay the amount of such refund
or credit to such Credit Party within thirty (30) days of receipt of
such refund or application of such credit; PROVIDED that the
calculation of such refund or credit shall be determined solely by
such Lender or Agent, as applicable.
(b) Each Credit Party shall jointly and severally indemnify and, within
ten (10) days of demand therefor, pay Agent and each Lender for the
full amount of Taxes (including any Taxes imposed by any
jurisdiction on amounts payable under this Section 1.15) paid by
Agent or such Lender, as appropriate, and any liability (including
penalties and interest, neither of which are the result of gross
negligence by Agent or such Lender, and reasonable expenses) arising
therefrom or with respect thereto.
(c) Each Lender organized under the laws of a jurisdiction outside the
United States (a "FOREIGN LENDER") as to which payments to be made
under this Agreement or under the Notes are exempt from United
States withholding tax under an applicable statute or tax treaty
shall provide to Borrower Representative and Agent, at the time such
Foreign Lender becomes a party to this Agreement, a properly
completed and executed IRS Form W-8ECI or Form W-8BEN or other
applicable form, certificate or document prescribed by the IRS or
the United States certifying as to such Foreign Lender's entitlement
to such exemption (a "CERTIFICATE OF EXEMPTION"). Any foreign Person
that seeks to become a Lender under this Agreement shall provide a
Certificate of Exemption to Borrower Representative and Agent prior
to becoming a Lender hereunder, and each Foreign Lender shall
complete all further documentation reasonably requested by Borrower
Representative or the Agent required to establish and maintain such
withholding exemption. No foreign Person may become a Lender
hereunder if such Person fails to deliver a Certificate of Exemption
in advance of becoming a Lender.
1.16 Capital Adequacy; Increased Costs; Illegality
(a) If any Lender shall have determined in good faith that any law,
treaty, governmental (or quasi-governmental) rule, regulation,
guideline or order regarding capital adequacy, reserve requirements
or similar requirements or compliance by any Lender with any request
or directive regarding capital adequacy, reserve requirements or
similar requirements (whether or not having the force of law), in
each case adopted after the Closing Date, from any central bank or
other Governmental Authority increases or would
26
have the effect of increasing the amount of capital, reserves or
other funds required to be maintained by such Lender and thereby
reducing the rate of return on such Lender's capital as a
consequence of its obligations hereunder, then Borrowers shall from
time to time upon written demand by such Lender (with a copy of such
demand to Agent) pay to Agent, for the account of such Lender,
additional amounts sufficient to compensate such Lender for such
reduction. A certificate as to the amount of that reduction and
showing the basis of the computation thereof submitted by such
Lender to Borrower Representative and to Agent shall, absent
manifest error, be final, conclusive and binding for all purposes.
(b) If, due to either (i) the introduction of or any change in any law
or regulation (or any change in the interpretation thereof) or (ii)
the compliance with any guideline or request from any central bank
or other Governmental Authority (whether or not having the force of
law), in each case adopted after the Closing Date, there shall be
any increase in the cost to any Lender of agreeing to make or
making, funding or maintaining any Loan (excluding for purposes of
this Section 1.16(b) Taxes, as to which Section 1.15 shall govern),
then Borrowers shall from time to time, upon written demand by such
Lender (with a copy of such demand to Agent), pay to Agent for the
account of such Lender additional amounts sufficient to compensate
such Lender for such increased cost. A certificate as to the amount
of such increased cost, submitted to Borrower Representative and to
Agent by such Lender, shall be conclusive and binding on Borrowers
for all purposes, absent manifest error. Each Lender agrees that, as
promptly as practicable after it becomes aware of any circumstances
referred to above which would result in any such increased cost, the
affected Lender shall, to the extent not inconsistent with such
Lender's internal policies of general application, use reasonable
commercial efforts to minimize costs and expenses incurred by it and
payable to it by Borrowers pursuant to this Section 1.16(b).
(c) Notwithstanding anything to the contrary contained herein, if the
introduction of or any change in any law or regulation (or any
change in the interpretation thereof) shall make it unlawful, or any
central bank or other Governmental Authority shall assert that it is
unlawful, for any Lender to agree to make or to make or to continue
to fund or maintain any LIBOR Loan, then, unless that Lender is able
to make or to continue to fund or to maintain such LIBOR Loan at
another branch or office of that Lender without, in that Lender's
good faith opinion, adversely affecting it or its Loans or the
income obtained therefrom, on written notice thereof and written
demand therefor by such Lender to Borrower Representative through
Agent, (i) the obligation of such Lender to agree to make or to make
or to continue to fund or maintain LIBOR Loans shall terminate and
(ii) each Borrower shall forthwith prepay in full all outstanding
LIBOR Loans owing by such Borrower to such Lender, together with
interest accrued thereon, unless such Borrower, within five (5)
Business Days after the delivery of such notice and demand, converts
all LIBOR Loans into Index Rate Loans.
27
(d) Within fifteen (15) days after receipt by Borrower Representative of
written notice and demand from any Lender (an "AFFECTED LENDER") for
payment of additional amounts, increased costs or reserve costs as
provided in Section 1.15(a), 1.15(b), 1.16(a), 1.16(b) or 1.16(c),
Borrower Representative may, at its option, notify Agent and such
Affected Lender of its intention to replace the Affected Lender. So
long as no Default or Event of Default has occurred and is
continuing, Borrower Representative, with the consent of Agent not
to be unreasonably withheld, may obtain, at Borrowers' expense, a
replacement Lender ("REPLACEMENT LENDER") for the Affected Lender,
which Replacement Lender must be reasonably satisfactory to Agent.
If Borrower Representative obtains a Replacement Lender within
ninety (90) days following notice of its intention to do so, the
Affected Lender must sell and assign (in accordance with the
register requirements for assignments in Section 9.1) its Loans and
Commitments to such Replacement Lender for an amount equal to the
principal balance of all Loans held by the Affected Lender and all
accrued interest and Fees with respect thereto through the date of
such sale, PROVIDED, that Borrowers shall have reimbursed such
Affected Lender for the additional amounts or increased costs that
it is entitled to receive under this Agreement through the date of
such sale and assignment. Notwithstanding the foregoing, Borrowers
shall not have the right to obtain a Replacement Lender if the
Affected Lender rescinds its demand for increased costs or
additional amounts within fifteen (15) days following its receipt of
Borrower Representative's notice of intention to replace such
Affected Lender. Furthermore, if Borrower Representative gives a
notice of intention to replace and does not so replace such Affected
Lender within ninety (90) days thereafter, Borrowers' rights under
this Section 1.16(d) shall terminate and Borrowers shall promptly
pay all increased costs or additional amounts demanded by such
Affected Lender pursuant to Sections 1.15(a), 1.16(a) and 1.16(b).
(e) Notwithstanding the provisions of Section 1.16(a) and (b), if any
Lender fails to notify Borrower Representative of any event or
circumstance which will entitle such Lender to compensation pursuant
to Section 1.16(a) or (b) within 180 days after such Lender becomes
aware of such event or occurrence, then such Lender shall not be
entitled to compensation from Borrowers for any amount arising prior
to the date which is 180 days before the date of such notice to
Borrower Representative.
1.17 Single Loan
All Loans to each Borrower and all of the other Obligations of each
Borrower arising under this Agreement and the other Loan Documents shall
constitute one general obligation of that Borrower secured, until the
Termination Date, by all of the Collateral.
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2. CONDITIONS PRECEDENT
2.1 Conditions to the Initial Loans
No Lender shall be obligated to make any Loan to, or incur any Letter of
Credit Obligations on the Closing Date, or to take, fulfill or perform
any other action hereunder, until the following conditions have been
satisfied or provided for in a manner satisfactory to Agent, or waived in
writing by Agent and Lenders:
(a)
Credit Agreement; Loan Documents
This Agreement or counterparts hereof shall have been duly executed
by, and delivered to, each Credit Party, Agent and Lenders; and
Agent shall have received such documents, instruments, agreements
and legal opinions as Agent shall reasonably request in connection
with the transactions contemplated by this Agreement and the other
Loan Documents, including all those listed in the Closing Checklist
attached hereto as Annex D, each in form and substance reasonably
satisfactory to Agent.
(b) Repayment of Prior Obligations; Satisfaction of Outstanding L/Cs
(i) Agent shall have received fully executed originals of pay-off
letters reasonably satisfactory to Agent confirming that all
of the Prior Obligations will be repaid in full from the
proceeds of the initial Revolving Credit Advance and all
Liens upon any of the property of Borrowers or any of their
Subsidiaries in favor of any Prior Lender shall be terminated
by such Prior Lender immediately upon such payment; and
(ii) all letters of credit issued or guaranteed by such Prior
Lender shall have been terminated, cash collateralized,
supported by a guaranty of Agent or supported by a Letter of
Credit issued pursuant to Annex B, as mutually agreed upon by
Agent, Borrowers and such Prior Lender.
(c) Approvals
Agent shall have received (i) reasonably satisfactory evidence that
each Credit Party has obtained all required consents and approvals
of all Persons including all requisite Governmental Authorities, to
the execution, delivery and performance of this Agreement and the
other Loan Documents and the consummation of the Related
Transactions or (ii) a certificate of an Authorized Officer in form
and substance reasonably satisfactory to Agent affirming that no
such consents or approvals are required.
(d) Opening Availability
The Eligible Accounts, Eligible Rentals, Eligible Parts and Tools
Inventory, Eligible Rolling Stock and Eligible Equipment Inventory
supporting the initial Revolving Credit Advance and the initial
Letter of Credit Obligations incurred and the amount of the
29
Reserves to be established on the Closing Date shall be sufficient
in value, as determined by Agent, to provide Borrowers,
collectively, with Borrowing Availability, after giving effect to
the initial Revolving Credit Advance made to each Borrower, the
incurrence of any initial Letter of Credit Obligations and the
consummation of the Related Transactions (on a PRO FORMA basis, with
trade payables being paid currently, and expenses and liabilities
being paid in the ordinary course of business and without
acceleration of sales) of at least $50,000,000.
(e) Payment of Fees
Borrowers shall have paid the Fees required to be paid on the
Closing Date in the respective amounts specified in Section 1.9
(including the Fees specified in the GE Capital Fee Letter), and
shall have reimbursed Agent for all fees, costs and expenses of
closing presented as of the Closing Date in accordance with Section
11.3.
(f) Capital Structure: Other Indebtedness
The organizational documents, terms of equity interests, capital
structure of each Credit Party and the terms and conditions of all
Indebtedness of each Credit Party shall be reasonably acceptable to
Agent.
(g) Due Diligence
Agent shall have completed its business and legal due diligence with
results reasonably satisfactory to Agent.
(h) Funding of Senior Debt
Agent shall have received (i) evidence satisfactory to it that
Borrowers shall have received not less than (x) $200,000,000 (less
discounts and commissions) in cash in consideration of the issuance
of Senior Notes pursuant to the Senior Note Indenture and (y)
$50,000,000 (less discounts and commissions) in cash in
consideration of the issuance of Senior Subordinated Notes pursuant
to the Senior Subordinated Note Indenture, (ii) fully executed
copies of the Senior Note Indenture and Senior Subordinated Note
Indenture in form and substance reasonably satisfactory to it and
(iii) the Intercreditor Agreement, executed and delivered on behalf
of the Collateral Agent.
(i) Consummation of Related Transactions
Agent shall have received fully executed copies of the Contribution
Agreement and Plan of Reorganization and each of the other Related
Transactions Documents, each of which shall be in form and substance
reasonably satisfactory to Agent and its counsel. The Mergers and
the other Related Transactions shall have been consummated in
accordance with the terms of the Contribution Agreement and Plan of
Reorganization and the other Related Transaction Documents.
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2.2 Further Conditions to Each Loan
Except as otherwise expressly provided herein, no Lender shall be
obligated to fund any Advance, convert or continue any Loan as a LIBOR
Loan or incur any Letter of Credit Obligation, if, as of the date
thereof:
(a) (i) any representation or warranty by any Credit Party contained
herein or in any other Loan Document is untrue or incorrect as of
such date in any material respect, except to the extent that such
representation or warranty expressly relates to an earlier date and
except for changes therein expressly permitted or expressly
contemplated by this Agreement and (ii) Agent or Requisite Lenders
have determined not to make such Advance, convert or continue any
Loan as a LIBOR Loan or incur such Letter of Credit Obligation as a
result of the fact that such warranty or representation is untrue or
incorrect; or
(b) (i) any event or circumstance having a Material Adverse Effect has
occurred since the date hereof as determined by the Requisite
Lenders and (ii) Agent or Requisite Lenders have determined not to
make such Advance, convert or continue any Loan as a LIBOR Loan or
incur such Letter of Credit Obligation as a result of the fact that
such event or circumstance has occurred; or
(c) (i) any Default or Event of Default has occurred and is continuing
or would result after giving effect to any Advance (or the
incurrence of any Letter of Credit Obligation), and (ii) Agent or
Requisite Lenders shall have determined not to make any Advance,
convert or continue any Loan as a LIBOR Loan or incur any Letter of
Credit Obligation as a result of such Default or Event of Default;
or
(d) after giving effect to any Advance (or the incurrence of any Letter
of Credit Obligations), (i) the outstanding principal amount of the
aggregate Revolving Loan would exceed the lesser of the Aggregate
Borrowing Base and the Maximum Amount, in each case, LESS the
aggregate outstanding Swing Line Loan at such time, or (ii) the
outstanding principal amount of the Revolving Loan to the applicable
Borrower would exceed such Borrower's separate Borrowing Base LESS
the aggregate outstanding Swing Line Loan at such time, to that
Borrower; or
(e) after giving effect to any Swing Line Advance, the outstanding
principal amount of the Swing Line Loan would exceed Swing Line
Availability.
The request and acceptance by any Borrower of the proceeds of any
Advance, the incurrence of any Letter of Credit Obligations or the
conversion or continuation of any Loan into, or as, a LIBOR Loan, shall
be deemed to constitute, as of the date thereof, (i) a representation and
warranty by such Borrower that the conditions in this Section 2.2 have
been satisfied and (ii) a reaffirmation by such Borrower of the
cross-guaranty provisions set forth in Section 12 and of the granting and
continuance of Agent's Liens, on behalf of itself and Lenders, pursuant
to the Collateral Documents.
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3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Loans and to incur Letter of Credit
Obligations, each Credit Party, jointly and severally, makes the
following representations and warranties to Agent and each Lender, with
respect to all Credit Parties, each and all of which shall survive the
execution and delivery of this Agreement.
3.1 Corporate or Limited Liability Company Existence; Compliance with Law
Each Credit Party (a) is a limited liability company or corporation, as
applicable, duly organized, validly existing and in good standing under
the laws of its respective jurisdiction of organization or incorporation
set forth in Disclosure Schedule (3.1); (b) is duly qualified to conduct
business and is in good standing in each other jurisdiction where its
ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified would not
result in exposure to losses, damages or liabilities in excess of
$50,000; (c) has the requisite corporate or limited liability company, as
applicable, power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the
property it operates under lease and to conduct its business as is now,
heretofore and is proposed to be conducted; (d) has all material
licenses, permits, consents or approvals from or by, and has made all
material filings with, and has given all material notices to, all
Governmental Authorities having jurisdiction, to the extent required for
such ownership, operation and conduct; (e) is in compliance with its
charter and bylaws or certificate of formation and operating agreement,
as applicable; and (f) subject to specific representations set forth
herein regarding ERISA, Environmental Laws, tax and other laws, is in
compliance with all applicable provisions of law; except in the case of
clauses (b), (d) and (f) of this Section 3.1, where the failure to
comply, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
3.2 Executive Offices; Collateral Locations; FEIN
As of the Closing Date, the current location of each Credit Party's chief
executive office and the warehouses and premises at which any Collateral
is located are set forth in Disclosure Schedule (3.2), and none of such
locations has changed within the 12 months preceding the Closing Date. In
addition, Disclosure Schedule (3.2) lists the jurisdiction of
organization, organizational identification number, if any, and federal
employer identification number of each Credit Party.
3.3 Corporate or Limited Liability Company Power, Authorization, Enforceable
Obligations
The execution, delivery and performance by each Credit Party of the Loan
Documents to which it is a party and the creation of all Liens provided
for therein: (a) are within such Credit Party's corporate or limited
liability company, as applicable, power; (b) have been duly authorized by
all necessary corporate, limited liability company, shareholder and
member action, as applicable; (c) do not contravene any provision of such
Credit Party's certificate of formation, operating agreement, charter or
by-laws, as applicable; (d) do not violate any law or regulation, or any
order
32
or decree of any court or Governmental Authority; (e) do not conflict
with or result in the breach or termination of, constitute a default
under or accelerate or permit the acceleration of any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or
other instrument to which such Credit Party is a party or by which such
Credit Party or any of its property is bound that alone or in the
aggregate could reasonably be expected to have a Material Adverse Effect;
(f) do not result in the creation or imposition of any Lien upon any of
the property of such Credit Party other than Permitted Encumbrances or
those in favor of Agent, on behalf of itself and Lenders, pursuant to the
Loan Documents; and (g) do not require the consent or approval of any
Governmental Authority or any other Person, except those referred to in
Section 2.1(c), all of which will have been duly obtained, made or
complied with prior to the Closing Date. Each of the Loan Documents shall
be duly executed and delivered by each Credit Party that is a party
thereto and each such Loan Document shall constitute a legal, valid and
binding obligation of such Credit Party enforceable against it in
accordance with its terms, subject to any applicable bankruptcy,
insolvency, moratorium or similar laws affecting creditors' rights
generally and to general principles of equity.
3.4 Financial Statements and Projections
Except for the Projections, the Fair Salable Balance Sheet and the
Financial Statements referenced in items (a)(iii) and (a)(iv) below, all
Financial Statements concerning any Credit Party and its Subsidiaries
that are referred to below have been prepared in accordance with GAAP
consistently applied throughout the periods covered (except as disclosed
therein and except, with respect to unaudited Financial Statements, for
the absence of footnotes and normal year-end audit adjustments) and
present fairly in all material respects the financial position of the
Persons covered thereby as at the dates thereof and the results of their
operations and cash flows for the periods then ended.
(a) Financial Statements
The following Financial Statements attached hereto as Disclosure
Schedule (3.4(a)) have been delivered on the date hereof:
(i) The audited consolidated and consolidating balance sheets at
December 31, 2001 and the related statements of income and
cash flows of ICM and its Subsidiaries for the Fiscal Year
then ended certified by KPMG Peat Marwick LLP.
(ii) The audited consolidated and consolidating balance sheets as
of December 31, 2001 and the related statements of income and
cash flows of Gulf Wide and its Subsidiaries for the Fiscal
Year then ended, certified by KPMG Peat Marwick LLP.
(iii) The unaudited balance sheets as of March 31, 2002 and the
related statements of income and cash flows of ICM and its
Subsidiaries for the Fiscal Quarter then ended.
33
(iv) The unaudited balance sheets as of March 31, 2002 and the
related statements of income and cash flows of Gulf Wide and
its Subsidiaries for the Fiscal Quarter then ended.
(b) Pro Forma
The Pro Forma delivered on or prior to the date hereof and attached
hereto as Disclosure Schedule (3.4(b)) was prepared by Borrowers
giving PRO FORMA effect to the Related Transactions, was based on
the unaudited consolidated and consolidating balance sheets of ICM
and its Subsidiaries dated March 31, 2002, Head & Xxxxxxxx Equipment
and its Subsidiaries dated March 31, 2002 and Gulf Wide and its
Subsidiaries dated March 31, 2002 and was prepared in accordance
with GAAP, with only such adjustments thereto as would be required
in accordance with GAAP.
(c) Projections
The Projections delivered on or prior to the date hereof and
attached hereto as Disclosure Schedule (3.4(c)) have been prepared
by Borrowers in light of the past operations of their businesses,
but including future payments of known contingent liabilities
reflected on the Fair Salable Balance Sheet, and reflect projections
for the five (5) year period beginning on January 1, 2002 on a
quarter by quarter basis for the first year and on a year by year
basis thereafter. The Projections are based upon estimates and
assumptions stated therein, all of which Borrowers believe to be
reasonable and fair in light of current conditions and current facts
known to Borrowers and, as of the Closing Date, reflect Borrowers'
good faith and reasonable estimates of the future financial
performance of Borrowers and of the other information projected
therein for the period set forth therein.
(d) Fair Salable Balance Sheet
The Fair Salable Balance Sheet delivered on or prior to the date
hereof and attached hereto as Disclosure Schedule (3.4(d)) was
prepared by Borrowers on the same basis as the Projections, except
that Borrowers' assets are set forth therein at their fair salable
values on a going concern basis and the liabilities set forth
therein include all contingent liabilities of Borrowers stated at
the reasonably estimated present values thereof.
3.5 Material Adverse Effect
Between December 31, 2001 and the Closing Date: (a) none of the Credit
Parties has incurred any obligations, contingent or noncontingent
liabilities, liabilities for Charges, long-term leases or unusual forward
or long-term commitments that are not reflected in the Pro Forma and
that, alone or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, (b) no contract, lease or other agreement or
instrument has been entered into by any Credit Party or has become
binding upon any Credit Party's assets and no law or regulation
applicable to any Credit Party has been adopted that has had or could
reasonably be expected to have a Material Adverse Effect, and (c) no
Credit Party is in default and to the best of any Credit Party's
knowledge no
34
third party is in default under any material contract, lease or other
agreement or instrument, that alone or in the aggregate could reasonably
be expected to have a Material Adverse Effect. Between December 31, 2001
and the Closing Date no event has occurred, that alone or together with
other events, could reasonably be expected to have a Material Adverse
Effect. For all purposes of this Section 3.5, the entering into of the
Related Transaction Documents and the consummation of the Related
Transactions shall be deemed not to have a Material Adverse Effect.
3.6 Ownership of Property; Liens
(a) As of the Closing Date, the real estate (together with any real
property acquired by any Borrower or Guarantor after the Closing
Date, "REAL ESTATE") designated as such and listed in Disclosure
Schedule (3.6) constitutes all of the real property owned, leased,
subleased, or operated by any Credit Party. Except as disclosed in
Disclosure Schedule (3.6), each Credit Party owns good and
marketable fee simple title to all of its owned Real Estate, and
valid and marketable leasehold interests in all of its leased Real
Estate, all as more particularly described on such schedule, and
copies of all such leases or a summary of terms thereof reasonably
satisfactory to Agent have been delivered to Agent. Disclosure
Schedule (3.6) further describes any Real Estate with respect to
which any Credit Party is a lessor, sublessor or assignor as of the
Closing Date. Each Credit Party also has good and marketable title
to, or valid leasehold interests in, all of its personal properties
and assets, including, without limitation, those titled vehicles
described in Disclosure Schedule (3.6) (the "TITLED VEHICLES"). As
of the Closing Date, none of the properties and assets of any Credit
Party are subject to any Liens other than Permitted Encumbrances,
and there are no facts, circumstances or conditions known to any
Credit Party that may result in any Liens (including Liens arising
under Environmental Laws) other than Permitted Encumbrances. Except
as described in Disclosure Schedule (3.6), each Credit Party has
received all deeds, certificates of title, assignments, waivers,
consents, nondisturbance and attornment or similar agreements, bills
of sale and other documents, and has duly effected all recordings,
filings and other actions necessary to establish, protect and
perfect such Credit Party's right, title and interest in and to all
such Real Estate and other properties and assets including, without
limitation, the Titled Vehicles. Disclosure Schedule (3.6) also
describes any purchase options, rights of first refusal or other
similar contractual rights pertaining to any Real Estate. No portion
of any Credit Party's Real Estate has suffered any material damage
by fire or other casualty loss that has not heretofore been repaired
and restored in all material respects to its original condition or
otherwise remedied. All material permits required to have been
issued or appropriate to enable the Real Estate to be lawfully
occupied and used for all of the purposes for which it is currently
occupied and used have been lawfully issued and are in full force
and effect.
35
3.7 Labor Matters
As of the Closing Date (a) no strikes or other material labor disputes
against any Credit Party are pending or, to any Credit Party's knowledge,
threatened that could reasonably be expected to have a Material Adverse
Effect; (b) hours worked by and payment made to employees of each Credit
Party comply in all material respects with the Fair Labor Standards Act
and each other federal, state, local or foreign law applicable to such
matters; (c) all payments due from any Credit Party for employee health
and welfare insurance have been paid or accrued as a liability on the
books of such Credit Party; (d) except as set forth in Disclosure
Schedule (3.7), no Credit Party is a party to or bound by any collective
bargaining agreement, management agreement, consulting agreement,
employment agreement, bonus, restricted stock, stock option, stock
appreciation plan or agreement or any similar plan, agreement or
arrangement (and true and complete copies of any agreements described in
Disclosure Schedule (3.7) have been delivered to Agent); (e) except as
set forth in Disclosure Schedule (3.7), there is no organizing activity
involving any Credit Party pending or, to any Credit Party's knowledge,
threatened by any labor union or group of employees; (f) except as set
forth in Disclosure Schedule (3.7), there are no representation
proceedings pending or, to any Credit Party's knowledge, threatened with
the National Labor Relations Board, and no labor organization or group of
employees of any Credit Party has made a pending demand for recognition;
and (g) except as set forth in Disclosure Schedule (3.7), there are no
complaints or charges against any Credit Party pending or, to the
knowledge of any Credit Party, threatened to be filed with any
Governmental Authority or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination
of employment by any Credit Party of any individual that could reasonably
be expected to have a Material Adverse Effect.
3.8 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness
Except as set forth in Disclosure Schedule (3.8), as of the Closing Date,
no Credit Party has any Subsidiaries, is engaged in any joint venture or
partnership with any other Person, or is an Affiliate of any other
Person. All of the issued and outstanding Stock of each Credit Party is
owned by each of the members or Stockholders, as applicable, and in the
amounts set forth in Disclosure Schedule (3.8). Except as set forth in
Disclosure Schedule (3.8), there are no outstanding rights to purchase,
options, warrants or similar rights or agreements pursuant to which any
Credit Party may be required to issue, sell, repurchase or redeem any of
its Stock or other equity securities or any Stock or other equity
securities of its Subsidiaries. All outstanding Indebtedness and
Guaranteed Indebtedness of each Credit Party as of the Closing Date is
described in Section 6.3 (including Disclosure Schedule (6.3)). None of
the Credit Parties other than Borrowers has any assets (except Stock of
their Subsidiaries) or any Indebtedness or Guaranteed Indebtedness
(except the Obligations). No Credit Party has any outstanding
Indebtedness or true lease obligations secured by a Lien described in
Section 6.7(c) or Section 6.7(d) except as described in Disclosure
Schedule (6.3) under the heading "Vendor Financings."
36
3.9 Government Regulation
No Credit Party is an "investment company" or an "affiliated person" of,
or "promoter" or "principal underwriter" for, an "investment company," as
such terms are defined in 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, or any other federal or state statute
that restricts or limits its ability to incur Indebtedness or to perform
its obligations hereunder. The making of the Loans by Lenders to
Borrowers, the incurrence of the Letter of Credit Obligations on behalf
of Borrowers, the application of the proceeds thereof and repayment
thereof and the consummation of the Related Transactions will not violate
any provision of any such statute or any rule, regulation or order issued
by the Securities and Exchange Commission.
3.10 Margin Regulations
No Credit Party is engaged, nor will it engage, principally or as one of
its important activities, in the business of extending credit for the
purpose of "purchasing" or "carrying" any "margin stock" as such terms
are defined in Regulation U of the Federal Reserve Board as now and from
time to time hereafter in effect (such securities being referred to
herein as "MARGIN STOCK"). No Credit Party owns any Margin Stock, and
none of the proceeds of the Loans or other extensions of credit under
this Agreement will be used, directly or indirectly, for the purpose of
purchasing or carrying any Margin Stock, for the purpose of reducing or
retiring any Indebtedness that was originally incurred to purchase or
carry any Margin Stock or for any other purpose that might cause any of
the Loans or other extensions of credit under this Agreement to be
considered a "purpose credit" within the meaning of Regulations T, U or X
of the Federal Reserve Board. No Credit Party will take or permit any
Subsidiary to take any action that might cause any Loan Document to
violate any regulation of the Federal Reserve Board.
3.11 Taxes
All tax returns, reports and statements, including information returns,
required by any Governmental Authority to be filed by any Credit Party
have been filed with the appropriate Governmental Authority and all
Charges have been paid prior to the date on which any fine, penalty,
interest or late charge may be added thereto for nonpayment thereof (or
any such fine, penalty, interest, late charge or loss has been paid),
except (a) Charges or other amounts being contested in accordance with
Section 5.2(b) or (b) to the extent that the failure to file or pay could
not reasonably be expected to result in a Material Adverse Effect. Proper
and accurate amounts have been withheld by each Credit Party from its
respective employees for all periods in full and complete compliance with
all applicable federal, state, local and foreign laws and such
withholdings have been timely paid to the respective Governmental
Authorities. Disclosure Schedule (3.11) sets forth as of the Closing Date
those taxable years for which any Credit Party's tax returns are
currently being audited by the IRS or any other applicable Governmental
Authority and any assessments or threatened assessments in connection
with such audit, or otherwise currently outstanding. Except as described
in Disclosure Schedule (3.11), no Credit Party has executed or filed with
the IRS or any other Governmental Authority any agreement or
37
other document extending, or having the effect of extending, the period
for assessment or collection of any Charges. None of the Credit Parties
or their respective predecessors are liable for any Charges: (a) under
any agreement (including any tax sharing agreements) or (b) to any Credit
Party's knowledge, as a transferee. As of the Closing Date, no Credit
Party has agreed or been requested to make any adjustment under IRC
Section 481(a), by reason of a change in accounting method or otherwise,
which would have a Material Adverse Effect.
3.12 ERISA
(a) Disclosure Schedule (3.12) lists all Plans and separately identifies
all Pension Plans, including Title IV Plans, Multiemployer Plans and
Welfare Plans, including all Retiree Welfare Plans. Copies of all
Title IV Plans, together with a copy of the latest IRS/DOL
5500-series form for each such Title IV Plan, have been made
available to Agent. Except as would not reasonably be expected to
have a Material Adverse Effect (i) except with respect to
Multiemployer Plans, each Qualified Plan has received a favorable
determination letter from the IRS, and nothing has occurred that
would cause the loss of such Qualified Plans qualification; (ii)
each Plan is in compliance in all material respects with the
applicable provisions of ERISA and the IRC, including the timely
filing of all reports required under the IRC or ERISA; (iii) neither
any Credit Party nor any ERISA Affiliate has failed to make any
contribution or pay any amount due as required by either Section 412
of the IRC or Section 302 of ERISA or the terms of any Title IV
Plan; and (iv) no Credit Party or any ERISA Affiliate has engaged in
a "prohibited transaction", as defined in Section 406 of ERISA and
Section 4975 of the IRC, that will subject any Credit Party to a
material tax on prohibited transactions imposed by Section 502(i) of
ERISA or Section 4975 of the IRC.
(b) Except as set forth in Disclosure Schedule (3.12): (i) no Title IV
Plan has any material Unfunded Pension Liability; (ii) no ERISA
Event or event described in Section 4062(e) of ERISA with respect to
any Title IV Plan has occurred or is reasonably expected to occur
that could reasonably be expected a Material Adverse Effect; (iii)
there are no pending, or to the knowledge of any Credit Party,
threatened claims (other than claims for benefits in the normal
course), sanctions, actions or lawsuits, asserted or instituted
against any Plan or any Person as fiduciary or sponsor of any Plan
that could reasonably be expected to have a Material Adverse Effect;
(iv) no Credit Party or ERISA Affiliate has incurred or reasonably
expects to incur any liability as a result of a complete or partial
withdrawal from a Multiemployer Plan that could reasonably be
expected to have a Material Adverse Effect; (v) within the last five
years no Title IV Plan of any Credit Party or ERISA Affiliate has
been terminated, whether or not in a "standard termination" as that
term is used in Section 4041(b)(1) of ERISA, nor has any Title IV
Plan of any Credit Party or any ERISA Affiliate (determined at any
time within the last five years) with Unfunded Pension Liabilities
been transferred outside of the "controlled group" (within the
meaning of Section 4001(a)(14) of ERISA) of any Credit Party or
ERISA Affiliate (determined at the time of any such transfer).
38
3.13 No Litigation
No action, claim, lawsuit, demand, investigation or proceeding is now
pending or, to the knowledge of any Credit Party, threatened against any
Credit Party or before any Governmental Authority or before any
arbitrator or panel of arbitrators (collectively, "LITIGATION"), (a) that
challenges any Credit Party's, right or power to enter into or perform
any of its obligations under any Related Transaction Document or any Loan
Document to which it is a party, or the validity or enforceability of any
Related Transaction Document or any Loan Document or any action taken
thereunder, or (b) that has a reasonable risk of being determined
adversely to any Credit Party, and which, if so determined, could
reasonably be expected to have a Material Adverse Effect. Except as set
forth in Disclosure Schedule (3.13), as of the Closing Date there is no
Litigation pending or to any Credit Party's knowledge threatened against
any Credit Party that seeks damages in excess of $100,000 or injunctive
relief against, or alleges criminal misconduct of, any Credit Party.
3.14 Brokers
No broker or finder brought about the obtaining, making or closing of the
Loans or the Related Transactions, and no Credit Party or Affiliate
thereof has any obligation to any Person in respect of any finder's or
brokerage fees in connection therewith, except for (i) a fee paid to
Bruckman, Rosser, Xxxxxxxx & Co., Inc. ("BRS MANAGEMENT CO.") on the
Closing Date in the amount of $7,218,750 pursuant to the terms of the
First Amended and Restated Management Agreement dated as of the date
hereof (the "BRS MANAGEMENT AGREEMENT") by and among BRS Management Co.,
H&E Holdings and H&E, such fee to be used in full to purchase on the
Closing Date Senior Subordinated Notes and common units of H&E Holdings,
and (ii) payments in accordance with Section 6.14(d).
3.15 Intellectual Property
As of the Closing Date, each Credit Party owns or has rights to use all
Intellectual Property material to the continuance of the conduct of its
business as now or heretofore conducted by it or proposed to be conducted
by it, and each Patent, each registration or each application for
registration of each Trademark, each Copyright and each License is
listed, together with application or registration numbers, as applicable,
in Disclosure Schedule (3.15). Each Credit Party conducts its business
and affairs without material infringement of or material interference
with any Intellectual Property of any other Person. Except as set forth
in Disclosure Schedule (3.15), no Credit Party is aware of any
infringement claim by any other Person with respect to any Intellectual
Property.
3.16 Full Disclosure
No information contained in this Agreement, any of the other Loan
Documents, any Projections, Financial Statements or Collateral Reports or
other written reports from time to time delivered hereunder or any
written statement furnished by or on behalf of any Credit Party to Agent
or any Lender pursuant to the terms of this Agreement contains or will
contain any untrue statement of a
39
material fact or omits or will omit to state a material fact necessary to
make the statements contained herein or therein not misleading in light
of the circumstances under which they were made. The Liens granted to
Agent, on behalf of itself and Lenders, pursuant to the Collateral
Documents will at all times be fully perfected first priority Liens in
and to the Collateral described therein, subject, as to priority, only to
Permitted Encumbrances.
3.17 Environmental Matters
(a) Except as set forth in Disclosure Schedule (3.17), as of the Closing
Date: (i) the Real Estate is free of contamination from any
Hazardous Material except for such contamination that would not
adversely impact the value or marketability of such Real Estate and
that would not result in Environmental Liabilities that could
reasonably be expected to exceed $250,000; (ii) no Credit Party has
caused or suffered to occur any Release of Hazardous Materials on,
at, in, under, above, to, from or about any of its Real Estate that
would result in Environmental Liabilities that could reasonably be
expected to exceed $250,000; (iii) each Credit Party is and has been
in compliance with all Environmental Laws, except for such
noncompliance that would not result in Environmental Liabilities
which could reasonably be expected to exceed $250,000; (iv) each
Credit Party has obtained, and is in compliance with, all
Environmental Permits required by Environmental Laws for the
operations of its businesses as presently conducted or as proposed
to be conducted, except where the failure to so obtain or comply
with such Environmental Permits would not result in Environmental
Liabilities that could reasonably be expected to exceed $250,000,
and all such Environmental Permits are valid, uncontested and in
good standing; (v) no Credit Party is involved in operations or
knows of any facts, circumstances or conditions, including any
Releases of Hazardous Materials, that are likely to result in any
Environmental Liabilities of Borrower that could reasonably be
expected to exceed $250,000, and no Credit Party has permitted any
current or former tenant or occupant of the Real Estate to engage in
any such operations; (vi) there is no Litigation arising under or
related to any Environmental Laws, Environmental Permits or
Hazardous Material that seeks damages, penalties, fines, costs or
expenses in excess of $100,000 or injunctive relief, or which
alleges criminal misconduct by any Credit Party, (vii) no notice has
been received by any Credit Party identifying it as a "potentially
responsible party" or requesting information under CERCLA or
analogous state statutes, and to the knowledge of any Credit Party,
there are no facts, circumstances or conditions that may result in
any Credit Party being identified as a "potentially responsible
party" under CERCLA or analogous state statutes; and (viii) the
Credit Parties have provided to Agent copies of all material
existing environmental reports, reviews and audits and all material
written information in their possession pertaining to actual or
potential Environmental Liabilities, in each case relating to the
Credit Parties.
