Exhibit 10.1 2014 Credit Facility






EXHIBIT 10.1












Published Transaction CUSIP Number: 03820KAC1
Published Transaction CUSIP Number: 03820KAD9












CREDIT AGREEMENT




among




APPLIED INDUSTRIAL TECHNOLOGIES, INC.
as Borrower




THE LENDERS NAMED HEREIN
as Lenders




and




KEYBANK NATIONAL ASSOCIATION
as Lead Arranger, Sole Book Runner and Administrative Agent












_____________________


dated as of
April 25, 2014
_____________________















TABLE OF CONTENTS


Page






	
				
	ARTICLE I.  
	DEFINITIONS
	1
	


	  Section 1.1.  
	Definitions
	1
	


	  Section 1.2.  
	Accounting Terms
	17
	


	  Section 1.3.  
	Terms Generally
	18
	


	 
	 
	 

	ARTICLE II.  
	AMOUNT AND TERMS OF CREDIT
	18
	


	  Section 2.1.  
	Amount and Nature of Credit
	18
	


	  Section 2.2.  
	Term Loan Commitment
	18
	


	  Section 2.3.  
	Interest
	19
	


	  Section 2.4.  
	Evidence of Indebtedness
	20
	


	  Section 2.5.  
	Notice of Credit Events; Funding of Interest Segments
	20
	


	  Section 2.6.  
	Payment on the Term Loan and Other Obligations
	21
	


	  Section 2.7.  
	Prepayment
	21
	


	  Section 2.8.  
	Payment of Fees
	22
	


	  Section 2.9.  
	Addition of Term Loan Facility
	22
	


	  Section 2.10.  
	Computation of Interest and Fees
	23
	


	 
	 
	 

	ARTICLE III.  
	ADDITIONAL PROVISIONS RELATING TO EURODOLLAR INTEREST SEGMENTS; INCREASED CAPITAL; TAXES
	23
	


	  Section 3.1.  
	Requirements of Law
	23
	


	  Section 3.2.  
	Taxes
	25
	


	  Section 3.3.  
	Funding Losses
	27
	


	  Section 3.4.  
	Eurodollar Rate Lending Unlawful; Inability to Determine Rate
	28
	


	  Section 3.5.  
	Change of Lending Office
	28
	


	  Section 3.6.  
	Replacement of Lenders
	28
	


	  Section 3.7.  
	Discretion of Lenders as to Manner of Funding
	29
	


	 
	 
	 

	ARTICLE IV.  
	CONDITIONS PRECEDENT
	29
	


	  Section 4.1.  
	Conditions to Each Credit Event
	29
	


	  Section 4.2.  
	Conditions to the First Credit Event
	30
	


	  Section 4.3.  
	Post-Closing Conditions
	31
	


	 
	 
	 

	ARTICLE V.  
	COVENANTS
	31
	


	  Section 5.1.  
	Insurance
	31
	


	  Section 5.2.  
	Money Obligations
	31
	


	  Section 5.3.  
	Financial Statements and Information
	31
	


	  Section 5.4.  
	Financial Records
	32
	


	  Section 5.5.  
	Franchises; Change in Business
	33
	


	  Section 5.6.  
	ERISA Pension and Benefit Plan Compliance
	33
	


	  Section 5.7.  
	Financial Covenants
	34
	


	  Section 5.8.  
	Borrowing
	34
	


	  Section 5.9.  
	Liens
	34
	








TABLE OF CONTENTS


Page


	
				
	  Section 5.10.  
	Regulations T, U and X
	35
	


	  Section 5.11.  
	Investments, Loans and Guaranties
	35
	


	  Section 5.12.  
	Merger and Sale of Assets
	37
	


	  Section 5.13.  
	Acquisitions
	38
	


	  Section 5.14.  
	Notice
	39
	


	  Section 5.15.  
	Environmental Compliance
	39
	


	  Section 5.16.  
	Affiliate Transactions
	39
	


	  Section 5.17.  
	Use of Proceeds
	40
	


	  Section 5.18.  
	Corporate Names
	40
	


	  Section 5.19.  
	Subsidiary Guaranties
	40
	


	  Section 5.20.  
	Guaranties Under Senior Unsecured Indebtedness
	41
	


	  Section 5.21.  
	Further Assurances
	41
	


	 
	 
	 

	ARTICLE VI.  
	REPRESENTATIONS AND WARRANTIES
	42
	


	  Section 6.1.  
	Corporate Existence; Subsidiaries; Foreign Qualification
	42
	


	  Section 6.2.  
	Corporate Authority
	42
	


	  Section 6.3.  
	Compliance with Laws and Contracts
	42
	


	  Section 6.4.  
	Litigation and Administrative Proceedings
	43
	


	  Section 6.5.  
	Title to Assets
	43
	


	  Section 6.6.  
	Liens and Security Interests
	43
	


	  Section 6.7.  
	Tax Returns
	43
	


	  Section 6.8.  
	Environmental Laws
	44
	


	  Section 6.9.  
	Continued Business
	44
	


	  Section 6.10.  
	Employee Benefits Plans
	44
	


	  Section 6.11.  
	Consents or Approvals
	45
	


	  Section 6.12.  
	Solvency
	45
	


	  Section 6.13.  
	Financial Statements
	45
	


	  Section 6.14.  
	Regulations
	45
	


	  Section 6.15.  
	Material Agreements
	46
	


	  Section 6.16.  
	Intellectual Property
	46
	


	  Section 6.17.  
	Insurance
	46
	


	  Section 6.18.  
	Accurate and Complete Statements
	46
	


	  Section 6.19.  
	Defaults
	46
	


	 
	 
	 

	ARTICLE VII.  
	EVENTS OF DEFAULT
	46
	


	  Section 7.1.  
	Payments
	46
	


	  Section 7.2.  
	Special Covenants
	46
	


	  Section 7.3.  
	Other Covenants
	46
	


	  Section 7.4.  
	Representations and Warranties
	47
	


	  Section 7.5.  
	Cross Default
	47
	


	  Section 7.6.  
	ERISA Default
	47
	


	  Section 7.7.  
	Change in Control
	47
	


	  Section 7.8.  
	Money Judgment
	47
	


	  Section 7.9.  
	Validity of Loan Documents
	47
	








TABLE OF CONTENTS


Page


	
				
	  Section 7.10.  
	Solvency
	47
	


	ARTICLE VIII.  
	REMEDIES UPON DEFAULT
	48
	


	  Section 8.1.  
	Optional Defaults
	48
	


	  Section 8.2.  
	Automatic Defaults
	48
	


	  Section 8.3.  
	Offsets
	48
	


	  Section 8.4.  
	Equalization Provisions
	49
	


	  Section 8.5.  
	Other Remedies
	49
	


	  Section 8.6.  
	Application of Proceeds
	49
	


	 
	 
	 

	ARTICLE IX.  
	THE ADMINISTRATIVE AGENT
	50
	


	  Section 9.1.  
	Appointment and Authorization
	50
	


	  Section 9.2.  
	Note Holders
	50
	


	  Section 9.3.  
	Consultation With Counsel
	51
	


	  Section 9.4.  
	Documents
	51
	


	  Section 9.5.  
	Administrative Agent and Affiliates
	51
	


	  Section 9.6.  
	Knowledge or Notice of Default
	51
	


	  Section 9.7.  
	Action by Administrative Agent
	51
	


	  Section 9.8.  
	Release of Guarantor of Payment
	52
	


	  Section 9.9.  
	Delegation of Duties
	52
	


	  Section 9.10.  
	Indemnification of Administrative Agent
	52
	


	  Section 9.11.  
	Successor Administrative Agent
	52
	


	  Section 9.12.  
	Administrative Agent May File Proofs of Claim
	53
	


	  Section 9.13.  
	No Reliance on Administrative Agent’s Customer Identification Program
	53
	


	  Section 9.14.  
	Other Agents
	54
	


	 
	 
	 

	ARTICLE X.  
	MISCELLANEOUS
	54
	


	  Section 10.1.  
	Lenders’ Independent Investigation
	54
	


	  Section 10.2.  
	No Waiver; Cumulative Remedies
	54
	


	  Section 10.3.  
	Amendments, Waivers and Consents
	54
	


	  Section 10.4.  
	Notices
	56
	


	  Section 10.5.  
	Costs, Expenses and Documentary Taxes
	56
	


	  Section 10.6.  
	Indemnification
	57
	


	  Section 10.7.  
	Obligations Several; No Fiduciary Obligations
	57
	


	  Section 10.8.  
	Execution in Counterparts
	57
	


	  Section 10.9.  
	Binding Effect; Borrower’s Assignment
	58
	


	  Section 10.10.  
	Lender Assignments
	58
	


	  Section 10.11.  
	Sale of Participations
	60
	


	  Section 10.12.  
	Patriot Act Notice
	60
	


	  Section 10.13.  
	Severability of Provisions; Captions; Attachments
	61
	


	  Section 10.14.  
	Investment Purpose
	61
	


	  Section 10.15.  
	Entire Agreement
	61
	


	  Section 10.16.  
	Confidentiality
	61
	


	  Section 10.17.  
	General Limitation of Liability
	62
	








TABLE OF CONTENTS


Page


	
				
	  Section 10.18.  
	No Duty
	62
	


	  Section 10.19.
	Legal Representation of Parties
	62
	


	  Section 10.20.  
	Governing Law; Submission to Jurisdiction
	63
	





	
		
	  Jury Trial Waiver
	Signature Page 1

	 
	 

	Exhibit A
	Form of Term Note

	Exhibit B
	Form of Notice of Interest Segment Selection

	Exhibit C
	Form of Compliance Certificate

	Exhibit D
	Form of Assignment and Acceptance Agreement

	 
	 

	Schedule 1
	Commitments of Lenders

	Schedule 2
	Guarantors of Payment

	Schedule 5.9
	Liens

	Schedule 6.1
	Corporate Existence; Subsidiaries; Foreign Qualification

	Schedule 6.4
	Litigation and Administrative Proceedings

	Schedule 6.10
	Employee Benefits Plans

	Schedule 6.15
	Material Agreements

	 
	 

	 
	 

	 
	 

















This CREDIT AGREEMENT (as the same may from time to time be amended, restated or otherwise modified, this “Agreement”) is made effective as of the 25th day of April, 2014 among:


(a)    APPLIED INDUSTRIAL TECHNOLOGIES, INC., an Ohio corporation (the “Borrower”);


(b)    the lenders listed on Schedule 1 hereto and each other Eligible Transferee, as hereinafter defined, that from time to time becomes a party hereto pursuant to Section 2.9 or 10.10 hereof (collectively, the “Lenders” and, individually, each a “Lender”); and


(c)    KEYBANK NATIONAL ASSOCIATION, a national banking association, as the administrative agent for the Lenders under this Agreement (the “Administrative Agent”).




WITNESSETH:


WHEREAS, the Borrower, the Administrative Agent and the Lenders desire to contract  for the establishment of credits in the aggregate principal amounts hereinafter set forth, to be made available to the Borrower upon the terms and subject to the conditions hereinafter set forth;


NOW, THEREFORE, it is mutually agreed as follows:




ARTICLE I.  DEFINITIONS


Section 1.1.  Definitions.  As used in this Agreement, the following terms shall have the meanings set forth below:


“Acquisition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in (a) the acquisition of all or substantially all of the assets of any Person (other than a Company), or any business or division of any Person (other than a Company), (b) the acquisition of in excess of fifty percent (50%) of the outstanding capital stock (or other equity interest) of any Person (other than a Company), or (c) the acquisition of another Person (other than a Company) by a merger, amalgamation or consolidation or any other combination with such Person.


