Exhibit 10.2
 
EXECUTION VERSION

AMENDMENT NO. 2 TO AMENDED AND RESTATED CREDIT AGREEMENT

This Amendment No. 2 to Amended and Restated Credit Agreement (this “Amendment”)
is dated as of July 22, 2010, by and among THE DAVEY TREE EXPERT COMPANY, an
Ohio corporation (“Borrower”), the lenders party to the Credit Agreement, as
hereinafter defined (the “Banks”), and KEYBANK NATIONAL ASSOCIATION, as agent
for the Banks (“Agent”).

WHEREAS, Borrower, Agent and the Banks are parties to a certain Amended and
Restated Credit Agreement, dated as of November 21, 2006, which provides, among
other things, for revolving loans, letters of credit and other financial
accommodations, all upon certain terms and conditions stated therein (as amended
and as the same may from time to time be further amended, restated or otherwise
modified, the “Credit Agreement”); and

WHEREAS, Borrower, Agent and the Banks desire to amend the Credit Agreement to
modify certain provisions thereof;

NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained and for other valuable considerations, Borrower, Agent and the
Banks hereby agree as follows:

Section 1.   Definitions.  Each capitalized term used herein and not otherwise
defined in this Amendment shall be defined in accordance with the Credit
Agreement.
 
Section 2.   Amendments.
 
2.1 Schedule 1.  The Credit Agreement is hereby amended to delete the Schedule 1
therefrom in its entirety and to insert in place thereof the Schedule 1 attached
hereto as Exhibit A.
 
2.2 Schedule 2.  The Credit Agreement is hereby amended to delete the Schedule 2
therefrom in its entirety and to insert in place thereof the Schedule 2 attached
hereto as Exhibit B.
 
2.3 Amendment to Article I.  Article I of the Credit Agreement is hereby amended
to delete the heading “DEFINITIONS” therefrom and to insert in its place
“SECTION 1.1 DEFINITIONS”.
 
2.4 Deletion of Definitions. Article I of the Credit Agreement is hereby amended
to delete the definitions of “Term Loan”, “Term Loan Commitment”, “Term Loan
Draw Date”, “Term Loan Draw Period”, “Term Loan Maturity Date”, “Term Note”, and
“Total Term Loan Commitment Amount” therefrom in their entirety.
 
2.5 Addition of Definitions.  Article I of the Credit Agreement is hereby
amended to add the following definitions thereto in appropriate alphabetical
order:
 

 
 

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 "Amendment No. 2” shall mean the Amendment No. 2 to Amended and Restated Credit
Agreement, dated as of July 22, 2010, among Borrower, Banks and Agent.
 
“Amendment No. 2 Effective Date” shall have the meaning assigned to such term in
the  Amendment No. 2.
 
“Applicable Base Rate Margin” shall mean:
 
(a)           for the period from the Amendment No. 2 Effective Date through and
including August 31, 2010, 0.0 basis points; and
 
(b)           commencing with the financial statements for the fiscal quarter
ending June 30, 2010, the number of basis points set forth in the following
matrix, based upon the result of the computation of the Leverage Ratio, shall be
used to establish the number of basis points that will go into effect on
September 1, 2010 and thereafter:
 
 
Leverage Ratio
Applicable Base Rate Margin
Greater than or equal to 1.50 to 1.00
25.0 basis points
Greater than or equal to 0.50 to 1.00 but less than 1.50 to 1.00
  0.0 basis points
Less than 0.50 to 1.00
  0.0 basis points

 
Changes to the Applicable Base Rate Margin shall be effective on the first day
of the month following the date upon which Agent received, or, if earlier, Agent
should have received, pursuant to Section 5.3 (a) or (b) hereof, the financial
statements of the Companies. The above matrix does not modify or waive, in any
respect, the requirements of Section 5.7 hereof, the rights of the Banks to
charge the Default Rate, or the rights and remedies of Agent and the Banks
pursuant to Articles VII and VIII hereof.  Notwithstanding the foregoing or
anything else in this Agreement to the contrary, to the extent that any of the
information contained in the financial statements required to be delivered
hereunder shall be incorrect in any manner and as a result thereof (or for any
other reason), the Leverage Ratio was determined incorrectly for any period,
then Agent shall recalculate the Leverage Ratio based upon the correct
information and shall recalculate the Applicable Base Rate Margin for the
relevant periods and Borrower shall be required to pay on demand by Agent any
amounts the Borrower should have paid had the Applicable Base Rate Margin been
calculated correctly for such periods (or, to the extent that Borrower has paid
any amounts in excess of the amounts Borrower should have paid, then the Banks
shall credit such over-payment to the Debt owing by Borrower to each such Bank).
 