(b) Each Credit Party hereby acknowledges and agrees that Agent (i) is
not now, and has not ever been in control of any of the Real Estate
or any Credit Party's affairs, and (ii) does
40
not have the capacity through the provisions of the Loan Documents
or otherwise to influence any Credit Party's conduct with respect to
the ownership, operation or management of any of its Real Estate or
compliance with Environmental Laws or Environmental Permits.
3.18 Insurance
Disclosure Schedule (3.18) lists all insurance policies of any nature
maintained, as of the Closing Date, for current occurrences by each
Credit Party, as well as a summary of the terms of each such policy.
3.19 Deposit and Disbursement Accounts
Disclosure Schedule (3.19) lists all banks and other financial
institutions at which each Credit Party maintains deposit or other
accounts as of the Closing Date, including any Disbursement Accounts, and
such Schedule correctly identifies the name, address and telephone number
of each depository, the name in which the account is held, a description
of the purpose of the account, and the complete account number therefor.
3.20 Government Contracts
Except as set forth in Disclosure Schedule (3.20), as of the Closing
Date, no Credit Party is a party to any contract or agreement with any
Governmental Authority the value of which exceeds $100,000 and no Credit
Party's Accounts are subject to the Federal Assignment of Claims Act, as
amended (31 U.S.C. Section 3727) or any similar foreign, state or local
law.
3.21 Customer and Trade Relations
As of the Closing Date, there exists no actual or, to the knowledge of
any Credit Party, threatened termination or cancellation of, or any
material adverse modification or change in: (a) the business relationship
of any Credit Party with any customer or group of customers whose
purchases during the preceding twelve (12) months caused it or them, as
applicable, to be ranked among the ten largest customers of such Credit
Party, considered as a whole; or (b) the business relationship of any
Credit Party with any supplier or group of suppliers whose sales during
the preceding twelve (12) months caused it or them, as applicable, to be
ranked among the ten largest suppliers of such Credit Party.
3.22 Agreements and Other Documents
As of the Closing Date, each Credit Party has provided to Agent or its
counsel, on behalf of Lenders, accurate and complete copies (or
summaries) of all of the following agreements or documents to which it is
subject and each of which is listed in Disclosure Schedule (3.22): (a)
supply agreements and purchase agreements not terminable by such Credit
Party within sixty (60) days following written notice issued by such
Credit Party and involving transactions in excess of $1,000,000 per
annum; (b) leases by such Credit Party as lessee of Equipment Inventory
having a remaining term of one year or longer, the total value of leases
of Equipment
41
Inventory as to which a Credit Party is lessee, for each lessor, the
annual payments on all such leases of Equipment Inventory and the
Operating Lease Pay-Off Value for each operating lease of Equipment
Inventory of a Borrower or a Guarantor; (c) licenses and permits held by
such Credit Party, the absence of which could be reasonably likely to
have a Material Adverse Effect; (d) instruments and documents evidencing
any Indebtedness or Guaranteed Indebtedness of such Credit Party and any
Lien (other than Permitted Encumbrances) granted by such Credit Party
with respect thereto; and (e) instruments and agreements evidencing the
issuance of any equity securities, warrants, rights or options to
purchase equity securities of such Credit Party. With respect to the
leases referred to in clause (b) above, other than as set forth on
Disclosure Schedule (3.22), no Credit Party has any obligation in such
lease or otherwise to purchase such Equipment Inventory from the lessor
of such Equipment Inventory at any time. Each Borrower has provided to
Agent the forms of lease under which such Borrower leases Equipment
Inventory to third Persons.
3.23 Solvency
Both before and after giving effect to (a) the Loans and Letter of Credit
Obligations to be made or incurred on the Closing Date or such other date
as Loans and Letter of Credit Obligations requested hereunder are made or
incurred, (b) the disbursement of the proceeds of such Loans pursuant to
the instructions of Borrowers, (c) the Mergers and the consummation of
the other Related Transactions and (d) the payment and accrual of all
transaction costs in connection with the foregoing, each Credit Party is
and will be Solvent.
3.24 Contribution Agreement and Plan of Reorganization
As of the Closing Date, Borrowers have delivered to Agent a complete and
correct copy of the Contribution Agreement and Plan of Reorganization
(including all schedules, exhibits, amendments, supplements,
modifications, assignments and all other documents delivered pursuant
thereto or in connection therewith). No Credit Party and no other Person
party thereto is in default in the performance or compliance with any
provisions thereof. The Contribution Agreement and Plan of Reorganization
complies with, and the Mergers have been consummated in accordance with,
all applicable laws. The Contribution Agreement and Plan of
Reorganization is in full force and effect as of the Closing Date and has
not been terminated, rescinded or withdrawn. All requisite approvals by
Governmental Authorities having jurisdiction over any Credit Party and
other Persons referenced therein with respect to the transactions
contemplated by the Contribution Agreement and Plan of Reorganization
have been obtained, and no such approvals impose any conditions to the
consummation of the transactions contemplated by the Contribution
Agreement and Plan of Reorganization or to the conduct by any Credit
Party of its business thereafter. To the best of each Credit Party's
knowledge, none of the representations or warranties in the Contribution
Agreement and Plan of Reorganization contain any untrue statement of a
material fact or omit any fact necessary to make the statements therein
not misleading.
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3.25 Status of Holdings
Prior to the Closing Date, H&E Holdings, H&E Finance, Gulf Wide and GNE
Investments will not have engaged in any business or incurred any
Indebtedness or any other liabilities (except in connection with its
corporate formation, the Related Transactions Documents and this
Agreement).
3.26 Senior Debt
As of the Closing Date, Borrowers have delivered to Agent a complete and
correct copy of the Senior Notes, the Senior Note Indenture, the Senior
Subordinated Notes and the Senior Subordinated Note Indenture and all
agreements and instruments executed and delivered in connection therewith
(including all schedules, exhibits, amendments, supplements,
modifications, assignments and all other documents delivered pursuant
thereto or in connection therewith). Borrowers have the limited liability
company power and authority to incur the Indebtedness evidenced by the
Senior Notes and the Senior Subordinated Notes. The subordination
provisions of the Senior Subordinated Note Indenture are enforceable
against the Trustee under the Senior Subordinated Note Indenture and the
holders of the Senior Subordinated Notes by Agent and Lenders. The terms
of the Intercreditor Agreement are enforceable against the trustee for
the Senior Notes and the holders of the Senior Notes.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices
(a) Each Credit Party hereby agrees that from and after the Closing Date
and until the Termination Date, it shall deliver to Agent or to
Agent and Lenders, as required, the Financial Statements, notices,
Projections and other information at the times, to the Persons and
in the manner set forth in Annex E.
(b) Each Credit Party hereby agrees that from and after the Closing Date
and until the Termination Date, it shall deliver to Agent or to
Agent and Lenders, as required, the various Collateral Reports
(including Borrowing Base Certificates in the form of Exhibit
4.1(b)) at the times, to the Persons and in the manner set forth in
Annex F.
4.2 Communication with Accountants
Each Credit Party authorizes (a) Agent and (b) so long as an Event of
Default has occurred and is continuing, each Lender, to communicate
directly with its independent certified public accountants including
Xxxxxx Xxxxxxxx, KPMG Peat Marwick LLP and Hawthorn Weymouth, and
authorizes and, at Agent's request, shall instruct those accountants and
advisors to disclose and make available to Agent and each Lender any and
all Financial Statements and other supporting financial documents,
schedules and information relating to any Credit Party (including copies
of any issued management letters) with respect to the business, financial
condition and other affairs of any Credit Party.
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5. AFFIRMATIVE COVENANTS
Each Credit Party jointly and severally agrees as to all Credit Parties
that from and after the date hereof and until the Termination Date:
5.1 Maintenance of Existence and Conduct of Business
Each Credit Party shall: (a) do or cause to be done all things necessary
to preserve and keep in full force and effect its existence as a limited
liability company or a corporation, as the case may be, and its rights
and franchises; (b) continue to conduct its business substantially as now
conducted or as otherwise permitted hereunder; (c) at all times maintain,
preserve and protect all of its assets and properties used or useful in
the conduct of its business, and keep the same in good repair, working
order and condition in all material respects (taking into consideration
ordinary wear and tear) and from time to time make, or cause to be made,
all necessary or appropriate repairs, replacements and improvements
thereto consistent with industry practices; and (d) transact business
only in such limited liability company, corporate and trade names as are
set forth in Disclosure Schedule (5.1).
5.2 Payment of Charges
(a) Subject to Section 5.2(b), each Credit Party shall pay and discharge
or cause to be paid and discharged promptly all Charges payable by
it, including (i) Charges imposed upon it, its income and profits,
or any of its property (real, personal or mixed) and all Charges
with respect to tax, social security and unemployment withholding
with respect to its employees, and (ii) lawful claims for labor,
materials, supplies and services or otherwise, and (iii) all storage
or rental charges payable to warehousemen or bailees, in each case,
before any thereof shall become past due.
(b) Each Credit Party may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges, Taxes or claims
described in Section 5.2(a); PROVIDED, that (i) adequate reserves
with respect to such contest are maintained on the books of such
Credit Party, in accordance with GAAP; (ii) no Lien shall be imposed
to secure payment of such Charges (other than payments to
warehousemen and/or bailees and Permitted Encumbrances) that is
superior to any of the Liens securing the Obligations and such
contest is maintained and prosecuted continuously and with diligence
and operates to suspend collection or enforcement of such Charges;
(iii) none of the Collateral becomes subject to forfeiture or loss
as a result of such contest; (iv) such Credit Party shall promptly
pay or discharge such contested Charges, Taxes or claims and all
additional charges, interest, penalties and expenses, if any, and
shall deliver to Agent evidence reasonably acceptable to Agent of
such compliance, payment or discharge, if such contest is terminated
or discontinued adversely to such Credit Party or the conditions set
forth in this Section 5.2(b) are no longer met, and (v) Agent has
not advised such Credit Party in writing that Agent reasonably
believes that nonpayment or nondischarge thereof could have or
result in a Material Adverse Effect.
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5.3 Books and Records
Each Credit Party shall keep adequate books and records with respect to
its business activities in which proper entries, reflecting all financial
transactions, are made in accordance with GAAP and on a basis consistent
with the Financial Statements attached as Disclosure Schedule (3.4(a)).
5.4 Insurance; Damage to or Destruction of Collateral
(a) Each Credit Party shall at its sole cost and expense, maintain the
policies of insurance described in Disclosure Schedule (3.18) as in
effect on the date hereof, and each Person succeeding to the
position of such individual, or otherwise in form and amounts and
with insurers reasonably acceptable to Agent. Such policies of
insurance (or the loss payable and additional insured endorsements
delivered to Agent) shall contain provisions pursuant to which the
insurer agrees to provide 30 days prior written notice to Agent in
the event of any non-renewal, cancellation or amendment of any such
insurance policy. If any Credit Party at any time or times hereafter
shall fail to obtain or maintain any of the policies of insurance
required above or to pay all premiums relating thereto, Agent may at
any time or times thereafter obtain and maintain such policies of
insurance and pay such premiums and take any other action with
respect thereto that Agent deems advisable. Agent shall have no
obligation to obtain insurance for any Credit Party or pay any
premiums therefor. By doing so, Agent shall not be deemed to have
waived any Default or Event of Default arising from any Credit
Party's failure to maintain such insurance or pay any premiums
therefor. All sums so disbursed, including reasonable attorneys'
fees, court costs and other charges related thereto, shall be
payable on demand by Borrowers to Agent and shall be additional
Obligations hereunder secured by the Collateral.
(b) Agent reserves the right at any time upon any change in any Credit
Party's risk profile (including any change in the product mix
maintained by any Credit Party or any laws affecting the potential
liability of such Credit Party) to require additional forms and
limits of insurance to, in Agent's opinion, adequately protect both
Agent's and Lender's interests in all or any portion of the
Collateral and to ensure that each Credit Party is protected by
insurance in amounts and with coverage customary for its industry.
If reasonably requested by Agent, each Credit Party shall deliver to
Agent from time to time a report of a reputable insurance broker,
reasonably satisfactory to Agent, with respect to its insurance
policies.
(c) Each Credit Party shall deliver to Agent, in form and substance
reasonably satisfactory to Agent, endorsements to (i) all "All
Risk," keyman life insurance and business interruption insurance
naming Agent, on behalf of itself and Lenders, as loss payee, and
(ii) all general liability and other liability policies naming
Agent, on behalf of itself and Lenders, as additional insured. Each
Credit Party irrevocably makes, constitutes and appoints Agent (and
all officers, employees or agents designated by Agent), so long as
any Event of Default has occurred and is continuing or the
anticipated insurance proceeds exceed
45
$5,000,000, as such Credit Party's true and lawful agent and
attorney-in-fact for the purpose of making, settling and adjusting
claims under such "All Risk" policies of insurance, endorsing the
name of such Credit Party on any check or other item of payment for
the proceeds of such "All Risk" policies of insurance and for making
all determinations and decisions with respect to such "All Risk"
policies of insurance. Agent shall have no duty to exercise any
rights or powers granted to it pursuant to the foregoing
power-of-attorney. Borrower Representative shall promptly notify
Agent of any loss, damage, or destruction to the Collateral in the
amount of $1,000,000 or more, whether or not covered by insurance.
After deducting from such proceeds the expenses, if any, incurred by
Agent in the collection or handling thereof, Agent may, at its
option, apply such proceeds to the reduction of the Obligations in
accordance with Section 1.3(d), or permit or require the applicable
Credit Party to use such money, or any part thereof, to replace,
repair, restore or rebuild the Collateral in a diligent and
expeditious manner with materials and workmanship of substantially
the same quality as existed before the loss, damage or destruction.
Notwithstanding the foregoing, if the casualty giving rise to such
insurance proceeds could not reasonably be expected to have a
Material Adverse Effect and such insurance proceeds do not exceed
$5,000,000 in the aggregate, Agent shall permit the applicable
Credit Party to replace, restore, repair or rebuild the Collateral;
PROVIDED, that if the applicable Credit Party has not completed or
entered into binding agreements to complete such replacement,
restoration, repair or rebuilding within 180 days of such casualty,
Agent may apply such insurance proceeds to the Obligations in
accordance with Section 1.3(d). All insurance proceeds that are to
be made available to a Credit Party to replace, repair, restore or
rebuild the Collateral shall be applied by Agent to reduce the
outstanding principal balance of the Revolving Loan (which
application shall not result in a permanent reduction of the
Revolving Loan Commitment) and upon such application, Agent shall
establish a reserve against the Aggregate Borrowing Base and, if
such Credit Party is a Borrower, the separate Borrowing Base of such
Borrower in an amount equal to the amount of such proceeds so
applied. Thereafter, such funds shall be made available to the
applicable Credit Party to provide funds to replace, repair, restore
or rebuild the Collateral as follows: (i) the Borrower
Representative shall request a Revolving Credit Advance for the
applicable Borrower (or, if the Credit Party is not a Borrower, for
all Borrowers, PRO RATA) in the amount requested to be released;
(ii) so long as the conditions set forth in Section 2.2 have been
met, Revolving Lenders shall make such Revolving Credit Advance; and
(iii) the reserve established with respect to such insurance
proceeds shall be reduced by the amount of such Revolving Credit
Advance. To the extent not used to replace, repair, restore or
rebuild the Collateral, such insurance proceeds shall be applied in
accordance with Section 1.3(d).
(d) Borrower Representative shall, immediately upon learning of the
institution of any proceeding for the condemnation or other taking
of any property of any Credit Party in excess of $1,000,000 in the
aggregate for all such condemnations or takings, notify the Agent of
the pendency of such proceeding, and agree that the Agent may
participate in any such proceeding, and Borrower Representative from
time to time will deliver to the
46
Agent all instruments reasonably requested by the Agent to permit
such participation. The Agent is authorized to collect the proceeds
of any condemnation claim or award and apply them, at the direction
of the Required Lenders, to the reduction of the Obligations.
Notwithstanding the foregoing, if the proceeds of such condemnation
could not reasonably be expected to have a Material Adverse Effect
and the amount of any condemnation does not exceed $5,000,000 in the
aggregate, Agent shall permit the applicable Credit Party to
replace, restore, repair or rebuild the property; PROVIDED, that if
the applicable Credit Party has not completed or entered into
binding agreements to complete such replacement, restoration, repair
or rebuilding within 180 days of such condemnation, Agent may apply
such condemnation proceeds to the Obligations in accordance with
Section 1.3(d). All condemnation proceeds that are to be made
available to a Credit Party to replace, repair, restore or rebuild
the Collateral shall be applied by Agent to reduce the outstanding
principal balance of the Revolving Loan (which application shall not
result in a permanent reduction of the Revolving Loan Commitment)
and upon such application, Agent shall establish a reserve against
the Aggregate Borrowing Base and, if such Credit Party is a
Borrower, the separate Borrowing Base of such Borrower in an amount
equal to the amount of such proceeds so applied. Thereafter, such
funds shall be made available to the applicable Credit Party to
provide funds to replace, repair, restore or rebuild the Collateral
as follows: (i) the Borrower Representative shall request a
Revolving Credit Advance for the applicable Borrower (or, if the
Credit Party is not a Borrower, for all Borrowers, PRO RATA) in the
amount requested to be released; (ii) so long as the conditions set
forth in Section 2.2 have been met, Revolving Lenders shall make
such Revolving Credit Advance; and (iii) the reserve established
with respect to such condemnation proceeds shall be reduced by the
amount of such Revolving Credit Advance. To the extent not used to
replace, repair, restore or rebuild the Collateral, such
condemnation proceeds shall be applied in accordance with Section
1.3(d).
5.5 Compliance with Laws
Each Credit Party shall comply with all federal, state, local and foreign
laws and regulations applicable to it, including those relating to
licensing, ERISA and labor matters and Environmental Laws and
Environmental Permits, except to the extent that the failure to comply,
individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
5.6 Supplemental Disclosure
From time to time as may be reasonably requested by Agent (which request
will not be made more frequently than once each year absent the
occurrence and continuance of a Default or an Event of Default), Credit
Parties shall supplement each Disclosure Schedule hereto, or any
representation herein or in any other Loan Document, with respect to any
matter hereafter arising that, if existing or occurring at the date of
this Agreement, would have been required to be set forth or described in
such Disclosure Schedule or as an exception to such representation or
that is necessary to correct any information in such Disclosure Schedule
or representation which has
47
been rendered inaccurate thereby (and, in the case of any supplements to
any Disclosure Schedule, such Disclosure Schedule shall be appropriately
marked to show the changes made therein); PROVIDED, that (a) no such
supplement to any such Disclosure Schedule or representation shall amend,
supplement or otherwise modify any Disclosure Schedule or representation,
or be or be deemed a waiver of any Default or Event of Default resulting
from the matters disclosed therein, except as consented to by Agent and
Requisite Lenders in writing; and (b) no supplement shall be required or
permitted as to representations and warranties that relate solely to the
Closing Date.
5.7 Intellectual Property
Each Credit Party will conduct its business and affairs without material
infringement of or material interference with any Intellectual Property
of any other Person; PROVIDED, that to the extent any Credit Party learns
of any such material infringement or interference and such Credit Party
promptly takes steps to eliminate such infringement or interference (by
procuring a license or otherwise) such Credit Party shall not be deemed
to be in violation of this Section 5.7 so long as such Credit Party is
entitled to continue to use such Intellectual Property.
5.8 Environmental Matters
Each Credit Party shall and shall cause each Person within its reasonable
control to: (a) conduct its operations and keep and maintain its Real
Estate in compliance with all Environmental Laws and Environmental
Permits other than noncompliance that could not reasonably be expected to
have a Material Adverse Effect; (b) implement any and all investigation,
remediation, removal and response actions that are appropriate or
necessary to maintain the value and marketability of the Real Estate or
to otherwise comply with Environmental Laws and Environmental Permits
pertaining to the presence, generation, treatment, storage, use,
disposal, transportation or Release of any Hazardous Material on, at, in,
under, above, to, from or about any of its Real Estate; (c) notify Agent
promptly after such Credit Party becomes aware of any violation of
Environmental Laws or Environmental Permits or any Release on, at, in,
under, above, to, from or about any Real Estate which could reasonably be
expected to result in Environmental Liabilities in excess of $250,000;
and (d) promptly forward to Agent a copy of any order, notice, request
for information or any written communication or report received by such
Credit Party in connection with any such violation or Release or any
other matter relating to any Environmental Laws or Environmental Permits
that could reasonably be expected to result in Environmental Liabilities
in excess of $250,000, in each case whether or not the Environmental
Protection Agency or any Governmental Authority has taken or threatened
any action in connection with any such violation, Release or other
matter. If Agent at any time has a reasonable basis to believe that there
may be a violation of any Environmental Laws or Environmental Permits by
any Credit Party or any Environmental Liability arising thereunder, or a
Release of Hazardous Materials on, at, in, under, above, to, from or
about any of its Real Estate, which, in each case, could reasonably be
expected to have a Material Adverse Effect, then Credit Parties shall,
upon Agent's written request (i) cause the performance of an
environmental audit, which may include subsurface sampling of soil and
groundwater, and preparation of an environmental report with respect to
the
48
subject matter of such breach, at Credit Parties' expense, as Agent may
from time to time reasonably request, which shall be conducted by
reputable environmental consulting firms reasonably acceptable to Agent
and shall be in form and substance reasonably acceptable to Agent, and
(ii) permit Agent or its representatives to have access to all Real
Estate for the purpose of conducting environmental audits and testing
with respect to the subject matter of such breach, as Agent deems
appropriate, including subsurface sampling of soil and groundwater,
PROVIDED, that Agent provides Borrower Representative with reasonable
prior notice and conducts, or causes its representatives to conduct, all
such audits and tests in a manner reasonably directed to minimize
interference with the applicable Credit Party's business. Borrowers shall
reimburse Agent for the reasonable costs of such audits and tests and the
same will constitute a part of the Obligations secured hereunder.
5.9 Landlords' Agreements, Mortgagee Agreements, Bailee Letters, Real Estate
Purchases and Vendor Inter-Creditor Agreements
(a) Each Credit Party shall use its commercially reasonable best efforts
to obtain a landlord's agreement, mortgagee agreement or bailee
letter, as applicable, from the lessor of each leased property,
mortgagee of owned property or bailee with respect to any warehouse,
processor or converter facility or other location where Collateral
is stored or located (other than with respect to Equipment Inventory
which is being leased by a Borrower to others in the ordinary course
of such Borrower's business), which agreement or letter shall
contain a waiver or subordination of all Liens or claims that the
landlord, mortgagee or bailee may assert against the Collateral at
that location, and shall otherwise be reasonably satisfactory in
form and substance to Agent. With respect to such locations or
warehouse space leased or owned as of the Closing Date and
thereafter, if Agent has not received a landlord or mortgagee
agreement or bailee letter as of 30 days after the Closing Date (or,
if later, as of the date such location is acquired or leased), the
applicable Borrower's Eligible Parts and Tools Inventory, Eligible
Rolling Stock or Eligible Equipment Inventory at that location
shall, in Agent's discretion, be excluded from the applicable
Borrower's Borrowing Base or be subject to such Reserves as may be
established in good faith by Agent in its reasonable credit judgment
and as set forth in Sections 1.6A, 1.7 and 1.7A. After the Closing
Date, no real property or warehouse space shall be leased by any
Borrower and no Parts and Tools Inventory or Equipment Inventory
shall be shipped to a processor or converter under arrangements
established after the Closing Date without prior written notice to
Agent. Each Credit Party shall timely and fully pay and perform its
obligations in all material respects under all leases and other
agreements with respect to each leased location or public warehouse
where any Collateral is or may be located. To the extent otherwise
permitted hereunder, if any Credit Party proposes to acquire a fee
ownership or leasehold interest in Real Estate after the Closing
Date, it shall first provide to Agent (with respect to any such
leasehold interest, at the reasonable request of Agent) written
notice thereof and a mortgage or deed of trust granting Agent a
first priority Lien on such Real Estate, together with a FIRREA
compliant appraisal (if requested by Agent), environmental audits,
mortgage title
49
insurance commitment, real property survey, local counsel opinions,
and, if required by Agent, supplemental casualty insurance and flood
insurance, and such other documents, instruments or agreements
reasonably requested by Agent, in each case, in form and substance
reasonably satisfactory to Agent.
(b) At the request of Agent, Borrowers shall execute and deliver or
cause to be executed and delivered to Agent a mortgage or deed of
trust granting to Agent a first priority Lien on any Real Estate
owned by any Borrower or Guarantor (or, if such Real Estate is
subject to any prior Liens as of the Closing Date, a Lien subject
only to such prior Liens), together with a FIRREA compliant
appraisal, environmental audit, mortgage title insurance commitment,
real property survey, local counsel opinion, and if required by
Agent, supplemental casualty insurance, and such other documents,
instruments or agreements reasonably requested by Agent, in each
case, in form and substance satisfactory to Agent. Borrowers shall
execute and deliver or cause to be executed and delivered in respect
of the Real Estate described on Disclosure Schedule (5.9) hereto on
or prior to the date sixty (60) days following the Closing Date,
documents of the type listed in the immediately foregoing sentence,
as described in such Disclosure Schedule (5.9) or as requested by
Agent.
(c) Prior to entering into any financing arrangement described in
Section 6.7(c) or Section 6.7(d) a Borrower shall notify Agent. In
the event that a Borrower obtains knowledge of the assignment by any
holder of any such Lien referred to in Section 6.7(c) or Section
6.7(d), or the owner of any equipment leased by a Borrower has
transferred or sold such Lien or Equipment to another Person, such
Borrower shall notify Agent and use reasonable efforts to cause such
Person to enter into an applicable Vendor Inter-Creditor Agreement
with such Person.
5.10 Government Accounts
Each Borrower shall at any time upon reasonable request by the Agent
prepare and deliver to the Agent a report setting forth all of its
Accounts on which the Account Debtor is the United States or Canadian
Government or a political subdivision thereof, or any state, province or
municipality or department, agency or instrumentality thereof, which such
report shall disclose the name of the Account Debtor, the amount of such
Account and any other information the Agent shall reasonably request.
5.11 Further Assurances
Each Credit Party agrees that it shall, and shall cause each other Credit
Party to, at such Credit Party's expense and upon request of Agent, duly
execute and deliver, or cause to be duly executed and delivered, to Agent
such further instruments and do and cause to be done such further acts as
may be necessary or proper in the reasonable opinion of Agent to carry
out more effectively the provisions and purposes of this Agreement or any
other Loan Document. All chattel paper owned
50
by any Credit Party shall be conspicuously legended to indicate that it
is subject to a Lien in favor of the Agent.
6. NEGATIVE COVENANTS
Each Credit Party agrees jointly and severally as to all parties that
from and after the date hereof until the Termination Date:
6.1 Acquisitions, Subsidiaries, Etc.
No Credit Party shall directly or indirectly, by operation of law or
otherwise, (a) form or acquire any Subsidiary, or (b) merge with,
consolidate with, acquire all or substantially all of the assets or Stock
of, or otherwise combine with or acquire, any Person; PROVIDED, that any
Credit Party may merge with another Credit Party, so long as (i) that
Borrower Representative shall be the survivor of any such merger to which
it is a party and (ii) a Borrower shall be the survivor of any such
merger to which one or more Borrowers is a party. Notwithstanding the
foregoing, any Borrower may acquire all or any substantial portion of the
assets (other than assets consisting of Stock) of any Person (the
"TARGET") (a "PERMITTED ACQUISITION") subject to the satisfaction of each
of the following conditions:
(i) Agent shall receive at least forty-five (45) days prior
written notice of such proposed Permitted Acquisition, which
notice shall include a detailed description of such proposed
Permitted Acquisition including, without limitation,
financial statements of Target and any other due diligence
items requested by Lenders;
(ii) such Permitted Acquisition shall only involve assets 75% or
more of which are located in the United States and comprising
a business, or those assets of a business, of the type
engaged in by Borrowers as of the Closing Date or a business
reasonably related thereto or a logical extension thereof,
and which business would not subject Agent or any Lender to
regulatory or third party approvals in connection with the
exercise of its rights and remedies under this Agreement or
any other Loan Documents other than approvals applicable to
the exercise of such rights and remedies with respect to
Borrowers prior to such Permitted Acquisition;
(iii) no additional Indebtedness or Guaranteed Indebtedness,
contingent obligations or other liabilities shall be
incurred, assumed or otherwise be reflected on a consolidated
balance sheet of Borrowers and Target after giving effect to
such Permitted Acquisition, except (A) Indebtedness permitted
under clause (v) and (B) ordinary course trade payables,
accrued expenses and unsecured Indebtedness and other
liabilities and contingent obligations of the Target to the
extent no Default or Event of Default has occurred and is
continuing or would result after giving effect to such
Permitted Acquisition;
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(iv) the sum of all amounts paid or payable in connection with all
Permitted Acquisitions (including all transaction costs and
all Indebtedness, liabilities and contingent obligations
incurred or assumed in connection therewith or otherwise
reflected on a consolidated balance sheet of Borrowers and
Target) shall not exceed $25,000,000 in any Fiscal Year or
$75,000,000 from and after the Closing Date until the
Termination Date in the aggregate and the portion thereof
allocable to goodwill and intangible assets for any Permitted
Acquisition shall not exceed 30% of the applicable purchase
price for such Permitted Acquisition;
(v) no Indebtedness for borrowed money to finance such
acquisitions shall be incurred, guaranteed, assumed or
consolidated in connection with such Permitted Acquisitions
other than Revolving Credit Advances subject to the terms
hereof and including any assets being purchased in the
Permitted Acquisition to the extent otherwise includable in
the Aggregate Borrowing Base;
(vi) the business and assets acquired in such Permitted
Acquisition shall be free and clear of all Liens (other than
Permitted Encumbrances);
(vii) at or prior to the closing of any Permitted Acquisition,
Agent will be granted a first priority perfected Lien
(subject to Permitted Encumbrances) in all assets acquired
pursuant thereto, and Credit Parties and the Target shall
have executed such documents and taken such actions as may be
required by Agent in connection therewith;
(viii) Concurrently with delivery of the notice referred to in
clause (i) above, Borrower Representative shall have
delivered to Agent, in form and substance satisfactory to
Agent:
(A) (x) a PRO FORMA consolidated and consolidating, if
applicable, balance sheet of Borrowers and their
Subsidiaries (the "ACQUISITION PRO FORMA"), based on
recent financial data, which shall be complete and
shall accurately and fairly represent the assets,
liabilities, financial condition and results of
operations of Borrowers and their Subsidiaries in
accordance with GAAP consistently applied, but taking
into account such Permitted Acquisition and the funding
of all Loans in connection therewith, and such
Acquisition Pro Forma shall reflect that
(y) on a PRO FORMA basis, no Event of Default has
occurred and is continuing or would result after giving
effect to such Permitted Acquisition and Borrowers
would have been in compliance with the financial
covenants set forth in Annex G for the four quarter
period reflected in the Compliance Certificate most
recently delivered to Agent pursuant to Annex E prior
to the consummation of such Permitted Acquisition
(after giving effect to such Permitted Acquisition and
all
52
Loans funded in connection therewith as if made on the
first day of such period);
(B) updated versions of the most recently delivered
operating plan in form reasonably satisfactory to the
Agent taking into account such Permitted Acquisition
(the "ACQUISITION PROJECTIONS"); and
(C) a certificate of an Authorized Officer of Borrower
Representative to the effect that: (w) Borrowers will
be Solvent upon the consummation of the Permitted
Acquisition; (x) the Acquisition Pro Forma fairly
presents the financial condition of Borrowers and their
Subsidiaries (on a consolidated and consolidating
basis, if applicable) as of the date thereof after
giving effect to the Permitted Acquisition; (y) the
Acquisition Projections are reasonable estimates of the
future financial performance of Borrowers subsequent to
the date thereof based upon the historical performance
of Borrowers and the Target and show that Borrowers
shall continue to be in compliance with the financial
covenants set forth in Annex G for the three (3) year
period thereafter or the balance remaining of the
Commitment term; and (z) Borrowers have completed their
due diligence investigation with respect to the Target
and such Permitted Acquisition, which investigation was
conducted in a manner similar to that which would have
been conducted by a prudent purchaser of a comparable
business and the results of which investigation were
delivered to Agent and Lenders;
(ix) on or prior to the date of such Permitted Acquisition, Agent
shall have received, in form and substance reasonably
satisfactory to Agent, copies of the acquisition agreement
and related agreements and instruments, and all opinions,
certificates, lien search results and other documents
reasonably requested by Agent;
(x) Agent and Lenders shall have received results of an appraisal
and audit of the Target, its assets, and its books and
records, in form and substance reasonably satisfactory to the
Agent;
(xi) the structure and terms of the Permitted Acquisition shall be
satisfactory to the Agent and no Credit Party shall acquire
any liabilities in such transaction other than those approved
by the Agent;
(xii) at the time of such Permitted Acquisition and after giving
effect thereto, no Default or Event of Default shall have
occurred and be continuing; and
(xiii) at the time of such Permitted Acquisition and after giving
effect thereto and the making of any Loans in connection
therewith, Borrowing Availability (for all Borrowers) shall
exceed $25,000,000.
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6.2 Investments; Loans and Advances
Except as otherwise expressly permitted by this Section 6, no Credit
Party shall make or permit to exist any investment in, or make, accrue or
permit to exist loans or advances of money to, any Person, through the
direct or indirect lending of money, holding of securities or otherwise,
except that (a) a Borrower may hold investments comprised of notes
payable, or stock or other securities issued by Account Debtors to such
Borrower pursuant to a bankruptcy proceeding of such Account Debtor or
negotiated agreements with respect to settlement of such Account Debtor's
Accounts, as applicable, in the ordinary course of business, so long as
the aggregate amount of such Accounts so settled by Borrowers does not
exceed $1,000,000; (b) a Borrower may acquire Intercompany Notes
permitted to be incurred under Section 6.3, (c) a Borrower may invest in
Capital Expenditures to the extent permitted under Annex G, (d) a Credit
Party may hold investments received pursuant to a sale of assets
permitted under Section 6.8, (e) a Credit Party may hold investments held
in the ordinary course of business in any Deposit Account subject to a
Lien in favor of Agent, (f) a Credit Party may hold investments in
existence on the date hereof and summarized in Disclosure Schedule (6.2),
and (g) so long as no Default or Event of Default has occurred and is
continuing, Borrowers may make investments, subject to Control Letters or
otherwise subject to a perfected security interest in favor of Agent for
the benefit of Lenders, in (i) marketable direct obligations issued,
unconditionally guaranteed or insured by the United States of America or
any agency thereof maturing within one year from the date of acquisition
thereof, (ii) commercial paper maturing no more than one year from the
date of creation thereof and currently having the highest rating
obtainable from either Standard & Poor's Ratings Group or Xxxxx'x
Investors Service, Inc., (iii) certificates of deposit, maturing no more
than one year from the date of creation thereof, issued by commercial
banks incorporated under the laws of the United States of America, each
having combined capital, surplus and undivided profits of not less than
$300,000,000 and having a senior secured rating of "A" or better by a
nationally recognized rating agency (an "A RATED BANK"), (iv) time
deposits, maturing no more than 30 days from the date of creation thereof
with A Rated Banks, (v) mutual funds that invest solely in one or more of
the investments described in clauses (i) through (iv) above and (vi)
other investments not exceeding $100,000 in aggregate amount in which
Agent has a perfected first priority security interest. Each Credit Party
may maintain its existing investments in its Subsidiaries as of the
Closing Date.