“Addition of Term Loan Period” means the period from the Closing Date to September 28, 2018.


“Additional Commitment” means that term as defined in Section 2.9(a) hereof. 


“Additional Lender” means a financial institution that shall become a Lender during the Addition of Term Loan Period pursuant to Section 2.9 hereof.



1






“Additional Lender Assumption Agreement” means an additional lender assumption agreement, in form and substance satisfactory to the Administrative Agent, wherein an Additional Lender shall become a Lender.


“Additional Term Loan Facility” means that term as defined in Section 2.9(a) hereof.


“Additional Term Loan Facility Amendment” means that term as defined in Section 2.9(e) hereof.


“Administrative Agent” means that term as defined in the first paragraph of this Agreement.


“Administrative Agent Fee Letter” means the Administrative Agent Fee Letter between the Borrower and the Administrative Agent, dated as of the Closing Date, as the same may from time to time be amended, restated or otherwise modified.


“Advantage” means any payment (whether made voluntarily or involuntarily, by offset of any deposit or other indebtedness or otherwise) received by any Lender in respect of the Obligations, if such payment results in that Lender having less than its pro rata share (based upon its Commitment Percentage) of the Obligations then outstanding.


“Affiliate” means any Person, directly or indirectly, controlling, controlled by or under common control with a Company and “control” (including the correlative meanings, the terms “controlling”, “controlled by” and “under common control with”) means the power, directly or indirectly, to direct or cause the direction of the management and policies of a Company, whether through the ownership of voting securities, by contract or otherwise.


“Agreement” means that term as defined in the first paragraph of this agreement.


“Applicable Margin” means:


(a)    for the period from the Closing Date through May 31, 2014, eighty-seven and one-half (87.50) basis points for Eurodollar Interest Segments and zero (0.00) basis points for Base Rate Interest Segments; and


(b)    commencing with the Consolidated financial statements of the Borrower for the fiscal quarter ending March 31, 2014, the number of basis points (depending upon whether Interest Segments are Eurodollar Interest Segments or Base Rate Interest Segments) set forth in the following matrix, based upon the result of the computation of the Leverage Ratio as set forth in the Compliance Certificate for such fiscal period, shall be used to establish the number of basis points that will go into effect on June 1, 2014 and, thereafter, as set forth in each successive Compliance Certificate, as provided below:



2






	
			
	Leverage Ratio
	Applicable Basis Points for Eurodollar Interest Segments
	Applicable Basis Points for Base Rate Interest Segments

	Greater than or equal to 2.75 to 1.00
	150.00
	50.00

	Greater than or equal to 2.00 to 1.00 but less than 2.75 to 1.00
	125.00
	25.00

	Greater than or equal to 1.25 to 1.00 but less than 2.00 to 1.00
	100.00
	0.00

	Greater than or equal to 0.50 to 1.00 but less than 1.25 to 1.00
	87.50
	0.00

	Less than 0.50 to 1.00
	75.00
	0.00






After June 1, 2014, changes to the Applicable Margin shall be effective on the first day of each calendar month following the date upon which the Administrative Agent should have received, pursuant to Section 5.3(a) and (b) hereof, the Consolidated financial statements of the Companies.  The above pricing matrix does not modify or waive, in any respect, the requirements of Section 5.7 hereof, the rights of the Administrative Agent and the Lenders to charge the Default Rate, or the rights and remedies of the Administrative Agent and the Lenders pursuant to Articles VII and VIII hereof.  Notwithstanding anything herein to the contrary, (i) during any period when the Borrower shall have failed to timely deliver the Consolidated financial statements pursuant to Section 5.3(a) or (b) hereof, or the Compliance Certificate pursuant to Section 5.3(c) hereof, until such time as the appropriate Consolidated financial statements and Compliance Certificate are delivered, the Applicable Margin shall be the highest rate per annum indicated in the above pricing grid for Interest Segments of that type, regardless of the Leverage Ratio at such time, and (ii) in the event that any financial information or certification provided to the Administrative Agent in the Compliance Certificate is shown to be inaccurate (regardless of whether this Agreement is in effect when such inaccuracy is discovered), and such inaccuracy, if corrected, would have led to the application of a different Applicable Margin for any period (an “Applicable Margin Period”) than the Applicable Margin applied for such Applicable Margin Period, then (A) if the recalculated Applicable Margin is higher for such Applicable Margin Period, (1) the Borrower shall promptly deliver to the Administrative Agent a corrected Compliance Certificate for such Applicable Margin Period, (2) the Applicable Margin shall be determined based on such corrected Compliance Certificate, and (3) the Borrower shall promptly pay to the Administrative Agent, for the pro rata benefit of the Lenders, the accrued additional interest owing as a result of such increased Applicable Margin for such Applicable Margin Period, and (B) if the recalculated Applicable Margin is lower for such Applicable Margin Period, neither the Administrative Agent nor any Lender shall have any obligation to repay any interest to the Borrower; provided that, if such inaccuracy affects more than one Applicable Margin Period, and the recalculated Applicable Margin is higher in one or more such Applicable Margin Periods and lower in one or more such Applicable Margin Periods, then the amount payable by the Borrower pursuant to this subpart (B) with respect to all such affected Applicable Margin Periods shall be based on the excess, if any, of the recalculated Applicable Margins for all such affected Applicable Margin Periods over the amounts actually paid for such Applicable Margin Periods.



3






“Assignment Agreement” means an Assignment and Acceptance Agreement in the form of the attached Exhibit D.


“Authorized Officer” means a Financial Officer or other individual authorized by a Financial Officer in writing (with a copy to the Administrative Agent) to handle certain administrative matters in connection with this Agreement.


“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy”, as now or hereafter in effect, or any successor thereto, as hereafter amended.


“Base Rate” means, for any day, a rate per annum equal to the highest of (a) the Prime Rate, (b) one‐half of one percent (.50%) in excess of the Federal Funds Effective Rate, and (c) one hundred (100.00) basis points in excess of the London Interbank Offered Rate for loans in Eurodollars for a period of one month (or, if such day is not a Business Day, such rate as calculated on the most recent Business Day).  Any change in the Base Rate shall be effective immediately from and after such change in the Base Rate.


“Base Rate Interest Segment” means a portion of the Term Loan, described in Section 2.2 hereof, that shall be denominated in Dollars and on which the Borrower shall pay interest at the Derived Base Rate.


“Borrower” means that term as defined in the first paragraph of this Agreement.


“Borrower Investment Policy” means the investment policy of the Borrower provided to the Administrative Agent and the Lenders prior to the Closing Date, as the same may be amended by the Borrower from time to time with prior written notice to the Administrative Agent and the Lenders.


“Business Day” means a day that is not a Saturday, a Sunday or another day of the year on which national banks are authorized or required to close in Cleveland, Ohio, and, in addition, if the applicable Business Day relates to a Eurodollar Interest Segment, is a day of the year on which dealings in Dollar deposits are carried on in the London interbank Eurodollar market.


“Capitalized Lease Obligations” means obligations of the Companies for the payment of rent for any real or personal property under leases or agreements to lease that, in accordance with GAAP, have been or should be capitalized on the books of the lessee and, for purposes hereof, the amount of any such obligation shall be the capitalized amount thereof determined in accordance with GAAP.


“CFC” means a Controlled Foreign Corporation, as such term is defined in Section 957 of the Code.


“Change in Control” means:


(a)    the acquisition of, or, if earlier, the shareholder or director approval of the acquisition of, ownership or voting control, directly or indirectly, beneficially (within the meaning of Rules 13d-3 and 13d-5 of the Exchange Act) or of record, on or after the Closing 

4






Date, by any Person or group (within the meaning of Sections 13d and 14d of the Exchange Act), of shares representing more than thirty-three percent (33%) of the aggregate ordinary Voting Power represented by the issued and outstanding equity interests of the Borrower;


(b)    the occupation of a majority of the seats (other than vacant seats) on the board of directors or other governing body of the Borrower by Persons who were neither (i) nominated by the board of directors or other governing body of the Borrower nor (ii) appointed by directors so nominated or elected by a majority of shareholders; or


(c)    the occurrence of a change in control, or other term of similar import used therein, as defined in any Material Indebtedness Agreement.


“Closing Date” means the effective date of this Agreement as set forth in the first paragraph of this Agreement.


“Code” means the Internal Revenue Code of 1986, as amended, together with the rules and regulations promulgated thereunder.


“Commitment Percentage” means, for each Lender, the percentage set forth opposite such Lender’s name under the column headed “Commitment Percentage”, as listed in Schedule 1 hereto (taking into account any assignments pursuant to Section 10.10 hereof).


“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, together with the rules and regulations promulgated thereunder.


“Companies” means the Borrower and all Subsidiaries.


“Company” means the Borrower or a Subsidiary.


“Compliance Certificate” means a Compliance Certificate in the form of the attached Exhibit C.


“Confidential Information” means all confidential or proprietary information about the Companies that has been furnished by any Company to the Administrative Agent or any Lender, whether furnished before or after the Closing Date and regardless of the manner in which it is furnished, but does not include any such information that (a) is or becomes generally available to the public other than as a result of a disclosure by the Administrative Agent or such Lender not permitted by this Agreement, (b) was available to the Administrative Agent or such Lender on a nonconfidential basis prior to its disclosure to the Administrative Agent or such Lender, or (c) becomes available to the Administrative Agent or such Lender on a nonconfidential basis from a Person other than any Company that is not, to the best knowledge of the Administrative Agent or such Lender, acting in violation of a confidentiality agreement with a Company or is not otherwise prohibited from disclosing the information to the Administrative Agent or such Lender. 


“Consideration” means, in connection with an Acquisition (or Disposition), the aggregate consideration paid or to be paid, including borrowed funds, cash, deferred payments, the issuance of securities or notes, the assumption or incurring of liabilities (direct or contingent), the payment 

5






of consulting fees or fees for a covenant not to compete and any other consideration paid or to be paid for such Acquisition (or Disposition).


“Consolidated” means the resultant consolidation of the financial statements of the Borrower and its Subsidiaries in accordance with GAAP, including principles of consolidation consistent with those applied in preparation of the consolidated financial statements referred to in Section 6.13 hereof.


“Consolidated Depreciation and Amortization Charges” means, for any period, the aggregate of all depreciation and amortization charges for fixed assets, leasehold improvements and general intangibles (specifically including goodwill) of the Borrower for such period, as determined on a Consolidated basis.


“Consolidated EBITDA” means, for any period, as determined on a Consolidated basis, Consolidated Net Earnings for such period plus, without duplication, the aggregate amounts deducted in determining such Consolidated Net Earnings in respect of (a) Consolidated Interest Expense, (b) Consolidated Income Tax Expense, (c) Consolidated Depreciation and Amortization Charges, (d) to the extent that the Borrower expenses such charges, Consolidated stock option expenses up to an aggregate amount of Five Million Dollars ($5,000,000) per fiscal year of the Borrower, and (e) (i) extraordinary or non-recurring non-cash charges, minus (ii) extraordinary or non-recurring non-cash gains.


“Consolidated Income Tax Expense” means, for any period, all provisions for taxes based on the gross or net income of the Borrower (including, without limitation, any additions to such taxes, and any penalties and interest with respect thereto), and all franchise taxes of the Borrower, as determined on a Consolidated basis.