“Derived Base Rate” shall mean a rate per annum equal to the sum of the
Applicable Base Rate Margin (from time to time in effect) plus the Base Rate.
 
“Master Note Purchase Agreement” shall mean that certain Master Note Purchase
Agreement, dated as of July 22, 2010, by and among Borrower and the purchasers
party thereto, pursuant to which Borrower issued and sold Thirty Million Dollars
($30,000,000)
 

 
 

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in aggregate principal amount of its 5.09% Senior Notes, Series A, due July 22,
2020, as the same may from time to time be amended, restated or otherwise
modified.
 
“Senior Note Purchase Agreements” shall mean (i) the Master Note Purchase
Agreement and (ii) one additional note purchase agreement, by and among Borrower
and the purchasers party thereto, pursuant to which Borrower issues and sells
not greater than Thirty Million Dollars ($30,000,000) in aggregate principal
amount of senior unsecured notes; provided that such additional note purchase
agreement is entered into prior to June 29, 2012, in each case in form and
substance acceptable to Agent; provided further that the aggregate amount of the
Master Note Purchase Agreement when combined with any other note purchase
agreement entered into in accordance with clause (ii) above, shall not at any
point exceed Fifty Million Dollars ($50,000,000).
 
2.6 Amendment of Definitions.  Article I of the Credit Agreement is hereby
amended to amend and restate the following definitions in their entirety as
follows:
 
“Applicable Commitment Fee Rate” shall mean:
 
(a)           for the period prior to the Amendment No. 2 Effective Date through
the day immediately prior to the Amendment No. 2 Effective Date, the number of
basis points as provided for in this Agreement without giving effect to the
Amendment No. 2;
 
(b)           for the period from the Amendment No. 2 Effective Date through and
including August 31, 2010, 20.0 basis points; and
 
(c)           commencing with the financial statements for the fiscal quarter
ending June 30, 2010, the number of basis points set forth in the following
matrix, based upon the result of the computation of the Leverage Ratio, shall be
used to establish the number of basis points that will go into effect on
September 1, 2010 and thereafter:
 
   Leverage Ratio
Applicable Commitment Fee Rate
Greater than or equal to 1.50 to 1.00
30.0 basis points
Greater than or equal to 0.50 to 1.00 but less than 1.50 to 1.00
20.0 basis points
Less than 0.50 to 1.00
20.0 basis points

 
Changes to the Applicable Commitment Fee Rate shall be effective on the first
day of the month following the date upon which Agent received, or, if earlier,
Agent should have received, pursuant to Section 5.3 (a) or (b) hereof, the
financial statements of the Companies.  The above matrix does not modify or
waive, in any respect, the requirements of Section 5.7 hereof, the rights of the
Banks to charge the Default Rate, or the rights and remedies of Agent and the
Banks pursuant to Articles VII and VIII hereof.  Notwithstanding the foregoing
or anything else in this Agreement to the contrary, to the extent that any of
the information contained in the financial statements required to be
 

 
 

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delivered hereunder shall be incorrect in any manner and as a result thereof (or
for any other reason), the Leverage Ratio was determined incorrectly for any
period, then Agent shall recalculate the Leverage Ratio based upon the correct
information and shall recalculate the Applicable Commitment Fee Rate for the
relevant periods and Borrower shall be required to pay on demand by Agent any
amounts the Borrower should have paid had the Applicable Commitment Fee Rate
been calculated correctly for such periods (or, to the extent that Borrower has
paid any amounts in excess of the amounts Borrower should have paid, then the
Banks shall credit such over-payment to the Debt owing by Borrower to each such
Bank).
 