6.3 Indebtedness
(a) No Credit Party shall create, incur, assume or permit to exist any
Indebtedness, except (without duplication) (i) Indebtedness secured
by purchase money security interests and Capital Leases permitted in
clause (c) or (d) of Section 6.7, (ii) the Loans and the other
Obligations, (iii) deferred taxes, to the extent permitted under
applicable law, (iv) unfunded pension fund and other employee
benefit plan obligations and liabilities to the extent they are
permitted to remain unfunded under applicable law, (v) existing
Indebtedness described in Disclosure Schedule (6.3) and refinancings
thereof or amendments or modifications thereto that do not have the
effect of increasing the
54
principal amount thereof or changing the amortization thereof (other
than to extend the same) and that are otherwise on terms and
conditions no less favorable to any Credit Party than the terms of
the Indebtedness being refinanced, amended or modified, (vi)
Indebtedness specifically permitted under Section 6.1, (vii)
Indebtedness of Borrowers not exceeding (x) $200,000,000 in
aggregate principal amount (less all payments of principal thereof)
evidenced by the Senior Notes and (y) $50,000,000 in aggregate
principal amount (less all payments of principal thereof) evidenced
by the Senior Subordinated Notes and (viii) Indebtedness consisting
of intercompany loans and advances made by any Borrower to any other
Borrower; PROVIDED, that: (A) each Borrower shall have executed and
delivered to each other Borrower, on the Closing Date, a demand note
(collectively, the "INTERCOMPANY NOTES") to evidence any such
intercompany Indebtedness owing at any time by such Borrower to such
other Borrowers which Intercompany Notes shall be in form and
substance reasonably satisfactory to Agent and shall be pledged and
delivered to Agent pursuant to the applicable Pledge Agreement or
Security Agreement as additional collateral security for the
Obligations; (B) each Borrower shall record all intercompany
transactions on its books and records in a manner reasonably
satisfactory to Agent; (C) the obligations of each Borrower under
any such Intercompany Notes shall be subordinated to the Obligations
of such Borrower hereunder in a manner reasonably satisfactory to
Agent; (D) at the time any such intercompany loan or advance is made
by any Borrower to any other Borrower and after giving effect
thereto, each such Borrower shall be Solvent; (E) no Default or
Event of Default would occur and be continuing after giving effect
to any such proposed intercompany loan; and (F) in the case of any
intercompany Indebtedness, (X) the Borrower advancing such funds
shall have Borrowing Availability under its separate Borrowing Base
of not less than $1.00 after giving effect to such intercompany
loan, or (Y) the intercompany Indebtedness shall be a Great Northern
Advance, (ix) Indebtedness owing to Affiliates and holders of Stock
of such Credit Party that constitutes Subordinated Debt, is
unsecured, interest on which is not payable in cash until after the
Termination Date and as to which no principal is payable until after
the Termination Date, (x) Indebtedness under Hedging Agreements to
the extent permitted under Section 6.17 and (xi) unsecured
Indebtedness not otherwise referred to in this Section 6.3 not
exceeding $1,000,000 in aggregate principal amount outstanding at
any time for all Credit Parties.
(b) No Credit Party shall, directly or indirectly, voluntarily purchase,
redeem, defease or prepay any principal of, premium, if any,
interest or other amount payable in respect of any Indebtedness,
other than (i) the Obligations, (ii) Indebtedness secured by a
Permitted Encumbrance if the asset securing such Indebtedness has
been sold or otherwise disposed of in accordance with Sections
6.8(b) or (c) and (iii) Indebtedness permitted by Section 6.3(a)(v)
upon any refinancing thereof in accordance with Section 6.3(a)(v).
55
6.4 Employee Loans and Affiliate Transactions
(a) No Credit Party shall enter into or be a party to any transaction
with any Affiliate of any Credit Party (other than another Credit
Party) thereof except in the ordinary course of and pursuant to the
reasonable requirements of such Credit Party's business and upon
fair and reasonable terms that are no less favorable to such Credit
Party than would be obtained in a comparable arm's length
transaction with a Person not an Affiliate of such Credit Party;
PROVIDED, that other than a transaction described in any Related
Transaction Documents or Disclosure Schedule 6.4(a), no Credit Party
shall in any event enter into any such transaction or series of
related transactions (i) involving payments in excess of $10,000
without disclosing to Agent in advance the terms of such
transactions and (ii) involving payments in excess of $50,000 in the
aggregate; and PROVIDED FURTHER, that Borrowers may pay the fees to
BRS Management Co. disclosed in, and subject to the terms of,
Section 6.14.
(b) All employee loans and affiliate transactions existing as of the
Closing Date hereof are described in Disclosure Schedule (6.4(b)).
No Credit Party shall enter into any lending or borrowing
transaction with any employees of any Credit Party, except loans to
its respective employees in the ordinary course of business
consistent with past practices for travel and entertainment
expenses, relocation costs and similar purposes up to a maximum of
$100,000 to any employee and up to a maximum of $500,000 in the
aggregate at any one time outstanding. No Credit Party shall
repurchase any Stock of any employee of such Credit Party, except
upon termination of such employee consistent with past practices for
such repurchase up to a maximum amount of $1,000,000 in the
aggregate for all employees of all Credit Parties in any one Fiscal
Year; PROVIDED, that at the time of any such repurchase and after
giving effect thereto the aggregate Borrowing Availability for all
Borrowers is in excess of $25,000,000.
6.5 Capital Structure and Business
No Credit Party shall (a) make any changes in any of its business
objectives, purposes or operations that could in any way adversely affect
the repayment of the Loans or any of the other Obligations or could
reasonably be expected to have or result in a Material Adverse Effect,
(b) other than with respect to H&E Holdings, make any change in its
capital structure as described in Disclosure Schedule (3.8), including
the issuance or sale of any shares of Stock, warrants or other securities
convertible into Stock or any revision of the terms of its outstanding
Stock, PROVIDED, that any Borrower may issue or sell shares of its Stock
for cash so long as (i) the proceeds thereof are applied in prepayment of
the Obligations as required by Section 1.3(b)(iii), (ii) no Change of
Control occurs after giving effect thereto and (iii) such shares are
pledged to the Agent for the benefit of the Lenders pursuant to a Pledge
Agreement, or (c) amend its charter, bylaws, certificate of formation or
operating agreement, each as applicable, in a manner that would adversely
affect Agent or Lenders or Credit Party's duty or ability to repay the
Obligations. No Credit Party shall engage in any business other than the
businesses currently engaged in by it or reasonably related thereto or a
logical extension thereof.
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6.6 Guaranteed Indebtedness
No Credit Party shall create, incur, assume or permit to exist any
Guaranteed Indebtedness except (a) for Guaranteed Indebtedness in
existence on the date hereof described in Disclosure Schedule (6.6), (b)
for Guaranteed Indebtedness incurred for the benefit of the purchasers of
Equipment Inventory to support sales by any Borrower or Guarantor of such
Equipment Inventory in the ordinary course of business to such
purchasers, not to exceed $2,000,000 at any one time outstanding for all
Credit Parties, (c) by endorsement of instruments or items of payment for
deposit to the general account of any Credit Party, and (d) for
Guaranteed Indebtedness incurred for the benefit of any other Credit
Party if the primary obligation is expressly permitted by this Agreement
other than Indebtedness, if any, of a Target existing at the time such
Target is acquired.
6.7 Liens
No Credit Party shall create, incur, assume or permit to exist any Lien
on or with respect to its Accounts or any of its other properties or
assets (whether now owned or hereafter acquired) except for (a) Permitted
Encumbrances; (b) Liens in existence on the date hereof and summarized in
Disclosure Schedule (6.7) securing the Indebtedness described in
Disclosure Schedule (6.3) (other than under the heading "Vendor
Financings" it being understood that Liens reflected under such heading
shall be permitted only if in compliance with Section 6.7(c) or Section
6.7(d)) and permitted refinancings, extensions and renewals thereof,
including extensions or renewals of any such Liens, PROVIDED, that the
principal amount of the Indebtedness so secured is not increased and the
Lien does not attach to any other property; (c) Liens created by
conditional sale or other title retention agreements (including Capital
Leases) or in connection with purchase money Indebtedness with respect to
P&E and Fixtures acquired by a Credit Party in the ordinary course of its
business, involving the incurrence of an aggregate amount of purchase
money Indebtedness and Capital Lease Obligations for all Credit Parties
of not more than $15,000,000 outstanding at any one time for all such
Liens (PROVIDED, that (i) such Liens attach only to the assets subject to
such purchase money debt and proceeds thereof, (ii) such Indebtedness is
incurred within ninety (90) days following such purchase; and (d) (x)
Liens created by conditional sale or other title retention agreements
(including Capital Leases) or in connection with purchase money
Indebtedness provided by the seller of such Equipment Inventory or an
Affiliate of such seller or a third party financing source not affiliated
with such seller with respect to Equipment Inventory acquired by a Credit
Party in the ordinary course of its business, involving the incurrence of
an aggregate principal amount of purchase money Indebtedness for all
Credit Parties of not more than $90,000,000 in principal amount
outstanding at any one time for all such Liens and (y) Liens on rental
proceeds of Equipment Inventory leased by a Borrower securing true lease
obligations of a Borrower of Equipment Inventory, PROVIDED, that (i) such
Liens attach only to the Equipment Inventory purchased with the proceeds
of such purchase money Indebtedness or such rental proceeds except as
otherwise permitted by any agreement referred to in subparagraph (iii)
below, (ii) such Indebtedness is incurred at the time of such purchase
and (iii) a Vendor Inter-Creditor Agreement between the holder of such
Lien and
57
Agent (in the form of Exhibit 6.7(d)(iii)(A) in the case of Floor Plan
Equipment Inventory, and in the form of Exhibit 6.7(d)(iii)(B) in the
case of Off Balance Sheet Equipment Inventory, in each case with such
changes thereto as may be acceptable to Agent or such other form of
intercreditor agreement as Agent may approve) has been delivered to
Agent, PROVIDED, HOWEVER, that notwithstanding the foregoing, the Credit
Parties may have outstanding Indebtedness or lease obligations secured by
a Lien described in this paragraph (d) without a Vendor Inter-Creditor
Agreement so long as the aggregate amount of such Indebtedness or lease
obligations does not exceed (x) during the period ending thirty (30) days
following the Closing Date, $17,500,000 in the aggregate for all Credit
Parties, including as to lease obligations, the amount of purchase option
amounts payable thereunder or (y) thereafter, $4,000,000 in the aggregate
in respect of lease obligations and $0 in respect of such Indebtedness,
for all Credit Parties, excluding as to lease obligations, purchase
option amounts payable thereunder, it being understood that the Agent may
establish Reserves in respect of any such Indebtedness or lease
obligations for which no Vendor Inter-Creditor Agreement has been
delivered. In addition, no Credit Party shall become a party to any
agreement, note, indenture or instrument, or take any other action, that
would prohibit the creation of a Lien on any of its properties or other
assets in favor of Agent, on behalf of itself and Lenders, as additional
collateral for the Obligations, except operating leases, Capital Leases
or Licenses which prohibit Liens upon the assets that are subject
thereto.
6.8 Disposition of Stock and Assets
No Credit Party shall sell, lease, license, transfer, convey, assign or
otherwise dispose of any of its properties or other assets (other than
cash), including the Stock of any of its Subsidiaries (whether in a
public or a private offering or otherwise) or any of their Accounts,
other than (a) the sale or lease by a Borrower of Equipment Inventory in
the ordinary course of its business, (b) the sale, transfer, conveyance
or other disposition by a Credit Party of P&E, Equipment Inventory,
Fixtures or Real Estate that are obsolete or no longer used or useful in
such Credit Party's business and having a Net Book Value not exceeding
$250,000 in any single transaction or $500,000 for all Credit Parties in
the aggregate in any Fiscal Year, (c) the sale, transfer, conveyance or
other disposition by a Credit Party of Equipment Inventory that is part
of a discontinued line, (d) the sale, transfer, conveyance or other
disposition by a Credit Party of other P&E and Fixtures having a value
not exceeding $500,000 in any single transaction or $1,000,000 in the
aggregate for all Credit Parties in any Fiscal Year, (e) the licensing of
Intellectual Property by any Credit Party in the ordinary course of its
business, (f) the sale, transfer, conveyance or other disposition of
assets from a Borrower to another Borrower and (g) a trade-in or trade-up
of assets (pursuant to which such Credit Party acquires a substantially
similar asset to the one disposed of within forty-five (45) days
following such disposition and the value of the asset disposed of is
credited against the purchase price of the asset so acquired) by a Credit
Party in the ordinary course of its business. With respect to any
disposition of assets or other properties permitted pursuant to clauses
(b) and (c) above, subject to Section 1.3(b), Agent agrees on reasonable
prior written notice to release its Lien (and the Lenders authorize Agent
to do so) on such assets or other properties in order to permit the
applicable Credit Party to effect such disposition and shall execute and
deliver to such Credit Party, at such Credit Party's expense,
58
appropriate UCC-3 termination statements and other releases as reasonably
requested by such Credit Party.
6.9 ERISA
No Credit Party shall, nor shall it cause or permit any ERISA Affiliate
to, cause or permit to occur an event that could result in the imposition
of a Lien under Section 412(n) of the IRC or Section 302(f) or 4068 of
ERISA or cause or permit to occur an ERISA Event to the extent such Lien
or such ERISA Event could reasonably be expected to have a Material
Adverse Effect.
6.10 Financial Covenants
No Borrower shall breach or fail to comply with any of the Financial
Covenants.
6.11 Hazardous Materials
No Credit Party shall cause or permit a Release of any Hazardous Material
on, at, in, under, above, to, from or about any of the Real Estate where
such Release would (a) violate in any respect, or form the basis for any
Environmental Liabilities under, any Environmental Laws or Environmental
Permits or (b) otherwise adversely impact the value or marketability of
any of the Real Estate or any of the Collateral, other than such
violations or impacts that could not reasonably be expected to have a
Material Adverse Effect.
6.12 Designated Senior Debt
This Agreement and the Indebtedness arising hereunder are "Designated
Senior Debt" under the Senior Subordinated Note Indenture and H&E shall
not designate any other Indebtedness or any
credit agreement as
"Designated Senior Debt" thereunder without the prior consent of
Requisite Lenders
6.13 Cancellation of Indebtedness
No Credit Party shall cancel any claim or debt owing to it having a face
value exceeding $100,000 except for reasonable consideration negotiated
on an arm's-length basis and in the ordinary course of its business
consistent with past practices.
6.14 Restricted Payments
No Credit Party shall make any Restricted Payment, except (a)
intercompany loans and advances between Borrowers and payments of
principal and interest on Intercompany Notes, in each case to the extent
permitted by Section 6.3, (b) dividends and distributions by Subsidiaries
of a Borrower paid to such Borrower, (c) employee loans permitted under
Section 6.4(b) above, (d) payments of management fees pursuant to the BRS
Management Services Agreement in accordance with Section 3.14 on the
Closing Date, and thereafter not to exceed the greater, on an annual
basis, of (x) $2,000,000 or (y) one point seventy-five percent (1.75%) of
EBITDAR for the immediately preceding Fiscal Year, in each case PLUS
reasonable out-of-pocket expenses,
59
(e) scheduled payments of interest as and when due and payable with
respect to the Subordinated Debt, subject to the subordination terms
thereof, (f) repurchases of Stock of any employee of such Credit Party
upon termination of such employee, subject to Section 6.4(b), (g)
distributions to H&E Holdings to the extent necessary to pay the taxes of
H&E Holdings and to cover administrative fees and reasonable
out-of-pocket expenses, and with respect to such fees and expenses in an
amount not to exceed $250,000, and (h) distributions of Stock of such
Credit Party in connection with the cashless exercise of options by the
holders of options for Stock of such Credit Party; PROVIDED, that in the
case of clauses (d) and (f) above (i) no Default or Event of Default
shall have occurred and be continuing or would result after giving effect
to any Restricted Payment pursuant to clauses (d) and (f) above.
6.15 Change of Name or Location; Change of Fiscal Year
No Credit Party shall (a) change its name as it appears in official
filings in the state of its incorporation or organization, or (b) change
its offices or warehouses or locations at which Collateral is held or
stored, or the location of its records concerning the Collateral, (c)
change the type of entity that it is, (d) change its organization
identification number, if any, issued by its state of incorporation or
organization, or (e) change its state of incorporation or organization,
in each case without at least thirty (30) days prior written notice to
Agent and after Agent's written acknowledgment that any reasonable action
requested by Agent in connection therewith, including to continue the
perfection of any Liens in favor of Agent, on behalf of Lenders, in any
Collateral, has been completed or taken; PROVIDED that any such new
location shall be in the continental United States. Without limiting the
foregoing, no Credit Party shall change its name, identity or limited
liability company (or corporate, as the case may be) structure in any
manner that might make any financing or continuation statement filed in
connection herewith seriously misleading within the meaning of Section
9-506 or 9-507 of the Code or any other then applicable provision of the
Code except upon prior written notice to Agent and Lenders and after
Agent's written acknowledgment that any reasonable action requested by
Agent in connection therewith, including to continue the perfection of
any Liens in favor of Agent, on behalf of Lenders, in any Collateral, has
been completed or taken. No Credit Party shall change its Fiscal Year
without the prior consent of Agent.
6.16 No Impairment of Intercompany Transfers
No Credit Party shall directly or indirectly enter into or become bound
by any agreement, instrument, indenture or other obligation (other than
this Agreement and the other Loan Documents) that could directly or
indirectly restrict, prohibit or require the consent of any Person with
respect to the payment of dividends or distributions or the making or
repayment of intercompany loans by a Subsidiary of a Borrower to such
Borrower or between Borrowers.
6.17 No Speculative Transactions
No Credit Party shall engage in any transaction involving commodity
options, futures contracts or similar transactions, except solely to
hedge against fluctuations in the prices of commodities
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owned or purchased by it and the values of foreign currencies receivable
or payable by it and interest swaps, caps or collars under a Hedging
Agreement; PROVIDED that (i) any such Hedging Agreement must have a
Lender as the sole counterparty, (ii) at any time, the aggregate amount
payable upon termination, liquidation or cancellation of such Hedging
Agreements for all Credit Parties, calculated in accordance with GAAP,
shall not exceed $1,000,000 and (iii) at any time, Agent may maintain
Reserves in the amount of such aggregate amount.
6.18 Changes Relating to Senior Debt; Subordinated Debt Designation of Credit
Facility
(a) No Credit Party shall change or amend the terms of any Senior Debt
or Subordinated Debt (or any indenture or agreement in connection
therewith) if the effect of such amendment is to: (a) increase the
interest rate on such Senior Debt or such Subordinated Debt by more
than two percentage points (2%); (b) change the dates upon which
payments of principal or interest are due on such Senior Debt or
such Subordinated Debt other than to extend such dates; (c) add any
default, event of default or change any default or event of default
other than to delete or make less restrictive any default provision
therein, or add any covenant with respect to such Senior Debt or
such Subordinated Debt; (d) add any covenant or change any covenant
in a matter adverse to such Credit Party, (e) change the redemption
or prepayment provisions of such Senior Debt or such Subordinated
Debt other than to extend the dates therefor or to reduce the
premiums payable in connection therewith; (f) grant any security or
collateral to secure payment of such Senior Debt or such
Subordinated Debt; (g) with respect to the Senior Note Indenture and
the Senior Subordinated Note Indenture, each change or amend the
asset sale provision of the Senior Note Indenture or the Senior
Subordinated Note Indenture, in each case, without the prior written
approval of the Required Lenders, (h) change or amend the definition
of "Borrowing Base" contained therein, or (i) change or amend any
other term if such change or amendment would materially increase the
obligations of the Credit Party thereunder or confer additional
material rights on the holder of such Senior Debt or such
Subordinated Debt in a manner adverse to any Credit Party, Agent or
any Lender.
(b) No Credit Party shall designate any
credit agreement, credit
facility, documents, agreement or indebtedness as a "Credit
Facility" under and as such term is defined in the Senior Note
Indenture, as originally in effect or as a "Credit Facility" under
which as such term is defined in the Senior Subordinated Note
Indenture, as originally in effect, other than, in each case, this
Agreement, or, except for this Agreement and the Loan Documents,
otherwise grant to any Indebtedness or Liens securing the same the
rights of "Priority Lien Obligations" or "Priority Liens" as such
terms are defined in the Senior Note Indenture, as originally in
effect.
6.19 Changes in Depreciation Schedules
No Credit Party shall change or amend the schedules or methodology used
to calculate depreciation on its assets (except as required by applicable
law or by a change in GAAP).
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6.20 Credit Parties Other than Borrowers
None of H&E Holdings, H&E Finance and GNE Investments shall engage in any
trade or business, or own any assets (other than Stock of their
Subsidiaries) or incur any Indebtedness or Guaranteed Indebtedness (other
than the Obligations); PROVIDED that (i) H&E Finance may consummate the
transactions contemplated by the Senior Note Indenture and the Senior
Subordinated Note Indenture, (ii) H&E Holdings may incur certain rights
and obligations under the BRS Management Agreement and (iii) GNE
Investments may provide the guaranty of (x) the Senior Notes as provided
for in the Senior Note Indenture and (y) the Senior Subordinated Notes as
provided for in the Senior Subordinated Note Indenture and (iv) H&E, H&E
Finance and GNE Investments may consummate the Related Transactions.
6.21 Lock Box Remittances; Vendor Payments
No Credit Party shall make, direct or permit any remittance to be made
into any lock box maintained for the benefit of Agent that is subject to
any Lien or claim or other interest of any Person, other than Liens in
favor of Agent, on behalf of itself and Lenders, and Collateral Agent, on
behalf of the holders of Senior Notes and Liens in favor of the
applicable depository bank permitted by the applicable lock box or
pledged account agreement with such depository bank; PROVIDED, that the
Credit Parties shall not be in default under this Section 6.21 if the
amount on deposit in the deposit accounts associated with all such lock
boxes and subject to any Lien or claim of any Person (other than the
depositary bank) does not exceed $200,000 in the aggregate at any time.
No Credit Party shall send an invoice or otherwise xxxx any purchaser
with respect to the purchase of any Floor Plan Equipment Inventory or any
Off Balance Sheet Equipment Inventory (that has been purchased by a
Credit Party) prior to the payment by such Credit Party of the purchase
price of such Floor Plan Equipment Inventory or such Off Balance Sheet
Equipment Inventory into such a lock box. Each Credit Party shall comply
with all requirements of each Vendor Inter-Creditor Agreement and shall
give all notices and take all other actions under each Vendor
Inter-Creditor Agreement to insure compliance with the requirements of
this Section 6.21.
7. TERM
7.1 Termination
The financing arrangements contemplated hereby shall be in effect until
the Commitment Termination Date, and the Loans and all other Obligations
shall be automatically due and payable in full on such date.
7.2 Survival of Obligations Upon Termination of Financing Arrangements
Except as otherwise expressly provided for in the Loan Documents, no
termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or
impair the obligations, duties and liabilities of Credit Parties or the
rights of Agent and Lenders relating to any unpaid portion of the Loans
or any other
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Obligations, due or not due, liquidated, contingent or unliquidated, or
any transaction or event occurring prior to such termination, or any
transaction or event, the performance of which is required after the
Commitment Termination Date. Except as otherwise expressly provided
herein or in any other Loan Document, all undertakings, agreements,
covenants, warranties and representations of or binding upon any Credit
Party, and all rights of Agent and each Lender, all as contained in the
Loan Documents, shall not terminate or expire, but rather shall survive
any such termination or cancellation and shall continue in full force and
effect until the Termination Date, whereupon it shall terminate;
PROVIDED, that the provisions of Section 11, the payment obligations
under Sections 1.15 and 1.16, and the indemnities contained in the Loan
Documents shall survive the Termination Date and PROVIDED FURTHER that
the indemnities contained in the Loan Documents in favor of a Lender
shall survive the assignment by such Lender of the Commitments and Loans
of such Lender.
7.3 Default Purchase Option
Agent agrees to promptly provide notice to the trustee under the Senior
Note Indenture when there has occurred the maturity (including as a
result of acceleration or the commencement of an Event of Default under
Section 8.1(h) or 8.1(i)) of the Obligations and the termination of the
Revolving Loan Commitment. Such notice (the "DEFAULT NOTICE") shall
include the name and address of each Lender, and Agent agrees to notify
Trustee of the name and address of any new Lender that acquires a Loan
during the period beginning on the date of such Default Notice and ending
on the earlier of the date twenty (20) Business Days following the
delivery of the Default Notice or the Authorized Representative Properly
Elects under this Section 7.3. If an Authorized Representative Properly
Elects to purchase all "Priority Lien Indebtedness" (as such term is
defined in the Senior Note Indenture as originally in effect) arising
under or secured by the Loan Documents (including, without limitation,
Indebtedness arising under Hedging Agreements secured thereby), each
Lender agrees to sell all, but not less than all, of the principal of and
interest on and all prepayment or acceleration penalties and premiums in
respect of the Loans outstanding at the time of purchase and all other
Obligations (except Unasserted Contingent Obligations (as defined in the
Senior Note Indenture as originally in effect)) then outstanding,
together with all rights of such Lender with respect to Liens securing
such Obligations and all Guarantees and other supporting obligations
relating to such Obligations (the "SUBJECT PROPERTY"), to Eligible
Purchasers (as such term is defined in the Senior Note Indenture as
originally in effect) identified by the Authorized Representative upon
the following terms and conditions: (a) for a purchase price equal to
100% of the principal amount and accrued interest outstanding on the
Obligations included in the Subject Property on the date of purchase plus
all other Obligations included in the Subject Property (except any
prepayment or acceleration penalty or premium (the term "prepayment
penalty or acceleration premium" being deemed not to include default
interest or LIBOR Rate breakage costs)) then unpaid, (b) with such
purchase price payable in cash on the date of purchase (which date of
purchase shall occur before the latter of (i) twenty (20) Business Days
following the date of receipt by such trustee of the Default Notice and
(ii) five (5) Business Days after the Authorized Representative shall
have Properly Elected to purchase under this Section 7.3), against
transfer to one or more "Eligible Purchasers" or its
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nominee or transferee identified by the Authorized Representative (such
transfer to be without recourse and without any representation or
warranty whatsoever, whether as to the enforceability of any Obligations
included in the Subject Property or the validity, enforceability,
perfection or priority or sufficiency of any Lien securing, or Guaranty
or other supporting obligation for, any Obligations included in the
Subject Property or as to any other matter whatsoever, except only the
representation and warranty that the transferee is transferring free and
clear of all Liens and encumbrances (other than those that will be
satisfied and discharged concurrently with the closing of such purchase),
and has good right to convey, whatever claims and interest it may have in
respect of the Subject Property pursuant to the Loan Documents), (c) with
such purchase accompanied by a deposit by the Authorized Representative
on behalf of such "Eligible Purchasers" of cash collateral under control
of the Agent (pursuant to agreements reasonably acceptable to the Agent
and with a depositary reasonably acceptable to the Agent) in an amount
equal to 105% of the undrawn amount of each Letter of Credit then
outstanding, as security for the additional obligation of the purchaser
to purchase, at par plus accrued interest, the reimbursement obligation
in respect of such Letters of Credit as and when such Letters of Credit
are funded and to pay all Obligations included in the Subject Property
then outstanding relating to such Letter of Credit and (d) upon documents
reasonably acceptable to Agent, such Lender and the Authorized
Representative and consistent with the foregoing clauses (a) through (c).
The option to purchase under this Section 7.3 is exercisable only once.
An "AUTHORIZED REPRESENTATIVE" shall mean the Trustee or an Eligible
Purchaser (as such term is defined in the Senior Note Indenture as
originally in effect) who the Trustee, in a writing delivered to the
Agent and each Lender, indicates is authorized to exercise rights under
this Section 7.3. The term "PROPERLY ELECTS" means the delivery within
twenty (20) Business Days following receipt by the Trustee of notice of
acceleration of the Obligations and termination of the Commitments to the
Agent and each Lender by an Authorized Representative of an irrevocable
written notice to purchase all "Priority Lien Indebtedness" (as such term
is defined in the Senior Note Indenture as originally in effect) arising
under or secured by the Loan Documents (including, without limitation,
Indebtedness arising under Hedging Agreements) pursuant to the terms of
this Section 7.3.
8. EVENTS OF DEFAULT: RIGHTS AND REMEDIES
8.1 Events of Default
The occurrence of any one or more of the following events (regardless of
the reason therefor) shall constitute an "EVENT OF DEFAULT" hereunder:
(a) Any Borrower (i) fails to make any payment of principal of, or
interest on, or Fees owing in respect of, the Loans or any of the
other Obligations when due and payable, or fails to provide cash
collateral as and when required, or (ii) fails to pay or reimburse
Agent or Lenders for any expense reimbursable hereunder or under any
other Loan Document within ten (10) days following Agent's demand
for such reimbursement or payment of expenses.
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(b) Any Credit Party fails or neglects to perform, keep or observe any
of the provisions of Sections 1.4, 1.8, 5.4(a) or 6 applicable to
it, or any of the provisions set forth in Annexes C, E or G,
respectively applicable to it.
(c) Any Credit Party fails or neglects to perform, keep or observe any
of the provisions of Section 4 or any provisions set forth in Annex
F, applicable to it and the same shall remain unremedied for ten
(10) days or more.
(d) Any Credit Party fails or neglects to perform, keep or observe any
other provision of this Agreement or of any of the other Loan
Documents applicable to it, (other than any provision embodied in or
covered by any other clause of this Section 8.1) and the same shall
remain unremedied for thirty (30) days or more.
(e) A default or breach occurs under any other agreement, document or
instrument to which any Credit Party is a party that is not cured
within any applicable grace period therefor, and such default or
breach (i) involves the failure to make any payment when due in
respect of any Indebtedness or Guaranteed Indebtedness (other than
the Obligations) of any Credit Party, including the Senior Debt and
the Indebtedness under the Senior Subordinated Note Indenture, in
excess of $2,000,000 in the aggregate (including (x) undrawn
committed or available amounts and (y) amounts owing to all
creditors under any combined or syndicated credit arrangements), or
in respect of any lease under which any Credit Party is lessee under
which the aggregate cost of the leased property exceeds $2,000,000,
or (ii) causes, or permits any holder of such Indebtedness or
Guaranteed Indebtedness or a trustee to cause, Indebtedness or
Guaranteed Indebtedness or a portion thereof, including the Senior
Debt, in excess of $2,000,000 in the aggregate, or rent in excess of
$2,000,000 in the aggregate, to become due prior to its stated
maturity or prior to its regularly scheduled dates of payment, or
cash collateralized in respect thereof to be demanded, in each case,
regardless of whether such right is exercised, by such holder or
trustee.
(f) Any information contained in any Borrowing Base Certificate is
untrue or incorrect in any respect (other than inadvertent,
immaterial errors not exceeding $2,500,000 in the aggregate in any
Borrowing Base Certificate), or any representation or warranty
herein or in any Loan Document or in any written statement, report,
financial statement or certificate (other than a Borrowing Base
Certificate) made or delivered to Agent or any Lender by any Credit
Party is untrue or incorrect in any material respect as of the date
when made or deemed made.
(g) Assets with a value in excess of $1,000,000 of any Credit Party are
attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of any Credit
Party and such condition continues for sixty (60) days or more.
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(h) A case or proceeding is commenced against any Credit Party seeking a
decree or order in respect of such Credit Party (i) under the
Bankruptcy Code, or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) appointing a custodian,
receiver, liquidator, assignee, trustee or sequestrator (or similar
official) for such Credit Party or for any substantial part of any
such Credit Party's assets, or (iii) ordering the winding-up or
liquidation of the affairs of such Credit Party, and such case or
proceeding shall remain undismissed or unstayed for 60 days or more
or a decree or order granting the relief sought in such case or
proceeding shall be entered by a court of competent jurisdiction.
(i) Any Credit Party (i) files a petition seeking relief under the
Bankruptcy Code, or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) consents to or fails to
contest in a timely and appropriate manner the institution of
proceedings thereunder or the filing of any such petition or the
appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official)
for such Credit Party or for any substantial part of any such Credit
Party's assets, (iii) makes an assignment for the benefit of
creditors, (iv) takes any action in furtherance of any of the
foregoing or (v) admits in writing its inability to, or is generally
unable to, pay its debts as such debts become due.
(j) A final judgment or judgments for the payment of money in excess of
$1,000,000 in the aggregate at any time are outstanding against one
or more of the Credit Parties and the same are not, within 30 days
after the entry thereof, discharged or execution thereof stayed or
bonded pending appeal, or such judgments are not discharged prior to
the expiration of any such stay.
(k) Any material provision of any Loan Document for any reason ceases to
be valid, binding and enforceable in accordance with its terms (or
any Credit Party shall challenge the enforceability of any Loan
Document or shall assert in writing, or engage in any action or
inaction based on any such assertion, that any provision of any of
the Loan Documents has ceased to be or otherwise is not valid,
binding and enforceable in accordance with its terms), or any Lien
created under any Loan Document on assets with a value in excess of
$1,000,000 in the aggregate ceases to be a valid and perfected first
priority Lien (except as otherwise permitted herein or therein) in
any of the Collateral purported to be covered thereby.
(l) Any Change of Control occurs.
8.2 Remedies
(a) If any Default or Event of Default has occurred and is continuing,
Agent may (and at the written request of the Requisite Lenders
shall), without notice, suspend this facility with respect to
additional Advances and/or the incurrence of additional Letter of
Credit Obligations, whereupon any additional Advances and additional
Letter of Credit
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Obligations shall be made or incurred in Agent's sole discretion (or
in the sole discretion of the Requisite Lenders, if such suspension
occurred at their direction) so long as such Default or Event of
Default is continuing. If any Default or Event of Default has
occurred and is continuing, Agent may (and at the written request of
Requisite Lenders shall), without notice except as otherwise
expressly provided herein, increase the rate of interest applicable
to the Loans and the Letter of Credit Fees to the Default Rate.
(b) If any Event of Default has occurred and is continuing, Agent may
(and at the written request of the Requisite Lenders shall), without
notice, (i) terminate this facility with respect to further Advances
or the incurrence of further Letter of Credit Obligations, (ii)
declare all or any portion of the Obligations, including all or any
portion of any Loan to be forthwith due and payable, and require
that the Letter of Credit Obligations be cash collateralized as
provided in Annex B, all without presentment, demand, protest or
further notice of any kind, all of which are expressly waived by
each Credit Party, or (iii) exercise any rights and remedies
provided to Agent under the Loan Documents or at law or equity,
including all remedies provided under the Code; PROVIDED, that upon
the occurrence of an Event of Default specified in Section 8.1(h) or
Section 8.1(i), all of the Obligations, including the Revolving
Loan, shall become immediately due and payable without declaration,
notice or demand by any Person.
8.3 Waivers by Credit Parties
Except as otherwise provided for in this Agreement or by applicable law,
each Credit Party waives (including for purposes of Section 12): (a)
presentment, demand and protest and notice of presentment, dishonor,
notice of intent to accelerate, notice of acceleration, protest, default,
nonpayment, maturity, release, compromise, settlement, extension or
renewal of any or all commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by
Agent on which any Credit Party may in any way be liable, and hereby
ratifies and confirms whatever Agent may do in this regard, (b) all
rights to notice and a hearing prior to Agent's taking possession or
control of, or to Agent's replevy, attachment or levy upon, the
Collateral or any bond or security that might be required by any court
prior to allowing Agent to exercise any of its remedies, and (c) the
benefit of all valuation, appraisal, marshalling and exemption laws.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations
(a) Subject to the terms of this Section 9.1, any Lender may make an
assignment to a Qualified Assignee of, or sell participations in, at
any time or times, the Loan Documents, Loans, Letter of Credit
Obligations and any Commitment or any portion thereof or interest
therein, including any Lender's rights, title, interests, remedies,
powers or duties thereunder. Any assignment by a Lender shall (i)
require the consent of Agent (which consent shall not be
unreasonably withheld or delayed with respect to a Qualified
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Assignee) and, so long as no Default or Event of Default has
occurred and is continuing, the Borrower Representative (which shall
not be unreasonably withheld or delayed) and the execution of an
assignment agreement (an "ASSIGNMENT AGREEMENT") substantially in
the form attached hereto as Exhibit 9.1(a) and otherwise in form and
substance reasonably satisfactory to, and acknowledged by, Agent,
PROVIDED, that neither the Agent's nor the Borrower Representative's
consent shall be required if such assignment is to an existing
Lender, to an Affiliate of such assigning Lender or to a special
purpose entity organized to acquire commercial loans and managed by
an existing Lender or an Affiliate or an existing Lender, and,
PROVIDED, FURTHER that Borrower Representative's consent shall not
be required if such assignment is to a Qualified Assignee; (ii) be
conditioned on such assignee Lender representing to the assigning
Lender and Agent that it is purchasing the applicable Loans to be
assigned to it for its own account, for investment purposes and not
with a view to the distribution thereof; (iii) after giving effect
to any such partial assignment, the assignee Lender shall have
Commitments in an amount at least equal to $5,000,000 and the
assigning Lender shall have retained Commitments in an amount at
least equal to $5,000,000; (iv) include a payment to Agent by the
assignor or assignee of an assignment fee of $3,500. In the case of
an assignment by a Lender under this Section 9.1, the assignee shall
have, to the extent of such assignment, the same rights, benefits
and obligations as all other Lenders hereunder and (v) not be
effective until such assignment is reflected in the Loan Account.
Subject to the proviso in the last sentence of Section 7.2, the
assigning Lender shall be relieved of its obligations hereunder with
respect to its Commitments or assigned portion thereof from and
after the date of such assignment. Each Credit Party hereby
acknowledges and agrees that any assignment shall give rise to a
direct obligation of such Credit Party to the assignee and that the
assignee shall be considered to be a "LENDER". In all instances,
each Lender's liability to make Loans hereunder shall be several and
not joint and shall be limited to such Lender's Pro Rata Share of
the applicable Commitment. In the event Agent or any Lender assigns
or otherwise transfers all or any part of a Note, Agent or any such
Lender shall so notify Borrowers and each Borrower shall execute new
Notes in exchange for the Notes being assigned. Notwithstanding the
foregoing provisions of this Section 9.1(a), any Lender may at any
time pledge as security for obligations of such Lender or assign all
or any portion of such Lender's rights under this Agreement and the
other Loan Documents to any Person, including to a Federal Reserve
Bank; PROVIDED, that no such pledge or assignment shall release such
Lender from such Lender's obligations hereunder or under any other
Loan Document.