“Consolidated Interest Expense” means, for any period, the interest expense of the Borrower for such period, as determined on a Consolidated basis.


“Consolidated Net Earnings” means, for any period, without duplication, an amount equal to (a) the net income (loss) of the Borrower for such period, plus (b) upon the consummation of an Acquisition (with Consideration in excess of Two Million Five Hundred Thousand Dollars ($2,500,000)) permitted under Section 5.13 hereof, trailing twelve (12) months pro forma historical net income (loss), less (c) upon the consummation of a Disposition (with Consideration in excess of Two Million Five Hundred Thousand Dollars ($2,500,000)), trailing twelve (12) months pro forma historical net income (loss), all as determined on a Consolidated basis.


“Consolidated Net Worth” means, at any date, the stockholders’ equity of the Borrower, determined as of such date on a Consolidated basis.


“Consolidated Total Assets” means, at any date, an amount equal to the total assets of the Borrower, as determined on a Consolidated basis.


“Controlled Group” means a Company and each Person required to be aggregated with a Company under Code Section 414(b), (c), (m) or (o).

6








“Credit Event” means the making by the Lenders of the Term Loan, the selection of an Interest Segment, the conversion by the Lenders of a Base Rate Interest Segment to a  Eurodollar Interest Segment, or the continuation by the Lenders of a Eurodollar Interest Segment after the end of the applicable Interest Period.


“Credit Party” means the Borrower, and any Subsidiary or other Affiliate that is a Guarantor of Payment.


“Default” means an event or condition that constitutes, or with the lapse of any applicable grace period or the giving of notice or both would constitute, an Event of Default, and that has not been waived by the Required Lenders (or, if required hereunder, all of the Lenders) in writing, or cured to the satisfaction of the Administrative Agent prior to becoming an actual Event of Default.


“Default Rate” means (a) with respect to the Term Loan or any other Obligation, a rate per annum equal to two percent (2%) in excess of the rate otherwise applicable thereto, and (b) with respect to any other amount, if no rate is specified or available, a rate per annum equal to two percent (2%) in excess of the Derived Base Rate from time to time in effect.


“Derived Base Rate” means a rate per annum equal to the sum of the Applicable Margin (from time to time in effect) for Base Rate Interest Segments plus the Base Rate.


“Derived Eurodollar Rate” means a rate per annum equal to the sum of the Applicable Margin (from time to time in effect) for Eurodollar Interest Segments plus the Eurodollar Rate.


“Disposition” means any transaction or series of related transactions for the purpose of or resulting, directly or indirectly, in the transfer or other disposition of (a) in excess of fifty percent (50%) of the stock (or other equity interest) or (b) all or substantially all of the assets of any Company, or any business unit or division of any Company.


“Dodd-Frank Act” means the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub.L. 111-203, H.R. 4173) signed into law on July 21, 2010, as amended from time to time.


“Dollar” or the $ sign means lawful currency of the United States of America.


“Domestic Subsidiary” means a Subsidiary that is not a Foreign Subsidiary.


“Dormant Subsidiary” means a Company that (a) is not a Credit Party or the direct or indirect equity holder of a Credit Party, (b) has aggregate assets of less than One Million Dollars ($1,000,000) and aggregate investments by the Companies of less than One Million Dollars ($1,000,000), and (c) has no direct or indirect Subsidiaries with aggregate assets, for such Company and all such Subsidiaries, of more than One Million Dollars ($1,000,000).


“Eligible Transferee” means a commercial bank, financial institution or other “accredited investor” (as defined in SEC Regulation D) that is not the Borrower, a Subsidiary or an Affiliate.



7






“Environmental Laws” means all provisions of law (including the common law), statutes, ordinances, codes, rules, guidelines, policies, procedures, orders-in-council, regulations, permits, licenses, judgments, writs, injunctions, decrees, orders, awards and standards promulgated by a Governmental Authority or by any court, agency, instrumentality, regulatory authority or commission of any of the foregoing concerning environmental health or safety and protection of, or regulation of the discharge of substances into, the environment.


“Environmental Permits” means all permits, licenses, authorizations, certificates, approvals or registrations required by any Governmental Authority under any Environmental Laws.


“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated pursuant thereto.


“ERISA Event” means (a) the existence of a condition or event with respect to an ERISA Plan that presents a significant risk of the imposition of an excise tax in a material amount or any other material liability on a Company or of the imposition of a Lien on the assets of a Company; (b) the engagement by a Controlled Group member in a non-exempt “prohibited transaction” (as defined under ERISA Section 406 or Code Section 4975) or a breach of a fiduciary duty under ERISA that, in either case, could result in material liability to a Company; (c) the application by a Controlled Group member for a waiver from the minimum funding requirements of Code Section 412 or ERISA Section 302 or a Controlled Group member is required to provide security under Code Section 401(a)(29) or ERISA Section 307; (d) the occurrence of a Reportable Event with respect to any Pension Plan as to which 30-day notice is required to be provided to the PBGC; (e) the withdrawal by a Controlled Group member from a Multiemployer Plan in a “complete withdrawal” or a “partial withdrawal” (as such terms are defined in ERISA Sections 4203 and 4205, respectively) which results or is likely to result in a material liability to a Company; (f) the involvement of, or occurrence or existence of any event or condition that makes likely the involvement of, a Multiemployer Plan in any reorganization under ERISA Section 4241; (g) the failure of an ERISA Plan (and any related trust) that is intended to be qualified under Code Sections 401 and 501 to be so qualified or the failure of any “cash or deferred arrangement” under any such ERISA Plan to meet the requirements of Code Section 401(k) if such failure is reasonably likely to result in a material liability; (h) the taking by the PBGC of any steps to terminate a Pension Plan or appoint a trustee to administer a Pension Plan, or the taking by a Controlled Group member of any steps to terminate a Pension Plan; (i) the failure by a Controlled Group member or an ERISA Plan to satisfy any requirements of law applicable to an ERISA Plan if such failure is reasonably likely to result in a material liability; (j) the commencement, existence or threatening of a claim, action, suit, audit or investigation with respect to an ERISA Plan, other than a routine claim for benefits, and such action or suit could reasonably be expected to have a Material Adverse Effect; or (k) any incurrence by or any expectation of the incurrence by a Controlled Group member of any liability for post-retirement medical benefits under any Welfare Plan, other than as required by ERISA Section 601, et. seq. or Code Section 4980B, except for limited benefits in connection with a severance arrangement or benefits for retired senior executives or directors of a Company.  



8






“ERISA Plan” means an “employee benefit plan” (within the meaning of ERISA Section 3(3)) that a Controlled Group member at any time sponsors, maintains, contributes to, has liability with respect to or has an obligation to contribute to such plan.


“Eurocurrency Liabilities” shall have 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.


“Eurodollar” means a Dollar denominated deposit in a bank or branch outside of the United States.


“Eurodollar Interest Segment” means a portion of the Term Loan described in Section 2.2 hereof, that shall be denominated in Dollars and on which the Borrower shall pay interest at the Derived Eurodollar Rate.


“Eurodollar Rate” means, with respect to a Eurodollar Interest Segment, for any Interest Period, a rate per annum equal to the quotient obtained (rounded upwards, if necessary, to the nearest 1/16th of 1%) by dividing (a) the rate of interest, determined by the Administrative Agent in accordance with its usual procedures (which determination shall be conclusive absent manifest error) as of approximately 11:00 A.M. (London time) three Business Days prior to the beginning of such Interest Period pertaining to such Eurodollar Interest Segment, as listed as the London interbank offered rate, as published by Thomson Reuters or Bloomberg (or, if for any reason such rate is unavailable from Thomson Reuters or Bloomberg, from any other similar company or service that provides rate quotations comparable to those currently provided by Thomson Reuters or Bloomberg) for Dollar deposits in immediately available funds with a maturity comparable to such Interest Period, provided that, in the event that such rate quotation is not available for any reason, then the Eurodollar Rate shall be the average (rounded upward to the nearest 1/16th of 1%) of the per annum rates at which deposits in immediately available funds in Dollars for the relevant Interest Period and in the amount of the Eurodollar Interest Segment to be disbursed or to remain outstanding during such Interest Period, as the case may be, are offered to the Administrative Agent (or an affiliate of the Administrative Agent, in the Administrative Agent’s discretion) by prime banks in any Eurodollar market reasonably selected by the Administrative Agent, determined as of 11:00 A.M. (London time) (or as soon thereafter as practicable), three Business Days prior to the beginning of the relevant Interest Period pertaining to such Eurodollar Interest Segment; by (b) 1.00 minus the Reserve Percentage.


“Event of Default” means an event or condition that shall constitute an event of default as defined in Article VII hereof.


“Exchange Act” means the Securities Exchange Act of 1934, as amended.


“Excluded Taxes” means, in the case of the Administrative Agent and each Lender, (a) taxes imposed on or measured by its overall net income or branch profits, and franchise taxes imposed on it (in lieu of net income taxes) (i) by the jurisdiction (or any political subdivision thereof) under the laws of which the Administrative Agent or such Lender, as the case may be, is organized or in which its principal office is located, or, in the case of any Lender, in which its applicable lending 

9






office is located, or (ii) that are Other Connection Taxes, and (b) any withholding tax imposed with respect to the Administrative Agent or such Lender, as the case may be, pursuant to FATCA.


“FATCA” means Sections 1471 through 1474 of the Code as in effect on the Closing Date (or any amended or successor version that is substantively comparable to and not materially more onerous to comply with) and any current or future regulations or official interpretations thereof.


“Federal Funds Effective Rate” means, for any day, the rate per annum (rounded upward to the nearest one one-hundredth of one percent (1/100 of 1%)) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate” as of the Closing Date.


“Financial Officer” means any of the following officers: chief executive officer, president, any vice president, chief financial officer, treasurer, assistant treasurer, controller or assistant controller.  Unless otherwise qualified, all references to a Financial Officer in this Agreement shall refer to a Financial Officer of the Borrower.


“Foreign Subsidiary” means a Subsidiary that is organized under the laws of any jurisdiction other than the United States of America, a State thereof or the District of Columbia.


“Funded Indebtedness” means, without duplication, the sum of (a) all Indebtedness for borrowed money, (b) all Capitalized Lease Obligations, and (c) all Indebtedness pursuant to letters of credit, synthetic lease and asset securitizations.


“GAAP” means generally accepted accounting principles in the United States as then in effect, which shall include the official interpretations thereof by the Financial Accounting Standards Board, applied on a basis consistent with the past accounting practices and procedures of the Borrower.


“Governmental Authority” means any nation or government, any state, province or territory or other political subdivision thereof, any governmental agency, department, authority, instrumentality, regulatory body, court, central bank or other governmental entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank), any securities exchange and any self-regulatory organization exercising such functions, and any group or body charged with setting financial accounting or regulatory capital rules or standards (including, without limitation, the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing).


“Guarantor” means a Person that shall have pledged its credit or property in any manner for the payment or other performance of the indebtedness, contract or other obligation of another and includes (without limitation) any guarantor (whether of payment or of collection), surety, co-maker, 

10






endorser or Person that shall have agreed conditionally or otherwise to make any purchase, loan or investment in order thereby to enable another to prevent or correct a default of any kind.