“Applicable LIBOR Margin” shall mean:
 
(a)           for the period prior to the Amendment No. 2 Effective Date through
the day immediately prior to the Amendment No. 2 Effective Date, the number of
basis points as provided for in this Agreement without giving effect to the
Amendment No. 2;
 
(b)           for the period from the Amendment No. 2 Effective Date through and
including August 31, 2010, 150.0 basis points; and
 
(c)           commencing with the financial statements for the fiscal quarter
ending June 30, 2010, the number of basis points set forth in the following
matrix, based upon the result of the computation of the Leverage Ratio, shall be
used to establish the number of basis points that will go into effect on
September 1, 2010 and thereafter:
 
   Leverage Ratio
Applicable LIBOR Margin
Greater than or equal to 1.50 to 1.00
175.0 basis points
Greater than or equal to 0.50 to 1.00 but less than 1.50 to 1.00
150.0 basis points
Less than 0.50 to 1.00
125.0 basis points

 
Changes to the Applicable LIBOR Margin shall be effective on the first day of
the month following the date upon which Agent received, or, if earlier, Agent
should have received, pursuant to Section 5.3 (a) or (b) hereof, the financial
statements of the Companies. The above matrix does not modify or waive, in any
respect, the requirements of Section 5.7 hereof, the rights of the Banks to
charge the Default Rate, or the rights and remedies of Agent and the Banks
pursuant to Articles VII and VIII hereof.  Notwithstanding the foregoing or
anything else in this Agreement to the contrary, to the extent that any of the
information contained in the financial statements required to be delivered
hereunder shall be incorrect in any manner and as a result thereof (or for any
other reason), the Leverage Ratio was determined incorrectly for any period,
then Agent shall recalculate the Leverage Ratio based upon the correct
information and shall recalculate the Applicable LIBOR Margin for the relevant
periods and Borrower shall be required to pay on demand by Agent any amounts the
Borrower should have paid had the Applicable LIBOR Margin been calculated
correctly for such periods (or, to the extent that Borrower has paid any
 

 
 

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amounts in excess of the amounts Borrower should have paid, then the Banks shall
credit such over-payment to the Debt owing by Borrower to each such Bank).
 
“Base Rate” shall mean a rate per annum equal to the greatest of (a) the Prime
Rate or (b) one-half of one percent (1/2%) in excess of the Federal Funds
Effective Rate and (c) the applicable LIBOR Rate for a LIBOR Loan made that day
with a one month Interest Period, plus 1.50% per annum..  Any change in the Base
Rate shall be effective immediately from and after such change in the Base Rate.
 
“Change in Control” shall mean (a) the acquisition, or, if earlier, the
shareholder or director approval of the acquisition, ownership or voting
control, directly or indirectly, beneficially or of record, on or after the
Restatement Date, by any Person or group (within the meaning of Rule 13d-3 of
the SEC under the Securities Exchange Act of 1934, as then in effect), of shares
representing more than thirty-three percent (33%) of the aggregate ordinary
Voting Power represented by the issued and outstanding capital stock of
Borrower; (b) the occupation of a majority of the seats (other than vacant
seats) on the board of directors of Borrower by Persons who were neither
(i) nominated by the board of directors of Borrower nor (ii) appointed by
directors so nominated; or (c) the approval by the shareholders or directors of
Borrower of a plan of complete liquidation of Borrower or an agreement or
agreements for the sale or disposition by Borrower of all or substantially all
of Borrower’s assets; provided that purchases or other acquisitions of Equity
Interests by, and sales or other transfers of Equity Interests to or within the
Davey ESOP in accordance with its terms shall not be deemed or construed to
cause, trigger or otherwise result in a Change in Control.
 
“Commitment” shall mean the obligation hereunder of the Banks to make Loans
pursuant to the Revolving Credit Commitments and to participate in the issuance
of Letters of Credit up to the Total Commitment Amount.
 
“Commitment Period” shall mean the period from the Original Closing Date to
December 19, 2014, or such earlier date on which the Commitment shall have been
terminated pursuant to Article VIII hereof.
 
 “Note” shall mean any Revolving Credit Note or any other note delivered
pursuant to this Agreement.
 
“Total Commitment Amount” shall mean, at any time, the Total Revolving
Commitment Amount.
 