(b) Any participation by a Lender of all or any part of its Commitments
and Loans shall be entered into with the understanding that all
amounts payable by Borrowers hereunder shall be determined as if
that Lender had not sold such participation, and that the holder of
any such participation shall not be entitled to require such Lender
to take or omit to take any action hereunder except actions directly
affecting (i) any reduction in the principal amount of, or interest
rate or Fees payable with respect to, any Loan in which such holder
participates, (ii) any extension of the final maturity of the
principal amount of
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any Loan in which such holder participates, and (iii) any release of
all or substantially all of the Collateral (other than in accordance
with the terms of this Agreement, the Collateral Documents or the
other Loan Documents). Each participation created by any Lender
shall provide that it shall be terminated by such Lender upon sale
of such Lender's Obligations pursuant to Section 7.3 (and such
Lender shall pay to the participant all amounts required to be paid
under such participation upon termination). Solely for purposes of
Sections 1.13, 1.15, 1.16 and 9.8, each Borrower acknowledges and
agrees that a participation shall give rise to a direct obligation
of such Borrower to the participant and the participant shall be
considered to be a "LENDER"; PROVIDED, that any such participant
shall not be entitled to receive any greater payment under Section
1.15 or Section 1.16 than the Lender granting such participation
would have been entitled to receive with respect to the portion of
its Commitment and Loans so participated. Except as set forth in the
preceding sentence no Borrower shall have any obligation or duty to
any participant. Neither Agent nor any Lender (other than the Lender
selling a participation) shall have any duty to any participant and
may continue to deal solely with the Lender selling a participation
as if no such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no Lender shall,
as between the Credit Parties, and that Lender, or Agent and that
Lender, be relieved of any of its obligations hereunder as a result
of any sale, assignment, transfer or negotiation of, or granting of
participation in, all or any part of the Loans, the Notes or other
Obligations owed to such Lender.
(d) Each Credit Party shall assist any Lender permitted to sell
assignments or participations under this Section 9.1 as reasonably
required to enable the assigning or selling Lender to effect any
such assignment or participation, including the execution and
delivery of any and all agreements, notes and other documents and
instruments as shall be requested and, in connection with the
initial syndication of the Loans and Commitments and if otherwise
requested by Agent, the preparation of informational materials for,
and the participation of management in meetings with, potential
assignees or participants. Each Credit Party shall certify the
correctness, completeness and accuracy of all descriptions of the
Credit Parties and their respective affairs contained in any selling
materials provided by it and all other information provided by it
and included in such materials, except that any Projections
delivered by Borrowers shall only be certified by Borrowers as
having been prepared by Borrowers in compliance with the
representations contained in Section 3.4(c).
(e) Any Lender may furnish any information concerning any Credit Party
in the possession of such Lender from time to time to assignees and
participants (including prospective assignees and participants);
PROVIDED, that such Lender shall obtain from assignees or
participants confidentiality covenants substantially equivalent to
those contained in Section 11.8.
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(f) So long as no Event of Default has occurred and is continuing, no
Lender shall assign or sell participations in any portion of its
Loans or Commitments to a potential Lender or participant, if, as of
the date of the proposed assignment or sale, the assignee Lender or
participant would be subject to capital adequacy, reserve or similar
requirements under Section 1.16(a), increased costs under Section
1.16(b), an inability to fund LIBOR Loans under Section 1.16(c), or
withholding taxes in accordance with Section 1.16(d).
9.2 Appointment of Agent
GE Capital is hereby appointed to act on behalf of all Lenders as Agent
under this Agreement and the other Loan Documents. The provisions of this
Section 9.2 are solely for the benefit of Agent and Lenders and no Credit
Party nor any other Person shall have any rights as a third party
beneficiary of any of the provisions hereof. In performing its functions
and duties under this Agreement and the other Loan Documents, Agent shall
act solely as an agent of Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship of agency or
trust with or for any Credit Party or any other Person. Agent shall have
no duties or responsibilities except for those expressly set forth in
this Agreement and the other Loan Documents. The duties of Agent shall be
mechanical and administrative in nature and Agent shall not have, or be
deemed to have, by reason of this Agreement, any other Loan Document or
otherwise a fiduciary relationship in respect of any Lender. Except as
expressly set forth in this Agreement and the other Loan Documents, Agent
shall not have any duty to disclose, and shall not be liable for failure
to disclose, any information relating to any Credit Party or any of their
respective Subsidiaries or any Account Debtor that is communicated to or
obtained by GE Capital or any of its Affiliates in any capacity. Neither
Agent nor any of its Affiliates nor any of their respective officers,
directors, employees, agents or representatives shall be liable to any
Lender for any action taken or omitted to be taken by it hereunder or
under any other Loan Document, or in connection herewith or therewith,
except for damages solely caused by its or their own gross negligence or
willful misconduct as finally determined by a court of competent
jurisdiction. Each Lender which is a party to a Hedging Agreement hereby
appoints GE Capital as collateral agent under the Collateral Documents.
If Agent shall request instructions from Requisite Lenders, Majority
Revolving Lenders or all affected Lenders with respect to any act or
action (including failure to act) in connection with this Agreement or
any other Loan Document, then Agent shall be entitled to refrain from
such act or taking such action unless and until Agent shall have received
instructions from Requisite Lenders, Majority Revolving Lenders, or all
affected Lenders, as the case may be, and Agent shall not incur liability
to any Person by reason of so refraining. Agent shall be fully justified
in failing or refusing to take any action hereunder or under any other
Loan Document (a) if such action would, in the opinion of Agent, be
contrary to law or the terms of this Agreement or any other Loan
Document, (b) if such action would, in the opinion of Agent, expose Agent
to Environmental Liabilities or (c) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any
such action. Without limiting the foregoing, no Lender shall have any
right of action whatsoever
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against Agent as a result of Agent acting or refraining from acting
hereunder or under any other Loan Document in accordance with the
instructions of Requisite Lenders, Majority Revolving Lenders or all
affected Lenders, as applicable.
9.3 Agent's Reliance, Etc.
Neither Agent nor any of its Affiliates nor any of their respective
directors, officers, agents or employees shall be liable for any action
taken or omitted to be taken by it or them under or in connection with
this Agreement or the other Loan Documents, except for damages solely
caused by its or their own gross negligence or willful misconduct as
finally determined by a court of competent jurisdiction. Without limiting
the generality of the foregoing, Agent: (a) may treat the payee of any
Note as the holder thereof until Agent receives written notice of the
assignment or transfer thereof signed by such payee and in form
reasonably satisfactory to Agent; (b) may consult with legal counsel,
independent public accountants and other experts selected by it and shall
not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or
experts; (c) makes no warranty or representation to any Lender and shall
not be responsible to any Lender for any statements, warranties or
representations made in or in connection with this Agreement or the other
Loan Documents; (d) shall not have any duty to ascertain or to inquire as
to the performance or observance of any of the terms, covenants or
conditions of this Agreement or the other Loan Documents on the part of
any Credit Party or to inspect the Collateral (including the books and
records) of any Credit Party; (e) shall not be responsible to any Lender
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or the other Loan Documents or any
other instrument or document furnished pursuant hereto or thereto; and
(f) shall incur no liability under or in respect of this Agreement or the
other Loan Documents by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telecopy, telegram, cable or
telex) believed by it to be genuine and signed or sent by the proper
party or parties.
9.4 GE Capital and Affiliates
With respect to its Commitments hereunder, GE Capital shall have the same
rights and powers under this Agreement and the other Loan Documents as
any other Lender and may exercise the same as though it were not Agent;
and the term "Lender" or "Lenders" shall, unless otherwise expressly
indicated, include GE Capital in its individual capacity. GE Capital and
its Affiliates may lend money to, invest in, and generally engage in any
kind of business with, any Credit Party, any of its Affiliates and any
Person who may do business with or own securities of any Credit Party or
any such Affiliate, all as if GE Capital were not Agent and without any
duty to account therefor to Lenders. GE Capital and its Affiliates may
accept fees and other consideration from any Credit Party for services in
connection with this Agreement or otherwise without having to account for
the same to Lenders.
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9.5 Lender Credit Decision
Each Lender acknowledges that it has, independently and without reliance
upon Agent or any other Lender and based on the Financial Statements
referred to in Section 3.4(a) and such other documents and information as
it has deemed appropriate, made its own credit and financial analysis of
the Credit Parties and its own decision to enter into this Agreement.
Each Lender also acknowledges that it will, independently and without
reliance upon Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this
Agreement. Each Lender acknowledges the potential conflict of interest of
each other Lender as a result of Lenders holding disproportionate
interests in the Loans, and expressly consents to, and waives any claim
based upon, such conflict of interest.
9.6 Indemnification
Lenders agree to indemnify Agent and Arranger (to the extent not
reimbursed by Credit Parties and without limiting the obligations of
Credit Parties hereunder), ratably according to their respective Pro Rata
Shares, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever that may be imposed on,
incurred by, or asserted against Agent or Arranger in any way relating to
or arising out of this Agreement or any other Loan Document or any action
taken or omitted to be taken by Agent or Arranger in connection
therewith; PROVIDED, that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from
Agent's or Arranger's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction. Without limiting the
foregoing, each Lender agrees to reimburse Agent or Arranger promptly
upon demand for its ratable share of any out-of-pocket expenses
(including reasonable counsel fees) incurred by Agent or Arranger in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations,
legal proceedings or otherwise) of, or legal advice in respect of rights
or responsibilities under, this Agreement and each other Loan Document,
to the extent that Agent is not reimbursed for such expenses by the
Credit Parties.
9.7 Successor Agent
Agent may resign at any time by giving not less than thirty (30) days'
prior written notice thereof to Lenders and Borrower Representative. Upon
any such resignation, the Requisite Lenders shall have the right to
appoint a successor Agent. If no successor Agent shall have been so
appointed by the Requisite Lenders and shall have accepted such
appointment within 30 days after the resigning Agent's giving notice of
resignation, then the resigning Agent may, on behalf of Lenders, appoint
a successor Agent, which shall be a Lender, if a Lender is willing to
accept such appointment, or otherwise shall be a commercial bank or
financial institution or a subsidiary of a commercial bank or financial
institution if such commercial bank or financial institution is organized
under the laws of the United States of America or of any State thereof
and has a
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combined capital and surplus of at least $300,000,000. If no successor
Agent has been appointed pursuant to the foregoing, within thirty (30)
days after the date such notice of resignation was given by the resigning
Agent, such resignation shall become effective and the Requisite Lenders
shall thereafter perform all the duties of Agent hereunder until such
time, if any, as the Requisite Lenders appoint a successor Agent as
provided above. Any successor Agent appointed by Requisite Lenders
hereunder shall be subject to the approval of Borrower Representative,
such approval not to be unreasonably withheld or delayed; PROVIDED, that
such approval shall not be required if a Default or an Event of Default
has occurred and is continuing. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall succeed
to and become vested with all the rights, powers, privileges and duties
of the resigning Agent. Upon the earlier of the acceptance of any
appointment as Agent hereunder by a successor Agent or the effective date
of the resigning Agent's resignation, the resigning Agent shall be
discharged from its duties and obligations under this Agreement and the
other Loan Documents, except that any indemnity rights or other rights in
favor of such resigning Agent shall continue. After any resigning Agent's
resignation hereunder, the provisions of this Section 9 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it
was acting as Agent under this Agreement and the other Loan Documents.
Agent may be removed at the written direction of the holders (other than
Agent) of two-thirds or more of the Commitments (excluding Agent's
Commitment); PROVIDED, that in so doing, such Lenders shall be deemed to
have waived and released any and all claims they may have against Agent.
9.8 Co-Agents
None of the Lenders identified on the facing page or signature pages of
this Agreement or any related document as "documentation agent",
"syndication agent" or "arranger" shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other
than those applicable to all Lenders as such. Without limiting the
foregoing, none of the Lenders so identified as "documentation agent",
"syndication agent" or "arranger" shall have or be deemed to have any
fiduciary relationship with any Lender. Each Lender acknowledges that it
has not relied, and will not rely, on any of the Lenders so identified in
deciding to enter into this Agreement or in taking or not taking action
hereunder.
9.9 Setoff and Sharing of Payments
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence and
during the continuance of any Event of Default and subject to Section
9.9(f), each Lender is hereby authorized at any time or from time to
time, without notice to any Credit Party or to any other Person, any such
notice being hereby expressly waived, to offset and to appropriate and to
apply any and all balances held by it at any of its offices for the
account of any Credit Party (regardless of whether such balances are then
due to such Credit Party) and any other properties or assets at any time
held or owing by that Lender or that holder to or for the credit or for
the account of any Credit Party against and on account of any of the
Obligations that are not paid when due. Any Lender exercising a right of
setoff or otherwise receiving any payment on account of the Obligations
in excess of its Pro Rata Share
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thereof (other than any right of setoff exercised with respect to, or
payments under, Section 1.13, 1.15 or 1.16) shall purchase for cash (and
the other Lenders or holders shall sell) such participations in each such
other Lender's or holder's Pro Rata Share of the Obligations as would be
necessary to cause such Lender to share the amount so offset or otherwise
received with each other Lender or holder in accordance with their
respective Pro Rata Shares. Each Lender's obligation under this Section
9.8 shall be in addition to and not in limitation of its obligations to
purchase a participation in an amount equal to its Pro Rata Share of the
Swing Line Loans under Section 1.1. Each Credit Party agrees, to the
fullest extent permitted by law, that (a) any Lender may exercise its
right to offset with respect to amounts in excess of its Pro Rata Share
of the Obligations and may sell participations in such amounts so offset
to other Lenders and holders and (b) any Lender so purchasing a
participation in the Loans made or other Obligations held by other
Lenders or holders may exercise all rights of offset, bankers' lien,
counterclaim or similar rights with respect to such participation as
fully as if such Lender or holder were a direct holder of the Loans and
the other Obligations in the amount of such participation.
Notwithstanding the foregoing, if all or any portion of the offset amount
or payment otherwise received is thereafter recovered from the Lender
that has exercised the right of offset, the purchase of participations by
that Lender shall be rescinded and the purchase price restored without
interest.
9.10 Advances; Payments; Non-Funding Lenders; Information; Actions in Concert
(a) Advances; Payments
(i) Revolving Lenders shall refund or participate in the Swing
Line Loan in accordance with clauses (iii) and (iv) of
Section 1.1(b). If the Swing Line Lender declines to make a
Swing Line Loan or if Swing Line Availability is zero, Agent
shall notify Revolving Lenders, promptly after receipt of a
Notice of Revolving Credit Advance and in any event prior to
noon (New York time) on the date such Notice of Revolving
Credit Advance is received, by telecopy, telephone or other
similar form of transmission. Each Revolving Lender shall
make the amount of such Lender's Pro Rata Share of each
Revolving Credit Advance available to Agent in same day funds
by wire transfer to Agent's account as set forth in Annex H
not later than 3:00 p.m. (New York time) on the requested
funding date, in the case of an Index Rate Loan, and not
later than 3:00 p.m. (New York time) on the requested funding
date in the case of a LIBOR Loan. After receipt of such wire
transfers (or, in the Agent's sole discretion, before receipt
of such wire transfers), subject to the terms hereof, Agent
shall make the requested Revolving Credit Advance to the
Borrower designated by Borrower Representative in the Notice
of Revolving Credit Advance. All payments by each Revolving
Lender shall be made without setoff, counterclaim or
deduction of any kind.
(ii) On the 2nd Business Day of each calendar week or more
frequently at Agent's election (each, a "SETTLEMENT DATE"),
Agent shall advise each Lender by telephone or telecopy of
the amount of such Lender's Pro Rata Share of principal,
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interest and Fees paid for the benefit of Lenders with
respect to each applicable Loan. Provided that each Lender
has funded all payments or Advances required to be made by it
and purchased all participations required to be purchased by
it under this Agreement and the other Loan Documents as of
such Settlement Date, Agent shall pay to each Lender such
Lender's Pro Rata Share of principal, interest and Fees paid
by Borrowers since the previous Settlement Date for the
benefit of such Lender on the Loans held by it. To the extent
that any Lender (a "NON-FUNDING LENDER") has failed to fund
all such payments and Advances or failed to fund the purchase
of all such participations, Agent shall be entitled to set
off the funding short-fall against that Non-Funding Lender's
Pro Rata Share of all payments received from Borrowers. Such
payments shall be made by wire transfer to such Lender's
account (as specified by such Lender in Annex H or the
applicable Assignment Agreement) not later than 2:00 p.m.
(New York time) on the next Business Day following each
Settlement Date.
(b) Availability of Lender's Pro Rata Share
Agent may assume that each Revolving Lender will make its Pro Rata
Share of each Revolving Credit Advance available to Agent on each
funding date. If such Pro Rata Share is not, in fact, paid to Agent
by such Revolving Lender when due, Agent will be entitled to recover
such amount on demand from such Revolving Lender without setoff,
counterclaim or deduction of any kind. If any Revolving Lender fails
to pay the amount of its Pro Rata Share forthwith upon Agent's
demand, Agent shall promptly notify Borrower Representative and
Borrowers shall immediately repay such amount to Agent. Nothing in
this Section 9.9(b) or elsewhere in this Agreement or the other Loan
Documents shall be deemed to require Agent to advance funds on
behalf of any Revolving Lender or to relieve any Revolving Lender
from its obligation to fulfill its Commitments hereunder or to
prejudice any rights that Borrowers may have against any Revolving
Lender as a result of any default by such Revolving Lender
hereunder. To the extent that Agent advances funds to any Borrower
on behalf of any Revolving Lender and is not reimbursed therefor on
the same Business Day as such Advance is made, Agent shall be
entitled to retain for its account all interest accrued on such
Advance until reimbursed by the applicable Revolving Lender.
(c) Return of Payments
(i) If Agent pays an amount to a Lender under this Agreement in
the belief or expectation that a related payment has been or
will be received by Agent from Borrowers and such related
payment is not received by Agent, then Agent will be entitled
to recover such amount from such Lender on demand without
setoff, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount received by
Agent under this Agreement must be returned to any Borrower
or paid to any other Person
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pursuant to any insolvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement
or any other Loan Document, Agent will not be required to
distribute any portion thereof to any Lender. In addition,
each Lender will repay to Agent on demand any portion of such
amount that Agent has distributed to such Lender, together
with interest at such rate, if any, as Agent is required to
pay to any Borrower or such other Person, without setoff,
counterclaim or deduction of any kind.
(d) Non-Funding Lenders
The failure of any Non-Funding Lender to make any Revolving Credit
Advance or any payment required by it hereunder or to purchase any
participation in any Swing Line Loan to be made or purchased by it
on the date specified therefor shall not relieve any other Lender
(each such other Revolving Lender, an "OTHER LENDER") of its
obligations to make such Advance or purchase such participation on
such date, but neither any Other Lender nor Agent shall be
responsible for the failure of any Non-Funding Lender to make an
Advance, purchase a participation or make any other payment required
hereunder. Notwithstanding anything set forth herein to the
contrary, a Non-Funding Lender shall not have any voting or consent
rights under or with respect to any Loan Document or constitute a
"Lender" or a "Revolving Lender" (or be included in the calculation
of "Requisite Lenders" or "Majority Revolving Lenders" hereunder)
for any voting or consent rights under or with respect to any Loan
Document. At Borrower Representative's request, Agent or a Person
reasonably acceptable to Agent shall have the right with Agent's
consent and in Agent's sole discretion (but shall have no
obligation) to purchase from any Non-Funding Lender, and each
Non-Funding Lender agrees that it shall, at Agent's request, sell
and assign to Agent or such Person, all of the Commitments of that
Non-Funding Lender for an amount equal to the principal balance of
all Loans held by such Non-Funding Lender and all accrued interest
and fees with respect thereto through the date of sale, such
purchase and sale to be consummated pursuant to an executed
Assignment Agreement and in accordance with the recording
requirements for transfers in Section 9.1.
(e) Dissemination of Information
Agent shall use reasonable efforts to provide Lenders with (i) any
notice of Default or Event of Default received by Agent from, or
delivered by Agent to, any Borrower, with notice of any Event of
Default of which Agent has actually become aware and with notice of
any action taken by Agent following any Event of Default; PROVIDED,
that Agent shall not be liable to any Lender for any failure to do
so, except to the extent that such failure is attributable solely to
Agent's gross negligence or willful misconduct as finally determined
by a court of competent jurisdiction and (ii) any Equipment
Inventory Appraisals, P&E Appraisals and Collateral audits received
by Agent. Lenders acknowledge that Borrowers are required to provide
Financial Statements and Collateral
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Reports to Lenders in accordance with Annexes E and F hereto and
agree that Agent shall have no duty to provide the same to Lenders.
(f) Actions in Concert
Anything in this Agreement to the contrary notwithstanding, each
Lender hereby agrees with each other Lender that no Lender shall
take any action to protect or enforce its rights arising out of this
Agreement or the Notes (including exercising any rights of setoff)
without first obtaining the prior written consent of Agent and
Requisite Lenders, it being the intent of Lenders that any such
action to protect or enforce rights under this Agreement and the
Notes shall be taken in concert and at the direction or with the
consent of Agent or Requisite Lenders.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns
This Agreement and the other Loan Documents shall be binding on and shall
inure to the benefit of each Credit Party, Agent, Lenders and their
respective successors and assigns (including, in the case of any Credit
Party, a debtor-in-possession on behalf of such Credit Party), except as
otherwise provided herein or therein. No Credit Party may assign,
transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties hereunder or under any of the other Loan Documents
without the prior express written consent of Agent and Requisite Lenders.
Any such purported assignment, transfer, hypothecation or other
conveyance by any Credit Party without the prior express written consent
of Agent and Requisite Lenders shall be void. The terms and provisions of
this Agreement are for the purpose of defining the relative rights and
obligations of each Credit Party, Agent and Lenders with respect to the
transactions contemplated hereby and no Person shall be a third party
beneficiary of any of the terms and provisions of this Agreement or any
of the other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement
The Loan Documents constitute the complete agreement between the parties
with respect to the subject matter thereof and may not be modified,
altered or amended except as set forth in Section 11.2. Any letter of
interest, commitment letter or fee letter (other than the GE Capital Fee
Letter) or confidentiality agreement, if any, between any Credit Party
and Agent or any Lender or any of their respective Affiliates, predating
this Agreement and relating to a financing of substantially similar form,
purpose or effect shall be superseded by this Agreement.
11.2 Amendments and Waivers
(a) Except for actions expressly permitted to be taken by Agent, no
amendment, modification, termination or waiver of any provision of
this Agreement or any other Loan Document, or any consent to any
departure by any Credit Party therefrom, shall in any
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event be effective unless the same shall be in writing and signed by
Agent and Borrowers, and by Requisite Lenders or all affected
Lenders, as applicable. Except as set forth in clauses (b) and (c)
below, all such amendments, modifications, terminations or waivers
requiring the consent of any Lenders shall require the written
consent of Requisite Lenders.
(b) No amendment, modification, termination or waiver of or consent with
respect to any provision of this Agreement that increases the
percentage advance rates set forth in the definition of the Great
Northern Borrowing Base or the H&E Borrowing Base, in each case,
above the Original Advance Rates, shall be effective unless the same
shall be in writing and signed by Agent, Lenders and Borrowers. No
amendment, modification, termination or waiver of or consent with
respect to any provision of this Agreement that waives compliance
with the conditions precedent set forth in Section 2.2 to the making
of any Loan or the incurrence of any Letter of Credit Obligations,
shall be effective unless the same shall be in writing and signed by
Agent, Requisite Lenders and Borrowers.
(c) No amendment, modification, termination or waiver shall, unless in
writing and signed by Agent and each Lender directly affected
thereby: (i) increase the principal amount of any Lender's
Commitment (which action shall be deemed to directly affect all
Lenders); (ii) reduce the principal of, rate of interest on or Fees
payable with respect to any Loan or Letter of Credit Obligations of
any affected Lender; (iii) extend any scheduled payment date (other
than payment dates of mandatory prepayments under Sections
1.3(b)(ii)-and (iii)) or final maturity date of the principal amount
of any Loan of any affected Lender; (iv) waive, forgive, defer,
extend or postpone any payment of interest or Fees payable to any
affected Lender; (v) release any Guaranty or, (vi) except as
otherwise permitted herein or in the other Loan Documents, permit
any Credit Party to sell or otherwise dispose of any Collateral with
a value exceeding $5,000,000 in the aggregate (which action shall be
deemed to directly affect all Lenders); (vii) change the percentage
of the Commitments or of the aggregate unpaid principal amount of
the Loans that shall be required for Lenders or any of them to take
any action hereunder; (viii) amend the definition of Prohibited
Swing Line Advance; (ix) change Section 1.1(b)(i) in any manner that
increases the obligations of the Lenders with respect to any Swing
Line Advance, (x) eliminate or make less restrictive any condition
to lending under Section 2.2; or (xi) amend or waive this Section
11.2 or the definitions of the terms "Requisite Lenders" or
"Majority Revolving Lenders" insofar as such definitions affect the
substance of this Section 11.2. Furthermore, no amendment,
modification, termination or waiver affecting the rights or duties
of Agent or L/C Issuer under this Agreement or any other Loan
Document shall be effective unless in writing and signed by Agent or
L/C Issuer, as the case may be, in addition to Lenders required
hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No
amendment, modification, termination or waiver shall be required for
Agent to take additional Collateral pursuant to any Loan Document.
No amendment, modification, termination or
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waiver of any provision of any Note shall be effective without the
written concurrence of the holder of that Note. No notice to or
demand on any Credit Party in any case shall entitle such Credit
Party or any other Credit Party to any other or further notice or
demand in similar or other circumstances. Any amendment,
modification, termination, waiver or consent effected in accordance
with this Section 11.2 shall be binding upon each Lender.
(d) If, in connection with any proposed amendment, modification, waiver
or termination (a "PROPOSED CHANGE"):
(i) requiring the consent of all affected Lenders, the consent of
Requisite Lenders is obtained, but the consent of other
Lenders whose consent is required is not obtained (any such
Lender whose consent is not obtained as described in this
clause (i) and in clauses (ii) and (iii) below being referred
to as a "NON-CONSENTING LENDER"), or
(ii) requiring the consent of Requisite Lenders, the consent of
Revolving Lenders holding 51% or more of the aggregate
Revolving Loan Commitments is obtained, but the consent of
Requisite Lenders is not obtained,
then, so long as Agent is not a Non-Consenting Lender, at Borrower
Representative's request, Agent, or a Person reasonably acceptable
to Agent, shall have the right with Agent's consent and in Agent's
sole discretion (but shall have no obligation) to purchase from such
Non-Consenting Lenders, and such Non-Consenting Lenders agree that
they shall, upon Agent's request, sell and assign to Agent or such
Person, all of the Commitments of such Non-Consenting Lenders for an
amount equal to the principal balance of all Loans held by the
Non-Consenting Lenders and all accrued interest and Fees with
respect thereto through the date of sale, such purchase and sale to
be consummated pursuant to an executed Assignment Agreement.
(e) Upon payment in full in cash and performance of all of the
Obligations (other than Unasserted Contingent Obligations),
termination of the Commitments and all Letters of Credit (or the
cash collateralization or backing with standby letters of credit of
all Letters of Credit in accordance with Annex B) and a release of
all claims against Agent and Lenders, and so long as no suits,
actions, proceedings or claims are pending or threatened against any
Indemnified Person asserting any damages, losses or liabilities that
are Indemnified Liabilities, Agent shall deliver to the Credit
Parties payoff letters, termination statements, mortgage releases
and other documents necessary or appropriate to evidence the
termination of the Liens securing payment of the Obligations.
11.3 Fees and Expenses
Borrowers shall reimburse (i) Agent and Arranger for all fees, costs and
expenses (including the reasonable fees and expenses of all of its
counsel, advisors, consultants and auditors) and (ii) Agent and Arranger
(and, with respect to clauses (c) and (d) below, all Lenders) for all
fees,
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costs and expenses, including the reasonable fees, costs and expenses of
counsel or other advisors (including environmental and management
consultants and appraisers), incurred in connection with the negotiation
and preparation of the Loan Documents as well as those incurred in
connection with:
(a) the forwarding to any Borrower or any other Person on behalf of any
Borrower by Agent of the proceeds of any Loan;
(b) any amendment, modification or waiver of, consent with respect to,
or termination of, any of the Loan Documents or Related Transactions
Documents or advice in connection with the syndication and
administration of the Loans made pursuant hereto or its rights
hereunder or thereunder;
(c) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Agent, any Lender, any Borrower or any other
Person and whether as a party, witness or otherwise) in any way
relating to the Collateral, any of the Loan Documents or any other
agreement to be executed or delivered in connection herewith or
therewith, including any litigation, contest, dispute, suit, case,
proceeding or action, and any appeal or review thereof, in
connection with a case commenced by or against any or all of the
Borrowers or any other Person that may be obligated to Agent by
virtue of the Loan Documents; including any such litigation,
contest, dispute, suit, proceeding or action arising in connection
with any work-out or restructuring of the Loans during the pendency
of one or more Events of Default; PROVIDED, that in the case of
reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;
PROVIDED FURTHER, that no Person shall be entitled to reimbursement
under this clause (c) in respect of any litigation, contest,
dispute, suit, proceeding or action to the extent any of the
foregoing results from such Person's gross negligence or willful
misconduct;
(d) any attempt to enforce any remedies of Agent or any Lender against
any or all of the Credit Parties or any other Person that may be
obligated to Agent or any Lender by virtue of any of the Loan
Documents, including any such attempt to enforce any such remedies
in the course of any work-out or restructuring of the Loans during
the pendency of one or more Events of Default; PROVIDED, that in the
case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders;
(e) any workout or restructuring of the Loans during the pendency of one
or more Events of Default; and
(f) efforts to (i) monitor the Loans or any of the other Obligations,
(ii) evaluate, observe or assess any Credit Party or its affairs,
and (iii) verify, protect, evaluate, assess, appraise, collect,
sell, liquidate or otherwise dispose of any of the Collateral in
accordance with the terms of the Loan Documents;
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including, as to each of clauses (a) through (f) above, all reasonable
attorneys' and other professional and service providers' fees arising
from such services and other advice, assistance or other representation,
including those in connection with any appellate proceedings, and all
expenses, costs, charges and other fees incurred by such counsel and
others in connection with or relating to any of the events or actions
described in this Section 11.3, all of which shall be payable, on demand,
by Borrowers to Agent. Without limiting the generality of the foregoing,
such expenses, costs, charges and fees may include: fees, costs and
expenses of accountants, environmental advisors, appraisers, investment
bankers, management and other consultants and paralegals; court costs and
expenses; photocopying and duplication expenses; court reporter fees,
costs and expenses; long distance telephone charges; air express charges;
telegram or telecopy charges; secretarial overtime charges; and expenses
for travel, lodging and food paid or incurred in connection with the
performance of such legal or other advisory services.
11.4 No Waiver
Agent's or any Lender's failure, at any time or times, to require strict
performance by any Credit Party of any provision of this Agreement or any
other Loan Document shall not waive, affect or diminish any right of
Agent or such Lender thereafter to demand strict compliance and
performance herewith or therewith. Any suspension or waiver of an Event
of Default shall not suspend, waive or affect any other Event of Default
whether the same is prior or subsequent thereto and whether the same or
of a different type. Subject to the provisions of Section 11.2, none of
the undertakings, agreements, warranties, covenants and representations
of any Credit Party contained in this Agreement or any of the other Loan
Documents and no Default or Event of Default by any Credit Party shall be
deemed to have been suspended or waived by Agent or any Lender, unless
such waiver or suspension is by an instrument in writing signed by an
officer of or other authorized employee of Agent and the applicable
required Lenders and directed to Borrowers specifying such suspension or
waiver.
11.5 Remedies
Agent's and Lenders' rights and remedies under this Agreement shall be
cumulative and nonexclusive of any other rights and remedies that Agent
or any Lender may have under any other agreement, including the other
Loan Documents, by operation of law or otherwise. Recourse to the
Collateral shall not be required.
11.6 Severability
Wherever possible, each provision of this Agreement and the other Loan
Documents shall be interpreted in such a manner as to be effective and
valid under applicable law, but if any provision of this Agreement or any
other Loan Document shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such
prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Agreement or such other
Loan Document.
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11.7 Conflict of Terms
Except as otherwise provided in this Agreement or any of the other Loan
Documents by specific reference to the applicable provisions of this
Agreement, if any provision contained in this Agreement conflicts with
any provision in any of the other Loan Documents, the provision contained
in this Agreement shall govern and control.
11.8 Confidentiality
Agent and each Lender agree to use commercially reasonable efforts
(equivalent to the efforts Agent or such Lender applies to maintain the
confidentiality of its own confidential information) to maintain as
confidential all confidential information provided to them by any Credit
Party and designated as confidential for a period of two (2) years
following receipt thereof, except that Agent and each Lender may disclose
such information (a) to Persons employed or engaged by Agent or such
Lender; (b) to any bona fide assignee or participant or potential
assignee or participant that has agreed to comply with the covenant
contained in this Section 11.8 (and any such bona fide assignee or
participant or potential assignee or participant may disclose such
information to Persons employed or engaged by them as described in clause
(a) above); (c) as required or requested by any Governmental Authority or
reasonably believed by Agent or such Lender to be compelled by any court
decree, subpoena or legal or administrative order or process; (d) as, in
the opinion of Agent's or such Lender's counsel, is required by law; (e)
in connection with the exercise of any right or remedy under the Loan
Documents or in connection with any Litigation to which Agent or such
Lender is a party; or (f) that ceases to be confidential through no fault
of Agent or any Lender.
11.9 GOVERNING LAW
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN
ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY, AGENT
AND LENDERS HEREBY CONSENT AND AGREE THAT THE STATE OR FEDERAL COURTS
LOCATED IN NEW YORK, NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR
AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY CREDIT PARTY, AGENT AND
LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF
THE OTHER LOAN DOCUMENTS, PROVIDED, THAT AGENT, LENDERS AND CREDIT
PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK, NEW YORK AND, PROVIDED,
FURTHER NOTHING IN THIS AGREEMENT SHALL
82
BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER
LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR
ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY, AGENT AND LENDERS
EXPRESSLY SUBMIT AND CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH CREDIT PARTY, AGENT
AND LENDERS HEREBY WAIVE ANY OBJECTION WHICH ANY CREDIT PARTY, AGENT OR
ANY LENDER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER
VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH
LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH
CREDIT PARTY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND
OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE
OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE BY REGISTERED
OR CERTIFIED MAIL ADDRESSED TO SUCH CREDIT PARTY AT THE ADDRESS SET FORTH
IN ANNEX I OF THIS AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED
COMPLETED UPON THE EARLIER OF EACH CREDIT PARTY'S ACTUAL RECEIPT THEREOF
OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE
PREPAID.
11.10 Notices
Except as otherwise provided herein, whenever it is provided herein that
any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties
by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to this
Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and shall be
deemed to have been validly served, given or delivered (a) upon actual
receipt in the case of notice sent by United States Mail, registered or
certified mail, return receipt requested, with proper postage prepaid,
(b) upon transmission, when sent by telecopy or other similar facsimile
transmission (with such telecopy or facsimile promptly confirmed by
delivery of a copy by personal delivery or United States Mail as
otherwise provided in this Section 11.10), (c) one (1) Business Day after
deposit with a reputable overnight courier with all charges prepaid or
(d) when delivered, if hand-delivered by messenger, all of which shall be
addressed to the party to be notified and sent to the address or
facsimile number indicated in Annex I or to such other address (or
facsimile number) as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Failure or delay in
delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to any Person (other than Borrower
Representative or Agent) designated in Annex I to receive copies shall in
no way adversely affect the effectiveness of such notice, demand,
request, consent, approval, declaration or other communication.
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11.11 Section Titles
The Section titles and Table of Contents contained in this Agreement are
and shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties
hereto.
11.12 Counterparts
This Agreement may be executed in any number of separate counterparts,
each of which shall collectively and separately constitute one agreement.
11.13 WAIVER OF JURY TRIAL
BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED
AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS
TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE,
TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM
AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND
ANY CREDIT PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH,
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
RELATED THERETO.