“Guarantor of Payment” means each of the Companies designated a “Guarantor of Payment” on Schedule 2 hereto, each of which is executing and delivering a Guaranty of Payment on the Closing Date, and any other Person that shall execute and deliver a Guaranty of Payment to the Administrative Agent, or become a party by joinder to the Guaranty of Payment that was executed on the Closing Date, subsequent to the Closing Date.


“Guaranty of Payment” means each Guaranty of Payment executed and delivered on or after the Closing Date in connection with this Agreement by the Guarantors of Payment, as the same may from time to time be amended, restated or otherwise modified.


“Guaranty of Payment Joinder” means each Guaranty of Payment Joinder, executed and delivered by a Guarantor of Payment for the purpose of adding such Guarantor of Payment as a party to a previously executed Guaranty of Payment.


“Indebtedness” means, for any Company (excluding in all cases trade payables payable in the ordinary course of business by such Company), without duplication, (a) all obligations to repay borrowed money, direct or indirect, incurred, assumed, or guaranteed, (b) all obligations in respect of the deferred purchase price of capital assets, (c) all obligations under conditional sales or other title retention agreements, (d) the fair value (as disclosed on the Borrower’s quarterly financial statements, prepared on a quarterly basis and reported to the SEC in 10-Q and 10-K reports) of all obligations (contingent or otherwise) under any letter of credit, banker’s acceptance, currency swap agreement, interest rate swap, cap, collar or floor agreement or other interest rate management or hedging device, (e) all synthetic leases, (f) all Capitalized Lease Obligations, (g) all obligations of such Company with respect to asset securitization financing programs to the extent that there is recourse against such Company or such Company is liable (contingent or otherwise) under any such program, (h) all obligations to advance funds to, or to purchase assets, property or services from, any other Person in order to maintain the financial condition of such Person, (i) any other transaction (including forward sale or purchase agreements) having the commercial effect of a borrowing of money entered into by such Company to finance its operations or capital requirements, and (j) any guaranty of any obligation described in subparts (a) through (i) above.


“Interest Adjustment Date” means the last day of each Interest Period.


“Interest Coverage Ratio” means, as determined for the most recently completed four fiscal quarters of the Borrower, on a Consolidated basis, the ratio of (a) Consolidated EBITDA to (b) Consolidated Interest Expense.


“Interest Period” means, with respect to a Eurodollar Interest Segment, the period commencing on the date such Eurodollar Interest Segment is made and ending on the last day of such period, as selected by the Borrower pursuant to the provisions hereof, and, thereafter (unless such Eurodollar Interest Segment is converted to a Base Rate Interest Segment, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of such period, as selected by the Borrower pursuant to the provisions hereof.  The duration 

11






of each Interest Period for a Eurodollar Interest Segment shall be one month, two months, three months or six months, in each case as the Borrower may select upon notice, as set forth in Section 2.5 hereof; provided that, if the Borrower shall fail to so select the duration of any Interest Period at least three Business Days prior to the Interest Adjustment Date applicable to such Eurodollar Interest Segment, the Borrower shall be deemed to have converted such Eurodollar Interest Segment to a Base Rate Interest Segment at the end of the then current Interest Period.


“Interest Segment” means a Base Rate Interest Segment or a Eurodollar Interest Segment. 


“KeyBank” means KeyBank National Association, and its successors and assigns.


“Lender” means that term as defined in the first paragraph of this Agreement.


“Leverage Ratio” means, at any time, on a Consolidated basis, the ratio of (a) Net Indebtedness (as of the end of the most recently completed fiscal quarter of the Borrower), to (b) Consolidated EBITDA (for the most recently completed four fiscal quarters of the Borrower).


“Lien” means any mortgage, deed of trust, security interest, lien (statutory or other), charge, assignment, hypothecation, encumbrance on, pledge or deposit of, or conditional sale, lease (other than operating leases), sale with a right of redemption or other title retention agreement and any capitalized lease with respect to any property (real or personal) or asset.


“Loan Documents” means, collectively, this Agreement, each Note, each Guaranty of Payment, each Guaranty of Payment Joinder and the Administrative Agent Fee Letter, as any of the foregoing may from time to time be amended, restated or otherwise modified or replaced, and any other document delivered pursuant thereto.


“Material Adverse Effect” means a material adverse effect on (a) the business, assets, operations or condition (financial or otherwise) of the Borrower, (b) the business, assets, operations or condition (financial or otherwise) of the Companies taken as a whole, (c) the material rights and remedies of the Administrative Agent or the Lenders under any Loan Document, (d) the ability of any Credit Party to perform its obligations under any Loan Document to which it is a party, or (e) the legality, validity, binding effect or enforceability against any Credit Party of any material provision of any Loan Document to which it is a party.   


“Material Indebtedness Agreement” means any debt instrument, lease (capital, operating or otherwise), guaranty, contract, commitment, agreement or other arrangement evidencing or entered into in connection with any Funded Indebtedness of any Company or the Companies equal to or in excess of the amount of Twenty Million Dollars ($20,000,000).


“Maximum Amount” means, for each Lender, the amount set forth opposite such Lender’s name under the column headed “Maximum Amount” as set forth on Schedule 1 hereto, subject to (a) increases pursuant to Section 2.9 hereof, (b) decreases of the Term Loan by virtue of principal payments made, and (c) assignments of interests pursuant to Section 10.10 hereof.


“Maximum Rate” means that term as defined in Section 2.3(c) hereof.



12






“Moody’s” means Moody’s Investors Service, Inc., and any successor to such company.


“Multiemployer Plan” means a Pension Plan that is subject to the requirements of Subtitle E of Title IV of ERISA.


“Net Indebtedness” means, at any time, the excess, if any, of (a) Indebtedness of the Companies as of such date, over (b) the Unrestricted Domestic Cash Amount as of such date; provided, however, that, notwithstanding the actual amount of the Unrestricted Domestic Cash Amount, no more than Eighty Million Dollars ($80,000,000) of the Unrestricted Domestic Cash Amount may be used to calculate Net Indebtedness.


“Non‐Consenting Lender” means that term as defined in Section 10.3(c) hereof.


“Non-U.S. Lender” means that term as defined in Section 3.2(d) hereof.


“Note” means a Term Note, or any other promissory note delivered pursuant to this Agreement.


“Notice of Interest Segment Selection” means a Notice of Interest Segment Selection in the form of the attached Exhibit B.


“Obligations” means, collectively, (a) all Indebtedness and other obligations now owing or hereafter incurred by the Borrower to the Administrative Agent or any Lender pursuant to this Agreement and the other Loan Documents, and includes the principal of and interest on the Term Loan; (b) each extension, renewal, consolidation or refinancing of any of the foregoing, in whole or in part; (c) all fees, and any prepayment fees, payable pursuant to this Agreement or any other Loan Document; and (d) every other liability, now or hereafter owing to the Administrative Agent or any Lender by any Company pursuant to this Agreement or any other Loan Document. 


“Organizational Documents” means, with respect to any Person (other than an individual), such Person’s Articles (Certificate) of Incorporation, operating agreement or equivalent formation documents, and Regulations (Bylaws), or equivalent governing documents, and any amendments to any of the foregoing.


“Other Connection Taxes” means, with respect to any Lender, Taxes imposed as a result of a present or former connection between such Lender and the jurisdiction imposing such Tax (other than connections arising from such Lender having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).


“Other Taxes” means any and all present or future stamp or documentary taxes or any other excise, ad valorem or property taxes, goods and services taxes, harmonized sales taxes and other sales taxes, use taxes, value added taxes, charges or similar taxes or levies arising from any payment made hereunder, or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document.



13






“Participant” means that term as defined in Section 10.11 hereof.


“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, USA Patriot Act, Title III of Pub. L. 107-56, signed into law October 26, 2001, as amended from time to time.


“PBGC” means the Pension Benefit Guaranty Corporation, and its successor.


“Pension Plan” means an ERISA Plan that is a “pension plan” (within the meaning of ERISA Section 3(2)).


“Permitted Foreign Subsidiary Loans, Guaranties and Investments” means:


(a)    any loans made prior to the Closing Date by a Credit Party or a Domestic Subsidiary to a Foreign Subsidiary;


(b)    any investments made prior to the Closing Date by a Credit Party or a Domestic Subsidiary in a Foreign Subsidiary; 


(c)    any guaranties of Indebtedness of a Foreign Subsidiary made prior to the Closing Date by a Credit Party or a Domestic Subsidiary; and


(d)    any loans by a Credit Party to, investments by a Credit Party in, guaranties by a Credit Party of Indebtedness of, and Letters of Credit issued to or for the benefit of, a Foreign Subsidiary that is not a Credit Party, made on or after the Closing Date, up to the aggregate amount at any time outstanding, for all such Foreign Subsidiaries, equal to twenty percent (20%) of Consolidated Net Worth; provided that, (i) if any loan, investment, guaranty or letter of credit is made for the benefit of a Foreign Subsidiary that becomes a Credit Party after the Closing Date, the amount attributable to such loan, investment, guaranty or letter of credit shall be excluded from the foregoing calculation, and (ii) any loan, investment, guaranty or letter of credit made at a time when it was permitted under this subpart (d) shall not be deemed to violate this subpart (d) due to subsequent reductions in Consolidated Net Worth.


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


“Prime Rate” means the interest rate established from time to time by the Administrative Agent as the Administrative Agent’s prime rate, whether or not such rate shall be publicly announced; the Prime Rate may not be the lowest interest rate charged by the Administrative Agent for commercial or other extensions of credit. Each change in the Prime Rate shall be effective immediately from and after such change.


“Register” means that term as described in Section 10.10(i) hereof.



14






“Regularly Scheduled Payment Date” means the last day of each March, June, September and December of each year.


“Related Writing” means each Loan Document and any other assignment, mortgage, security agreement, guaranty agreement, subordination agreement, financial statement, audit report or other writing furnished by any Credit Party, or any of its officers, to the Administrative Agent or the Lenders pursuant to or otherwise in connection with this Agreement.


“Reportable Event” means a reportable event as that term is defined in Title IV of ERISA, except actions of general applicability by the Secretary of Labor under Section 110 of such Act.


“Required Lenders” means the holders of more than fifty percent (50%), based upon each Lender’s Commitment Percentage, of the principal amount outstanding under the Term Loan; provided that, if there shall be two or more Lenders, Required Lenders shall constitute at least two Lenders.


“Requirement of Law” means, as to any Person, any law, treaty, rule or regulation or determination or policy statement or interpretation of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property.


“Reserve Percentage” means, for any day, that percentage (expressed as a decimal) that is in effect on such day, as prescribed by the Board of Governors of the Federal Reserve System (or any successor) for determining the maximum reserve requirement (including, without limitation, all basic, supplemental, marginal and other reserves and taking into account any transitional adjustments or other scheduled changes in reserve requirements) for a member bank of the Federal Reserve System in Cleveland, Ohio, in respect of Eurocurrency Liabilities.  The Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Reserve Percentage.


“SEC” means the United States Securities and Exchange Commission, or any governmental body or agency succeeding to any of its principal functions.


“Special Purpose Subsidiary” means a direct or indirect Subsidiary of the Borrower established solely in connection with an asset securitization permitted under this Agreement for the acquisition of receivables and related assets or interests therein, and that is organized in a manner intended to reduce the likelihood that it would be substantively consolidated with the Borrower or any of the Subsidiaries (other than Special Purpose Subsidiaries) in the event the Borrower or any such Subsidiary becomes subject to a proceeding under the Bankruptcy Code (or other insolvency law).


“Standard & Poor’s” means Standard & Poor’s Ratings Group, a division of McGraw-Hill, Inc., and any successor to such company.