2.7 Amendment to Article I.  Article I of the Credit Agreement is hereby amended
to add at the end thereof, the following new Section 1.2:
 
SECTION 1.2   ACCOUNTING PRINCIPLES.  Should any changes in U.S. generally
accepted principles from those used in the preparation of the audited
consolidated financial statements of Borrower referred to in Section 5.3(b)
occur by reason of any change in the rules, regulations, pronouncements, opinion
or other requirements of the Financial Accounting Standards Board (FASB) (or any
successor thereto or agency with similar function), or if Borrower adopts the
International Financial
 

 
 

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Reporting Standards, and such change in accounting principles and/or adoption of
such standards results in a change in the method or results of calculation of
financial covenants and/or defined terms contained in this Agreement, then at
the option of the Required Banks or Borrower, the parties will enter into good
faith negotiations to amend such financial covenants and/or defined terms in
such manner as the parties shall agree, each acting reasonably, in order to
reflect fairly such changes and/or adoption so that the criteria for evaluating
the financial condition of Borrower shall be the same in commercial effect
after, as well as before, such changes and/or adoption are made (in which case
the method and calculation of financial covenants and/or defined terms related
thereto hereunder shall be determined in the manner so agreed); provided that,
until so amended, such calculations shall continue to be computed in accordance
with GAAP prior to such change therein or adoption.
 
2.8 Amendment to Section 2.1.  Section 2.1 of the Credit Agreement is hereby
amended to delete the third paragraph therefrom in its entirety and to insert in
place thereof the following:
 
Each borrowing from the Banks hereunder shall be made pro rata according to the
Banks’ respective Commitment Percentages. The Loans may be made as Revolving
Loans, and Letters of Credit may be issued, as follows:
 
2.9 Amendment to Section 2.1B.  Section 2.1B of the Credit Agreement is hereby
amended and restated in its entirety as follows:
 
[Reserved.]
 
2.10 Amendment to Section 2.4.  Section 2.4 of the Credit Agreement is hereby
amended to delete the final sentence therefrom in its entirety.
 
2.11 Amendment to Section 2.5  Section 2.5 of the Credit Agreement is hereby
amended to delete the final paragraph therefrom in its entirety and to replace
it with the following:
 
On the effective date of any increase in the Total Revolving Commitment Amount
in accordance with this Section, Schedule 1 hereto shall be deemed automatically
amended to reflect the new Revolving Credit Commitments and Commitment
Percentages of each Bank.  For the avoidance of doubt, with respect to any
increases in the Total Revolving Commitment Amount provided for in accordance
with this Section prior to the Amendment No. 2 Effective Date, such increased
Total Revolving Commitment Amount shall be deemed to be replaced in full, as of
the Amendment No. 2 Effective Date, by the Total Revolving Commitment Amount as
identified on Exhibit A to the Amendment No. 2.
 
2.12 Amendment to Section 5.7.  Section 5.7 of the Credit Agreement is hereby
amended and restated in its entirety to read as follows:
 
SECTION 5.7         FINANCIAL COVENANTS.
 

 
 

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(a)           LEVERAGE RATIO.  Borrower shall not suffer or permit at any time
the Leverage Ratio to exceed 2.50 to 1.00.
 
(b)           BALANCE SHEET LEVERAGE RATIO.  Borrower shall not suffer or permit
at any time the Balance Sheet Leverage Ratio to exceed 0.60 to 1.00.
 
Notwithstanding anything contained in this Section 5.7 to the contrary, in the
event any Material Indebtedness Agreement of Borrower evidencing Indebtedness in
an original principal amount of $5,000,000 or more contains a Leverage Ratio,
Balance Sheet Leverage Ratio or other financial covenant more restrictive than
contained in this Section 5.7 (a “More Restrictive Covenant”), this Agreement
shall be deemed to have been amended to include such More Restrictive Covenant
(including any amendments thereto that are more restrictive than the initial
More Restrictive Covenant) in place of or in addition to the covenants contained
herein as of the date such More Restrictive Covenant first became binding on
Borrower; provided, however, that so long as no Default or Event of Default
shall have occurred and be continuing (i) upon (x) the satisfaction of all
Indebtedness evidenced by or incurred pursuant to any such Material Indebtedness
Agreement and (y) effective upon the delivery of a Compliance Certificate in
accordance with Section 5.3(c) for the period in which such Indebtedness has
been satisfied in full, reflecting compliance with such More Restrictive
Covenant during such period, any such covenant so incorporated herein shall be
deemed deleted and the provisions hereof shall thereupon be those in effect
prior to the date such More Restrictive Covenant first became binding on
Borrower, (ii) upon (x) the amendment of any More Restrictive Covenant by the
holder of such Indebtedness in a manner that is less restrictive, but remains
more restrictive than contained in this Section 5.7 as of the date immediately
prior to the date such More Restrictive Covenant became effective hereunder (an
“Amended More Restrictive Covenant”) and (y) effective upon the delivery of a
Compliance Certificate in accordance with Section 5.3(c) for the period in which
such Amended More Restrictive Covenant is to become binding on Borrower,
reflecting compliance with such More Restrictive Covenant during such period,
this Agreement shall be deemed to include such Amended More Restrictive Covenant
and the More Restrictive Covenant amended by such Amended Restrictive Covenant
shall be deemed deleted, and (iii) upon (x) the amendment of any More
Restrictive Covenant or Amended More Restrictive Covenant in a manner that is
less restrictive than contained in this Section 5.7 and (y) effective upon the
delivery of a Compliance Certificate in accordance with Section 5.3(c) for the
period in which such amendment is to become binding on Borrower, reflecting
compliance with such More Restrictive Covenant or Amended More Restrictive
Covenant during such period, any such covenant so incorporated herein shall be
deemed deleted and the provisions hereof shall thereupon be those in effect
prior to the date such More Restrictive Covenant first became binding on
Borrower.
 