11.14 Press Releases and Related Matters
Each Credit Party agrees that neither it nor its Affiliates will in the
future issue any press releases or other public disclosure with respect
to the transactions contemplated by this Agreement using the name of GE
Capital, any of the Lenders parties hereto or any of their affiliates or
referring to this Agreement, the other Loan Documents or the Related
Transactions Documents without at least two (2) Business Days' prior
notice to such party and without the prior written consent of such party
unless (and only to the extent that) such Credit Party or Affiliate is
required to do so under law and then, in any event, such Credit Party or
Affiliate will consult with such party before issuing such press release
or other public disclosure. Each Credit Party consents to the publication
by Agent or any Lender of a tombstone or similar advertising material
relating to the financing transactions contemplated by this Agreement.
Agent reserves the right to provide to industry trade organizations
information necessary and customary for inclusion in league table
measurements.
84
11.15 Reinstatement
This Agreement shall remain in full force and effect and continue to be
effective should any petition be filed by or against any Credit Party for
liquidation or reorganization, should any Credit Party become insolvent
or make an assignment for the benefit of any creditor or creditors or
should a receiver or trustee be appointed for all or any significant part
of any Credit Party's assets, and shall continue to be effective or to be
reinstated, as the case may be, if at any time payment and performance of
the Obligations, or any part thereof, is, pursuant to applicable law,
rescinded or reduced in amount, or must otherwise be restored or returned
by any obligee of the Obligations, whether as a "voidable preference,"
"fraudulent conveyance," or otherwise, all as though such payment or
performance had not been made. In the event that any payment, or any part
thereof, is rescinded, reduced, restored or returned, the Obligations
shall be reinstated and deemed reduced only by such amount paid and not
so rescinded, reduced, restored or returned.
11.16 Advice of Counsel
Each of the parties represents to each other party hereto that it has
discussed this Agreement and, specifically, the provisions of Sections
11.9 and 11.13, with its counsel.
11.17 No Strict Construction
The parties hereto have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
12. CROSS-GUARANTY
12.1 Cross-Guaranty
Each Borrower hereby agrees that such Borrower is jointly and severally
liable for, and hereby absolutely and unconditionally guarantees to Agent
and Lenders and their respective successors and assigns, the full and
prompt payment (whether at stated maturity, by acceleration or otherwise)
and performance of, all Obligations owed or hereafter owing to Agent and
Lenders by each other Borrower. Each Borrower agrees that its guaranty
obligation hereunder is a continuing guaranty of payment and performance
and not of collection, that its obligations under this Section 12 shall
not be discharged until payment and performance, in full, of the
Obligations has occurred, and that its obligations under this Section 12
shall be absolute and unconditional, irrespective of, and unaffected by:
(a) the genuineness, validity, regularity, enforceability or any future
amendment of, or change in, this Agreement, any other Loan Document
or any other agreement, document or instrument to which any Borrower
is or may become a party;
85
(b) the absence of any action to enforce this Agreement (including this
Section 12) or any other Loan Document or the waiver or consent by
Agent and Lenders with respect to any of the provisions thereof;
(c) the existence, value or condition of, or failure to perfect its Lien
against, any security for the Obligations or any action, or the
absence of any action, by Agent and Lenders in respect thereof
(including the release of any such security);
(d) the insolvency of any Credit Party; or
(e) any other action or circumstances that might otherwise constitute a
legal or equitable discharge or defense of a surety or guarantor.
Each Borrower shall be regarded, and shall be in the same position, as
principal debtor with respect to the Obligations guaranteed hereunder.
12.2 Waivers by Borrowers
Each Borrower expressly waives all rights it may have now or in the
future under any statute, or at common law, or at law or in equity, or
otherwise, to compel Agent or Lenders to marshal assets or to proceed in
respect of the Obligations guaranteed hereunder against any other Credit
Party, any other party or against any security for the payment and
performance of the Obligations before proceeding against, or as a
condition to proceeding against, such Borrower. It is agreed among each
Borrower, Agent and Lenders that the foregoing waivers are of the essence
of the transaction contemplated by this Agreement and the other Loan
Documents and that, but for the provisions of this Section 12 and such
waivers, Agent and Lenders would decline to enter into this Agreement.
12.3 Benefit of Guaranty
Each Borrower agrees that the provisions of this Section 12 are for the
benefit of Agent and Lenders and their respective successors,
transferees, endorsees and assigns, and nothing herein contained shall
impair, as between any other Borrower and Agent or Lenders, the
obligations of such other Borrower under the Loan Documents.
12.4 Subordination of Subrogation, Etc.
Notwithstanding anything to the contrary in this Agreement or in any
other Loan Document, and except as set forth in Section 12.7, each
Borrower hereby expressly and irrevocably subordinates to payment of the
Obligations any and all rights at law or in equity to subrogation,
reimbursement, exoneration, contribution, indemnification or set off and
any and all defenses available to a surety, guarantor or accommodation
co-obligor until the Obligations are indefeasibly paid in full in cash.
Each Borrower acknowledges and agrees that this subordination and waiver
is intended to benefit Agent and Lenders and shall not limit or otherwise
affect such Borrower's liability hereunder or the enforceability of this
Section 12, and that Agent, Lenders and their respective successors and
assigns are intended third party beneficiaries of the waivers and
agreements set forth in this Section 12.4.
86
12.5 Election of Remedies
If Agent or any Lender may, under applicable law, proceed to realize its
benefits under any of the Loan Documents giving Agent or such Lender a
Lien upon any Collateral, whether owned by any Borrower or by any other
Person, either by judicial foreclosure or by non-judicial sale or
enforcement, Agent or any Lender may, at its sole option, determine which
of its remedies or rights it may pursue without affecting any of its
rights and remedies under this Section 12. If, in the exercise of any of
its rights and remedies, Agent or any Lender shall forfeit any of its
rights or remedies, including its right to enter a deficiency judgment
against any Borrower or any other Person, whether because of any
applicable laws pertaining to "election of remedies" or the like, each
Borrower hereby consents to such action by Agent or such Lender and
waives any claim based upon such action, even if such action by Agent or
such Lender shall result in a full or partial loss of any rights of
subrogation that each Borrower might otherwise have had but for such
action by Agent or such Lender. Any election of remedies that results in
the denial or impairment of the right of Agent or any Lender to seek a
deficiency judgment against any Borrower shall not impair any other
Borrower's obligation to pay the full amount of the Obligations. In the
event Agent or any Lender shall bid at any foreclosure or trustee's sale
or at any private sale permitted by law or the Loan Documents, Agent or
such Lender may bid all or less than the amount of the Obligations and
the amount of such bid need not be paid by Agent or such Lender but shall
be credited against the Obligations. The amount of the successful bid at
any such sale, whether Agent, Lender or any other party is the successful
bidder, shall be conclusively deemed to be the fair market value of the
Collateral and the difference between such bid amount and the remaining
balance of the Obligations shall be conclusively deemed to be the amount
of the Obligations guaranteed under this Section 12, notwithstanding that
any present or future law or court decision or ruling may have the effect
of reducing the amount of any deficiency claim to which Agent or any
Lender might otherwise be entitled but for such bidding at any such sale.
12.6 Limitation
Notwithstanding any provision herein contained to the contrary, each
Borrower's liability under this Section 12 (which liability is in any
event in addition to amounts for which such Borrower is primarily liable
under Section 1) shall be limited to an amount not to exceed as of any
date of determination the greater of:
(a) the net amount of all Loans advanced to any other Borrower under
this Agreement and then re-loaned or otherwise transferred to, or
for the benefit of, such Borrower; and
(b) the amount that could be claimed by Agent and Lenders from such
Borrower under this Section 12 without rendering such claim voidable
or avoidable under Section 548 of Chapter 11 of the Bankruptcy Code
or under any applicable state Uniform Fraudulent Transfer Act,
Uniform Fraudulent Conveyance Act or similar statute or common law
after taking into account, among other things, such Borrower's right
of contribution and indemnification from each other Borrower under
Section 12.7.
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12.7 Contribution with Respect to Guaranty Obligations
(a) To the extent that any Borrower shall make a payment under this
Section 12 of all or any of the Obligations (other than Loans made
to that Borrower for which it is primarily liable) (a "GUARANTOR
PAYMENT") that, taking into account all other Guarantor Payments
then previously or concurrently made by any other Borrower, exceeds
the amount that such Borrower would otherwise have paid if each
Borrower had paid the aggregate Obligations satisfied by such
Guarantor Payment in the same proportion that such Borrower's
"ALLOCABLE AMOUNT" (as defined below) (as determined immediately
prior to such Guarantor Payment) bore to the aggregate Allocable
Amounts of each of the Borrowers as determined immediately prior to
the making of such Guarantor Payment, then, following indefeasible
payment in full in cash of the Obligations and termination of the
Commitments, such Borrower shall be entitled to receive contribution
and indemnification payments from, and be reimbursed by, each other
Borrower for the amount of such excess, PRO RATA based upon their
respective Allocable Amounts in effect immediately prior to such
Guarantor Payment.
(b) As of any date of determination, the "ALLOCABLE AMOUNT" of any
Borrower shall be equal to the maximum amount of the claim that
could then be recovered from such Borrower under this Section 12
without rendering such claim voidable or avoidable under Section 548
of Chapter 11 of the Bankruptcy Code or under any applicable state
Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act
or similar statute or common law.
(c) This Section 12.7 is intended only to define the relative rights of
Borrowers and nothing set forth in this Section 12.7 is intended to
or shall impair the obligations of Borrowers, jointly and severally,
to pay any amounts as and when the same shall become due and payable
in accordance with the terms of this Agreement, including Section
12.1. Nothing contained in this Section 12.7 shall limit the
liability of any Borrower to pay the Loans made directly or
indirectly to that Borrower and accrued interest, Fees and expenses
with respect thereto for which such Borrower shall be primarily
liable.
(d) The parties hereto acknowledge that the rights of contribution and
indemnification hereunder shall constitute assets of the Borrower to
which such contribution and indemnification is owing.
(e) The rights of the indemnifying Borrowers against other Credit
Parties under this Section 12.7 shall be exercisable upon the full
and indefeasible payment in full in cash of the Obligations and the
termination of the Commitments and Letters of Credit (or the cash
collateralization or backing with standby letters of credit of all
Letters of Credit in accordance with Annex B).
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12.8 Liability Cumulative
The liability of Borrowers under this Section 12 is in addition to and
shall be cumulative with all liabilities of each Borrower to Agent and
Lenders under this Agreement and the other Loan Documents to which such
Borrower is a party or in respect of any Obligations or obligation of the
other Borrower, without any limitation as to amount, unless the
instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.
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IN WITNESS WHEREOF, this
Credit Agreement has been duly executed as of
the date first written above.
H&E EQUIPMENT SERVICES L.L.C.,
as Borrower
By: /s/ Xxxxxxx Xxxxx
----------------------------------
Name:
Title:
GREAT NORTHERN EQUIPMENT, INC.,
as Borrower
By: /s/ Xxxxxxx Xxxxx
----------------------------------
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION,
as Agent and Lender
By: /s/ Laurent Paris
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
BANK OF AMERICA, N.A.,
as Syndication Agent and Lender
By: /s/ Xxxxxxx Xxxx
----------------------------------
Name:
Title:
FLEET CAPITAL CORPORATION,
as Documentation Agent and Lender
By: /s/ Xxxxx Xxxxxxx
----------------------------------
Name:
Title:
90
PNC BANK, NATIONAL ASSOCIATION,
as Lender
By: /s/ Xxxx Xxxxxxxx
----------------------------------
Name:
Title:
LASALLE BUSINESS CREDIT, INC.,
as Lender
By: /s/ Xxxxx Xxxxxx
----------------------------------
Name:
Title:
ORIX FINANCIAL SERVICES, INC.,
as Lender
By: /s/ Xxxxxx Xxxxxx
----------------------------------
Name:
Title:
The following Persons are signatories to this
Credit Agreement in their
capacity as Credit Parties and not as Borrowers:
H&E HOLDINGS L.L.C.,
as a Credit Party
By: /s/ Xxxxx Xxxxxxx
----------------------------------
Name:
Title:
GNE INVESTMENTS, INC.,
as a Credit Party
By: /s/ Xxxxx Xxxxxxx
----------------------------------
Name:
Title:
91
H&E FINANCE CORP.,
as a Credit Party
By: /s/ Xxxxx Xxxxxxx
----------------------------------
Name:
Title:
92
ANNEX A (RECITALS)
TO
CREDIT AGREEMENT
DEFINITIONS
Capitalized terms used in the Loan Documents shall have (unless otherwise
provided elsewhere in the Loan Documents) the following respective meanings, and
all references to Sections, Exhibits, Schedules or Annexes in the following
definitions shall refer to Sections, Exhibits, Schedules or Annexes of or to the
Agreement:
"A RATED BANK" has the meaning assigned to it in Section 6.2.
"ACCOUNT DEBTOR" means any Person who may become obligated to a Credit
Party under, with respect to, or on account of, an Account, Chattel Paper
or General Intangibles (including a payment intangible).
"ACCOUNTING CHANGES" has the meaning assigned to it in Annex G.
"ACCOUNTS" means all "ACCOUNTS," as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party including (a) all accounts
receivable, other receivables, book debts and other forms of obligations
(other than forms of obligations evidenced by Chattel Paper, or
Instruments), (including any such obligations that may be characterized as
an account or contract right under the Code), (b) all of each Credit
Party's rights in, to and under all purchase orders or receipts for goods
or services, (c) all of each Credit Party's rights to any goods represented
by any of the foregoing (including unpaid sellers' rights of rescission,
replevin, reclamation and stoppage in transit and rights to returned,
reclaimed or repossessed goods), (d) all rights to payment due to any
Credit Party for property sold, leased, licensed, assigned or otherwise
disposed of, for a policy of insurance issued or to be issued, for a
secondary obligation incurred or to be incurred, for energy provided or to
be provided, for the use or hire of a vessel under a charter or other
contract, arising out of the use of a credit card or charge card, or for
services rendered or to be rendered by such Credit Party or in connection
with any other transaction (whether or not yet earned by performance on the
part of such Credit Party), (e) all health care insurance receivables and
(f) all collateral security of any kind, given by any Account Debtor or any
other Person with respect to any of the foregoing.
"ADJUSTED INTEREST COVERAGE RATIO" means, with respect to H&E Holdings and
its Subsidiaries on a consolidated basis for any period, the ratio of (a)
EBITDAR to (b) (i) Interest Expense PLUS (ii) Operating Lease Payments PLUS
(iii) Capital Lease Payments PLUS, to the extent not already included under
sub clause (i), (ii) or (iii) of this clause (b), Restricted Payments. For
the purposes of this definition, Interest Expense for the Fiscal Quarters
ending on September 30, 2001, December 31, 2001, and March 31, 2002 shall
be deemed to be $8,600,000 for each such Fiscal Quarter.
A-1
"ADJUSTED LEVERAGE RATIO" means, with respect to H&E Holdings and its
Subsidiaries, on a consolidated basis, the ratio of (i) Funded Debt as of
any date of determination PLUS Operating Lease Payoff Value, to (ii)
EBITDAR for the period of four consecutive Fiscal Quarters ending on that
date of determination.
"ADVANCE" means any Revolving Credit Advance or Swing Line Advance, as the
context may require.
"AFFILIATE" means, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, ten percent (10%) or more of the
Stock having ordinary voting power in the election of directors of such
Person, (b) each Person that controls, is controlled by or is under common
control with such Person, (c) each of such Person's officers, directors,
joint venturers and partners and (d) in the case of any Credit Party, the
immediate family members, spouses and lineal descendants of individuals who
are Affiliates of such Credit Party. For the purposes of this definition,
"control" of a Person means the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies,
whether through the ownership of voting securities, by contract or
otherwise; PROVIDED, that the term "Affiliate" shall specifically include
Xxx Xxxxxxx and Xxxx Xxxxxxxx and exclude Agent and each Lender.
"AGENT" means GE Capital in its capacity as Administrative Agent for
Lenders or its successor appointed pursuant to Section 9.7.
"AGGREGATE BORROWING BASE" means, as of any date of determination, an
amount equal to the sum of the Great Northern Borrowing Base and the H&E
Borrowing Base.
"AGREEMENT" means the Credit Agreement by and among the Credit Parties
party thereto, GE Capital, as Arranger, GE Capital, as Administrative Agent
and Lender and the other Lenders from time to time party thereto, as the
same may be amended, supplemented, amended and restated or otherwise
modified from time to time.
"APPENDICES" has the meaning assigned to it in the recitals to the
Agreement.
"APPLICABLE L/C MARGIN" means the per annum fee, from time to time in
effect, payable with respect to outstanding Letter of Credit Obligations as
determined by reference to Section 1.5(a).
"APPLICABLE MARGINS" means collectively the Applicable L/C Margin, the
Applicable Unused Line Fee Margin, the Applicable Revolver Index Margin and
the Applicable Revolver LIBOR Margin all as set forth in Section 1.5(a).
"APPLICABLE REVOLVER INDEX MARGIN" means the per annum interest rate margin
from time to time in effect and payable in addition to the Index Rate
applicable to the Revolving Credit Advances, the Swingline Advances,
unreimbursed Letter of Credit Obligations and other Obligations (excluding
LIBOR Loans) as determined by reference to Section 1.5(a).
A-2
"APPLICABLE REVOLVER LIBOR MARGIN" means the per annum interest rate from
time to time in effect and payable in addition to the LIBOR Rate applicable
to LIBOR Loans, as determined by reference to Section 1.5(a).
"APPLICABLE UNUSED LINE FEE MARGIN" means the per annum fee, from time to
time in effect, payable in respect of Borrowers' non-use of committed funds
pursuant to Section 1.9(b), which fee is determined by reference to Section
1.5(a).
"ARRANGER" has the meaning assigned to it in the recitals to the Agreement.
"ASSIGNMENT AGREEMENT" has the meaning assigned to it in Section 9.1(a).
"AUTHORIZED OFFICER" means any of the following officers of each Credit
Party: the chief executive officer, the chief operating officer, the chief
financial officer, executive vice president, the secretary and the
treasurer.
"BANKRUPTCY CODE" means the provisions of Title 11 of the United States
Code, 11 U.S.C. Sections 101 ET SEQ.
"AUTHORIZED REPRESENTATIVE" has the meaning assigned to it in Section 7.3.
"BLOCKED ACCOUNT AGREEMENT" has the meaning assigned to it in Annex C.
"BLOCKED ACCOUNTS" has the meaning assigned to it in Annex C.
"BORROWER" has the meaning assigned to it in the preamble to the Agreement.
"BORROWER REPRESENTATIVE" means H&E in its capacity as Borrower
Representative pursuant to the provisions of Section 1.1(c).
"BORROWING AVAILABILITY" means as of any date of determination (a) as to
all Borrowers, the lesser of (i) the Maximum Amount and (ii) the Aggregate
Borrowing Base, in each case, LESS the sum of the aggregate Revolving Loan
and Swing Line Loan then outstanding, or (b) as to an individual Borrower,
the lesser of (i) the Maximum Amount LESS the sum of the Revolving Loan and
Swing Line Loan outstanding to all other Borrowers and (ii) that Borrower's
separate Borrowing Base, LESS the sum of the Revolving Loan and Swing Line
Loan outstanding to that Borrower, PROVIDED, that in the case of
determining Borrowing Availability under this clause (b), with respect to
any requested H&E/Great Northern Advance, "such Borrower's separate
Borrowing Base" shall mean the Great Northern Borrowing Base.
"BORROWING BASE" means, as the context may require, the H&E Borrowing Base,
the Great Northern Borrowing Base or the Aggregate Borrowing Base.
"BORROWING BASE CERTIFICATE" means a certificate to be executed and
delivered from time to time by Borrower Representative on behalf of each
Borrower in the form attached to the Agreement as Exhibit 4.1(b).
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"BRS" means collectively Bruckmann, Xxxxxx, Xxxxxxxx & Co., L.P., a
Delaware limited partnership, BRS Partners, LP and BRSE LLP.
"BRS MANAGEMENT AGREEMENT" has the meaning assigned to it in Section 3.14.
"BRS MANAGEMENT CO." has the meaning assigned to it in Section 3.14.
"BRS RELATED PARTY" means (1) any stockholder having more than 5% of any
class of stock of any entity that comprises BRS, any individual controlling
any such stockholder, any immediate family member of any such stockholder
(if an individual) or of any such individual and any majority owned
Subsidiary, of BRS; or (2) any trust, corporation, partnership or other
entity, the beneficiaries, stockholders, partners, owners or Persons
beneficially holding a majority interest of any of the entities that
comprise BRS and/or such other Persons referred to in the immediately
preceding clause (1).
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or a day on
which banks are required or permitted to be closed in the State of [Utah]
or the State of New York and in reference to LIBOR Loans means any such day
that is also a LIBOR Business Day.
"CAPITAL LEASE" means, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that,
in accordance with GAAP, would be required to be classified and accounted
for as a capital lease on a balance sheet of such Person.
"CAPITAL LEASE OBLIGATION" means as of any date of determination, with
respect to any Capital Lease of any Person, the amount of the obligation of
the lessee thereunder that, in accordance with GAAP, would appear on a
balance sheet of such lessee in respect of such Capital Lease as of the
date of determination.
"CAPITAL LEASE PAYMENTS" means during any period for any Person, all
payments (other than any portion of any payment included in Interest
Expense for such period) required to be made by such Person during such
period in respect of Capital Lease Obligations.
"CASH COLLATERAL ACCOUNT" has the meaning assigned to it Annex B.
"CASH EQUIVALENTS" has the meaning assigned to it in Annex B.
"CASH MANAGEMENT SYSTEMS" has the meaning assigned to it in Section 1.8.
"CERTIFICATE OF EXEMPTION" has the meaning assigned to it in Section
1.15(c).
"CHANGE OF CONTROL" any event, transaction or occurrence as a result of
which (a) prior to any initial public offering of the Stock of H&E
Holdings, BRS together with any BRS Related Party shall cease to own and
control directly or indirectly all of the voting rights associated with
ownership of at least fifty-one percent (51%) of the outstanding membership
interests (or other outstanding Stock) of H&E Holdings, (b) following any
such initial public offering of the Stock of H&E Holdings, BRS together
with any BRS Related Party together with Xxxx Xxxxxxxx (and
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the immediate family members, spouse and lineal descendants of Xxxx
Xxxxxxxx) shall cease to own and control directly or indirectly all of the
economic and voting rights associated with ownership of at least forty
percent (40%) of the outstanding membership interests (or other outstanding
Stock) of H&E Holdings, (c) H&E Holdings shall cease to own and control all
of the economic and voting rights associated with ownership of at least one
hundred percent (100%) of the outstanding membership interests (or other
outstanding Stock) of H&E, (d) H&E shall cease to own and control all of
the economic and voting rights associated with ownership of at least one
hundred percent (100%) of the outstanding capital Stock of H&E Finance and
GNE Investments, each on a fully diluted basis, (e) GNE Investments shall
cease to own and control all of the economic and voting rights associated
with ownership of at least one hundred percent (100%) of the outstanding
capital Stock of Great Northern on a fully diluted basis, in each case
except pursuant to a merger as provided in Section 6.1(b) or (f) there
shall occur any "Change of Control" as such term is defined in the Senior
Note Indenture or the Senior Subordinated Note Indenture.
"CHARGES" means all federal, state, county, city, municipal, local, foreign
or other governmental taxes (including taxes owed to the PBGC at the time
due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations,
(c) the employees, payroll, income or gross receipts of any Credit Party,
(d) any Credit Party's ownership or use of any properties or other assets,
or (e) any other aspect of any Credit Party's business.
"CHATTEL PAPER" means any "chattel paper," as such term is defined in the
Code, including electronic chattel paper, now owned or hereafter acquired
by any Credit Party.
"CLOSING CHECKLIST" means the schedule, including all appendices, exhibits
or schedules thereto, listing certain documents and information to be
delivered in connection with the Agreement, the other Loan Documents and
the transactions contemplated thereunder, substantially in the form
attached hereto as Annex D.
"CLOSING DATE" means June 17, 2002.
"CODE" means the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of New York; PROVIDED, that to
the extent that the Code is used to define any term herein or in any Loan
Document and such term is defined differently in different Articles of the
Code, the definition of such term contained in Article 9 of the Code shall
govern; PROVIDED, FURTHER, that in the event that, by reason of mandatory
provisions of law, any or all of the attachment, perfection or priority of,
or remedies with respect to, Agent's or any Lender's Lien on any Collateral
is governed by the Uniform Commercial Code as enacted and in effect in a
jurisdiction other than the State of New York, the term "CODE" shall mean
the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority or remedies and for purposes of
definitions related to such provisions.
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"COLLATERAL" means the property covered by the Security Agreements and the
other Collateral Documents and any other property, real or personal,
tangible or intangible, now existing or hereafter acquired, that may at any
time be or become subject to a security interest or Lien in favor of Agent,
on behalf of itself and Lenders, to secure the Obligations.
"COLLATERAL AGENT" means the Trustee for the Senior Notes, in its capacity
as "Collateral Agent."
"COLLATERAL DOCUMENTS" means the Security Agreements, the Pledge
Agreements, the Guaranties, the Patent Security Agreements, the Trademark
Security Agreements, the Copyright Security Agreements and all similar
agreements entered into guaranteeing payment of, or granting a Lien upon
property as security for payment of, the Obligations.
"COLLATERAL REPORTS" means the reports with respect to the Collateral
referred to in Annex F.
"COLLECTION ACCOUNT" means that certain account of Agent, account number
000-000-00 in the name of Agent at Bankers Trust Company in New York, New
York ABA No. 021 001 033, or such other account as may be specified in
writing by Agent as the "Collection Account".
"COMMITMENT TERMINATION DATE" means the earliest of (a) June 17, 2007, (b)
the date of termination of Lenders' obligations to make Advances and to
incur Letter of Credit Obligations or permit existing Loans to remain
outstanding pursuant to Section 8.2(b), and (c) the date of indefeasible
prepayment in full in cash by Borrowers of the Loans and the cancellation
and return (or stand-by guarantee) of all Letters of Credit or the cash
collateralization of all Letter of Credit Obligations pursuant to Annex B,
and the permanent reduction of all Commitments to zero dollars ($0) or the
termination of all Commitments (or the cash collateralization or backing
with standby letters of credit of all Letters of Credit in accordance with
Annex B), in accordance with the provisions of Section 1.3(a).
"COMMITMENTS" means (a) as to any Lender, such Lender's Revolving Loan
Commitment (including without duplication the Swing Line Lender's Swing
Line Commitment as a subset of its Revolving Loan Commitment) as set forth
on the signature page to the Agreement or in the most recent Assignment
Agreement executed by such Lender and (b) as to all Lenders, the aggregate
of all Lenders' Revolving Loan Commitments (including without duplication
the Swing Line Lender's Swing Line Commitment as a subset of its Revolving
Loan Commitment), which aggregate commitment shall be One Hundred Fifty
Million Dollars ($150,000,000) on the Closing Date, as such amount may be
reduced, amortized or adjusted from time to time in accordance with the
Agreement.
"COMPLIANCE CERTIFICATE" has the meaning assigned to it in Annex E.
"CONCENTRATION ACCOUNT" has the meaning assigned to it in Annex C.
"CONTRACTS" means all "contracts," as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, in any event, including
all contracts, undertakings, or agreements (other than rights evidenced by
Chattel Paper, Documents or Instruments) in or under which any
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Credit Party may now or hereafter have any right, title or interest,
including any agreement relating to the terms of payment or the terms of
performance of any Account.
"CONTRIBUTION AGREEMENT AND PLAN OF REORGANIZATION" has the meaning
assigned to it in the recitals to the Agreement.
"CONTROL LETTER" means a letter agreement between Agent and (i) the issuer
of uncertificated securities with respect to uncertificated securities in
the name of any Credit Party, (ii) a securities intermediary with respect
to securities, whether certificated or uncertificated, securities
entitlements and other financial assets held in a securities account in the
name of any Credit Party, (iii) a futures commission merchant or clearing
house, as applicable, with respect to commodity accounts and commodity
contracts held by any Credit Party, whereby, among other things, the
issuer, securities intermediary or futures commission merchant disclaims
any security interest in the applicable financial assets, acknowledges the
Lien of Agent, on behalf of itself and Lenders, on such financial assets,
and agrees to follow the instructions or entitlement orders of Agent
without further consent by the affected Credit Party.
"COPYRIGHT LICENSE" means any and all rights now owned or hereafter
acquired by any Credit Party under any written agreement granting any right
to use any Copyright or Copyright registration.
"COPYRIGHT SECURITY AGREEMENTS" means the Copyright Security Agreements
made in favor of Agent, on behalf of itself and Lenders, by each applicable
Credit Party.
"COPYRIGHTS" means all of the following now owned or hereafter acquired by
any Credit Party: (a) all copyrights and General Intangibles of like nature
(whether registered or unregistered), all registrations and recordings
thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright
Office or in any similar office or agency of the United States, any state
or territory thereof, or any other country or any political subdivision
thereof, and (b) all reissues, extensions or renewals thereof.
"CREDIT PARTIES" means each Borrower and each Guarantor.
"DEFAULT" means any event that, with the passage of time or notice or both,
would, unless cured or waived, become an Event of Default.
"DEFAULT NOTICE" has the meaning assigned to it in Section 7.3.
"DEFAULT RATE" has the meaning assigned to it in Section 1.5(d).
"DEPOSIT ACCOUNTS" means all "deposit accounts" as such term is defined in
the Code, now or hereafter held in the name of any Credit Party.
"DISBURSEMENT ACCOUNTS" has the meaning assigned to it on Annex C.
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"DISCLOSURE SCHEDULES" means the Schedules prepared by Borrowers and
denominated as Disclosure Schedules 1.4 through 6.7 in the Index to the
Agreement.
"DOCUMENTS" means all "documents," as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, wherever located.
"DOLLARS" or "$" means lawful currency of the United States of America.
"EBITDA" means, with respect to any Person for any fiscal period, without
duplication an amount equal to (a) consolidated net income of such Person
for such period determined in accordance with GAAP, MINUS (b) the sum of
(i) income tax credits, (ii) interest income, (iii) gain from extraordinary
items for such period, and (iv) any aggregate net gain (but not any
aggregate net loss) during such period arising from the sale, exchange or
other disposition of capital assets by such Person (including any fixed
assets, whether tangible or intangible, all inventory sold in conjunction
with the disposition of fixed assets and all securities), and (v) any other
non-cash gains that have been added in determining consolidated net income,
in each case to the extent included in the calculation of consolidated net
income of such Person for such period in accordance with GAAP, but without
duplication, PLUS (c) the sum of (i) any provision for income taxes, (ii)
Interest Expense, (iii) loss from extraordinary items for such period, (iv)
the amount of non-cash charges (including depreciation and amortization)
for such period, (v) amortized debt discount for such period, (vi) the
amount of any deduction to consolidated net income as the result of any
grant to any members of the management of such Person of any Stock, in each
case to the extent included in the calculation of consolidated net income
of such Person for such period in accordance with GAAP, but without
duplication and (vii) amounts not exceeding [$2,000,000] paid on or about
the Closing Date in respect of transaction expenses relating to the Related
Transactions. For purposes of this definition, the following items shall be
excluded in determining consolidated net income of a Person: (1) the income
(or deficit) of any other Person accrued prior to the date it became a
Subsidiary of, or was merged or consolidated into, such Person or any of
such Person's Subsidiaries; (2) the income (or deficit) of any other Person
(other than a Subsidiary) in which such Person has an ownership interest,
except to the extent any such income has actually been received by such
Person in the form of cash dividends or distributions; (3) the
undistributed earnings of any Subsidiary of such Person to the extent that
the declaration or payment of dividends or similar distributions by such
Subsidiary is not at the time permitted by the terms of any contractual
obligation or requirement of law applicable to such Subsidiary; (4) any
restoration to income of any contingency reserve, except to the extent that
provision for such reserve was made out of income accrued during such
period; (5) any write-up of any asset; (6) any net gain from the collection
of the proceeds of life insurance policies; (7) any net gain arising from
the acquisition of any securities, or the extinguishment, under GAAP, of
any Indebtedness, of such Person, (8) in the case of a successor to such
Person by consolidation or merger or as a transferee of its assets, any
earnings of such successor prior to such consolidation, merger or transfer
of assets, and (9) any deferred credit representing the excess of equity in
any Subsidiary of such Person at the date of acquisition of such Subsidiary
over the cost to such Person of the investment in such Subsidiary. For the
purposes of this definition, Interest Expense
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for the Fiscal Quarters ending on September 30, 2001, December 31, 2001,
and March 31, 2002 shall be deemed to be $8,600,000 for each such Fiscal
Quarter.
"EBITDAR" means, with respect to any Person for any fiscal period, EBITDA
of such Person for such Period PLUS Operating Lease Payments of such Person
for such Period.
"ELIGIBLE ACCOUNTS" has the meaning assigned to it in Section 1.6.
"ELIGIBLE EQUIPMENT INVENTORY" has the meaning assigned to it in Section
1.7A and excludes Eligible Parts and Tools Inventory and Eligible Rolling
Stock.
"ELIGIBLE PARTS AND TOOLS INVENTORY" has the meaning assigned to it in
Section 1.7 and excludes Eligible Equipment Inventory and Eligible Rolling
Stock.
"ELIGIBLE RENTALS" has the meaning assigned to it in Section 1.6B.
"ELIGIBLE ROLLING STOCK" has the meaning assigned to it in Section 1.6A and
excludes Eligible Parts and Tools Inventory and Eligible Equipment
Inventory.
"ENVIRONMENTAL LAWS" means all applicable federal, state, local and foreign
laws, statutes, ordinances, codes, rules, standards and regulations, now or
hereafter in effect, and any applicable judicial or administrative
interpretation thereof, including any applicable judicial or administrative
order, consent decree, order or judgment, imposing liability or standards
of conduct for or relating to the regulation and protection of human health
or safety, the environment and natural resources (including ambient air,
surface water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation). Environmental Laws include the
Comprehensive Environmental Response, Compensation, and Liability Act of
1980 (42 U.S.C. Sections 9601 et seq.) ("CERCLA"); the Hazardous Materials
Transportation Authorization Act of 1994 (49 U.S.C. Sections 5101 et seq.);
the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Sections
136 et seq.); the Solid Waste Disposal Act (42 U.S.C. Sections 6901 et
seq.); the Toxic Substance Control Act (15 U.S.C. Sections 2601 et seq.);
the Clean Air Act (42 U.S.C. Sections 7401 et seq.); the Federal Water
Pollution Control Act (33 U.S.C. Sections 1251 et seq.); the Occupational
Safety and Health Act (29 U.S.C. Sections 651 et seq.); and the Safe
Drinking Water Act (42 U.S.C. Sections 300(f) et seq.), and any and all
regulations promulgated thereunder, and all analogous state, local and
foreign counterparts or equivalents and any transfer of ownership
notification or approval statutes.
"ENVIRONMENTAL LIABILITIES" means, with respect to any Person, all
liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation
and maintenance costs, losses, damages, punitive damages, property damages,
natural resource damages, consequential damages, treble damages, costs and
expenses (including all reasonable fees, disbursements and expenses of
counsel, experts and consultants), fines, penalties, sanctions and interest
incurred as a result of or related to any claim, suit, action,
investigation, proceeding or demand by any Person, whether based in
contract, tort, implied or express warranty, strict liability, criminal or
civil statute or common law, including any arising
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under or related to any Environmental Laws, Environmental Permits, or in
connection with any Release or threatened Release or presence of a
Hazardous Material whether on, at, in, under, from or about or in the
vicinity of any real or personal property.
"ENVIRONMENTAL PERMITS" means all permits, licenses, authorizations,
certificates, approvals, registrations or other written documents required
by any Governmental Authority under any Environmental Laws.
"EQUIPMENT INVENTORY" means Inventory of any Borrower consisting of
equipment held for sale or lease to third parties and Inventory of such
Borrower while on lease to third parties.
"EQUIPMENT INVENTORY APPRAISAL" means each periodic appraisal of Borrowers'
Equipment Inventory and Parts and Tools Inventory conducted at the
Borrowers' cost and expense by appraisers reasonably satisfactory to Agent
and using a methodology reasonably satisfactory to Agent, PROVIDED, that
unless an Event of Default is continuing, the Borrowers' shall be
responsible for the cost and expense of not more than four (4) such
appraisals during the first twelve months following the Closing Date and
not more than three (3) such appraisals per year thereafter, it being
agreed that so long as such limit is in effect, each item of Equipment
Inventory shall be appraised pursuant to a visit to sites of any one or
more Credit Parties on one occasion during each year and the balance of
such appraisals of such item in such year shall be done as a "desk
appraisal." An appraisal of Equipment Inventory and of Parts and Tools
Inventory shall, for the purposes of the preceding sentence, constitute one
appraisal.
"EQUIPMENT INVENTORY RENTAL REVENUES" means, with respect to any Person for
any fiscal period, an amount equal to the gross revenues of such Person
derived from the lease of Equipment Inventory owned by such Person to third
parties (excluding revenues in respect of taxes, freight insurance and like
items).
"EQUIPMENT INVENTORY RENTAL EXPENDITURES" means, with respect to any Person
at any time, the aggregate acquisition cost (including all costs of initial
acquisition, improvements and additions) of all Equipment Inventory owned
by such Person at such time.