“Subsidiary” of a Company means (a) a corporation more than fifty percent (50%) of the Voting Power of which is owned, directly or indirectly, by such Company or by one or more other subsidiaries of such Company or by such Company and one or more subsidiaries of such Company, 

15






(b) a partnership, limited liability company or unlimited liability company of which such Company, one or more other subsidiaries of such Company or such Company and one or more subsidiaries of such Company, directly or indirectly, is a general partner or managing member, as the case may be, or otherwise has an ownership interest greater than fifty percent (50%) of all of the ownership interests in such partnership, limited liability company or unlimited liability company, or (c) any other Person (other than a corporation, partnership, limited liability company or unlimited liability company) in which such Company, one or more other subsidiaries of such Company or such Company and one or more subsidiaries of such Company, directly or indirectly, has at least a majority interest in the Voting Power or the power to elect or direct the election of a majority of directors or other governing body of such Person.


“Target Company” means that certain Canadian business entity disclosed to the Administrative Agent and the Lenders in writing prior to the Closing Date. 


“Target Company Acquisition” means the Acquisition by a Credit Party of the Target Company.


“Target Company Acquisition Agreements” means those certain contracts and agreements entered into in connection with, and delivered pursuant to, the Target Company Acquisition.


“Taxes” means any and all present or future taxes of any kind, including, but not limited to, levies, imposts, duties, surtaxes, charges, fees, deductions or withholdings now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority (together with any interest, penalties, fines, additions to taxes or similar liabilities with respect thereto) other than Excluded Taxes.


“Term Loan” means the loan made to the Borrower by the Lenders pursuant to the Term Loan Commitment in accordance with Section 2.2 hereof.


“Term Loan Commitment” means the obligation hereunder of the Lenders to make the Term Loan in the original principal amount of One Hundred Million Dollars ($100,000,000), with each Lender’s obligation to participate therein being in the amount set forth opposite such Lender’s name under the column headed “Term Loan Commitment Amount” as set forth on Schedule 1 hereto.


“Term Note” means a Term Note, in the form of the attached Exhibit A executed and delivered pursuant to Section 2.4 hereof.


“Unrestricted Domestic Cash Amount” means, at any date, that portion of the Borrower’s or a Domestic Subsidiary’s aggregate cash and cash equivalents in excess of Ten Million Dollars ($10,000,000) that is on deposit with one or more Lenders and that is not encumbered by or subject to any Lien (including, without limitation, any Lien permitted hereunder), setoff (other than ordinary course setoff rights of a depository bank arising under a bank depository agreement for customary fees, charges and other account-related expenses due to such depository bank thereunder), counterclaim, recoupment, defense or other right in favor of any Person.



16






“Voting Power” means, with respect to any Person, the exclusive ability to control, through the ownership of shares of capital stock, partnership interests, membership interests or otherwise, the election of members of the board of directors or other similar governing body of such Person.  The holding of a designated percentage of Voting Power of a Person means the ownership of shares of capital stock, partnership interests, membership interests or other interests of such Person sufficient to control exclusively the election of that percentage of the members of the board of directors or similar governing body of such Person.


“Welfare Plan” means an ERISA Plan that is a “welfare plan” within the meaning of ERISA Section 3(l).


Section 1.2.  Accounting Terms.  


(a)    Any accounting term not specifically defined in this Article I shall have the meaning ascribed thereto by GAAP.


(b)    If any change in the rules, regulations, pronouncements, opinions or other requirements of the Financial Accounting Standards Board (or any successor thereto or agency with similar function) with respect to GAAP, or if the Borrower adopts the International Financial Reporting Standards, and such change or adoption results in a change in the calculation of any component (or components in the aggregate) of the financial covenants set forth in Section 5.7 hereof or the related financial definitions, at the option of the Administrative Agent, the Required Lenders or the Borrower, the parties hereto will enter into good faith negotiations to amend such financial covenants and financial definitions in such manner as the parties shall agree, each acting reasonably, in order to reflect fairly such change or adoption so that the criteria for evaluating the financial condition of the Borrower shall be the same in commercial effect after, as well as before, such change or adoption is made (in which case the method and calculating such financial covenants and definitions 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 as in effect prior to such change or adoption.  


Section 1.3.  Terms Generally.  The foregoing definitions shall be applicable to the singular and plural forms of the foregoing defined terms. 




ARTICLE II.  AMOUNT AND TERMS OF CREDIT


Section 2.1.  Amount and Nature of Credit.


(a)    Subject to the terms and conditions of this Agreement, the Lenders, to the extent hereinafter provided, shall make the Term Loan to the Borrower as described in Section 2.2 hereof.


(b)    Each Lender, for itself and not one for any other, agrees to make the Term Loan on such basis that:


(i)    the aggregate outstanding principal amount of the portion of the Term Loan made by such Lender shall not be in excess of the Maximum Amount for such Lender; and

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(ii)    the aggregate outstanding principal amount of the portion of the Term Loan made by such Lender shall represent that percentage of the aggregate principal amount then outstanding on the Term Loan that shall be such Lender’s Commitment Percentage.


The Term Loan shall be made pro rata according to the respective Commitment Percentages of the Lenders. 


Section 2.2.  Term Loan Commitment.  Subject to the terms and conditions of this Agreement, the Lenders shall make the Term Loan to the Borrower on the Closing Date, in the amount of the Term Loan Commitment.  The Term Loan shall be payable in consecutive quarterly installments in the amounts set forth in the table below, commencing June 30, 2014, and continuing on each Regularly Scheduled Payment Date thereafter, with the balance thereof payable in full on April 24, 2019. 


	
					
	Year
	March 31
	June 30
	September 30
	December 31

	2014
	N/A
	$625,000
	$625,000
	$625,000

	2015
	$625,000
	$625,000
	$625,000
	$625,000

	2016
	$625,000
	$1,250,000
	$1,250,000
	$1,250,000

	2017
	$1,250,000
	$1,250,000
	$1,250,000
	$1,250,000

	2018
	$1,250,000
	$1,875,000
	$1,875,000
	$1,875,000

	2019
	$1,875,000
	N/A
	N/A
	N/A






The Borrower shall notify the Administrative Agent, in accordance with the notice provisions of Section 2.5 hereof, whether the Term Loan will be comprised of a Base Rate Interest Segment or one or more Eurodollar Interest Segments.  The Term Loan may be a mixture of a Base Rate Interest Segment and Eurodollar Interest Segments.  Once the Term Loan is made, any portion of the Term Loan repaid may not be re‐borrowed.  The Term Loan Commitment shall terminate on the date that the Term Loan has been made.


Section 2.3.  Interest.


(a)    Term Loan.


(i)    Base Rate Interest Segment.  With respect to any portion of the Term Loan that is a Base Rate Interest Segment, the Borrower shall pay interest on the unpaid principal amount thereof outstanding from time to time from the date thereof until paid, commencing June 30, 2014, and continuing on each Regularly Scheduled Payment Date thereafter and at the maturity thereof, at the Derived Base Rate from time to time in effect.


(ii)    Eurodollar Interest Segments.  With respect to any portion of the Term Loan that is a Eurodollar Interest Segment, the Borrower shall pay interest on the unpaid principal amount of such Eurodollar Interest Segment outstanding from time to time, with the interest rate to be fixed in advance on the first day of the Interest Period applicable thereto through the last day of the Interest Period applicable thereto (but subject to changes in the Applicable Margin for Eurodollar Interest Segments), at the Derived Eurodollar Rate.  Interest on such 

18






Eurodollar Interest Segment shall be payable on each Interest Adjustment Date with respect to an Interest Period (provided that, if an Interest Period shall exceed three months, the interest must also be paid every three months, commencing three months from the beginning of such Interest Period).


(b)    Default Rate.  Anything herein to the contrary notwithstanding, if an Event of Default shall occur and be continuing, upon the election of the Administrative Agent or the Required Lenders, (i) the principal of the Term Loan and the unpaid interest thereon shall bear interest, until paid, at the Default Rate, and (ii) in the case of any other amount not paid when due from the Borrower hereunder or under any other Loan Document, such amount shall bear interest at the Default Rate; provided that, during an Event of Default under Section 7.1 or 7.10 hereof, the applicable Default Rate shall apply without any election or action on the part of the Administrative Agent or any Lender.


(c)    Limitation on Interest.  In no event shall the rate of interest hereunder exceed the maximum rate allowable by law.  Notwithstanding anything to the contrary contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the maximum rate of non-usurious interest permitted by applicable law (the “Maximum Rate”).  If the Administrative Agent or any Lender shall receive interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the principal of the Term Loan or, if it exceeds such unpaid principal, refunded to the Borrower.  In determining whether the interest contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable law, (i) characterize any payment that is not principal as an expense, fee, or premium rather than interest, (ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations.


Section 2.4.  Evidence of Indebtedness.  Upon the request of a Lender, to evidence the obligation of the Borrower to repay the portion of the Term Loan made by such Lender and to pay interest thereon, the Borrower shall execute a Term Note, payable to the order of such Lender in the principal amount of its Commitment Percentage of the Term Loan Commitment; provided that the failure of such Lender to request a Term Note shall in no way detract from the Borrower’s obligations to such Lender hereunder.


Section 2.5.  Notice of Credit Events; Funding of Interest Segments.


(a)    Notice of Credit Events.  The Borrower, through an Authorized Officer, shall provide to the Administrative Agent a Notice of Interest Segment Selection prior to (i) 11:00 A.M. (Eastern time) on the proposed date of selection of, or conversion of an Interest Segment to, a Base Rate Interest Segment, and (ii) 11:00 A.M. (Eastern time) three Business Days prior to the proposed date of selection of, continuation of, or conversion of an Interest Segment to, a Eurodollar Interest Segment.


(b)    Conversion and Continuation of Interest Segments.  


(i)    At the request of the Borrower to the Administrative Agent, subject to the notice and other provisions of this Agreement, the Lenders shall convert a Base Rate Interest 

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Segment to one or more Eurodollar Interest Segments at any time and shall convert a Eurodollar Interest Segment to a Base Rate Interest Segment on any Interest Adjustment Date applicable thereto. 


(ii)    At the request of the Borrower to the Administrative Agent, subject to the notice and other provisions of this Agreement, the Lenders shall continue one or more Eurodollar Interest Segments as of the end of the applicable Interest Period as a new Eurodollar Interest Segment with a new Interest Period.


(c)    Minimum Amount for Interest Segments.  Each request for:


(i)    a Base Rate Interest Segment shall be in an amount of not less than One Million Dollars ($1,000,000), increased by increments of Five Hundred Thousand Dollars ($500,000); and


(ii)    a Eurodollar Interest Segment shall be in an amount of not less than Five Million Dollars ($5,000,000), increased by increments of One Million Dollars ($1,000,000).


(d)    Interest Periods.  The Borrower shall not request that Eurodollar Interest Segments be outstanding for more than four different Interest Periods at the same time.


Section 2.6.  Payment on the Term Loan and Other Obligations.


(a)    Payments Generally.  Each payment made hereunder by a Credit Party shall be made without any offset, abatement, recoupment, counterclaim, withholding or reduction whatsoever.