2.13 Amendment to Section 5.8(d).  Section 5.8(d) of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:
 
(d)           unsecured Indebtedness incurred under lines of credit established
by Agent or other financial institutions customarily engaged in the business of
lending
 

 
 

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money; provided, however, that the maximum amount of Indebtedness permitted by
this subpart (d) shall at no time exceed Fifteen Million Dollars ($15,000,000);
 
2.14 Amendment to Section 5.8(i).  Section 5.8(i) of the Credit Agreement is
hereby amended and restated in its entirety to read as follows:
 
(i)           any (i) loans granted to a Company for the purchase of fixed
assts, or (ii) Indebtedness incurred by a Company in connection with any capital
leases, so long as the aggregate amount of all such loans and capital leases for
all Companies (excluding capital leases between the Borrower or a Subsidiary
Guarantor and a Subsidiary Guarantor) does not exceed Twelve Million Dollars
($12,000,000) at any time; and
 
2.15 Amendment to Section 5.8. Section 5.8 of the Credit Agreement is hereby
amended to delete the word “and” after clause (i), delete “.” at the end of
clause (j) and insert in its place “; and” and to add the following new clause
(k) thereto:
 
(k)           unsecured Indebtedness issued pursuant to the Senior Note Purchase
Agreements, and all guaranties by any Company of such Indebtedness.
 
2.16 Amendment to Section 5.9(d).  Section 5.9(d) of the Credit Agreement is
hereby amended to delete the words “Section 5.8(j)” therefrom and to insert in
place thereof the words “Section 5.8(i)”.
 
2.17 Amendment to Section 5.9.  Section 5.9 of the Credit Agreement is hereby
amended to delete the final sentence thereof and to insert in its place the
following:
 
No Company shall enter into any contract or agreement that would prohibit Agent
or the Banks from acquiring a security interest, mortgage or other Lien on, or a
collateral assignment of, any of the property or assets of a Company; provided,
however, that nothing herein contained shall be deemed or construed to prohibit
Agent or any of the Banks, as the case may be, from entering into a sharing or
intercreditor agreement in commercially customary form under which any such
security interest, mortgage or other Lien on, or collateral assignment of, any
such property or assets of a Company shall be shared equally and ratably between
and among Agent, each of the Banks, as the case may be, and the holders of the
Notes issued and outstanding under either of the Senior Note Purchase Agreements
if and to the extent any Indebtedness due and owing to Agent or any of the Banks
has been or is to be issued and outstanding under Section 10.3 of either of the
Senior Note Purchase Agreements and such security interest, mortgage or other
Lien on or collateral assignment of any such property or assets has been or is
to be created or incurred within the limitations of Section 10.4(i) of either of
the Senior Note Purchase Agreements.
 
2.18 Amendment to Section 5.11(ix).  Clause (ix) of Section 5.11 to the Credit
Agreement is hereby amended by deleting it in its entirety and replacing it with
the following new clause (ix):
 
(ix) Sales, contributions or transfers of assets and or/Acquisitions made by the
Companies pursuant to Section 5.12(b) or Section 5.13 hereof, and the creation
of
 

 
 

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Subsidiaries in connection therewith and/or for the purposes of managing tax
and/or regulatory matters so long as each such Subsidiary becomes a Guarantor of
Payment if required pursuant to Section 5.20 hereof;
 
2.19 Amendment to Section 5.12(b).  Section 5.12(b) of the Credit Agreement is
hereby amended by deleting it in its entirety and replacing it with the
following new Section 5.12(b):
 