"ERISA" means the Employee Retirement Income Security Act of 1974, and any
regulations promulgated thereunder.
"ERISA AFFILIATE" means, with respect to any Credit Party, any trade or
business (whether or not incorporated) that, together with such Credit
Party, is treated as a single employer within the meaning of Sections
414(b), (c), (m) or (o) of the IRC.
"ERISA EVENT" means, with respect to any Credit Party or any ERISA
Affiliate, (a) any event described in Section 4043(c) of ERISA with respect
to a Title IV Plan (other than an event with respect to which the reporting
requirement has been waived); (b) the withdrawal of such Credit Party or
ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA
during a plan year in which it was a substantial employer, as defined in
Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal of such
Credit Party or any ERISA Affiliate from any
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Multiemployer Plan; (d) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA; (e) the institution of proceedings to terminate a
Title IV Plan or Multiemployer Plan by the PBGC; (f) the failure by such
Credit Party or ERISA Affiliate to make when due required contributions to
a Multiemployer Plan or Title IV Plan unless such failure is cured within
30 days; (g) any other event or condition that might reasonably be expected
to constitute grounds under Section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any Title IV Plan or
Multiemployer Plan or for the imposition of liability under Section 4069 or
4212(c) of ERISA; or (h) the termination of a Multiemployer Plan under
Section 4041A of ERISA or the reorganization or insolvency of a
Multiemployer Plan under Section 4241 or 4245 of ERISA or (i) the loss of a
Qualified Plan's qualification or tax exempt status; or (j) the termination
of a Title IV Plan described in Section 4064 of ERISA.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EVENT OF DEFAULT" has the meaning assigned to it in Section 8.1.
"FAIR LABOR STANDARDS ACT" means the Fair Labor Standards Act, 29 U.S.C.
Section 201 ET SEQ.
"FAIR SALABLE BALANCE SHEET" means a balance sheet of Borrowers prepared in
accordance with Section 3.4(d).
"FEDERAL FUNDS RATE" means, for any day, a floating rate equal to the
weighted average of the rates on overnight Federal funds transactions among
members of the Federal Reserve System, as determined by Agent in its sole
discretion, which determination shall be final, binding and conclusive
(absent manifest error).
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal Reserve
System.
"FEES" means any and all fees payable to Agent or any Lender pursuant to
the Agreement or any of the other Loan Documents.
"FINANCIAL COVENANTS" means the financial covenants set forth in ANNEX G.
"FINANCIAL STATEMENTS" means the consolidated and consolidating income
statements, statements of cash flows and balance sheets of Borrowers
delivered in accordance with Section 3.4 and Annex E.
"FIRREA" means the Financial Institutions Reform, Recovery and Enforcement
Act of 1989.
"FISCAL MONTH" means any of the monthly accounting periods of Borrowers.
"FISCAL QUARTER" means any of the quarterly accounting periods of
Borrowers, ending on March 31, June 30, September 30, and December 31 of
each year.
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"FISCAL YEAR" means any of the annual accounting periods of Borrowers
ending on December 31 of each year.
"FIXTURES" means all "fixtures" as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party.
"FLOOR PLAN EQUIPMENT INVENTORY" means Equipment Inventory purchased by any
Credit Party for sale or lease in the ordinary course of business and
subject to a purchase money Lien in favor of the seller thereof or a third
party financing source.
"FOREIGN LENDER" has the meaning assigned to it in Section 1.15(c).
"FUNDED DEBT" means, with respect to any Person, without duplication, all
Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness that by its terms matures more than one
year from, or is directly or indirectly renewable or extendible at such
Person's option under a revolving credit or similar agreement obligating
the lender or lenders to extend credit over a period of more than one year
from the date of creation thereof, and specifically including Capital Lease
Obligations, current maturities of long-term debt, revolving credit and
short-term debt extendible beyond one year at the option of the debtor, and
including without limitation, in the case of Borrowers, the Obligations
(calculated with reference to the average outstanding balance of the
Obligations during the six month period ending immediately prior to the
relevant date of determination (or such shorter period that begins on the
Closing Date and ends immediately prior to such relevant date of
determination)), the Senior Debt and the Subordinated Debt.
"GAAP" means generally accepted accounting principles in the United States
of America consistently applied as such term is further defined in Annex G
to the Agreement.
"GE CAPITAL" means General Electric Capital Corporation, a Delaware
corporation.
"GE CAPITAL FEE LETTER" has the meaning assigned to it in Section 1.9(a).
"GENERAL INTANGIBLES" means all "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
including all right, title and interest that such Credit Party may now or
hereafter have in or under any Contract, all payment intangibles, customer
lists, Licenses, Copyrights, Trademarks, Patents, and all applications
therefor and reissues, extensions or renewals thereof, rights in
Intellectual Property, interests in partnerships, joint ventures and other
business associations, licenses, permits, copyrights, trade secrets,
proprietary or confidential information, inventions (whether or not
patented or patentable), technical information, procedures, designs,
knowledge, know-how, software, data bases, data, skill, expertise,
experience, processes, models, drawings, materials and records, goodwill
(including the goodwill associated with any Trademark or Trademark
License), all rights and claims in or under insurance policies (including
insurance for fire, damage, loss and casualty, whether covering personal
property, real property, tangible rights or intangible rights, all
liability, life, key man and business interruption insurance, and all
unearned premiums), uncertificated
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securities, choses in action, deposit, checking and other bank accounts,
rights to receive tax refunds and other payments, rights to receive
dividends, distributions, cash, Instruments and other property in respect
of or in exchange for pledged Stock and Investment Property, rights of
indemnification, all books and records, correspondence, credit files,
invoices and other papers, including without limitation all tapes, cards,
computer runs and other papers and documents in the possession or under the
control of such Credit Party or any computer bureau or service company from
time to time acting for such Credit Party.
"GNE INVESTMENTS" has the meaning assigned to it in the recitals to the
Agreement.
"GNE INVESTMENTS PLEDGE AGREEMENT" means the Pledge Agreement dated as of
the Closing Date executed by GNE Investments in favor of Agent, on behalf
of itself and Lenders, pledging all Stock of its Subsidiaries owned or held
by GNE Investments.
"GOODS" means all "goods" as defined in the Code, now owned or hereafter
acquired by any Credit Party, wherever located, including embedded software
to the extent included in "goods" as defined in the Code, manufactured
homes, standing timber that is cut and removed for sale and unborn young of
animals.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or other
political subdivision thereof, and any agency, department or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"GREAT NORTHERN" has the meaning assigned to it in the recitals to the
Agreement.
"GREAT NORTHERN ADVANCE" shall mean an advance by H&E to Great Northern of
the proceeds of an H&E/Great Northern Advance.
"GREAT NORTHERN BORROWING BASE" means, as of any date of determination by
Agent, from time to time, an amount equal to the sum at such time of:
(a) up to eighty-five percent (85%) of Great Northern's Eligible
Accounts plus up to eighty five percent (85%) of Great Northern's
Eligible Rentals, less any Reserves (without duplication)
established by Agent in good faith using reasonable credit judgment
as of such time; plus
(b) up to fifty percent (50%) of the Net Book Value of Great Northern's
Eligible Parts and Tools Inventory, less any Reserves (without
duplication) established by Agent in good faith using reasonable
credit judgment as of such time; plus
(c) up to one hundred percent (100%) of the Net Book Value of Great
Northern's new Eligible Equipment Inventory held for sale, less any
Reserves (without duplication) established by Agent in good faith
using reasonable credit judgment as of such time; plus
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(d) up to fifty percent (50%) of the Net Book Value of Great Northern's
used Eligible Equipment Inventory held for sale, less any Reserves
(without duplication) established by Agent in good faith using
reasonable credit judgment as of such time; PLUS
(e) the lesser of (i) one hundred percent (100%) of the Net Book Value
of Great Northern's Eligible Equipment Inventory held for lease to
third parties or being leased to third parties and (ii) up to eighty
percent (80%) of the Orderly Liquidation Value of Great Northern's
Eligible Equipment Inventory held for lease or being leased to third
parties, in each case, less any Reserves (without duplication)
established by Agent in good faith using reasonable credit judgment
as of such time; plus
(f) up to fifty percent (50%) of the Orderly Liquidation Value of Great
Northern's Eligible Rolling Stock, less any Reserves (without
duplication) established by Agent in good faith using reasonable
credit judgment as of such time.
"GUARANTEED INDEBTEDNESS" means, as to any Person, any obligation of such
Person guaranteeing, providing comfort or otherwise supporting any
Indebtedness, lease, dividend, or other obligation ("PRIMARY OBLIGATIONS")
of any other Person (the "PRIMARY OBLIGOR") in any manner, including any
obligation or arrangement of such Person to (a) purchase or repurchase any
such primary obligation, (b) advance or supply funds (i) for the purchase
or payment of any such primary obligation or (ii) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain
the net worth or solvency or any balance sheet condition of the primary
obligor, (c) purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation, (d)
protect the beneficiary of such arrangement from loss (other than product
warranties given in the ordinary course of business) or (e) indemnify the
owner of such primary obligation against loss in respect thereof. The
amount of any Guaranteed Indebtedness at any time shall be deemed to be an
amount equal to the lesser at such time of (x) the stated or determinable
amount of the primary obligation in respect of which such Guaranteed
Indebtedness is incurred and (y) the maximum amount for which such Person
may be liable pursuant to the terms of the instrument embodying such
Guaranteed Indebtedness, or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect
thereof.
"GUARANTIES" means, collectively, the H&E Holdings Guaranty, each
Subsidiary Guaranty and any other guaranty executed by any Guarantor in
favor of Agent and Lenders in respect of the Obligations.
"GUARANTORS" means H&E Holdings, Great Northern, each Subsidiary of each
Borrower (other than each such Subsidiary that is a Borrower) and each
other Person, if any, that executes a guaranty or other similar agreement
in favor of Agent, for itself and the ratable benefit of Lenders, in
connection with the transactions contemplated by the Agreement and the
other Loan Documents.
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"GULF WIDE" has the meaning assigned to it in the recitals to the
Agreement.
"H&E" has the meaning assigned to it in the recitals to the Agreement.
"H&E BORROWING BASE" means, as of any date of determination by Agent, from
time to time, an amount equal to the sum at such time of:
(a) up to eighty-five percent (85%) of H&E's Eligible Accounts plus up
to eighty five percent of H&E's Eligible Rentals, less any Reserves
(without duplication) established by Agent in good faith using
reasonable credit judgment as of such time; plus
(b) up to fifty percent (50%) of the Net Book Value of H&E's Eligible
Parts and Tools Inventory, less any Reserves (without duplication)
established by Agent in good faith using reasonable credit judgment
as of such time; plus
(c) up to one hundred percent (100%) of the Net Book Value of H&E's new
Eligible Equipment Inventory held for sale, less any Reserves
(without duplication) established by Agent in good faith using
reasonable credit judgment as of such time; plus
(d) up to fifty percent (50%) of the Net Book Value of H&E's used
Eligible Equipment Inventory held for sale, less any Reserves
(without duplication) established by Agent in good faith using
reasonable credit judgment as of such time; PLUS
(e) the lesser of (i) one hundred percent (100%) of the Net Book Value
of H&E's Eligible Equipment Inventory held for lease to third
parties or being leased to third parties, and (ii) up to eighty
percent (80%) of the Orderly Liquidation Value of H&E's Eligible
Equipment Inventory held for lease to third parties or being leased
to third parties, in each case, less any Reserves (without
duplication) established by Agent in good faith using reasonable
credit judgment as of such time; plus
(f) up to fifty percent (50%) of the Orderly Liquidation Value of H&E's
Eligible Rolling Stock, less any Reserves (without duplication)
established by Agent in good faith using reasonable credit judgment
as of such time.
"H&E CONTRIBUTION" has the meaning assigned to it in the recitals to the
Agreement.
"H&E FINANCE" has the meaning assigned to it in the recitals to the
Agreement.
"H&E/GREAT NORTHERN ADVANCE" shall mean a Revolving Advance or Swing Line
Advance made to H&E and identified as an "H&E/Great Northern Advance" on
the applicable notice of Revolving Credit Advance, the proceeds of which
are to be advanced by H&E to Great Northern as a Great Northern Advance.
Payments in respect of the Obligations shall be applied between H&E/Great
Northern Advances and Advances other than H&E/Great Northern Advances as
determined by Agent.
"H&E HOLDINGS" has the meaning assigned to it in the recitals to the
Agreement.
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"H&E HOLDINGS GUARANTY" means the guaranty dated as of the Closing Date
executed by H&E Holdings in favor of Agent, on behalf of itself and
Lenders, in respect of the Obligations.
"H&E HOLDINGS PLEDGE AGREEMENT" means the Pledge Agreement dated as of the
Closing Date executed by H&E Holdings in favor of Agent, on behalf of
itself and Lenders, pledging all stock of its Subsidiaries owned or held by
H&E Holdings and all Intercompany Notes owing to or held by it.
"HAZARDOUS MATERIAL" means any substance, material or waste that is
regulated by or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance that is (a) defined
as a "solid waste," "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," "restricted hazardous waste,"
"pollutant," "contaminant," "hazardous constituent," "special waste,"
"toxic substance" or other similar term or phrase under any Environmental
Laws, (b) petroleum or any fraction or by-product thereof, asbestos,
polychlorinated biphenyls (PCB's), or any radioactive substance.
"HEDGING AGREEMENT" means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement, treasury
management products or other interest or currency exchange rate or
commodity price hedging arrangement to which a Lender and one or more
Credit Parties are parties.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money or for the deferred purchase
price of property payment for which is deferred six (6) months or more, but
excluding obligations to trade creditors incurred in the ordinary course of
business that are unsecured and not overdue by more than six (6) months
unless being contested in good faith, (b) all reimbursement and other
obligations with respect to letters of credit, bankers' acceptances and
surety bonds, whether or not matured, (c) all obligations evidenced by
notes, bonds, debentures or similar instruments, (d) all indebtedness
created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though the
rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property), (e)
all Capital Lease Obligations and the present value (discounted at the
Index Rate as in effect on the Closing Date) of future rental payments
under all synthetic leases, (f) all obligations of such Person under
commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all
obligations of such Person under any foreign exchange contract, currency
swap agreement, interest rate swap, cap or collar agreement or other
similar agreement or arrangement designed to alter the risks of that Person
arising from fluctuations in currency values or interest rates, in each
case whether contingent or matured, (h) all Indebtedness referred to above
secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien upon or in
property or other assets (including accounts and contract rights) owned by
such Person, even though such Person has not assumed or become liable for
the payment of such Indebtedness, and (i) the Obligations.
A-16
"INDEMNIFIED LIABILITIES" has the meaning assigned to it in Section 1.13.
"INDEMNIFIED PERSON" has the meaning assigned to it in Section 1.13.
"INDEX RATE" means, for any day, a floating rate equal to the higher of (i)
the rate publicly quoted from time to time by THE WALL STREET JOURNAL as
the "base rate on corporate loans posted by at least 75% of the nation's 30
largest banks" (or, if THE WALL STREET JOURNAL ceases quoting a base rate
of the type described, the highest per annum rate of interest published by
the Federal Reserve Board in Federal Reserve statistical release H.15 (519)
entitled "Selected Interest Rates" as the Bank prime loan rate or its
equivalent), and (ii) the Federal Funds Rate PLUS fifty (50) basis points
per annum. Each change in any interest rate provided for in the Agreement
based upon the Index Rate shall take effect at the time of such change in
the Index Rate.
"INDEX RATE LOAN" means a Loan or portion thereof bearing interest by
reference to the Index Rate.
"INSPECTION " has the meaning assigned to it in Section 1.14.
"INSTRUMENTS" means any "instrument," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, wherever located, and,
in any event, including all certificated securities, all certificates of
deposit, and all promissory notes and other evidences of indebtedness,
other than instruments that constitute, or are a part of a group of
writings that constitute, Chattel Paper.
"INTELLECTUAL PROPERTY" means any and all Licenses, Patents, Copyrights,
Trademarks, and the goodwill associated with such Trademarks.
"INTERCOMPANY NOTES" has the meaning assigned to it in Section 6.3.
"INTER-CREDITOR AGREEMENT" means, the intercreditor agreement of even date
herewith entered into by and among Bank of New York as Xxxxxxxxxx Xxxxx,
Xxxxx, X&X Finance and H&E.
"INTEREST EXPENSE" means, with respect to any Person for any fiscal period,
interest expense paid in cash of such Person determined in accordance with
GAAP for the relevant period ended on such date, including expense with
respect to any Funded Debt of such Person and interest expense for the
relevant period that has been capitalized on the balance sheet of such
Person.
"INTEREST PAYMENT DATE" means (a) as to any Index Rate Loan, the first
Business Day of each month to occur while such Loan is outstanding and (b)
as to any LIBOR Loan, the last day of the applicable LIBOR Period;
PROVIDED, that in the case of any LIBOR Period greater than three months in
duration, interest shall be payable at three month intervals and on the
last day of such LIBOR Period; and PROVIDED, FURTHER, that, in addition to
the foregoing, each of (x) the date upon which all of the Commitments have
been terminated and the Loans have been paid in full and (y) the Commitment
Termination Date shall be deemed to be an "Interest Payment Date" with
respect to any interest that has then accrued under the Agreement.
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"INVENTORY" means all "inventory," as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, wherever located, and in
any event including inventory, merchandise, goods and other personal
property that are held by or on behalf of any Credit Party for sale or
lease or are furnished or are to be furnished under a contract of service,
or that constitute raw materials, work in process, finished goods, returned
goods, or materials or supplies of any kind, nature or description used or
consumed or to be used or consumed in such Credit Party's business or in
the processing, production, packaging, promotion, delivery or shipping of
the same, including all supplies and embedded software.
"INVESTMENT PROPERTY" means all "investment property" as such term is
defined in the Code now owned or hereafter acquired by any Credit Party,
wherever located, including (i) all securities, whether certificated or
uncertificated, including stocks, bonds, interests in limited liability
companies, partnership interests, treasuries, certificates of deposit, and
mutual fund shares; (ii) all securities entitlements of any Credit Party,
including the rights of any Credit Party to any securities account and the
financial assets held by a securities intermediary in such securities
account and any free credit balance or other money owing by any securities
intermediary with respect to that account; (iii) all securities accounts of
any Credit Party; (iv) all commodity contracts of any Credit Party; and (v)
all commodity accounts of any Credit Party.
"IRC" means the Internal Revenue Code of 1986 and all regulations
promulgated thereunder.
"IRS" means the Internal Revenue Service.
"L/C ISSUER" means (a) any Lender, any Affiliate of any Lender and, with
respect to any Lender that is an investment fund that invests in commercial
loans, any other investment fund that invests in commercial loans and that
is managed or advised by the same investment advisor as such Lender or by
an Affiliate of such investment advisor, and (b) any commercial bank,
savings and loan association or savings bank or any other entity which is
an "accredited investor" (as defined in Regulation D under the Securities
Act of 1933) which extends credit, buys loans or provides letters of credit
as one of its businesses, including insurance companies, mutual funds,
lease financing companies and commercial finance companies, in each case,
which has a rating of BBB or higher from S&P and a rating of Baa2 or higher
from Xxxxx'x at the date that it becomes an L/C Issuer; PROVIDED, that no
Person or Affiliate of such Person (other than a Person that is already a
Lender) holding Subordinated Debt or Stock issued by any Credit Party shall
be an L/C Issuer.
"L/C SUBLIMIT" has the meaning assigned to such term in Annex B.
"LENDERS" means GE Capital, the other initial Lenders named on the
signature pages of the Agreement, and, if any such Lender shall decide to
assign all or any portion of the Obligations, such term shall include any
registered assignee of such Lender.
"LETTER OF CREDIT FEE" has the meaning assigned to it in Annex B.
A-18
"LETTER OF CREDIT OBLIGATIONS" means all outstanding obligations incurred
by Agent and Lenders at the request of any Borrower, whether direct or
indirect, contingent or otherwise, due or not due, in connection with the
issuance of Letters of Credit by Agent or any other L/C Issuer or the
purchase of a participation as set forth in Annex B with respect to any
Letter of Credit. The amount of such Letter of Credit Obligations shall
equal the maximum amount that may be payable at such time or at any time
thereafter by Agent or Lenders thereupon or pursuant thereto.
"LETTERS OF CREDIT" means documentary or standby letters of credit issued
for the account of any Borrower by any L/C Issuer, and bankers' acceptances
issued by any Borrower, for which Agent and Lenders have incurred Letter of
Credit Obligations.
"LETTER-OF-CREDIT RIGHTS" means "letter-of-credit rights" as such term is
defined in the Code, now owned or hereafter acquired by any Credit Party,
including rights to payment or performance under a letter of credit,
whether or not such Credit Party, as beneficiary, has demanded or is
entitled to demand payment or performance.
LEVERAGE RATIO" means, with respect to H&E Holdings and its Subsidiaries,
on a consolidated basis, the ratio of (i) Funded Debt of H&E Holdings and
its Subsidiaries as of any date of determination, to (ii) EBITDA of H&E
Holdings and its Subsidiaries for the twelve-month period ending on that
date of determination.
"LIBOR BUSINESS DAY" means a Business Day on which banks in the City of
London are generally open for interbank or foreign exchange transactions.
"LIBOR LOAN" means a Loan or any portion thereof bearing interest by
reference to the LIBOR Rate.
"LIBOR PERIOD" means, with respect to any LIBOR Loan, each period
commencing on a LIBOR Business Day selected by Borrower Representative
pursuant to the Agreement and ending one, two, three or six months
thereafter, as selected by Borrower Representative's irrevocable notice to
Agent as set forth in Section 1.5(e); PROVIDED, that the foregoing
provision relating to LIBOR Periods is subject to the following:
(a) if any LIBOR Period would otherwise end on a day that is not a LIBOR
Business Day, such LIBOR Period shall be extended to the next
succeeding LIBOR Business Day unless the result of such extension
would be to carry such LIBOR Period into another calendar month in
which event such LIBOR Period shall end on the immediately preceding
LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond the Commitment
Termination Date shall end 1 LIBOR Business Days prior to such date;
(c) any LIBOR Period that begins on the last LIBOR Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the
A-19
end of such LIBOR Period) shall end on the last LIBOR Business Day
of a calendar month;
(d) Borrower Representative shall select LIBOR Periods so as not to
require a payment or prepayment of any LIBOR Loan during a LIBOR
Period for such Loan; and
(e) Borrower Representative shall select LIBOR Periods so that there
shall be no more than ten (10) separate LIBOR Loans in existence at
any one time.
"LIBOR RATE" means for each LIBOR Period, (a) a rate of interest determined
by Agent equal to the offered rate for deposits in United States Dollars
for the applicable LIBOR Period that appears on Telerate Page 3750 as of
11:00 a.m., London time, on the second full LIBOR Business Day next
preceding the first day of such LIBOR Period (unless such date is not a
Business Day, in which event the next succeeding Business Day will be
used); DIVIDED by (b) a number equal to 1.0 MINUS the aggregate (but
without duplication) of the rates (expressed as a decimal fraction) of
reserve requirements in effect on the day that is 2 LIBOR Business Days
prior to the beginning of such LIBOR Period (including basic, supplemental,
marginal and emergency reserves under any regulations of the Federal
Reserve Board or other Governmental Authority having jurisdiction with
respect thereto, as now and from time to time in effect) for Eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation
D of the Federal Reserve Board that are required to be maintained by a
member bank of the Federal Reserve System. If such interest rate shall
cease to be available from Telerate News Service, the LIBOR Rate shall be
determined from such financial reporting service or other information as
shall be mutually acceptable to Agent and Borrower Representative.
"LICENSE" means any Copyright License, Patent License, Trademark License or
other license of rights or interests now held or hereafter acquired by any
Credit Party.
"LIEN" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including any lease or title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement perfecting a
security interest under the Code or comparable law of any jurisdiction).
"LITIGATION" has the meaning assigned to it in Section 3.13.
"LOAN ACCOUNT" has the meaning assigned to it in Section 1.12.
"LOAN DOCUMENTS" means the Agreement, the Notes, the GE Capital Fee Letter,
the Syndication Letter and the Collateral Documents and all other
agreements, instruments, documents and certificates identified in the
Closing Checklist executed and delivered to, or in favor of, Agent or any
Lenders and including all other pledges, powers of attorney, consents,
assignments, contracts, notices, and all other written matter whether
heretofore, now or hereafter executed by or on
A-20
behalf of any Credit Party, and delivered to Agent or any Lender in
connection with the Agreement or the transactions contemplated thereby. Any
reference in the Agreement, any other Loan Document or the Syndication
Letter to a Loan Document shall include all appendices, exhibits or
schedules thereto, and all amendments, restatements, supplements or other
modifications thereto, and shall refer to the Agreement or such Loan
Document as the same may be in effect at any and all times such reference
becomes operative.
"LOANS" means the Revolving Loan and the Swing Line Loan.
"LOCK BOXES" has the meaning assigned to it in Annex C.
"MAJORITY REVOLVING LENDERS" means (a) Lenders having more than 50% of the
Commitments of all Lenders, or (b) if the Commitments have been terminated,
more than 50% of the aggregate outstanding amount of the Loans (without
giving effect to the Swing Line Loan) and Letter of Credit Obligations.
"MARGIN STOCK" has the meaning assigned to in Section 3.10.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
business, assets, operations, prospects or financial or other condition of
Credit Parties considered as a whole, (b) Borrowers' ability to pay any of
the Loans or any of the other Obligations in accordance with the terms of
the Agreement, (c) the Collateral or Agent's Liens, on behalf of itself and
Lenders, on the Collateral or the priority of such Liens, or (d) Agent's or
any Lender's rights and remedies under the Agreement and the other Loan
Documents.
"MAXIMUM AMOUNT" means, as of any date of determination, an amount equal to
the Revolving Loan Commitment of all Lenders as of that date.
"MERGERS" has the meaning assigned to it in the recitals to the Agreement.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA, and to which any Credit Party or an ERISA Affiliate is
making or is obligated to make, contributions on behalf of participants who
are or were employed by any of them.
"NET BOOK VALUE" means book value as determined in accordance with GAAP,
lower of cost and market, and after taking into account depreciation and
excluding all "freight-in" costs and preparatory costs.
"NON-FUNDING LENDER" has the meaning assigned to it in Section 9.9(d).
"NOTES" means, collectively, the Revolving Notes and the Swing Line Notes.
"NOTICE OF CONVERSION/CONTINUATION" has the meaning assigned to it in
Section 1.5(e).
"NOTICE OF REVOLVING CREDIT ADVANCE" has the meaning assigned to it in
Section 1.1(a).
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"OBLIGATIONS" means (a) all loans, advances, debts, liabilities and
obligations for the performance of covenants, tasks or duties or for
payment of monetary amounts (whether or not such performance is then
required or contingent, or such amounts are liquidated or determinable)
owing by any Credit Party to Agent or any Lender, and all covenants and
duties regarding such amounts, of any kind or nature, present or future,
whether or not evidenced by any note, agreement or other instrument,
arising under the Agreement or any of the other Loan Documents and (b) for
the purposes of the application of payments under Section 1.11(a) and the
Collateral Documents, all liabilities, indebtedness and obligations of any
Borrower arising under any Hedging Agreement. This term includes all
principal, interest (including all interest that accrues after the
commencement of any case or proceeding by or against any Credit Party in
bankruptcy, whether or not allowed in such case or proceeding), Fees,
Charges, expenses, attorneys' fees and any other sum chargeable to any
Credit Party under the Agreement or any of the other Loan Documents or any
Hedging Agreement.
"OFF BALANCE SHEET EQUIPMENT INVENTORY" means Equipment Inventory that has
been leased by any Credit Party as lessee under an operating lease, and
held for sublease by such Credit Party to third parties in the ordinary
course of business.
"OPERATING LEASE PAYMENTS" means, for any Person during any period, all
payments required to be made by such Person during such Period in respect
of leases by such Person as lessee of Equipment Inventory, excluding any
payment under any Capital Lease Obligation as lessee of such Equipment
Inventory.
"OPERATING LEASE PAYOFF VALUE" means, with respect to any operating lease
of Equipment Inventory to which any Borrower or Guarantor is a lessee, at
any time, the sum of the then remaining lease payments under such operating
lease, discounted to present value at the notional interest rate for such
operating lease.
"ORDERLY LIQUIDATION VALUE" shall mean (i) with respect to Eligible
Equipment Inventory, the orderly liquidation value thereof as determined by
the most recent Equipment Inventory Appraisal and (ii) with respect to
Eligible Rolling Stock, the orderly liquidation value thereof as determined
by the most recent P&E Appraisal.
"ORIGINAL ADVANCE RATE" means, with respect to any percentage advance rate
contained in the Great Northern Borrowing Base or the H&E Borrowing Base,
such advance rate as in effect on the Closing Date.
"P&E" means all "equipment," as such term is defined in the Code, now owned
or hereafter acquired by any Credit Party, wherever located and, in any
event, including all such Credit Party's machinery and equipment, including
processing equipment, conveyors, machine tools, data processing and
computer equipment, including embedded software and peripheral equipment
and all engineering, processing and manufacturing equipment, office
machinery, furniture, materials handling equipment, tools, attachments,
accessories, automotive equipment, trailers, trucks, forklifts, molds,
dies, stamps, motor vehicles, rolling stock and other equipment of every
kind and
A-22
nature, trade fixtures and fixtures not forming a part of real property,
together with all additions and accessions thereto, replacements therefor,
all parts therefor, all substitutes for any of the foregoing, fuel
therefor, and all manuals, drawings, instructions, warranties and rights
with respect thereto and all products and proceeds thereof and condemnation
awards and insurance proceeds with respect thereto. P&E excludes Equipment
Inventory and Fixtures.
"P&E APPRAISAL" means each periodic appraisal of Borrowers' P&E conducted
at the Borrowers' cost and expense by appraisers reasonably satisfactory to
Agent and using a methodology reasonably satisfactory to Agent, PROVIDED,
that unless an Event of Default has occurred and is continuing, the
Borrowers shall be responsible for the cost and expense of not more than
four (4) such appraisals during the first twelve months following the
Closing Date and not more than three (3) such appraisals per year
thereafter, it being agreed that so long as such limit is in effect, each
item of Equipment Inventory shall be appraised pursuant to a visit to sites
of any one or more Credit Parties on one occasion during each year and the
balance of such appraisals of such item in such year shall be done as a
"desk appraisal."
"P&E CAPITAL EXPENDITURES" means, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness)
by such Person during any measuring period for any P&E or improvements or
for replacements, substitutions or additions thereto, that have a useful
life of more than one year and that are required to be capitalized under
GAAP (excluding any such expenditures related to Permitted Acquisitions).
"PARTS AND TOOLS INVENTORY" means Inventory of any Borrower consisting of
parts, tools and supplies.
"PATENT LICENSE" means rights under any written agreement now owned or
hereafter acquired by any Credit Party granting any right with respect to
any invention on which a Patent is in existence.
"PATENT SECURITY AGREEMENTS" means the Patent Security Agreements made in
favor of Agent, on behalf of itself and Lenders, by each applicable Credit
Party.
"PATENTS" means all of the following in which any Credit Party now holds or
hereafter acquires any interest: (a) all letters patent of the United
States or of any other country, all registrations and recordings thereof,
and all applications for letters patent of the United States or of any
other country, including registrations, recordings and applications in the
United States Patent and Trademark Office or in any similar office or
agency of the United States, any State or any other country, and (b) all
reissues, continuations, continuations-in-part or extensions thereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PENSION PLAN" means a Plan described in Section 3(2) of ERISA.
"PERMITTED ACQUISITION" has the meaning assigned to it in Section 6.1.
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"PERMITTED ENCUMBRANCES" means the following encumbrances: (a) Liens for
taxes or assessments or other governmental Charges not yet due and payable,
or which are being contested in accordance with Section 5.2(b); (b) pledges
or deposits of money securing statutory obligations under workmen's
compensation, unemployment insurance, social security or public liability
laws or similar legislation (excluding Liens under ERISA); (c) pledges or
deposits of money securing bids, tenders, contracts (other than contracts
for the payment of money) or leases to which any Borrower is a party as
lessee made in the ordinary course of business; (d) deposits of money
securing statutory obligations of any Borrower; (e) inchoate and
unperfected workers', mechanics' or similar liens arising in the ordinary
course of business, so long as such Liens attach only to P&E, Fixtures
and/or Real Estate; (f) carriers', warehousemen's, suppliers' or other
similar possessory liens arising in the ordinary course of business and
securing liabilities, so long as such Liens attach only to Equipment
Inventory; (g) deposits securing, or in lieu of, surety, appeal or customs
bonds in proceedings to which any Borrower is a party; (h) any attachment
or judgment lien not constituting an Event of Default under Section 8.1(j);
(i) zoning restrictions, easements, licenses, or other restrictions on the
use of any Real Estate or other minor irregularities in title (including
leasehold title) thereto, so long as the same do not materially impair the
use, value, or marketability of such Real Estate; (j) presently existing or
hereafter created Liens in favor of Agent, on behalf of Lenders, and to the
extent subject to the Inter-Creditor Agreement, in favor of Collateral
Agent, on behalf of the holders of Senior Notes; and (k) Liens of landlords
or mortgages arising by operation of law or pursuant to the terms of real
property leases, PROVIDED, that the mortgage or rental payments secured
thereby are not yet overdue, and the applicable mortgage or lease is not
otherwise in default in a manner which could permit the applicable
mortgagee or lessee to take enforcement action with respect to such Liens.
"PERSON" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
limited liability company, institution, public benefit corporation, other
entity or government (whether federal, state, county, city, municipal,
local, foreign, or otherwise, including any instrumentality, division,
agency, body or department thereof).
"PLAN" means, at any time, an "employee benefit plan", as defined in
Section 3(3) of ERISA, that any Credit Party maintains, contributes to or
has an obligation to contribute to or has any liability under.
"PLEDGE AGREEMENTS" means the H&E Holdings Pledge Agreement, the H&E Pledge
Agreement, the GNE Investments Pledge Agreement and any other pledge
agreement entered into after the Closing Date in connection herewith (as
required by the Agreement or any other Loan Document).
"PRIOR LENDERS" means the holders of the Prior Obligations.
"PRIOR OBLIGATIONS" means collectively, the indebtedness under or pursuant
to, as applicable, (i) the Credit Agreement dated as of February 4, 1998,
as amended and restated as of July 31, 1998, among ICM, Great Northern
Equipment, Inc., Xxxxxxxx Bros. Construction, Inc., the Prior
A-24
Lenders, Bankers Trust Company as Syndication Agent and Co-Agent, GE
Capital as Documentation Agent and Co-Agent and The CIT Group/Equipment
Financing, Inc. as Agent, as subsequently amended; (ii) the Loan Agreement
dated August 10, 1998 between The CIT Group/Equipment Financing, Inc. and
H&E, as subsequently amended; and (iii) the 10% Senior Subordinated
Promissory Note dated February 20, 2002 issued by ICM to Xxxx Xxxxxxxx.
"PROCEEDS" means "proceeds," as such term is defined in the Code, including
(a) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to any Credit Party from time to time with respect to any of the
Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to any Credit Party from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or
any part of the Collateral by any Governmental Authority (or any Person
acting under color of governmental authority), (c) any claim of any Credit
Party against third parties (i) for past, present or future infringement of
any Patent or Patent License, or (ii) for past, present or future
infringement or dilution of any Copyright, Copyright License, Trademark or
Trademark License, or for injury to the goodwill associated with any
Trademark or Trademark License, (d) any recoveries by any Credit Party
against third parties with respect to any litigation or dispute concerning
any of the Collateral, including claims arising out of the loss or
nonconformity of, interference with the use of, defects in, or infringement
of rights in, or damage to, Collateral, (e) all amounts collected on, or
distributed on account of, other Collateral, including dividends, interest,
distributions and Instruments with respect to Investment Property and
pledged Stock, and (f) any and all other amounts, rights to payment or
other property acquired upon the sale, lease, license, exchange or other
disposition of Collateral and all rights arising out of Collateral.
"PRO FORMA" means the unaudited consolidated and consolidating balance
sheet of Borrowers and their Subsidiaries as of March 31, 2002 after giving
PRO FORMA effect to the Related Transactions.
"PROHIBITED SWING LINE ADVANCE" means a Swing Line Advance (i) that was
made without satisfaction of the condition contained in Section 2.2(e) by
virtue of such Swing Line Advance exceeding Swing Line Availability due to
the limitation imposed by Section 1.1(b)(i)(A) or 1.1(b)(i)(B)(x) (but not
1.1(b)(i)(B)(y)), or (ii) (x) that was made without satisfaction of the
condition contained in Section 2.2(e) by virtue of such Swing Line Advance
exceeding Swing Line Availability due to the limitation imposed by Section
1.1(b)(i)(B)(y) based on the Aggregate Borrowing Base as reflected in the
most recent Borrowing Base Certificate delivered to the Agent prior to the
making of such Swing Line Advance and (y) that (A) exceeds $4,000,000, or
(B) when added to any Swing Line Advances (described in clause (ii)(x) of
this definition) made (1) during the period of 10 Business Days ending on
(and including) the date of making of such Swing Line Advance, exceeds
$4,000,000 or (2) during the period from and after the Closing Date,
exceeds $10,000,000.