(b)    Payments in Dollars.  All payments (including prepayments) to the Administrative Agent of the principal of or interest on the Term Loan or other payment, including but not limited to principal, interest, fees or any other amount owed by the Borrower under this Agreement, shall be made in Dollars.  All payments described in this subsection (b) shall be remitted to the Administrative Agent, at the address of the Administrative Agent for notices referred to in Section 10.4 hereof for the account of the Lenders not later than 11:00 A.M. (Eastern time) on the due date thereof in immediately available funds.  Any such payments received by the Administrative Agent after 11:00 A.M. (Eastern time) shall be deemed to have been made and received on the next Business Day.  


(c)    Payments to Lenders.  Upon the Administrative Agent’s receipt of payments hereunder, the Administrative Agent shall immediately distribute to each Lender its ratable shares, if any, of the amount of principal, interest, and any fees received by the Administrative Agent for the account of such Lender.  Payments received by the Administrative Agent shall be delivered to the Lenders in immediately available funds.  Each Lender shall record any principal, interest or other payment, the principal amounts of Base Rate Interest Segments and Eurodollar Interest Segments, all prepayments and the applicable dates, including Interest Periods, with respect to its portion of the Term Loan made, and payments received by such Lender, by such method as such Lender may generally employ; provided that failure to make any such entry shall in no way detract from the obligations of the Borrower under this Agreement or any Note.  The aggregate unpaid 

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amount of the Term Loan, types of Interest Segments, Interest Periods and similar information with respect to the Term Loan set forth on the records of the Administrative Agent shall be rebuttably presumptive evidence with respect to such information, including the amounts of principal, interest and fees owing to each Lender.


(d)    Timing of Payments.  Whenever any payment to be made hereunder, including, without limitation, any payment to be made on the Term Loan, shall be stated to be due on a day that is not a Business Day, such payment shall be made on the next Business Day and such extension of time shall in each case be included in the computation of the interest payable on the Term Loan; provided that, with respect to a Eurodollar Interest Segment, if the next Business Day shall fall in the succeeding calendar month, such payment shall be made on the preceding Business Day and the relevant Interest Period shall be adjusted accordingly.


Section 2.7.  Prepayment.


(a)    Right to Prepay.  The Borrower shall have the right at any time or from time to time to prepay, on a pro rata basis for all of the Lenders, all or any part of the principal amount of the Term Loan.  Such payment shall include interest accrued on the amount so prepaid to the date of such prepayment and any amount payable under Article III hereof with respect to the amount being prepaid.  Prepayments of Base Rate Interest Segments shall be without any premium or penalty.  Each prepayment of the Term Loan and the Additional Term Loan Facility (if any) shall be applied to the principal installments thereof in the inverse order of their respective maturities.


(b)    Notice of Prepayment.  The Borrower shall give the Administrative Agent irrevocable written notice of prepayment of (i) a Base Rate Interest Segment by no later than 11:00 A.M. (Eastern time) on the Business Day on which such prepayment is to be made, and (ii) a Eurodollar Interest Segment by no later than 1:00 P.M. (Eastern time) three Business Days before the Business Day on which such prepayment is to be made.


(c)    Minimum Amount.  Each prepayment of a Eurodollar Interest Segment shall be in the principal amount of not less than One Million Dollars ($1,000,000), or the principal amount of such Interest Segment, except in the case of a mandatory payment pursuant to Article III hereof. 


Section 2.8.  Payment of Fees.  The Borrower shall pay to the Administrative Agent, for its sole benefit, the fees set forth in the Administrative Agent Fee Letter.


Section 2.9.  Addition of Term Loan Facility.


(a)    At any time during the Addition of Term Loan Period, but in no event on more than two separate occasions during the Addition of Term Loan Period, the Borrower may by written notice to the Administrative Agent request to add an additional term loan facility to this Agreement (an “Additional Term Loan Facility”); provided that the aggregate principal amount of Additional Term Loan Facilities made pursuant to this Section 2.9 shall not exceed One Hundred Million Dollars ($100,000,000).  Each such request for an Additional Term Loan Facility shall be in an amount of at least Ten Million Dollars ($10,000,000), increased by increments of One Million Dollars ($1,000,000), and may be made by either (i) adding a new commitment for one or more 

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Lenders, with their prior written consent, with respect to such Additional Term Loan Facility, or (ii) including one or more Additional Lenders, each with a new commitment under such Additional Term Loan Facility, as a party to this Agreement (each an “Additional Commitment” and, collectively, the “Additional Commitments”). 


(b)    During the Addition of Term Loan Period, all of the Lenders agree that the Administrative Agent, in its reasonable discretion, may permit one or more Additional Commitments upon satisfaction of the following requirements: (i) each Additional Lender, if any, shall execute an Additional Lender Assumption Agreement, (ii) each Additional Commitment from an Additional Lender, if any, shall be in an amount of at least Ten Million Dollars ($10,000,000), and (iii) the Borrower shall execute and deliver to the Administrative Agent and the Lenders such additional Term Notes as shall be required by the Administrative Agent (and requested by the Lenders).  The Lenders hereby authorize the Administrative Agent to execute each Additional Lender Assumption Agreement on behalf of the Lenders.  


(c)    The Borrower shall not request an Additional Term Loan Facility pursuant to this Section 2.9 if a Default or an Event of Default shall then exist, or, after giving pro forma effect to any such increase, would exist. 


(d)    Each Additional Term Loan Facility (i) shall rank pari passu in right of payment with the Term Loan, (ii) shall not mature earlier than the Term Loan (but may have amortization prior to such date), and (iii) shall be treated substantially the same as (and in any event no more favorably than) the Term Loan, including, without limitation, similar interest rates for such Additional Term Loan Facility and amortization consistent with that in effect for the remainder of the Term Loan. 


(e)    An Additional Term Loan Facility may be added hereunder pursuant to an amendment or restatement (an “Additional Term Loan Facility Amendment”) of this Agreement and, as appropriate, the other Loan Documents, executed by the Borrower, each Lender providing a commitment with respect to such Additional Term Loan Facility, each Additional Lender providing a commitment with respect to such Additional Term Loan Facility, and the Administrative Agent.  Notwithstanding anything herein to the contrary, an Additional Term Loan Facility Amendment may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent, to effect the provisions of this Section 2.9 (including, without limitation, amendments to the definitions in this Agreement and Section 8.6 hereof for the purpose of treating such Additional Term Loan Facility pari passu with the Term Loan).


Section 2.10.  Computation of Interest and Fees.  With the exception of Base Rate Interest Segments, interest on the Term Loan and any fees and charges hereunder shall be computed on the basis of a year having three hundred sixty (360) days and calculated for the actual number of days elapsed.  With respect to Base Rate Interest Segments, interest shall be computed on the basis of a year having three hundred sixty-five (365) days or three hundred sixty-six (366) days, as the case may be, and calculated for the actual number of days elapsed.







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ARTICLE III.  ADDITIONAL PROVISIONS RELATING TO
EURODOLLAR INTEREST SEGMENTS; INCREASED CAPITAL; TAXES


Section 3.1.  Requirements of Law.


(a)    If, after the Closing Date, (i) the adoption of or any change in any Requirement of Law or in the interpretation or application thereof by a Governmental Authority, or (ii) the compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority:


(A)    shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement or any Eurodollar Interest Segment made by it, or change the basis of taxation of payments to such Lender in respect thereof (except for Taxes which are governed by Section 3.2 hereof and except for Excluded Taxes);


(B)    shall impose, modify or hold applicable any reserve, special deposit, insurance charge, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender that is not otherwise included in the determination of the Eurodollar Rate; or


(C)    shall impose on such Lender any other condition;


and the result of any of the foregoing is to increase the cost to such Lender of making, converting into, continuing or maintaining Eurodollar Interest Segments or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall pay to such Lender, promptly after receipt of a written request therefor, any additional amounts necessary to compensate such Lender for such increased cost or reduced amount receivable.  If any Lender becomes entitled to claim any additional amounts pursuant to this subsection (a), such Lender shall promptly notify the Borrower (with a copy to the Administrative Agent) of the event by reason of which it has become so entitled.


(b)    If any Lender shall have determined that, after the Closing Date, the adoption of or any change in any Requirement of Law regarding capital adequacy or liquidity, or liquidity requirements, or in the interpretation or application thereof by a Governmental Authority or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy or liquidity (whether or not having the force of law) from any Governmental Authority shall have the effect of reducing the rate of return on such Lender’s or such corporation’s capital as a consequence of its obligations hereunder to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration the policies of such Lender or such corporation with respect to capital adequacy and liquidity), then from time to time, upon submission by such Lender to the Borrower (with a copy to the Administrative Agent) of a written request therefor (which shall include the method for calculating such amount and reasonable detail with respect to the calculation), the Borrower shall promptly pay or cause to be paid to such Lender such additional amount or amounts as will compensate such Lender or such corporation for such reduction.

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(c)    For purposes of this Section 3.1 and Section 3.4(a) hereof, the Dodd-Frank Act, any requests, rules, guidelines or directives concerning capital adequacy promulgated by the Bank for International Settlements, or the Basel Committee on Banking Regulations and Supervisory Practices (or any successor or similar authority) under Basel III, and any rules, regulations, orders, requests, guidelines and directives adopted, promulgated or implemented in connection with any of the foregoing, regardless of the date adopted, issued, promulgated or implemented, are deemed to have been introduced and adopted after the Closing Date.


(d)    A certificate as to any additional amounts payable pursuant to this Section 3.1 together with a reasonably detailed calculation and description of such amounts contemplated by this Section 3.1, submitted by any Lender to the Borrower (with a copy to the Administrative Agent) shall be rebuttably presumptive evidence as to such additional amounts.  In determining any such additional amounts, such Lender may use any method of averaging and attribution that it (in its reasonable credit judgment) shall deem applicable.  The obligations of the Borrower pursuant to this Section 3.1 shall survive the termination of this Agreement and the payment of the Term Loan and all other amounts payable hereunder. 


(e)    Notwithstanding the foregoing, no Lender shall be entitled to any indemnification or reimbursement pursuant to this Section 3.1 to the extent such Lender has not made demand therefore (as set forth above) within one year after the occurrence of the event giving rise to such entitlement or, if later, such Lender having knowledge of such event


Section 3.2.  Taxes.


(a)    All payments made by any Credit Party under any Loan Document shall be made free and clear of, and without deduction or withholding for or on account of, any Taxes or Other Taxes.  If any Taxes or Other Taxes are required to be deducted or withheld from any amounts payable to the Administrative Agent or any Lender hereunder, the amounts so payable to the Administrative Agent or such Lender shall be increased to the extent necessary to yield to the Administrative Agent or such Lender (after deducting, withholding and payment of all Taxes and Other Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in the Loan Documents.


(b)    Whenever any Taxes or Other Taxes are required to be withheld and paid by a Credit Party, such Credit Party shall timely withhold and pay such taxes to the relevant Governmental Authorities.  As promptly as possible thereafter, such Credit Party shall send to the Administrative Agent for its own account or for the account of the relevant Lender, as the case may be, a certified copy of an original official receipt received by such Credit Party showing payment thereof or other evidence of payment reasonably acceptable to the Administrative Agent or such Lender.  If such Credit Party shall fail to pay any Taxes or Other Taxes when due to the appropriate Governmental Authority or fails to remit to the Administrative Agent the required receipts or other required documentary evidence, such Credit Party and the Borrower shall indemnify the Administrative Agent and the appropriate Lenders within five Business Days after request for payment is made for any incremental Taxes or Other Taxes paid or payable by the Administrative Agent or such Lender as a result of any such failure.