(b) Borrower or any Subsidiary may sell, lease, contribute, transfer or
otherwise dispose of any of its assets to (i) Borrower (in the case of sales,
leases, contributions, transfers or other dispositions by any Subsidiary)
(ii) any Wholly-Owned Subsidiary that is a Guarantor of Payment, or (iii) any
Guarantor of Payment, of which Borrower and/or one or more Wholly-Owned
Subsidiaries, that are Guarantors of Payment, shall own not less than the same
percentage of Voting Power as Borrower and/or one or more Wholly-Owned
Subsidiaries (that are Guarantors of Payment) then own of the Subsidiary making
such sale, lease, contribution, transfer or other disposition.
 
2.20 Amendment to Section 5.13.  Section 5.13 of the Credit Agreement is hereby
amended by deleting the words “Restatement Date” therefrom and inserting in
place thereof the words “Amendment No. 2 Effective Date.”
 
2.21 Amendment to Section 5.16.  Section 5.16 of the Credit Agreement is hereby
amended by deleting it in its entirety and replacing it with the following new
Section 5.16:
 
SECTION 5.16    AFFILIATE TRANSACTIONS.  No Company shall, or shall permit any
Subsidiary to, directly or indirectly, enter into or permit to exist any
material transaction (including, without limitation, the purchase, sale, lease
or exchange of any property or the rendering of any service) with any Affiliate
of a Company on terms that are less favorable to such Company or such
Subsidiary, as the case may be, than those that might be obtained at the time in
a transaction with a non-Affiliate; provided, however, that the foregoing shall
not prohibit the payment of customary and reasonable directors’ fees to
directors who are not employees of a Company or any Affiliate of a Company or
any transaction permitted under Sections 5.11, 5.12 or 5.13.
 
2.22 Amendment to Section 6.10.  Section 6.10 of the Credit Agreement is hereby
amended by deleting it in its entirety and replacing it with the following new
Section 6.10:
 
SECTION 6.10    EMPLOYEE BENEFIT PLANS.  Schedule 6.10 hereto identifies each
ERISA Plan.  Since the Restatement Date, no ERISA Event has occurred or is
expected to occur with respect to an ERISA Plan that could reasonably be
expected to have a Material Adverse Effect.  Full payment has been made of all
amounts which a Controlled Group member is required, under applicable law or
under the governing documents, to have been paid as a contribution to or a
benefit under each ERISA Plan.  The liability of each Controlled Group member
with respect to each ERISA Plan has been fully funded based upon reasonable and
proper actuarial assumptions, has been fully insured, or has been fully reserved
for on its financial statements.  No changes have occurred or are expected to
occur that would cause a material increase in the cost of
 

 
 

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providing benefits under the ERISA Plan that could reasonably be expected to
have a Material Adverse Effect.  With respect to each ERISA Plan that is
intended to be qualified under Code Section 401(a):  (a) the ERISA Plan and any
associated trust operationally comply with the applicable requirements of Code
Section 401(a), (b) the ERISA Plan and any associated trust have been amended to
comply with all such requirements as currently in effect, other than those
requirements for which a retroactive amendment can be made within the “remedial
amendment period” available under Code Section 401(b) (as extended under
Treasury Regulations and other Treasury pronouncements upon which taxpayers may
rely), (c) the ERISA Plan and any associated trust have received a favorable
determination letter from the Internal Revenue Service stating that the ERISA
Plan qualifies under Code Section 401(a), that the associated trust qualifies
under Code Section 501(a) and, if applicable, that any cash or deferred
arrangement under the ERISA Plan qualifies under Code Section 401(k), unless the
ERISA Plan was first adopted at a time for which the above-described “remedial
amendment period” has not yet expired, (d) the ERISA Plan currently satisfies
the requirements of Code Section 410(b), without regard to any retroactive
amendment that may be made within the above-described “remedial amendment
period”, and (e) no contribution made to the ERISA Plan is subject to an excise
tax under Code Section 4972.  With respect to all Pension Plans, the aggregate
“accumulated benefit obligation” of Controlled Group members with respect to
such Pension Plans (as determined in accordance with Statement of Accounting
Standards No. 87, “Employers’ Accounting for Pensions”) does not exceed the
aggregate fair market value of all Pension Plan assets by more than 15% of
Consolidated Net Worth. If all Controlled Group members withdrew from all
Multiemployer Plans in a “complete withdrawal” (within the meaning of ERISA
Section 4203) such withdrawal would not reasonably be expected to result in a
Material Adverse Effect.
 