"PROJECTIONS" means Borrowers' forecasted consolidated and consolidating
(a) balance sheets; (b) profit and loss statements; (c) cash flow
statements; and (d) capitalization statements, all prepared on a Subsidiary
by Subsidiary or division-by-division basis, if applicable, and otherwise
A-25
consistent with the historical Financial Statements of Borrowers, together
with appropriate supporting details and a statement of underlying
assumptions.
"PROPERLY ELECTS" has the meaning assigned to it in Section 7.3.
"PRO RATA SHARE" means with respect to all matters relating to any Lender
and with respect to the Revolving Loan, the percentage obtained by dividing
(i) the Revolving Loan Commitment of that Lender by (ii) the aggregate
Revolving Loan Commitments of all Lenders.
"QUALIFIED ASSIGNEE" means (a) any Lender, any Affiliate of any Lender and,
with respect to any Lender that is an investment fund that invests in
commercial loans, any other investment fund that invests in commercial
loans and that is managed or advised by the same investment advisor as such
Lender or by an Affiliate of such investment advisor, and (b) any
commercial bank, savings and loan association or savings bank or any other
entity which is an "accredited investor" (as defined in Regulation D under
the Securities Act of 1933) which extends credit or buys loans as one of
its businesses, including insurance companies, mutual funds, lease
financing companies and commercial finance companies, in each case, which
has a rating of BBB or higher from S&P and a rating of Baa2 or higher from
Xxxxx'x at the date that it becomes a Lender and which, through its
applicable lending office, is capable of lending to Borrowers without the
imposition of any withholding or similar taxes; PROVIDED, that no Person
determined by Agent to be acting in the capacity of a vulture fund or
distressed debt purchaser shall be a Qualified Assignee, and no Person or
Affiliate of such Person (other than a Person that is already a Lender)
holding Subordinated Debt or Stock issued by any Credit Party shall be a
Qualified Assignee.
"QUALIFIED PLAN" means a Pension Plan that is intended to be tax-qualified
under Section 401(a) of the IRC.
"REAL ESTATE" has the meaning assigned to it in Section 3.6.
"REFINANCING" means the repayment in full by Borrowers of the Prior
Obligations on the Closing Date.
"REFUNDED SWING LINE LOAN" has the meaning assigned to it in Section
1.1(b)(iii).
"RELATED TRANSACTIONS" means the initial borrowing under the Commitments on
the Closing Date, the Mergers, contributions and other transactions to
occur under the Contribution Agreement and Plan of Reorganization, the
Refinancing, the issuance of the Senior Notes, the issuance of the Senior
Subordinated Notes and the related preferred and common units, the payment
of all fees, costs and expenses associated with all of the foregoing and
the execution and delivery of all of the Related Transactions Documents.
"RELATED TRANSACTIONS DOCUMENTS" means the Loan Documents, the Contribution
Agreement and Plan of Reorganization, the Senior Note Indenture, the Senior
Subordinated Note Indenture and all other agreements and instruments
executed and delivered in connection with the Related Transactions.
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"RELEASE" means any release, threatened release, spill, emission, leaking,
pumping, pouring, emitting, emptying, escape, injection, deposit, disposal,
discharge, dispersal, dumping, leaching or migration of Hazardous Material
in the indoor or outdoor environment, including the movement of Hazardous
Material through or in the air, soil, surface water, ground water or
property.
"RENTALS" means rental payments due to any Borrower from the rental of (i)
Equipment Inventory owned by such Borrower or (ii) inventory leased by such
Borrower.
"REQUISITE LENDERS" means (a) Lenders having at least 66 2/3% of the
Commitments of all Lenders, or (b) if the Commitments have been terminated,
at least 66 2/3% of the aggregate outstanding amount of the Loans (without
giving effect to the Swing Line Loan) and Letter of Credit Obligations.
"RESERVES" means, with respect to the Borrowing Base of any Borrower (a)
reserves established by Agent from time to time against Eligible Parts and
Tools Inventory or Eligible Equipment Inventory pursuant to Section 5.9,
(b) reserves established pursuant to Section 5.4(c), and (c) such other
reserves against Eligible Accounts, Eligible Rentals, Eligible Parts and
Tools Inventory, Eligible Rolling Stock, Eligible Equipment Inventory or
Borrowing Availability of such Borrower that Agent may, in good faith and
in its reasonable credit judgment, establish from time to time. Without
limiting the generality of the foregoing, Reserves established to ensure
the payment of accrued Interest Expenses shall be deemed to be a reasonable
exercise of Agent's credit judgment.
"RESTRICTED PAYMENT" means, with respect to any Credit Party, (a) the
declaration or payment of any dividend or the incurrence of any liability
to make any other payment or distribution of cash or other property or
assets in respect of such Credit Party's Stock; (b) any payment on account
of the purchase, redemption, defeasance, sinking fund or other retirement
of such Credit Party's Stock or any other payment or distribution made in
respect thereof, either directly or indirectly; (c) any payment or
prepayment of principal of, premium, if any, or interest, fees or other
charges on or with respect to, and any redemption, purchase, retirement,
defeasance, sinking fund or similar payment and any claim for rescission
with respect to, any Subordinated Debt; (d) any payment made to redeem,
purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire Stock of such
Credit Party now or hereafter outstanding; (e) any payment of a claim for
the rescission of the purchase or sale of, or for material damages arising
from the purchase or sale of, any shares of such Credit Party's Stock or of
a claim for reimbursement, indemnification or contribution arising out of
or related to any such claim for damages or rescission; (f) any payment,
loan, contribution, or other transfer of funds or other property to any
Stockholder of such Credit Party other than payment of compensation and
directors' fees in the ordinary course of business to Stockholders who are
employees of such Person; (g) any payment of management fees (or other fees
of a similar nature) by such Credit Party to any Stockholder of such Credit
Party or its Affiliates and (h) any optional payment or prepayment of
principal of the Senior Notes or the Senior Subordinated Notes, any
prepayment of premium, if any, or interest, fees, or other charges on or
with respect to
A-27
the Senior Notes or the Senior Subordinated Notes, and any redemption,
purchase, retirement, defeasance, subleasing fund or similar optional
payment with respect to the Senior Notes or the Senior Subordinated Notes.
"RETIREE WELFARE PLAN" means, at any time, a Welfare Plan that provides for
continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at
the sole expense of the participant or the beneficiary of the participant.
"REVOLVING CREDIT ADVANCE" has the meaning assigned to it in Section
1.1(a)(i).
"REVOLVING LENDERS" means, as of any date of determination, Lenders having
a Revolving Loan Commitment.
"REVOLVING LOAN" means, at any time, the sum of (i) the aggregate amount of
Revolving Credit Advances outstanding, as the context may require, to any
Borrower or all Borrowers PLUS (ii) the aggregate Letter of Credit
Obligations incurred on behalf of any Borrower or all Borrowers. Unless the
context otherwise requires, references to the outstanding principal balance
of the Revolving Loan shall include the outstanding balance of Letter of
Credit Obligations. A Letter of Credit issued for the account of a Borrower
shall be included in calculating the Letter of Credit Obligations of, and
consequently the outstanding principal balance of the Revolving Loan made
to, such Borrower.
"REVOLVING LOAN COMMITMENT" means (a) as to any Revolving Lender, the
aggregate commitment of such Revolving Lender to make Revolving Credit
Advances or incur Letter of Credit Obligations as set forth on Annex J or
in the most recent Assignment Agreement executed by such Revolving Lender
and (b) as to all Revolving Lenders, the aggregate commitment of all
Revolving Lenders to make Revolving Credit Advances or incur Letter of
Credit Obligations, which aggregate commitment shall be One Hundred Fifty
Million Dollars ($150,000,000) on the Closing Date, as such amount may be
adjusted, if at all, from time to time in accordance with the Agreement,
PROVIDED, HOWEVER, that in the event that the maximum amount permitted
under clause (1) of the definition of "Permitted Debt" contained in the
Senior Note Indenture or the Senior Subordinated Note Indenture is reduced
by virtue of the application to "Senior Debt" (as defined in the Senior
Note Indenture or Senior Subordinated Note Indenture) of "Net Proceeds" of
"Assets Sales" (as such terms are defined in the Senior Note Indenture or
Senior Subordinated Note Indenture), then and in such event the Revolving
Loan Commitment shall be reduced automatically by the amount of each such
reduction, with any such reduction to the Revolving Loan Commitment to be
allocated to all Lenders pro rata.
"REVOLVING NOTE" has the meaning assigned to it in Section 1.1(a)(ii).
"SECURITY AGREEMENTS" means each Security Agreement of even date herewith
entered into by and among Agent, on behalf of itself and Lenders, and each
Credit Party that is a signatory thereto.
A-28
"SENIOR DEBT" of any Person, means all Indebtedness and Capital Lease
Obligations of such Person, other than Subordinated Debt of such Person.
"SENIOR DEBT TO TANGIBLE ASSETS RATIO" means, with respect to any Person
for any fiscal period, the ratio of Senior Debt of such Person to Tangible
Assets of such Person.
"SENIOR NOTE INDENTURE" has the meaning assigned to it in the recitals to
the Agreement.
"SENIOR NOTES" has the meaning assigned to it in the recitals to the
Agreement.
"SENIOR SUBORDINATED NOTE INDENTURE" has the meaning assigned to it in the
recitals to the Agreement.
"SENIOR SUBORDINATED NOTES" has the meaning assigned to it in the recitals
to the Agreement.
"SETTLEMENT DATE" has the meaning assigned to it in Section 9.10(a)(ii).
"SOFTWARE" means all "software" as such term is defined in the Code, now
owned or hereafter acquired by any Credit Party, other than software
embedded in any category of Goods, including all computer programs and all
supporting information provided in connection with a transaction related to
any program.
"SOLVENT" means, with respect to any Person on a particular date, that on
such date (a) the fair value of the property of such Person is greater than
the total amount of liabilities, including contingent liabilities, of such
Person; (b) the present fair salable value of the assets of such Person is
not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and matured;
(c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature; and (d) such Person is not engaged in a
business or transaction, and is not about to engage in a business or
transaction, for which such Person's property would constitute an
unreasonably small capital. The amount of contingent liabilities (such as
litigation, guaranties and pension plan liabilities) at any time shall be
computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can be reasonably be
expected to become an actual or matured liability.
"STOCK" means all shares, options, warrants, general or limited partnership
interests, membership interests or other equivalents (regardless of how
designated) of or in a corporation, partnership, limited liability company
or equivalent entity whether voting or nonvoting, including common stock,
preferred stock or any other "equity security" (as such term is defined in
Rule 3a11-1 of the General Rules and Regulations promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of
1934).
"STOCKHOLDER" means, with respect to any Person, each holder of Stock of
such Person.
"SUBJECT PROPERTY" has the meaning assigned to it in Section 7.3.
A-29
"SUBORDINATED DEBT" means Indebtedness evidenced by the Senior Subordinated
Notes and any other Indebtedness of any Borrower subordinated to the
Obligations in a manner and form satisfactory to Agent and Lenders in their
sole discretion, as to right and time of payment and as to any other rights
and remedies thereunder.
"SUBSIDIARY" means, with respect to any Person, (a) any corporation of
which an aggregate of more than 50% of the outstanding Stock having
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time, directly or
indirectly, owned legally or beneficially by such Person or one or more
Subsidiaries of such Person, or with respect to which any such Person has
the right to vote or designate the vote of 50% or more of such Stock
whether by proxy, agreement, operation of law or otherwise, and (b) any
partnership or limited liability company in which such Person and/or one or
more Subsidiaries of such Person shall have an interest (whether in the
form of voting or participation in profits or capital contribution) of more
than fifty percent (50%) or of which any such Person is a general partner
or may exercise the powers of a general partner. Unless the context
otherwise requires, each reference to a Subsidiary shall be a reference to
a Subsidiary of a Borrower.
"SUBSIDIARY GUARANTIES" means each Subsidiary Guaranty executed by each
Subsidiary, of even date herewith or at any time thereafter, of each
Borrower in favor of Agent, on behalf of itself and Lenders.
"SUPPORTING OBLIGATIONS" means all "supporting obligations" as such term is
defined in the Code, including letters of credit and guaranties issued in
support of Accounts, Chattel Paper, Documents, General Intangibles,
Instruments or Investment Property.
"SWING LINE ADVANCE" has the meaning assigned to it in Section 1.1(b)(i).
"SWING LINE AVAILABILITY" has the meaning assigned to it in Section
1.1(b)(i).
"SWING LINE COMMITMENT" means, as to the Swing Line Lender, the commitment
of the Swing Line Lender to make Swing Line Loans as set forth on Annex J
which commitment constitutes a subfacility of the Revolving Loan Commitment
of the Swing Line Lender.
"SWING LINE LENDER" means GE Capital.
"SWING LINE LOAN" means at any time, as the context may require, the
aggregate amount of Swing Line Advances outstanding to any Borrower or to
all Borrowers.
"SWING LINE NOTE" has the meaning assigned to it in Section 1.1(b)(ii).
"SYNDICATION LETTER" means the letter agreement of every date herewith
among the Borrowers and the Agent.
A-30
"TANGIBLE ASSETS" means, with respect to any Person, all tangible assets of
such Person as of any date of determination calculated in accordance with
GAAP.
"TARGET" has the meaning assigned to it in Section 6.1.
"TAXES" means taxes, levies, imposts, deductions, Charges or withholdings,
and all liabilities with respect thereto, excluding taxes imposed on or
measured by the net income of Agent or a Lender by the jurisdictions under
the laws of which Agent and Lenders are organized or conduct business or
any political subdivision thereof.
"TERMINATION DATE" means the date on which (a) the Loans have been
indefeasibly repaid in full in cash, (b) all other Obligations (other than
contingent obligations for which no claim has been asserted), under the
Agreement and the other Loan Documents have been completely discharged, (c)
all Letter of Credit Obligations have been cash collateralized, canceled or
backed by standby letters of credit in accordance with Annex B, and (d)
none of the Borrowers shall have any further right to borrow any monies
under the Agreement.
"TITLE IV PLAN" means an "employee pension benefit plan" as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan), that is covered by
Title IV of ERISA, and that any Credit Party or ERISA Affiliate maintains,
contributes to or has an obligation to contribute to or has any liability
with respect to on behalf of participants who are or were employed by any
of them.
"TRADEMARK SECURITY AGREEMENTS" means the Trademark Security Agreements
made in favor of Agent, on behalf of Lenders, by each applicable Credit
Party.
"TRADEMARK LICENSE" means rights under any written agreement now owned or
hereafter acquired by any Credit Party granting any right to use any
Trademark.
"TRADEMARKS" means all of the following now owned or hereafter existing,
adopted or acquired by any Credit Party: (a) all trademarks, trade names,
limited liability company names, corporate names, business names, trade
styles, service marks, logos, other source or business identifiers, prints
and labels on which any of the foregoing have appeared or appear, designs
and general intangibles of like nature (whether registered or
unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings
and applications in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof; (b) all
reissues, extensions or renewals thereof; and (c) all goodwill associated
with or symbolized by any of the foregoing.
"TRUSTEE" means Bank of New York as trustee for (i) the holders of Senior
Notes under the Senior Note Indenture and (ii) the holders of Senior
Subordinated Notes under the Senior Subordinated Note Indenture,
"UNASSERTED CONTINGENT OBLIGATIONS" means, at any time, Obligations for
taxes, costs, indemnifications, reimbursements, damages and other
liabilities (except for (i) the principal of and interest and premium (if
any) on, and fees relating to, any Indebtedness and (ii) contingent
A-31
reimbursement obligations in respect of amounts that may be drawn under
Letters of Credit) in respect of which no claim or demand for payment has
been made (or, in the case of Obligations for indemnification, no notice
for indemnification has been issued by the indemnitee) at such time.
"UNFUNDED PENSION LIABILITY" means, at any time, the aggregate amount, if
any, of the sum of the amount by which the present value of all accrued
benefits under each Title IV Plan exceeds the fair market value of all
assets of such Title IV Plan, all determined as of the most recent
valuation date for each such Title IV Plan using the actuarial assumptions
for funding purposes in effect under such Title IV Plan.
"UTILIZATION RATE OF EQUIPMENT INVENTORY RATIO" means, with respect to any
Person for any fiscal period, the ratio of Equipment Inventory Rental
Revenues to Equipment Inventory Rental Expenditures of such Person for such
period.
"VENDOR INTER-CREDITOR AGREEMENT" means an agreement in the form of Exhibit
6.7(d)(iii)(A) or Exhibit 6.7(d)(iii)(B), in each case, with such changes
thereto as may be approved by the Agent, between the Agent and the holder
of a purchase money Lien in Equipment Inventory or such other form of
intercreditor agreement as the Agent may approve.
"WELFARE PLAN" means a Plan described in Section 3(1) of ERISA.
Rules of construction with respect to accounting terms used in the Agreement or
the other Loan Documents shall be as set forth in Annex G. All other undefined
terms contained in any of the Loan Documents shall, unless the context indicates
otherwise, have the meanings provided for by the Code to the extent the same are
used or defined therein; in the event that any term is defined differently in
different Articles of the Code, the definition contained in Article 9 shall
control. Unless otherwise specified, references in the Agreement or any of the
Appendices to a Section, subsection or clause refer to such Section, subsection
or clause as contained in the Agreement. The words "herein," "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole,
including all Annexes, Exhibits and Schedules, as the same may from time to time
be amended, restated, modified or supplemented, and not to any particular
section, subsection or clause contained in the Agreement or any such Annex,
Exhibit or Schedule.
Wherever from the context it appears appropriate, each term stated in either the
singular or plural shall include the singular and the plural, and pronouns
stated in the masculine, feminine or neuter gender shall include the masculine,
feminine and neuter genders. The words "including", "includes" and "include"
shall be deemed to be followed by the words "without limitation"; the word "or"
is not exclusive; references to Persons include their respective successors and
assigns (to the extent and only to the extent permitted by the Loan Documents)
or, in the case of governmental Persons, Persons succeeding to the relevant
functions of such Persons; and all references to statutes and related
regulations shall include any amendments of the same and any successor statutes
and regulations. Whenever any provision in any Loan Document refers to the
knowledge (or an analogous phrase) of any Credit Party, such words are intended
to signify that such Credit Party has actual knowledge or awareness of a
particular fact or
A-32
circumstance or that such Credit Party, if it had exercised reasonable
diligence, would have known or been aware of such fact or circumstance.
A-33
ANNEX B (SECTION 1.2)
TO
CREDIT AGREEMENT
LETTERS OF CREDIT
(a) Issuance
Subject to the terms and conditions of the Agreement, Agent and Revolving
Lenders agree to incur, from time to time prior to the Commitment
Termination Date, upon the request of Borrower Representative on behalf of
the applicable Borrower and for such Borrower's account, Letter of Credit
Obligations by causing Letters of Credit to be issued by an L/C Issuer for
such Borrower's account and guaranteed by Agent; PROVIDED, that if the L/C
Issuer is a Revolving Lender, then such Letters of Credit shall not be
guaranteed by Agent but rather each Revolving Lender shall, subject to the
terms and conditions hereinafter set forth, purchase (or be deemed to have
purchased) risk participations in all such Letters of Credit issued with
the written consent of Agent, as more fully described in paragraph (b)(ii)
below. The aggregate amount of all such Letter of Credit Obligations shall
not at any time exceed the least of (i) Ten Million Dollars ($10,000,000)
(the "L/C SUBLIMIT"), and (ii) the Maximum Amount LESS the aggregate
outstanding principal balance of the Revolving Credit Advances and the
Swing Line Loan, and (iii) the Aggregate Borrowing Base LESS the aggregate
outstanding principal balance of the Revolving Credit Advances and the
Swing Line Loan. Furthermore, the aggregate amount of any Letter of Credit
Obligations incurred on behalf of any Borrower shall not at any time exceed
such Borrower's separate Borrowing Base LESS the aggregate principal
balance of the Revolving Credit Advances and the Swing Line Loan to such
Borrower. No such Letter of Credit shall have an expiry date that is more
than one year following the date of issuance thereof, unless otherwise
determined by Agent in its sole discretion, and neither Agent nor Revolving
Lenders shall be under any obligation to incur Letter of Credit Obligations
in respect of, or purchase risk participations in, any Letter of Credit
having an expiry date that is later than the date that is referred to in
clause (a) of the definition of Commitment Termination Date. Each issuance
of a Letter of Credit shall be made on notice by Borrower Representative on
behalf of the applicable Borrower to the representative of Agent identified
in Schedule 1.1 at the address specified therein. Any such notice must be
given no later noon (New York time) on the date which is three (3) Business
Days prior to the proposed issuance of such Letter of Credit. Each such
notice (a "NOTICE OF ISSUANCE OF LETTER OF CREDIT") must be given in
writing (by telecopy or overnight courier) substantially in the form of
Exhibit B-1(a) and shall include the information required in such Exhibit
and such other administrative information as may be reasonably required by
Agent.
(b) Advances Automatic; Participations
(i) In the event that Agent or any Revolving Lender shall make any
payment on or pursuant to any Letter of Credit Obligation, such
payment shall then be deemed automatically to constitute a Revolving
Credit Advance to the applicable Borrower under Section 1.1(a) of
B-1
the Agreement regardless of whether a Default or Event of Default
has occurred and is continuing and notwithstanding any Borrower's
failure to satisfy the conditions precedent set forth in Section 2,
and each Revolving Lender shall be obligated to pay its Pro Rata
Share thereof in accordance with the Agreement. The failure of any
Revolving Lender to make available to Agent for Agent's own account
its Pro Rata Share of any such Revolving Credit Advance or payment
by Agent under or in respect of a Letter of Credit shall not relieve
any other Revolving Lender of its obligation hereunder to make
available to Agent its Pro Rata Share thereof, but no Revolving
Lender shall be responsible for the failure of any other Revolving
Lender to make available such other Revolving Lender's Pro Rata
Share of any such payment.
(ii) If it shall be illegal or unlawful for any Borrower to incur
Revolving Credit Advances as contemplated by paragraph (b)(i) above
because of an Event of Default described in Section 8.1(h) or
Section 8.1(i) or otherwise or if it shall be illegal or unlawful
for any Revolving Lender to be deemed to have assumed a ratable
share of the reimbursement obligations owed to an L/C Issuer, or if
the L/C Issuer is a Revolving Lender, then (A) immediately and
without further action whatsoever, each Revolving Lender shall be
deemed to have irrevocably and unconditionally purchased from Agent
(or such L/C Issuer, as the case may be) an undivided interest and
participation equal to such Revolving Lender's Pro Rata Share (based
on the Revolving Loan Commitments) of the Letter of Credit
Obligations in respect of all Letters of Credit then outstanding and
(B) thereafter, immediately upon issuance of any Letter of Credit,
each Revolving Lender shall be deemed to have irrevocably and
unconditionally purchased from Agent (or such L/C Issuer, as the
case may be) an undivided interest and participation in such
Revolving Lender's Pro Rata Share (based on the Revolving Loan
Commitments) of the Letter of Credit Obligations with respect to
such Letter of Credit on the date of such issuance. Each Revolving
Lender shall fund its participation in all payments or disbursements
made under the Letters of Credit in the same manner as provided in
the Agreement with respect to Revolving Credit Advances.
(c) Cash Collateral
(i) If Borrowers are required to provide cash collateral for any Letter
of Credit Obligations pursuant to the Agreement prior to the
Commitment Termination Date, each Borrower will pay to Agent for the
ratable benefit of itself and Revolving Lenders cash or cash
equivalents acceptable to Agent ("CASH EQUIVALENTS") in an amount
equal to 105% of the maximum amount then available to be drawn under
each applicable Letter of Credit outstanding for the benefit of such
Borrower. Such funds or Cash Equivalents shall be held by Agent in a
cash collateral account (the "CASH COLLATERAL ACCOUNT") maintained
at a bank or financial institution acceptable to Agent. The Cash
Collateral Account shall be in the name of the applicable Borrower
and shall be pledged to, and subject to the control of, Agent, for
the benefit of Agent and Lenders, in a manner reasonably
satisfactory to Agent. Each Borrower hereby pledges and grants to
Agent, on behalf of itself and Lenders, a security interest in all
such funds and Cash Equivalents held in the
B-2
Cash Collateral Account from time to time and all proceeds thereof,
as security for the payment of all amounts due in respect of the
Letter of Credit Obligations and other Obligations, whether or not
then due. The Agreement, including this Annex B, shall constitute a
security agreement under applicable law.
(ii) If any Letter of Credit Obligations, whether or not then due and
payable, shall for any reason be outstanding on the Commitment
Termination Date, Borrowers shall either (A) provide cash collateral
therefor in the manner described above, or (B) cause all such
Letters of Credit and guaranties thereof, if any, to be canceled and
returned, or (C) deliver a stand-by letter (or letters) of credit in
guaranty of such Letter of Credit Obligations, which stand-by letter
(or letters) of credit shall be of like tenor and duration as, and
in an amount equal to 105% of the aggregate maximum amount then
available to be drawn under, the Letters of Credit to which such
outstanding Letter of Credit Obligations relate and shall be issued
by a Person, and shall be subject to such terms and conditions, as
are be satisfactory to Agent in its sole discretion.
(iii) From time to time after funds are deposited in the Cash Collateral
Account by any Borrower, whether before or after the Commitment
Termination Date, Agent may apply such funds or Cash Equivalents
then held in the Cash Collateral Account to the payment of any
amounts, and in such order as Agent may elect, as shall be or shall
become due and payable by such Borrower to Agent and Lenders with
respect to such Letter of Credit Obligations of such Borrower and,
upon the satisfaction in full of all Letter of Credit Obligations of
such Borrower, to any other Obligations of any Borrower then due and
payable.
(iv) No Borrower nor any Person claiming on behalf of or through any
Borrower shall have any right to withdraw any of the funds or Cash
Equivalents held in the Cash Collateral Account, except that upon
the termination of all Letter of Credit Obligations and the payment
of all amounts payable by Borrowers to Agent and Lenders in respect
thereof, any funds remaining in the Cash Collateral Account shall be
applied to other Obligations then due and owing and upon payment in
full of such Obligations, any remaining amount shall be paid to
Borrowers or as otherwise required by law. Interest earned on
deposits in the Cash Collateral Account shall be for the account of
Agent.
(d) Fees and Expenses
Borrowers agree to pay to Agent for the benefit of Revolving Lenders, as
compensation to such Lenders for Letter of Credit Obligations incurred
hereunder, (i) all costs and expenses incurred by Agent or any Lender on
account of such Letter of Credit Obligations, and (ii) for each month
during which any Letter of Credit Obligation shall remain outstanding, a
fee (the "LETTER OF CREDIT FEE") in an amount equal to the Applicable L/C
Margin from time to time in effect multiplied by the maximum amount
available from time to time to be drawn under the applicable Letter of
Credit. Such fee shall be paid to Agent for the benefit of the Revolving
Lenders in arrears, on the first day of each month and on the Commitment
Termination Date. In addition, Borrowers shall pay to any L/C Issuer, on
demand, such fees (including all per annum fees),
B-3
charges and expenses of such L/C Issuer in respect of the issuance,
negotiation, acceptance, amendment, transfer and payment of such Letter of
Credit or otherwise payable pursuant to the application and related
documentation under which such Letter of Credit is issued.
(e) Request for Incurrence of Letter of Credit Obligations
Borrower Representative shall give Agent at least two (2) Business Days'
prior written notice requesting the incurrence of any Letter of Credit
Obligation. The notice shall be accompanied by the form of the Letter of
Credit (which shall be acceptable to the L/C Issuer). Notwithstanding
anything contained herein to the contrary, Letter of Credit applications by
Borrower Representative and approvals by Agent and the L/C Issuer may be
made and transmitted pursuant to electronic codes and security measures
mutually agreed upon and established by and among Borrower Representative,
Agent and the L/C Issuer.
(f) Obligation Absolute
The obligation of Borrowers to reimburse Agent and Revolving Lenders for
payments made with respect to any Letter of Credit Obligation shall be
absolute, unconditional and irrevocable, without necessity of presentment,
demand, protest or other formalities, and the obligations of each Revolving
Lender to make payments to Agent with respect to Letters of Credit shall be
unconditional and irrevocable. Such obligations of Borrowers and Revolving
Lenders shall be paid strictly in accordance with the terms hereof under
all circumstances including the following:
(i) any lack of validity or enforceability of any Letter of Credit or
the Agreement or the other Loan Documents or any other agreement;
(ii) the existence of any claim, setoff, defense or other right that any
Borrower or any of its Affiliates or any Lender may at any time have
against a beneficiary or any transferee of any Letter of Credit (or
any Persons or entities for whom any such transferee may be acting),
Agent, any Lender, or any other Person, whether in connection with
the Agreement, the Letter of Credit, the transactions contemplated
herein or therein or any unrelated transaction (including any
underlying transaction between any Borrower or any of its Affiliates
and the beneficiary for which the Letter of Credit was procured);
(iii) any draft, demand, certificate or any other document presented under
any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by Agent (except as otherwise expressly provided in
paragraph (g)(ii)(C) below) or any L/C Issuer under any Letter of
Credit or guaranty thereof against presentation of a demand, draft
or certificate or other document that does not comply with the terms
of such Letter of Credit or such guaranty;
(v) any other circumstance or event whatsoever, that is similar to any
of the foregoing; or
(vi) the fact that a Default or an Event of Default has occurred and is
continuing.
B-4
(g) Indemnification; Nature of Lenders' Duties
(i) In addition to amounts payable as elsewhere provided in the
Agreement, Borrowers hereby agree to pay and to protect, indemnify,
and save harmless Agent and each Lender from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees and allocated costs
of internal counsel) that Agent or any Lender may incur or be
subject to as a consequence, direct or indirect, of (A) the issuance
of any Letter of Credit or guaranty thereof, or (B) the failure of
Agent or any Lender seeking indemnification or of any L/C Issuer to
honor a demand for payment under any Letter of Credit or guaranty
thereof as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
Governmental Authority, in each case other than to the extent solely
as a result of the gross negligence or willful misconduct of Agent
or such Lender (as finally determined by a court of competent
jurisdiction).
(ii) As between Agent and any Lender and Borrowers, Borrowers assume all
risks of the acts and omissions of, or misuse of any Letter of
Credit by beneficiaries of any Letter of Credit. In furtherance and
not in limitation of the foregoing, to the fullest extent permitted
by law neither Agent nor any Lender shall be responsible for: (A)
the form, validity, sufficiency, accuracy, genuineness or legal
effect of any document issued by any party in connection with the
application for and issuance of any Letter of Credit, even if it
should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (B) the validity or
sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part,
that may prove to be invalid or ineffective for any reason; (C)
failure of the beneficiary of any Letter of Credit to comply fully
with conditions required in order to demand payment under such
Letter of Credit; PROVIDED that, in the case of any payment by Agent
under any Letter of Credit or guaranty thereof, Agent shall be
liable to the extent such payment was made solely as a result of its
gross negligence or willful misconduct (as finally determined by a
court of competent jurisdiction) in determining that the demand for
payment under such Letter of Credit or guaranty thereof complies on
its face with any applicable requirements for a demand for payment
under such Letter of Credit or guaranty thereof; (D) errors,
omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex or otherwise, whether
or not they may be in cipher; (E) errors in interpretation of
technical terms; (F) any loss or delay in the transmission or
otherwise of any document required in order to make a payment under
any Letter of Credit or guaranty thereof or of the proceeds thereof;
(G) the credit of the proceeds of any drawing under any Letter of
Credit or guaranty thereof; and (H) any consequences arising from
causes beyond the control of Agent or any Lender. None of the above
shall affect, impair, or prevent the vesting of any of Agent's or
any Lender's rights or powers hereunder or under the Agreement.
B-5
(iii) Nothing contained herein shall be deemed to limit or to expand any
waivers, covenants or indemnities made by Borrowers in favor of any
L/C Issuer in any letter of credit application, reimbursement
agreement or similar document, instrument or agreement between or
among Borrowers and such L/C Issuer.
B-6
ANNEX C (SECTION 1.8)
TO
CREDIT AGREEMENT
CASH MANAGEMENT SYSTEMS
Borrowers shall and shall cause each other Credit Party to establish and
maintain the Cash Management Systems described below:
(a) On or before the Closing Date, and until the Termination Date, each
Borrower shall (i) establish lock boxes ("LOCK BOXES") or at Agent's
discretion, blocked accounts ("BLOCKED ACCOUNTS") at one or more of the
banks set forth in Disclosure Schedule (3.19), and shall request in writing
and otherwise take such reasonable steps to ensure that all Account Debtors
(except as set forth below) forward payment directly to such Lock Boxes,
and (ii) deposit and cause its Subsidiaries to deposit or cause to be
deposited promptly, and in any event no later than the first Business Day
after the date of receipt thereof, all cash, checks, drafts or other
similar items of payment relating to or constituting payments made in
respect of any and all Collateral (whether or not otherwise delivered to a
Lock Box) into one or more Blocked Accounts in such Borrower's name or any
such Subsidiary's name and at a bank identified in Disclosure Schedule
(3.19) (each, a "RELATIONSHIP BANK"). At the request of Agent, each
Borrower shall have established a concentration account in its name (each a
"CONCENTRATION ACCOUNT" and collectively, the "CONCENTRATION ACCOUNTS") at
the bank which shall be designated as the Concentration Account bank for
such Borrower in Disclosure Schedule (3.19) (the "CONCENTRATION ACCOUNT
BANK" and, collectively, the "CONCENTRATION ACCOUNT BANKS") which bank
shall be reasonably satisfactory to Agent and Borrowers.
(b) Each Borrower may maintain, in its name, an account (each a "DISBURSEMENT
ACCOUNT" and collectively, the "DISBURSEMENT ACCOUNTS") at a bank
reasonably acceptable to Agent into which Agent shall, from time to time,
deposit proceeds of Revolving Credit Advances and Swing Line Advances made
to such Borrower pursuant to Section 1.1 for use by such Borrower solely in
accordance with the provisions of Section 1.4. No Credit Party shall
maintain any deposit account other than a deposit account that is subject
to a Blocked Account Agreement, PROVIDED, that until the date forty-five
(45) days following the Closing Date the Credit Parties may maintain not
more than ten deposit accounts that are not subject to a Blocked Account
Agreement so long as no such deposit account has at any time a balance of
more than $5,000.
(c) On or before the Closing Date (or such later date as Agent shall consent to
in writing), each Concentration Account Bank, each bank where a
Disbursement Account is maintained and all other Relationship Banks, shall
have entered into tri-party blocked account agreements with Agent, for the
benefit of itself and Lenders, and the applicable Credit Party and
Subsidiaries thereof, as applicable, in form and substance reasonably
acceptable to Agent, which shall become operative on or prior to the
Closing Date (a "BLOCKED ACCOUNT Agreement"). Each such blocked account
agreement shall provide, among other things, that (i) all items of payment
deposited in
C-1
such account and proceeds thereof deposited in the applicable Concentration
Account are held by such bank as agent or bailee-in-possession for Agent,
on behalf of itself and Lenders, (ii) the bank executing such agreement has
no rights of setoff or recoupment or any other claim against such account,
as the case may be, other than for payment of its service fees and other
charges directly related to the administration of such account and for
returned checks or other items of payment, and (iii) from and after the
Closing Date (A) with respect to banks at which a Blocked Account is
maintained, such bank agrees, from and after the receipt of a notice (an
"ACTIVATION NOTICE") from Agent (which Activation Notice may be given by
Agent at any time at which (1) a Default or Event of Default has occurred
and is continuing, (2) Agent reasonably believes based upon information
available to it that a Default or an Event of Default is likely to occur;
(3) Agent reasonably believes that an event or circumstance that is likely
to have a Material Adverse Effect has occurred, or (4) Agent reasonably has
grounds to believe that the integrity of any Credit Party Cash Management
Systems has been compromised or any Credit Party compliance with the
provisions of this Annex C or any other provisions of the Loan Documents to
the extent related to such Cash Management Systems (any of the foregoing
being referred to herein as an "ACTIVATION EVENT")), to forward immediately
all amounts in each Blocked Account to such Borrower's Concentration
Account Bank and to commence the process of daily sweeps from such Blocked
Account into the applicable Concentration Account and (B) with respect to
each Concentration Account Bank, such bank agrees from and after the
receipt of an Activation Notice from Agent upon the occurrence of an
Activation Event, to immediately forward all amounts received in the
applicable Concentration Account to the Collection Account through daily
sweeps from such Concentration Account into the Collection Account. From
and after the date Agent has delivered an Activation Notice to any bank
with respect to any Blocked Account(s), no Credit Party shall, or shall
cause or permit any Subsidiary thereof to, accumulate or maintain cash in
Disbursement Accounts or payroll accounts as of any date of determination
in excess of checks outstanding against such accounts as of that date and
amounts necessary to meet minimum balance requirements.