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(c)    If any Lender shall be so indemnified by a Credit Party, such Lender shall use reasonable efforts to obtain the benefits of any refund, deduction or credit for any taxes or other amounts with respect to the amount paid by such Credit Party and shall reimburse such Credit Party to the extent, but only to the extent, that such Lender shall receive a refund with respect to the amount paid by such Credit Party or an effective net reduction in taxes or other governmental charges (including any taxes imposed on or measured by the total net income of such Lender) of the United States or any state or subdivision or any other Governmental Authority thereof by virtue of any such deduction or credit, after first giving effect to all other deductions and credits otherwise available to such Lender.  If, at the time any audit of such Lender’s income tax return is completed, such Lender determines, based on such audit, that it shall not have been entitled to the full amount of any refund reimbursed to such Credit Party as aforesaid or that its net income taxes shall not have been reduced by a credit or deduction for the full amount reimbursed to such Credit Party as aforesaid, such Credit Party, upon request of such Lender, shall promptly pay to such Lender the amount so refunded to which such Lender shall not have been so entitled, or the amount by which the net income taxes of such Lender shall not have been so reduced, as the case may be.


(d)    Each Lender that is not (i) a citizen or resident of the United States of America, (ii) a corporation, partnership or other entity created or organized in or under the laws of the United States of America (or any jurisdiction thereof), or (iii) an estate or trust that is subject to federal income taxation regardless of the source of its income (any such Person, a “Non-U.S. Lender”) shall deliver to the Borrower and the Administrative Agent two copies of either U.S. Internal Revenue Service Form W‐8BEN, Form W-8IMY or Form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a statement with respect to such interest and two copies of a Form W-8BEN, or any subsequent versions thereof or successors thereto, properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from, or a reduced rate of, U.S. federal withholding tax on all payments by Credit Parties under this Agreement and the other Loan Documents.  Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement or such other Loan Document.  In addition, each Non-U.S. Lender shall deliver such forms or appropriate replacements promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender.  Each Non-U.S. Lender shall promptly notify the Borrower at any time it determines that such Lender is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the U.S. taxing authorities for such purpose).  Notwithstanding any other provision of this subsection (d), a Non-U.S. Lender shall not be required to deliver any form pursuant to this subsection (d) that such Non-U.S. Lender is not legally able to deliver.


(e)    Any Lender that is not a Non-U.S. Lender shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax.



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(f)    A Lender that is entitled to an exemption from or reduction of non-U.S. withholding tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under any Loan Document shall use reasonable efforts to deliver to the Borrower (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrower, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate; provided that (i) such Lender is legally entitled to complete, execute and deliver such documentation and in such Lender’s judgment such completion, execution or submission would not materially prejudice the legal position of such Lender, and (ii) to the extent that such Lender fails to comply with the requirements of this subpart (f), such Lender shall not be entitled to additional compensation otherwise payable under this Section 3.2 if such additional compensation would not have been required had such Lender so complied.  


(g)    If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment.


(h)    Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Borrower and the Administrative Agent in writing of its legal inability to do so.


(i)    The agreements in this Section 3.2 shall survive the termination of the Loan Documents and the payment of the Term Loan and all other amounts payable hereunder.


Section 3.3.  Funding Losses.  The Borrower agrees to indemnify each Lender, promptly after receipt of a written request therefor, and to hold each Lender harmless from, any properly documented loss or expense that such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurodollar Interest Segments after the Borrower has given a notice (including a written or verbal notice that is subsequently revoked) requesting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment of or conversion from Eurodollar Interest Segments after the Borrower has given a notice (including a written or verbal notice that is subsequently revoked) thereof in accordance with the provisions of this Agreement, (c) the making of a prepayment of a Eurodollar Interest Segment on a day that is not the last day of an Interest Period applicable thereto, or (d) any conversion of a Eurodollar Interest Segment to a Base Rate Interest Segment on a day that is not the last day of an Interest Period applicable thereto.  Such indemnification shall be in an amount equal to the excess, if any, of (i) the amount of interest that 

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would have accrued on the amounts so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of such Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Lender’s applicable portion of the Term Loan provided for herein (excluding, however, the Applicable Margin included therein, if any) over (ii) the amount of interest (as reasonably determined by such Lender) that would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the appropriate London interbank market, along with any administration fee charged by such Lender.  A certificate as to any amounts payable pursuant to this Section 3.3 submitted to the Borrower (with a copy to the Administrative Agent) by any Lender, together with a reasonably detailed calculation and description of such amounts shall be rebuttably presumptive evidence as to such amounts.  The obligations of the Borrower pursuant to this Section 3.3 shall survive the termination of this Agreement and the payment of the Term Loan and all other amounts payable hereunder.


Section 3.4.  Eurodollar Rate Lending Unlawful; Inability to Determine Rate.


(a)    If any Lender shall determine (which determination shall, upon notice thereof to the Borrower and the Administrative Agent, be conclusive and binding on the Borrower) that, after the Closing Date, (i) the introduction of or any change in or in the interpretation of any law makes it unlawful, or (ii) any Governmental Authority asserts that it is unlawful, for such Lender to make or continue any Interest Segment as, or to convert (if permitted pursuant to this Agreement) any Interest Segment into, a Eurodollar Interest Segment, the obligations of such Lender to make, continue or convert into any such Eurodollar Interest Segment shall, upon such determination, be suspended until such Lender shall notify the Administrative Agent that the circumstances causing such suspension no longer exist, and all outstanding Eurodollar Interest Segments payable to such Lender shall automatically convert (if conversion is permitted under this Agreement) into a Base Rate Interest Segment, or be repaid (if no conversion is permitted) at the end of the then current Interest Periods with respect thereto or sooner, if required by law or such assertion.


(b)    If the Administrative Agent or the Required Lenders determine that for any reason adequate and reasonable means do not exist for determining the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Interest Segment, or that the Eurodollar Rate for any requested Interest Period with respect to a proposed Eurodollar Interest Segment does not adequately and fairly reflect the cost to the Lenders of funding such portion of the Term Loan, the Administrative Agent will promptly so notify the Borrower and each Lender.  Thereafter, the obligation of the Lenders to make or maintain such Eurodollar Interest Segment shall be suspended until the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice.  Upon receipt of such notice, the Borrower may revoke any pending request for a borrowing of, conversion to or continuation of such Eurodollar Interest Segment or, failing that, will be deemed to have converted such request into a request for a borrowing of a Base Rate Interest Segment in the amount specified therein.


Section 3.5.  Change of Lending Office.  Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 3.1 or 3.2(a) hereof with respect to such Lender, 

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it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office (or an affiliate of such Lender, if practical for such Lender) with the object of avoiding the consequences of such event; provided, that such designation is made on terms that, in the sole judgment of such Lender, cause such Lender and its lending office(s) to suffer no economic, legal or regulatory disadvantage; and provided, further, that nothing in this Section 3.5 shall affect or postpone any of the obligations of the Borrower or the rights of any Lender pursuant to Section 3.1 or 3.2(a) hereof.


Section 3.6.  Replacement of Lenders.  The Borrower shall be permitted to replace any Lender that requests reimbursement for amounts owing pursuant to Section 3.1 or 3.2(a) hereof, or asserts its inability to make a Eurodollar Interest Segment pursuant to Section 3.4 hereof; provided that (a) such replacement does not conflict with any Requirement of Law, (b) no Default or Event of Default shall have occurred and be continuing at the time of such replacement, (c) prior to any such replacement, such Lender shall have taken no action under Section 3.5 hereof so as to eliminate the continued need for payment of amounts owing pursuant to Section 3.1 or 3.2(a) hereof or, if it has taken any action, such request has still been made, (d) the replacement financial institution shall purchase, at par, the entire portion of the Term Loan and other amounts owing to such replaced Lender on or prior to the date of replacement and assume all commitments and obligations of such replaced Lender (and any such purchase shall be considered a prepayment of such portion of the Term Loan for purposes of Section 3.3 hereof), (e) the Borrower shall be liable to such replaced Lender under Section 3.3 hereof if any Eurodollar Interest Segment owing to such replaced Lender shall be purchased other than on the last day of the Interest Period relating thereto, (f) the replacement Lender, if not already a Lender, shall be satisfactory to the Administrative Agent, (g) the replaced Lender shall be obligated to make such replacement in accordance with the provisions of Section 10.10 hereof (provided that the Borrower (or the succeeding Lender, if such Lender is willing) shall be obligated to pay the assignment fee referred to therein), and (h) until such time as such replacement shall be consummated, the Borrower shall pay all additional amounts (if any) required pursuant to Section 3.1 or 3.2(a) hereof, as the case may be; provided that a Lender shall not be required to make any such assignment if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to replace such Lender cease to apply.


Section 3.7.  Discretion of Lenders as to Manner of Funding.  Notwithstanding any provision of this Agreement to the contrary, each Lender shall be entitled to fund and maintain its funding of all or any part of such Lender’s portion of the Term Loan in any manner such Lender deems to be appropriate; it being understood, however, that for the purposes of this Agreement all determinations hereunder shall be made as if such Lender had actually funded and maintained each Eurodollar Interest Segment during the applicable Interest Period for such Eurodollar Interest Segment through the purchase of deposits having a maturity corresponding to such Interest Period and bearing an interest rate equal to the Eurodollar Rate for such Interest Period.

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ARTICLE IV.  CONDITIONS PRECEDENT


Section 4.1.  Conditions to Each Credit Event.   The obligation of the Lenders to participate in any Credit Event shall be conditioned, in the case of each Credit Event, upon the following:


(a)    all conditions precedent as listed in Section 4.2 hereof required to be satisfied prior to the first Credit Event shall have been satisfied prior to or as of the first Credit Event;


(b)    the Borrower shall have submitted a Notice of Interest Segment Selection and otherwise complied with Section 2.5 hereof; and 


(c)    no Default or Event of Default shall then exist or immediately after such Credit Event would exist.


Section 4.2.  Conditions to the First Credit Event.    The Borrower shall cause the following conditions to be satisfied on or prior to the Closing Date.  The obligation of the Lenders to participate in the first Credit Event is subject to the Borrower satisfying each of the following conditions prior to or concurrently with such Credit Event:


(a)    Notes as Requested.  The Borrower shall have executed and delivered to each Lender requesting a Term Note such Lender’s Term Note.


(b)    Guaranties of Payment.  Each Guarantor of Payment shall have executed and delivered to the Administrative Agent, for the benefit of the Lenders, a Guaranty of Payment, in form and substance satisfactory to the Administrative Agent and the Lenders.


(c)    Officer’s Certificate, Resolutions, Organizational Documents.  The Borrower shall have delivered to the Administrative Agent an officer’s certificate (or comparable domestic or foreign documents) certifying the names of the officers of each Credit Party authorized to sign the Loan Documents, together with the true signatures of such officers and certified copies of (i) the resolutions of the board of directors (or comparable domestic or foreign documents) of such Credit Party evidencing approval of the execution, delivery and performance of the Loan Documents and the execution and performance of other Related Writings to which such Credit Party is a party, and the consummation of the transactions contemplated thereby, and (ii) the Organizational Documents of such Credit Party.


(d)    Lien Searches.  With respect to each Credit Party, the Borrower shall have caused to be delivered to the Administrative Agent (i) the results of Uniform Commercial Code lien searches, satisfactory to the Administrative Agent, and (ii) the results of federal and state tax lien and judicial lien searches, satisfactory to the Administrative Agent.