Section 3.   Effectiveness.  This Amendment shall be effective on the date (the
 “Amendment No. 2 Effective Date”) upon which the following conditions are
satisfied:
 
3.1 Delivery.  This Amendment shall have been executed by Borrower, Agent and
each Bank, and counterparts hereof as so executed shall have been delivered to
Agent, and each Guarantor of Payment shall have acknowledged the terms hereof.
 
3.2 Notes.  Borrower shall have executed and delivered to each Bank, if so
requested, its Revolving Credit Note or a replacement Revolving Credit Note.
 
3.3 Master Note Purchase Agreement. Borrower shall have delivered to Agent a
fully executed copy of the Master Note Purchase Agreement.
 
3.4 Banks.  Agent shall have received fully executed Assignment Agreements,
including the fees associated therewith, for each Bank listed on Schedule 1 to
the Credit Agreement (as amended by this Amendment) that is not a Bank to the
Credit Agreement prior to the effective date of this Amendment.
 

 

 
 

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3.5 Legal Opinion.  Borrower shall have delivered to Agent an opinion of counsel
for Borrower and each Guarantor of Payment, in form and substance satisfactory
to Agent and the Banks.
 
3.6 Officer’s Certificate, Resolutions, Organizational Documents.  Borrower and
each Guarantor of Payment shall have delivered to each Bank an officer’s
certificate certifying the names of the officers of Borrower or such Guarantor
of Payment authorized to sign the Amendment and the Notes, as applicable,
together with the true signatures of such officers and certified copies of (a)
the resolutions of the board of directors of Borrower and each Guarantor of
Payment evidencing approval of the execution and delivery of the Amendment and
the Notes, as applicable, and (b) the Organizational Documents of Borrower and
each Guarantor of Payment.
 
3.7 Good Standing Certificates.  Borrower shall have delivered to Agent a good
standing certificate for Borrower and each Guarantor of Payment, issued on or
about the Restatement Date by the Secretaries of State of Ohio and California
 
3.8 Fees and Expenses.  Borrower shall have paid (i) to the Agent, for the
benefit of the Lenders, in immediately available funds, an amendment fee equal
to 25 basis points multiplied by the sum of the outstanding Revolving Credit
Commitments as of the date of this Amendment and (ii) all costs, fees and
expenses in connection with the preparation and negotiation of this Amendment
and the other documents being executed or delivered in connection therewith in
accordance with the terms of the Credit Agreement, including, without
limitation, the fees and expenses of legal counsel.
 
3.9 No Default.  After giving effect to this Amendment, all of the
representations and warranties set forth in Section 4 below and in the Credit
Agreement will be true and correct and no Default or Event of Default shall
exist.
 
Section 4.   Representations and Warranties.  Borrower hereby represents and
warrants to Agent and the Banks that (a) Borrower has the legal power and
authority to execute and deliver this Amendment, (b) the officers executing this
Amendment have been duly authorized to execute and deliver the same and bind
Borrower with respect to the provisions hereof, (c) the execution and delivery
hereof by Borrower and the performance and observance by Borrower of the
provisions hereof do not violate or conflict with the organizational agreements
of Borrower or any law applicable to Borrower or result in a breach of any
provision of or constitute a default under any other agreement, instrument or
document binding upon or enforceable against Borrower, (d) no Default or Event
of Default exists under the Credit Agreement, nor will any occur immediately
after the execution and delivery of this Amendment or by the performance or
observance of any provision hereof, (e) Borrower is not aware of any claim or
offset against, or defense or counterclaim to, any of Borrower’s obligations or
liabilities under the Credit Agreement or any Related Writing, and (f) this
Amendment constitutes a valid and binding obligation of Borrower in every
respect, enforceable in accordance with its terms.
 
Section 5.   Miscellaneous.
 
5.1 Waiver.  Borrower, by signing below, hereby waives and releases Agent and
each of the Banks and their respective directors, officers, employees,
attorneys, affiliates and
 

 
 

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 subsidiaries from any and all claims, offsets, defenses and counterclaims of
which Borrower is aware, such waiver and release being with full knowledge and
understanding of the circumstances and effect thereof and after having consulted
legal counsel with respect thereto.
 