(d) So long as no Default or Event of Default has occurred and is continuing,
Credit Parties may amend Disclosure Schedule (3.19) to add or replace a
Relationship Bank, Lock Box or Blocked Account or to replace any
Concentration Account or any Disbursement Account; PROVIDED, that (i) Agent
shall have consented in writing in advance to the opening of such account
or Lock Box with the relevant bank and (ii) prior to the time of the
opening of such account or Lock Box, the applicable Credit Party or its
Subsidiaries, as applicable, and such bank shall have executed and
delivered to Agent a tri-party blocked account agreement, in form and
substance reasonably satisfactory to Agent. Each Credit Party shall close
any of its accounts (and establish replacement accounts in accordance with
the foregoing sentence) promptly and in any event within thirty (30) days
following notice from Agent that the creditworthiness of any bank holding
an account is no longer acceptable in Agent's reasonable judgment, or as
promptly as practicable and in any event within sixty (60) days following
notice from Agent that the operating performance, funds transfer or
availability procedures or performance with respect to accounts or Lock
Boxes of the bank holding such accounts or Agent's liability under any
tri-party blocked account agreement with such bank is no longer acceptable
in Agent's reasonable judgment.
C-2
(e) The Lock Boxes, Blocked Accounts, Disbursement Accounts and the
Concentration Accounts shall be cash collateral accounts, with all cash,
checks and other similar items of payment in such accounts securing payment
of the Loans and all other Obligations, and in which the applicable Credit
Party and each Subsidiary thereof shall have granted a Lien to Agent, on
behalf of itself and Lenders, pursuant to its Security Agreement.
(f) All amounts deposited in the Collection Account shall be deemed received by
Agent in accordance with Section 1.10 and shall be applied (and allocated)
by Agent in accordance with Section 1.11. In no event shall any amount be
so applied unless and until such amount shall have been credited in
immediately available funds to the Collection Account.
(g) Each Credit Party shall and shall cause its Affiliates, officers,
employees, agents, directors or other Persons acting for or in concert with
such Borrower (each a "RELATED PERSON") to (i) hold in trust for Agent, for
the benefit of itself and Lenders, all checks, cash and other items or
payment constituting proceeds of Collateral received by such Credit Party
or any such Related Person, and (ii) within one (1) Business Day after
receipt by such Borrower or any such Related Person of any checks, cash or
other items or payment, deposit the same into a Blocked Account of such
Credit Party. Each Credit Party and each Related Person thereof
acknowledges and agrees that all cash, checks or other items of payment
constituting proceeds of Collateral are part of the Collateral. All
proceeds of the sale or other disposition of any Collateral, shall be
deposited directly into the applicable Blocked Accounts.
C-3
ANNEX D (SECTION 2.1(a))
TO
CREDIT AGREEMENT
CLOSING CHECKLIST
In addition to, and not in limitation of, the conditions described in Section
2.1 of the Agreement, pursuant to Section 2.1(a), the following items must be
received by Agent in form and substance satisfactory to Agent on or prior to the
Closing Date (each capitalized term used but not otherwise defined herein has
the meaning ascribed thereto in Annex A to the Agreement):
(A) Appendices
All Appendices to the Agreement, in form and substance satisfactory to
Agent.
(B) Revolving Notes and Swing Line Note
Duly executed originals of the Revolving Notes and Swing Line Notes for
each applicable Lender, dated the Closing Date, if requested by the
respective Lenders.
(C) Security Agreements
Duly executed originals of the Security Agreements executed by each Credit
Party, dated the Closing Date, and all instruments, documents and
agreements executed pursuant thereto.
(D) Insurance
Satisfactory evidence that the insurance policies required by Section 5.4
are in full force and effect, together with appropriate evidence showing
loss payable and/or additional insured clauses or endorsements, as
requested by Agent, in favor of Agent, on behalf of Lenders.
(E) Security Interests and Code Filings
(a) Evidence satisfactory to Agent that Agent (for the benefit of itself
and Lenders) has a valid and perfected first priority security
interest in the Collateral, including (i) such documents duly
executed by each Credit Party (including financing statements under
the Code and other applicable documents under the laws of any
jurisdiction with respect to the perfection of Liens) as Agent may
request in order to perfect its security interests in the Collateral
and (ii) copies of Code search reports listing all effective
financing statements that name any Credit Party as debtor, together
with copies of such financing statements, none of which shall cover
the Collateral, except for those relating to the Prior Obligations
(all of which shall be terminated on the Closing Date) or Permitted
Encumbrances.
D-1
(b) Evidence satisfactory to Agent, including copies, of all UCC-1 and
other financing statements filed in favor of any Credit Party with
respect to each location, if any, at which Parts and Tools Inventory
or Equipment Inventory may be consigned.
(c) Control Letters from (i) all issuers of uncertificated securities
and financial assets held by each Borrower, (ii) all securities
intermediaries with respect to all securities accounts and
securities entitlements of each Borrower, and (iii) all futures
commission agents and clearing houses with respect to all
commodities contracts and commodities accounts held by any Borrower.
(d) Notwithstanding the foregoing, each Credit Party shall take all
necessary action (including, without limitation, the delivery of all
certificates of title to Agent and the addition of Agent as a Lien
holder to each such certificate of title), to provide Agent with a
first priority perfected security interest in all P&E covered by a
certificate of title held by such Credit Party as soon as
practicable following the Closing Date, but in no event later than
thirty (30) days following the Closing Date.
(F) Payoff Letter; Termination Statements
Copies of a duly executed payoff letter, in form and substance reasonably
satisfactory to Agent, by and between all parties to the Prior Lenders'
loan documents evidencing repayment in full of all Prior Obligations,
together with (a) UCC-3 or other appropriate termination statements, in
form and substance reasonably satisfactory to Agent, manually signed by the
Prior Lenders releasing all liens of Prior Lender upon any of the personal
property of each applicable Credit Party, and (b) termination of all
blocked account agreements, bank agency agreements or other similar
agreements or arrangements or arrangements in favor of Prior Lender or
relating to the Prior Obligations.
(G) Intellectual Property Security Agreements
Duly executed originals of Trademark Security Agreements, Copyright
Security Agreements and Patent Security Agreements, each dated the Closing
Date and signed by each Credit Party that owns Trademarks, Copyrights
and/or Patents, as applicable, all in form and substance reasonably
satisfactory to Agent, together with all instruments, documents and
agreements executed pursuant thereto.
(H) Initial Borrowing Base Certificate
Duly executed originals of an initial Borrowing Base Certificate from each
Borrower, dated the Closing Date, reflecting information concerning
Eligible Accounts, Eligible Parts and Tools Inventory, Eligible Rolling
Stock and Eligible Equipment Inventory of Borrowers.
D-2
(I) Initial Notice of Revolving Credit Advance
Duly executed originals of a Notice of Revolving Credit Advance, dated the
Closing Date, with respect to the initial Revolving Credit Date Advance to
be requested by Borrowers on the Closing Date.
(J) Letter of Direction
Duly executed originals of a letter of direction from Borrowers addressed
to Agent, on behalf of itself and Lenders, with respect to the disbursement
on the Closing Date of the proceeds of the initial Revolving Credit
Advance.
(K) Cash Management System; Blocked Account Agreements
Evidence satisfactory to Agent that, as of the Closing Date, Cash
Management Systems complying with Annex C to the Agreement have been
established and are currently being maintained in the manner set forth in
such Annex C, together with copies of duly executed tri-party blocked
account and lock box agreements, reasonably satisfactory to Agent, with the
banks as required by Annex C.
(L) Certificate of Formation and Good Standing
For each Credit Party, (a) its articles or certificate of incorporation or
certificate of formation, as applicable, and all amendments thereto, (b)
good standing certificates (including verification of tax status) in its
state of incorporation or formation, as applicable, and (c) good standing
certificates (including verification of tax status) and certificates of
qualification to conduct business in each jurisdiction where its ownership
or lease of property or the conduct of its business requires such
qualification, each dated a recent date prior to the Closing Date and
certified by the applicable Secretary of State or other authorized
Governmental Authority.
(M) By-laws and Resolutions
For each Credit Party, (a) its by-laws or operating agreement, as
applicable, together with all amendments thereto and (b) resolutions of
such Person's Board of Directors or Board of Members, as applicable,
approving and authorizing the execution, delivery and performance of the
Loan Documents to which it is a party and the transactions to be
consummated in connection therewith, each certified as of the Closing Date
by such Person's secretary or an assistant secretary as being in full force
and effect without any modification or amendment.
(N) Incumbency Certificates
For each Credit Party, signature and incumbency certificates of the
officers of such Person executing any of the Loan Documents, certified as
of the Closing Date by such Person's secretary or an assistant secretary as
being true, accurate, correct and complete.
D-3
(O) Opinions of Counsel
Duly executed originals of opinions of Xxxxxxxx & Xxxxx, New York counsel
for the Credit Parties, together with opinions of Louisiana, Delaware,
Washington and Montana counsel, each in form and substance reasonably
satisfactory to Agent and its counsel, dated the Closing Date, and each
accompanied by a letter addressed to such counsel from the Credit Parties,
authorizing and directing such counsel to address its opinion to Agent, on
behalf of Lenders, and to include in such opinion an express statement to
the effect that Agent and Lenders are authorized to rely on such opinion.
(P) Pledge Agreements
Duly executed originals of each of the Pledge Agreements accompanied by (as
applicable) share certificates representing all of the outstanding Stock
being pledged pursuant to such Pledge Agreement and stock powers for such
share certificates executed in blank.
(Q) Accountants' Letter
A letter from the Credit Parties to the independent auditors authorizing
the independent certified public accountants of the Credit Parties to
communicate with Agent and Lenders in accordance with Section 4.2 and
acknowledging Lenders' reliance on the auditor's certification of past and
future Financial Statements.
(R) Appointment of Agent for Service
An appointment of CT Corporation as each Credit Party's agent for service
of process.
(S) Guaranties
Duly executed originals of each Guaranty dated the Closing Date, and all
documents, instruments and agreements executed pursuant thereto.
(T) GE Capital Fee Letter
Duly executed originals of the GE Capital Fee Letter in form and substance
satisfactory to GE Capital.
(U) Officer's Certificate
Duly executed originals of a certificate of an Authorized Officer of each
Credit Party, dated the Closing Date, stating that, since December 31, 2001
(a) no event or condition has occurred or is existing which could
reasonably be expected to have a Material Adverse Effect; (b) there has
been no material adverse change in the industry in which any Borrower
operates; (c) no Litigation has been commenced against such Credit Party
which, if successful, would have a Material Adverse Effect or could
challenge any of the transactions contemplated by the Agreement and the
other Loan Documents; (d) there have been no Restricted Payments made by
any Credit Party;
D-4
and (e) there has been no material increase in liabilities, liquidated or
contingent, and no material decrease in assets of any Borrower or any of
its Subsidiaries.
(V) Waivers
Landlord waivers and consents, bailee letters and mortgagee agreements in
form and substance reasonably satisfactory to Agent, in each case as
required pursuant to Section 5.9, PROVIDED that Agent may waive this
condition as to any one or more locations as contemplated by Section 5.9
and the various borrowing base definitions.
(W) Appraisals
Equipment Inventory Appraisals and P&E Appraisals conducted by an appraiser
reasonably satisfactory to Agent and Borrowers and using a methodology
reasonably satisfactory to Agent, each of which shall be in form and
substance reasonably satisfactory to Agent.
(X) Environmental Reports
Agent shall have received such environmental review and audit reports with
respect to the Real Estate of any Credit Party as Agent shall have
requested, and Agent shall be satisfied, in its sole discretion, with the
contents of all such environmental reports.
(Y) Audited Financials; Financial Condition
The Financial Statements, Projections and other materials set forth in
Section 3.4, certified by an Authorized Officer of Borrower Representative,
in each case in form and substance reasonably satisfactory to Agent, and
Agent shall be satisfied, in its sole discretion, with all of the
foregoing. Agent shall have further received a certificate of an Authorized
Officer of each Borrower, based on such Pro Forma and Projections, to the
effect that (a) such Borrower will be Solvent upon the consummation of the
transactions contemplated herein; (b) the Pro Forma fairly presents the
financial condition of such Borrower as of the date thereof after giving
effect to the transactions contemplated by the Loan Documents; (c) the
Projections are based upon estimates and assumptions stated therein, all of
which such Borrower believes to be reasonable and fair in light of current
conditions and current facts known to such Borrower and, as of the Closing
Date, reflect such Borrower's good faith and reasonable estimates of its
future financial performance and of the other information projected therein
for the period set forth therein; (d) the Fair Salable Balance Sheet was
prepared on the same basis as the Pro Forma, except that Borrowers' assets
are set forth therein at their fair SALABLE values on a going concern
basis, and the liabilities set forth therein include all contingent
liabilities of Borrower stated at the reasonably estimated present values
thereof; and (e) containing such other statements with respect to the
solvency of such Borrower and matters related thereto as Agent shall
request.
(Z) Syndication Letter
Duly executed originals of the Syndication Letter in form and substance
satisfactory to GE Capital.
D-5
(AA) Inter-Creditor Agreement
Duly executed originals of the Inter-Creditor Agreement, and all documents,
instruments and agreements executed pursuant thereto.
(BB) Vendor Inter-Creditor Agreements
Duly executed originals of a Vendor Inter-Creditor Agreement for each
holder of a Lien described in Section 6.7(d) in the form required by such
Section, in each case as required pursuant to Section 6.7(d), PROVIDED that
Agent may waive this condition as to any one or more holders of such a Lien
within the $17,500,000 limit contemplated by the last proviso to Section
6.7(d).
(CC) Other Documents
Such other certificates, documents and agreements respecting and Credit
Party as Agent may, in its sole discretion, request.
D-6
ANNEX E (SECTION 4.1(a))
TO
CREDIT AGREEMENT
FINANCIAL STATEMENTS AND PROJECTIONS -- REPORTING
H&E Holdings and Borrowers shall deliver or cause to be delivered to Agent or to
Agent and Lenders, as indicated, the following:
(a) Monthly Financials
To Agent and Lenders, within thirty (30) days after the end of each
Fiscal Month, financial information regarding H&E Holdings and its
Subsidiaries, certified by an Authorized Officer of Borrower
Representative, consisting of consolidated and consolidating, if
applicable (i) unaudited balance sheets as of the close of such
Fiscal Month (including a summary of the outstanding balance of all
Intercompany Notes as of the last day of such Fiscal Month) and the
related statements of income and cash flow and shareholders' equity
for that portion of the Fiscal Year ending as of the close of such
Fiscal Month and (ii) unaudited statements of income, cash flows and
shareholders' equity for such Fiscal Month, setting forth in
comparative form the figures for the corresponding period in the
prior year and the figures contained in the Projections for such
Fiscal Year, all prepared in accordance with GAAP (subject to normal
year-end adjustments). Such financial information shall be
accompanied by (A) a statement in reasonable detail (each, a
"COMPLIANCE CERTIFICATE") showing the calculations used in
determining compliance with each Financial Covenant which is tested
on a monthly basis as of the end of such Fiscal Quarter, and (B) the
certification of an Authorized Officer of Borrower Representative
that (i) such financial information presents fairly in accordance
with GAAP (subject to normal year-end adjustments) the financial
position and results of operations of H&E Holdings and its
Subsidiaries, on a consolidated and consolidating basis, if
applicable, in each case as at the end of such Fiscal Month and for
that portion of the Fiscal Year then ended and (ii) any other
information presented is true, correct and complete in all material
respects and that there was no Default or Event of Default in
existence as of such time or, if a Default or Event of Default has
occurred and is continuing, describing the nature thereof and all
efforts undertaken to cure such Default or Event of Default.
(b) Quarterly Financials
To Agent and Lenders, within forty-five (45) days after the end of
each Fiscal Quarter, consolidated and consolidating, if applicable,
financial information regarding H&E Holdings and its Subsidiaries,
certified by an Authorized Officer of Borrower Representative,
including (i) unaudited balance sheets as of the close of such
Fiscal
E-1
Quarter and the related statements of income and cash flow for that
portion of the Fiscal Year ending as of the close of such Fiscal
Quarter and (ii) unaudited statements of income and cash flows for
such Fiscal Quarter, in each case setting forth in comparative form,
the figures for the corresponding period in the prior year and the
figures contained in the Projections for such Fiscal Year, all
prepared in accordance with GAAP (subject to normal year-end
adjustments). Such financial information shall be accompanied by (A)
a Compliance Certificate in respect of each of the Financial
Covenants that are tested on a quarterly basis as at the end of such
Fiscal Quarter and (B) the certification of an Authorized Officer of
Borrower Representative that (i) such financial information presents
fairly in accordance with GAAP (subject to normal year-end
adjustments) the financial position, results of operations and
statements of cash flows of H&E Holdings and its Subsidiaries, on
both a consolidated and consolidating basis, if applicable, as at
the end of such Fiscal Quarter and for that portion of the Fiscal
Year then ended, (ii) any other information presented is true,
correct and complete in all material respects and that there was no
Default or Event of Default in existence as of such time or, if a
Default or Event of Default has occurred and is continuing,
describing the nature thereof and all efforts undertaken to cure
such Default or Event of Default. In addition, H&E Holdings and
Borrowers shall deliver to Agent and Lenders, within forty-five (45)
days after the end of each Fiscal Quarter, a management discussion
and analysis that includes a comparison to budget for that Fiscal
Quarter and a comparison of performance for that Fiscal Quarter to
the corresponding period in the prior year.
(c) Operating Plan
To Agent and Lenders, as soon as available, but not later than
forty-five (45) days after the end of each Fiscal Year, an annual
operating plan for H&E Holdings and its Subsidiaries, on a
consolidated and consolidating basis, approved by the Board of
Directors of H&E Holdings, (a) for the first Fiscal Year following
the Closing Date, which (i) includes a statement of all of the
material assumptions on which such plan is based and (ii) includes
monthly balance sheets, a monthly budget, income statements and
statements of cash flow for the following year and (b) for the four
Fiscal Years thereafter, which (i) includes a statement of all of
the material assumptions on which such plan is based and (ii)
includes monthly balance sheets, a monthly budget, income statements
and statements of cash flow for the following year, and in each such
case, integrates sales, gross profits, operating expenses, operating
profit, cash flow projections and Borrowing Availability
projections, all prepared on the same basis and in similar detail as
that on which operating results are reported (and in the case of
cash flow projections, representing management's good faith
estimates of future financial performance based on historical
performance), and including plans for personnel, Capital
Expenditures and facilities.
E-2
(d) Annual Audited Financials
To Agent and Lenders, within ninety (90) days after the end of each
Fiscal Year, audited Financial Statements for H&E Holdings and its
Subsidiaries on a consolidated and (unaudited) consolidating basis,
if applicable, consisting of balance sheets and statements of income
and retained earnings and cash flows, setting forth in comparative
form in each case the figures for the previous Fiscal Year which
Financial Statements shall be prepared in accordance with GAAP and
certified without qualification, by an independent certified public
accounting firm of national standing or otherwise acceptable to
Agent. Such Financial Statements shall be accompanied by (i) a
statement prepared in reasonable detail showing the calculations
used in determining compliance with each of the Financial Covenants
as of the end of such Fiscal Year, (ii) a report from such
accounting firm to the effect that, in connection with their audit
examination, nothing has come to their attention to cause them to
believe that a Default or Event of Default has occurred (or
specifying those Defaults and Events of Default that they became
aware of), it being understood that such audit examination extended
only to accounting matters and that no special investigation was
made with respect to the existence of Defaults or Events of Default,
(iii) a letter addressed to Agent, on behalf of itself and Lenders,
in form and substance reasonably satisfactory to Agent and subject
to standard qualifications required by nationally recognized
accounting firms, signed by such accounting firm acknowledging that
Agent and Lenders are entitled to rely upon such accounting firm's
certification of such audited Financial Statements, (iv) the annual
letters to such accountants in connection with their audit
examination detailing contingent liabilities and material litigation
matters, and (v) the certification of an Authorized Officer of
Borrower Representative that all such Financial Statements present
fairly in accordance with GAAP the financial position, results of
operations and statements of cash flows of H&E Holdings and its
Subsidiaries on a consolidated and consolidating basis, if
applicable, as at the end of such Fiscal Year and for the period
then ended, and that there was no Default or Event of Default in
existence as of such time or, if a Default or Event of Default has
occurred and is continuing, describing the nature thereof and all
efforts undertaken to cure such Default or Event of Default.
(e) Management Letters
To Agent and Lenders, within ten (10) Business Days after receipt
thereof by any Credit Party, copies of all management letters,
exception reports or similar letters or reports received by such
Credit Party from its independent certified public accountants.
(f) Default Notices
To Agent and Lenders, as soon as practicable, and in any event
within five (5) Business Days after an executive officer of any
Credit Party has actual knowledge of the existence of any Default,
Event of Default or other event that has had a Material Adverse
Effect, telephonic or telecopied notice specifying the nature of
such Default or Event of Default
E-3
or other event, including the anticipated effect thereof, which
notice, if given telephonically, shall be promptly confirmed in
writing on the next Business Day.
(g) SEC Filings and Press Releases
To Agent and Lenders, promptly upon their becoming available, copies
of: (i) all Financial Statements, reports, notices and proxy
statements made publicly available by any Credit Party to its
security holders; (ii) all regular and periodic reports and all
registration statements and prospectuses, if any, filed by any
Credit Party with any securities exchange or with the Securities and
Exchange Commission or any governmental regulatory authority; and
(iii) all press releases and other statements made available by any
Credit Party to the public concerning material adverse changes or
developments in the business of such Credit Party.
(h) Subordinated Debt, Senior Notes and Equity Notices
To Agent and Lenders, as soon as practicable, copies of all material
written notices given or received by any Credit Party with respect
to any Subordinated Debt (including the Senior Subordinated Notes),
the Senior Notes or Stock of such Credit Party, and, within two (2)
Business Days after such Credit Party obtains knowledge of any
matured or unmatured event of default with respect to any
Subordinated Debt (including the Senior Subordinated Notes), or the
Senior Notes, notice of such event of default.
(i) Supplemental Schedules
To Agent, supplemental disclosures, if any, required by Section 5.6.
(j) Litigation
To Agent and Lenders in writing, promptly upon learning thereof,
written notice of any Litigation commenced or threatened against any
Credit Party that (i) seeks damages in excess of $500,000, (ii)
seeks injunctive relief, (iii) is asserted or instituted against any
Plan, its fiduciaries or its assets or against any Credit Party or
ERISA Affiliate in connection with any Plan, (iv) alleges criminal
misconduct by any Credit Party, or (v) alleges the violation of any
law regarding, or seeks remedies in connection with, any
Environmental Liabilities or (vi) involves any product recall.
(k) Insurance Notices
To Agent, disclosure of losses or casualties required by Section
5.4.
(l) Default and Other Notices
To Agent and Lenders, within five (5) Business Days after receipt
thereof, copies of (i) any and all default notices received under or
with respect to any leased location or
E-4
public warehouse where Collateral is located, and (ii) such other
notices or documents as Agent may reasonably request.
(m) Lease Amendments
To Agent within five (5) Business Days after the receipt thereof,
copies of all material amendments to any of the five (5) largest
real estate leases (by the value of annual payments of the real
estate so leased) or to any real estate lease to which Xxx Xxxxxxx
or Xxxx Xxxxxxxx is a lessor.
(n) Other Documents
To Agent and Lenders, such other financial and other information
respecting any Credit Party's business or financial condition as
Agent or any Lender shall, from time to time, reasonably request.
E-5
ANNEX F (SECTION 4.1(b))
TO
CREDIT AGREEMENT
COLLATERAL REPORTS
Borrowers shall deliver or cause to be delivered the following:
(a) To Agent, upon its request, and in no event less frequently than ten (10)
Business Days after the end of each Fiscal Month (together with a copy of
all or any part of the following reports requested by any Lender in writing
after the Closing Date), each of the following reports, each of which shall
be prepared by the applicable Borrower as of the last day of the
immediately preceding Fiscal Month or the date two (2) days prior to the
date of any such request:
(i) a Borrowing Base Certificate with respect to each Borrower, in
each case accompanied by such supporting detail and documentation as shall
be requested by Agent in its reasonable discretion;
(ii) with respect to each Borrower, a summary of Parts and Tools
Inventory and Equipment Inventory by branch location and type with a
supporting perpetual Parts and Tools Inventory and Equipment Inventory
report, in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion;
(iii) with respect to each Borrower, a monthly trial balance showing
Accounts outstanding aged from invoice due date as follows: 1 to 30 days,
31 to 60 days, 61 to 90 days and 91 days or more, accompanied by such
supporting detail and documentation as shall be requested by Agent in its
reasonable discretion; and
(iv) with respect to each Borrower, a report describing outstanding
Equipment Inventory rentals for such period and the Equipment Inventory
subject thereto.
(b) To Agent, on a weekly basis or at such more frequent intervals as Agent may
request from time to time (together with a copy of all or any part of such
delivery requested by any Lender in writing after the Closing Date),
collateral reports with respect to each Borrower, including all additions
and reductions (cash and non-cash) with respect to Accounts of each
Borrower, in each case accompanied by such supporting detail and
documentation as shall be requested by Agent in its reasonable discretion
each of which shall be prepared by the applicable Borrower as of the last
day of the immediately preceding week or the date 2 days prior to the date
of any such request;
(c) To Agent, at the time of delivery of each of the monthly Financial
Statements delivered pursuant to Annex E:
(i) a reconciliation of the Accounts trial balance of each Borrower
to such Borrower's most recent Borrowing Base Certificate, general ledger
and monthly Financial
F-1
Statements delivered pursuant to Annex E, in each case accompanied by such
supporting detail and documentation as shall be requested by Agent in its
reasonable discretion;
(ii) a reconciliation of the perpetual inventory by branch location
of each Borrower to such Borrower's most recent Borrowing Base Certificate,
general ledger and monthly Financial Statements delivered pursuant to Annex
E, in each case accompanied by such supporting detail and documentation as
shall be requested by Agent in its reasonable discretion;
(iii) an aging of accounts payable and a reconciliation of that
accounts payable aging to each Borrower's general ledger and monthly
Financial Statements delivered pursuant to Annex E, in each case
accompanied by such supporting detail and documentation as shall be
requested by Agent in its reasonable discretion; and
(iv) a reconciliation of the outstanding Loans as set forth in the
monthly Loan Account statement provided by Agent to each Borrower's general
ledger and monthly Financial Statements delivered pursuant to Annex E, in
each case accompanied by such supporting detail and documentation as shall
be requested by Agent in its reasonable discretion;
(d) To Agent, at the time of delivery of each of the quarterly Financial
Statements delivered pursuant to Annex E, (i) a listing of government
contracts of each Borrower subject to the Federal Assignment of Claims Act
of 1940; and (ii) a list of any applications for the registration of any
Patent, Trademark or Copyright filed by any Credit Party with the United
States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency in the prior Fiscal Quarter;
(e) Each Borrower, at its own expense, shall deliver to Agent the results of
each physical verification, if any, that such Borrower or any of its
Subsidiaries may in their discretion have made, or caused any other Person
to have made on their behalf, of all or any portion of their Parts and
Tools Inventory or Equipment Inventory (and, if an Event of Default has
occurred and is continuing, each Borrower shall, upon the request of Agent,
conduct, and deliver the results of, such physical verifications as Agent
may require);
(f) Each Borrower, at its own expense, shall deliver to Agent monthly, a fleet
utilization report, prepared on a "days rented" basis, or on such other
basis or format as is reasonably acceptable to the Agent;
(g) Each Borrower, at its own expense, shall deliver to Agent the Equipment
Inventory Appraisal, the P&E Appraisal and such other appraisals of its
assets as Agent may request at any time after the occurrence and during the
continuance of a Default or an Event of Default, such appraisals to be
conducted by an appraiser, and in form and substance, reasonably
satisfactory to Agent; and
(h) Such other reports, statements and reconciliations with respect to the
Borrowing Base, Collateral or Obligations of any Borrower or any other
Credit Party as Agent shall from time to time request in its reasonable
discretion.
F-2
ANNEX G (SECTION 6.10)
TO
CREDIT AGREEMENT
FINANCIAL COVENANTS
Neither H&E Holdings nor any Subsidiary thereof shall breach or fail to
comply with any of the following financial covenants, each of which shall be
calculated in accordance with GAAP consistently applied:
(a) MAXIMUM SENIOR DEBT TO TANGIBLE ASSETS RATIO. H&E Holdings and its
Subsidiaries shall have on a consolidated basis at the end of each Fiscal
Quarter, a Senior Debt to Tangible Assets Ratio as of the last day of such
Fiscal Quarter of not more than 1.10 to 1.00 for such Fiscal Quarter.
(b) MAXIMUM LEVERAGE RATIO. H&E Holdings and its Subsidiaries on a consolidated
basis shall have, at the end of each Fiscal Quarter set forth below, a
Leverage Ratio as of the last day of such Fiscal Quarter and for the
12-month period then ended of not more than the following:
4.60 to 1.00 for each Fiscal Quarter ending on or prior to
December 31, 2004;
4.25 to 1.00 for each Fiscal Quarter ending thereafter.
(c) MAXIMUM ADJUSTED LEVERAGE RATIO. H&E Holdings and its Subsidiaries on a
consolidated basis shall have, at the end of each Fiscal Quarter set forth
below, an Adjusted Leverage Ratio as of the last day of such Fiscal Quarter
and for the 12-month period then ended of not more than the following:
4.60 to 1.00 for each Fiscal Quarter ending on or prior to
December 31, 2004;
4.40 to 1.00 for each Fiscal Quarter ending thereafter.
(d) MINIMUM UTILIZATION RATE OF EQUIPMENT INVENTORY RATIO. H&E Holdings and its
Subsidiaries shall have on a consolidated basis at the end of each Fiscal
Quarter set forth below, a Utilization Rate of Equipment Inventory Ratio
for the 12-month period then ended of not less than 28% for such Fiscal
Quarter.
(e) MINIMUM ADJUSTED INTEREST COVERAGE RATIO. H&E Holdings and its Subsidiaries
on a consolidated basis shall have at the end of each Fiscal Quarter set
forth below, an Adjusted Interest Coverage Ratio for the 12-month period
then ended of not less than the following:
1.45 to 1.00 for each Fiscal Quarter ending on or prior to March 31, 2004;
1.50 to 1.00 for each Fiscal Quarter ending on or after June 30, 2004 and
on or prior to December 31, 2004;
1.60 to 1.00 for each Fiscal Quarter ending thereafter.
G-1
(f) MAXIMUM P&E CAPITAL EXPENDITURES. H&E Holdings and its Subsidiaries on a
consolidated basis shall not make P&E Capital Expenditures during any
Fiscal Year that exceed in the aggregate $5,000,000 for such Fiscal Year.
Unless otherwise specifically provided herein, any accounting term used in
the Agreement has the meaning customarily given such term in accordance
with GAAP, and all financial computations hereunder shall be computed in
accordance with GAAP consistently applied. That certain items or
computations are explicitly modified by the phrase "in accordance with
GAAP" shall in no way be construed to limit the foregoing. If any
"Accounting Changes" (as defined below) occur and such changes result in a
change in the calculation of the financial covenants, standards or terms
used in the Agreement or any other Loan Document, then Borrowers, Agent and
Lenders agree to enter into negotiations in order to amend such provisions
of the Agreement so as to equitably reflect such Accounting Changes with
the desired result that the criteria for evaluating Borrowers' and their
Subsidiaries' financial condition shall be the same after such Accounting
Changes as if such Accounting Changes had not been made; PROVIDED, that the
agreement of Requisite Lenders to any required amendments of such
provisions shall be sufficient to bind all Lenders. "ACCOUNTING CHANGES"
means (a) changes in accounting principles required by the promulgation of
any rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants
(or successor thereto or any agency with similar functions), (b) changes in
accounting principles concurred in by any Borrower's certified public
accountants; (c) purchase accounting adjustments under A.P.B. 16 or 17 and
EITF 88-16, and the application of the accounting principles set forth in
FASB 109, including the establishment of reserves pursuant thereto and any
subsequent reversal (in whole or in part) of such reserves; and (d) the
reversal of any reserves established as a result of purchase accounting
adjustments. All such adjustments resulting from expenditures made
subsequent to the Closing Date (including capitalization of costs and
expenses or payment of pre-Closing Date liabilities) shall be treated as
expenses in the period the expenditures are made and deducted as part of
the calculation of EBITDA in such period. If Agent, Borrowers and Requisite
Lenders agree upon the required amendments, then after appropriate
amendments have been executed and the underlying Accounting Change with
respect thereto has been implemented, any reference to GAAP contained in
the Agreement or in any other Loan Document shall, only to the extent of
such Accounting Change, refer to GAAP, consistently applied after giving
effect to the implementation of such Accounting Change. If Agent, Borrowers
and Requisite Lenders cannot agree upon the required amendments within
thirty (30) days following the date of implementation of any Accounting
Change, then all Financial Statements delivered and all calculations of
financial covenants and other standards and terms in accordance with the
Agreement and the other Loan Documents shall be prepared, delivered and
made without regard to the underlying Accounting Change. For purposes of
Section 8.1, a breach of a Financial Covenant contained in this Annex G
shall be deemed to have occurred as of any date of determination by Agent
as of the last day of any specified measurement period, regardless of when
the Financial Statements reflecting such breach are delivered to Agent.
G-2
ANNEX H (SECTION 9.10(a))
TO
CREDIT AGREEMENT
LENDERS' WIRE TRANSFER INFORMATION
Name: General Electric Capital Corporation
Bank: Bankers Trust Company
New York, New York
ABA #: 000000000
Account #: 00000000
Account Name: GECC/CAF Depository
Reference: CFC [4121]
Name: Bank of America Business, N.A.
Bank: Bank of America, N.A.
ABA #: 000-000-000
Account #: 1235303848
Account Name: Bank of America Business Credit
Reference: H&E Equipment
Name: Fleet Capital Corporation
Bank: Fleet National Bank
ABA #: 000-000-000
Account #: 000-000-0000
Account Name: For Credit To: Fleet Capital NE Collections
Reference: H&E Finance
Name: LaSalle Business Credit, Inc.
Bank: LaSalle National Bank
ABA #: 000000000
Account #: 5800333378
Account Name: LaSalle Business Credit, Inc.
Reference: Head & Xxxxxxxx Participation
Name: ORIX Financial Services, Inc.
Bank: Mellon Bank
ABA #: 000-000-000
Account #: 050-2481
Account Name: ORIX Financial Services, Inc.
Reference: H&E Equipment Services
H-1
Name: PNC Bank National Association
Bank: PNC Bank
ABA #: 000000000
Account #: 196039957830
Account Name: PNC Business Credit
Reference: H&E Equipment Services
H-2
ANNEX I (SECTION 11.10)
TO
CREDIT AGREEMENT
NOTICE ADDRESSES
(A) If to Agent or GE Capital, at:
General Electric Capital Corporation
Capital Funding, Inc.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: H&E Equipment Services L.L.C. Account Manager
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with copies to:
General Electric Capital Corporation
Capital Funding, Inc.
000 Xxxx Xxxxx, Xxxxxxxx X, Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Corporate Counsel
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
and:
General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attention: Corporate Counsel
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
and:
Xxxxxxxx Chance Xxxxxx & Xxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
and
I-1
General Electric Capital Corporation, Commercial Equipment Finance
00 Xxx Xxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(B) If to a Lender other than GE Capital, at the following, as applicable:
PNC Bank, National Association
One PNC Plaza
000 Xxxxx Xxxxxx - 0xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx Xxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
LaSalle Business Credit, Inc.
Xxx Xxxxxxxxxxxx Xxxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Fleet Capital Corporation
0000 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
Orix Financial Services, Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
I-2
Bank of America, N.A.
000 Xxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xx Xxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(C) If to any Credit Party, to Borrower Representative at:
H&E Equipment Services L.L.C.
00000 Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
I-3
ANNEX J (FROM ANNEX A - COMMITMENTS DEFINITION)
to
CREDIT AGREEMENT
Lender(s):
GENERAL ELECTRIC CAPITAL CORPORATION
Revolving Loan Commitment: $ 50,000,000
Swing Line Commitment: $ 10,000,000
PNC BANK, NATIONAL ASSOCIATION
Revolving Loan Commitment: $ 20,000,000
LASALLE BUSINESS CREDIT, INC.
Revolving Loan Commitment: $ 15,000,000
FLEET CAPITAL CORPORATION
Revolving Loan Commitment: $ 30,000,000
ORIX FINANCIAL SERVICES, INC.
Revolving Loan Commitment: $ 10,000,000
BANK OF AMERICA, N.A.
Revolving Loan Commitment: $ 25,000,000
J-1