5.2 Credit Agreement Unaffected.  Each reference that is made in the Credit
Agreement or any Related Writing to the Credit Agreement shall hereafter be
construed as a reference to the Credit Agreement as amended hereby.  Except as
herein otherwise specifically provided, all provisions of the Credit Agreement
shall remain in full force and effect and be unaffected hereby.  This Amendment
is a Related Writing, as defined in the Credit Agreement.
 
5.3 Counterparts.     This Amendment may be executed in any number of
counterparts, by different parties hereto in separate counterparts and by
facsimile signature, each of which when so executed and delivered shall be
deemed to be an original and all of which taken together shall constitute but
one and the same agreement.
 
5.4 Governing Law.  The rights and obligations of all parties hereto shall be
governed by the laws of the State of Ohio, without regard to principles of
conflicts of laws.
 

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5.5 JURY TRIAL WAIVER.  BORROWER, AGENT AND EACH OF THE BANKS HEREBY WAIVE ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, AGENT AND THE BANKS, OR ANY
THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT OR ANY
NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN
CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
 

THE DAVEY TREE EXPERT COMPANY

By: /s/ David E. Adante 
Name: David E. Adante 
Title: Executive Vice President, CFO & Secretary

                                                

and  /s/ Joseph R. Paul 
Name: Joseph R. Paul                                           
Title: Treasurer 

KEYBANK NATIONAL ASSOCIATION,
as Agent and as a Bank

By: /s/ James A. Gelle 
Name: /s/ James A.
Gelle                                                                
Title: Vice President 

FIRSTMERIT BANK, N.A.

By: /s/ Robert G. Morlan 
Name: Robert G. Morlan 
Title: Senior Vice President 

PNC BANK, NATIONAL ASSOCIATION

By: /s/ Joseph G. Moran 
Name: Joseph G. Moran 
Title: Sr. Vice
President                                                                

WELLS FARGO BANK, N.A.

By: /s/ Andrew T.
Cavallari                                                                
Name: Andrew T.
Cavallari                                                                
Title: Vice President 

 
 

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GUARANTOR ACKNOWLEDGMENT AND AGREEMENT

The undersigned consents and agrees to and acknowledges the terms of the
foregoing Amendment No. 2 to Credit Agreement. The undersigned further agrees
that the obligations of the undersigned pursuant to the Guaranty of Payment
executed by the undersigned shall remain in full force and effect and be
unaffected hereby.

The undersigned hereby waives and releases Agent and each of the Banks and their
respective directors, officers, employees, attorneys, affiliates and
subsidiaries from any and all claims, offsets, defenses and counterclaims of
which the undersigned is aware, such waiver and release being with full
knowledge and understanding of the circumstances and effect thereof and after
having consulted legal counsel with respect thereto.

JURY TRIAL WAIVER.  THE UNDERSIGNED, AGENT AND EACH OF THE BANKS HEREBY WAIVE
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT OR OTHERWISE, AMONG BORROWER, THE UNDERSIGNED, AGENT AND THE
BANKS, OR ANY THEREOF, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY NOTE OR OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS RELATED THERETO.
 
THE DAVEY TREE EXPERT COMPANY

By: /s/ David E. Adante 
Name: David E. Adante 
Title: Executive Vice President, CFO & Secretary

 

WOLF TREE, INC.
By: /s/ Nicholas R.
Sucic                                                                
Name: Nicholas R. Sucic                     
Title:  Controller
                                           

THE CARE OF TREES, INC.
By: /s/ Joseph R. Paul 
Name: Joseph R. Paul 
Title:  Treasurer

 
 

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EXHIBIT A

SCHEDULE 1
 
 
BANKING INSTITUTIONS
COMMITMENT
PERCENTAGE
REVOLVING CREDIT
COMMITMENT AMOUNT
     
KeyBank National Association
34.461156578571%
$48,245,619.21
Wells Fargo Bank, N.A.
26.065161842857%
$36,491,226.58
PNC Bank, National Association.
23.809523685714%
$33,333,333.16
FirstMerit Bank, N.A.
15.664157892857%
$21,929,821.05
Total Percentage
   Total Commitment Amount
100%
 
$140,000,000.00

 
 

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EXHIBIT B

SCHEDULE 2
 

 
GUARANTORS OF PAYMENT
 
1.  Davey Tree Surgery Company, an Ohio corporation
 
2.  Wolf Tree, Inc., a Tennessee corporation
 
3.  The Care of Trees, Inc., an Illinois corporation
 

 
 

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