(e)    Good Standing and Full Force and Effect Certificates.  The Borrower shall have delivered to the Administrative Agent a good standing certificate or full force and effect certificate (or comparable document, if neither certificate is available in the applicable jurisdiction), as the case may be, for each Credit Party, issued on or about the Closing Date by the Secretary of State in the state or states where such Credit Party is incorporated or formed (or the foreign equivalent).

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(f)    Legal Opinion.  The Borrower shall have delivered to the Administrative Agent opinions of counsel for each Credit Party, in form and substance satisfactory to the Administrative Agent and the Lenders.


(g)    Borrower Investment Policy.  The Borrower shall have delivered to the Administrative Agent a copy of the Borrower Investment Policy as in effect on the Closing Date.


(h)    Administrative Agent Fee Letter and Other Fees.  The Borrower shall have (i) executed and delivered to the Administrative Agent, the Administrative Agent Fee Letter and paid to the Administrative Agent, for its sole account, the fees stated therein to be paid on or prior to the Closing Date, and (ii) paid all reasonable and properly documented legal fees and expenses of the Administrative Agent in connection with the preparation and negotiation of the Loan Documents.


(i)    Long Term Debt Instruments.  The Borrower shall have provided to the Administrative Agent copies of all long term debt instruments, certified by a Financial Officer as complete, of the Companies.


(j)    No Material Adverse Change.  No material adverse change, in the opinion of the Administrative Agent, shall have occurred in the financial condition, operations or prospects of the Companies since December 31, 2013.


Section 4.3.  Post-Closing Conditions.  Within thirty (30) days after the Closing Date, the Borrower shall (a) consummate the Target Company Acquisition and (b) provide to the Administrative Agent copies of the Target Company Acquisition Agreements.




ARTICLE V.  COVENANTS


Section 5.1.  Insurance.  Each Company shall (a) maintain insurance to such extent and against such hazards and liabilities as is commonly maintained by Persons similarly situated; and (b) within ten days of any Lender’s written request (given no more than annually, unless an Event of Default shall exist), furnish to such Lender such information about such Company’s insurance as that Lender may from time to time reasonably request, which information shall be prepared in form and detail satisfactory to such Lender and certified by a Financial Officer of such Company.


Section 5.2.  Money Obligations.  Each Company shall pay in full (a) prior in each case to the date when penalties would attach, all material taxes, assessments and governmental charges and levies (except only those so long as and to the extent that the same shall be contested in good faith by appropriate and timely proceedings and for which adequate provisions have been established in accordance with GAAP) for which it may be or become liable or to which any or all of its properties may be or become subject; (b) all of its material wage obligations to its employees in compliance with the Fair Labor Standards Act (29 U.S.C. §§ 206‐207) or any comparable provisions; and (c) all of its other obligations calling for the payment of money (except only those so long as and to the extent that nonpayment would not cause a Material Adverse Effect) before such payment becomes overdue. 

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Section 5.3.  Financial Statements and Information.


(a)    Quarterly Financials.  The Borrower shall deliver to the Administrative Agent and the Lenders, within fifty (50) days after the end of each of the first three quarterly periods of each fiscal year of the Borrower, balance sheets of the Companies as of the end of such period and statements of income (loss), stockholders’ equity and cash flow for the quarter and fiscal year to date periods, all prepared on a Consolidated basis, in form and detail satisfactory to the Administrative Agent and the Lenders and certified by a Financial Officer of the Borrower; provided that delivery pursuant to subsection (d) below of copies of the Form 10-Q quarterly report of the Companies for such quarterly period filed with the SEC shall be deemed to satisfy the requirements of this subsection (a).


(b)    Annual Audit Report.  The Borrower shall deliver to the Administrative Agent and the Lenders, within one hundred (100) days after the end of each fiscal year of the Borrower, an annual audit report of the Companies for that year prepared on a Consolidated basis,  in form and detail satisfactory to the Administrative Agent and the Lenders and certified by an unqualified opinion of an independent public accountant satisfactory to the Administrative Agent, which report shall include balance sheets and statements of income (loss), stockholders’ equity and cash-flow for that period; provided that delivery pursuant to subsection (d) below of copies of the Form 10-K annual report of the Companies for such period filed with the SEC shall be deemed to satisfy the requirements of this subsection (b).


(c)    Compliance Certificate.  The Borrower shall deliver to the Administrative Agent and the Lenders, concurrently with the delivery of the financial statements set forth in subsections (a) and (b) above, a Compliance Certificate.


(d)    Public Financial Information.  The Borrower shall furnish to the Administrative Agent and the Lenders, as soon as available, (i) copies of Form 10-Q quarterly reports, Form 10‐K annual reports, and Form 8-K current reports, (ii) notice of (and, upon the request of the Administrative Agent, copies of) any other filings made by the Borrower with the SEC, and (iii) notice of (and, upon the request of the Administrative Agent, copies of) any other information that is provided by the Borrower to its shareholders generally, provided that if any such materials are available electronically as a filing with the SEC, the Borrower shall give the Administrative Agent prompt notice of such filing and the giving of such notice shall satisfy the Borrower’s obligation to provide the Administrative Agent and the Lenders copies of such publicly filed materials.


(e)    Financial Information of the Companies.  The Borrower shall deliver to the Administrative Agent and the Lenders, within ten days of the written request of the Administrative Agent or any Lender, such other information about the financial condition, properties and operations of any Company as the Administrative Agent or such Lender may from time to time reasonably request, which information shall be submitted in form and detail satisfactory to the Administrative Agent or such Lender and certified by a Financial Officer of the Company or Companies in question


Section 5.4.  Financial Records.  The Companies shall at all times maintain true and complete, in all material respects, records and books of account, including, without limiting the generality of 

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the foregoing, appropriate provisions for possible losses and liabilities, all in accordance with GAAP, and at all reasonable times (during normal business hours and upon notice to such Company) permit the Administrative Agent or any Lender, or any representative thereof, to examine such Company’s books and records and to make excerpts therefrom and transcripts thereof. 


Section 5.5.  Franchises; Change in Business.  


(a)    Each Company shall preserve and maintain at all times its existence, and its material rights and franchises necessary for its business, except for (i) a liquidation, dissolution, wind up or other termination of existence in connection with any of the events permitted pursuant to Section 5.12 hereof; and (ii) a liquidation, dissolution or wind up of (A) a Dormant Subsidiary, (B) a Subsidiary that is a holding company, provided that, if such Subsidiary is a Credit Party, the assets held by such Subsidiary are transferred to one or more Credit Parties, and (C) any Special Purpose Subsidiary.


(b)    No Company shall engage in any business if, as a result thereof, the general nature of the business of the Companies taken as a whole would be substantially changed from the general nature of the business the Companies are engaged in on the Closing Date, together with businesses reasonably similar or related thereto.


Section 5.6.  ERISA Pension and Benefit Plan Compliance.  No Company shall incur any material accumulated funding deficiency within the meaning of ERISA, or any material liability to the PBGC, established thereunder in connection with any ERISA Plan.  The Borrower shall furnish to the Administrative Agent and the Lenders (a) as soon as possible and in any event within thirty (30) days after any Company knows or has reason to know that any material Reportable Event with respect to any ERISA Plan has occurred, a statement of a Financial Officer of such Company, setting forth details as to such Reportable Event and the action that such Company proposes to take with respect thereto, together with a copy of the notice of such Reportable Event given to the PBGC if a copy of such notice is available to such Company, and (b) promptly after receipt thereof, a copy of any material notice such Company, or any member of the Controlled Group may receive from the PBGC or the Internal Revenue Service with respect to any ERISA Plan administered by such Company; provided that this latter clause shall not apply to notices of general application promulgated by the PBGC or the Internal Revenue Service or to letters or notices (such as a favorable Determination Letter) with respect to an ERISA Plan, which do not threaten a material liability of the Companies.  The Borrower shall promptly notify the Administrative Agent of any material taxes assessed, proposed to be assessed or that the Borrower has reason to believe may be assessed against a Company by the Internal Revenue Service with respect to any ERISA Plan.  As used in this Section 5.6 and in Section 6.10 hereof, “material” means the measure of a matter of significance that shall be determined as being an amount equal to five percent (5%) of Consolidated Net Worth.  As soon as practicable, and in any event within twenty (20) days, after any Company shall become aware that a material ERISA Event shall have occurred, such Company shall provide the Administrative Agent with notice of such ERISA Event with a certificate by a Financial Officer of such Company setting forth the details of the event and the action such Company or another Controlled Group member proposes to take with respect thereto.  The Borrower shall, at the request of the Administrative Agent or any Lender, deliver or cause to be delivered to the Administrative Agent 

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or such Lender, as the case may be, true and correct copies of any documents relating to the ERISA Plan of any Company.


Section 5.7.  Financial Covenants.


(a)    Leverage Ratio.  The Borrower shall not suffer or permit at any time the Leverage Ratio to exceed 3.00 to 1.00.


(b)    Interest Coverage Ratio.  The Borrower shall not suffer or permit at any time the Interest Coverage Ratio to be less than 3.00 to 1.00.


Section 5.8.  Borrowing.  No Company shall create, incur or have outstanding any Indebtedness of any kind; provided that this Section 5.8 shall not apply to the following:


(a)    the Term Loan and any other Indebtedness under this Agreement; 


(b)    the aggregate cash amount paid by the lenders in connection with the financing of receivables (net of collections with respect thereto) pursuant to asset securitizations up to the maximum aggregate amount, for all Companies, of Fifty Million Dollars ($50,000,000) at any time outstanding;


(c)    secured Indebtedness (including Capitalized Lease Obligations) so long as the aggregate amount of all such Indebtedness (exclusive of asset securitizations) outstanding at any time for all Companies does not exceed an amount equal to fifteen percent (15%) of Consolidated Total Assets, based upon the financial statements of the Borrower for the most recently completed fiscal quarter; and


(d)    unsecured Indebtedness.


Section 5.9.  Liens.  No Company shall create, assume or suffer to exist (upon the happening of a contingency or otherwise) any Lien upon any of its property or assets, whether now owned or hereafter acquired; provided that this Section 5.9 shall not apply to the following:


(a)    (i) Liens for taxes, assessments or governmental charges or levies on such Company’s property or assets if the same shall not at the time be delinquent or thereafter can be paid without penalty, or are being actively contested in good faith by appropriate and timely proceedings and for which adequate reserves shall have been established in accordance with GAAP, and (ii) Liens arising in the ordinary course of business out of pledges or deposits under workers’ compensation laws, unemployment insurance, old age pensions, or social security, retirement benefits or similar legislation;


(b)    other statutory Liens, including, without limitation, statutory Liens of landlords, carriers, warehousers, utilities, mechanics, repairmen, workers and materialmen, incidental to the conduct of its business or the ownership of its property and assets that (i) were not incurred in connection with the incurring of Indebtedness or the obtaining of advances or credit, and (ii) do not in the aggregate materially detract from the value of its property or assets or materially impair the use thereof in the operation of its business;

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(c)    Liens on property or assets of a Subsidiary to secure obligations of such Subsidiary to the Borrower or a Guarantor of Payment;


(d)    easements or other minor defects or irregularities in title of real property not interfering in any material respect with the use of such property in the business of any Company;


(e)    Liens relating to ledger balances, consignments and other similar arrangements;


(f)    asset securitizations permitted pursuant to Section 5.8(b) hereof and Liens on the assets that are the subject of such asset securitizations;


(g)    any other Liens (including all Liens existing on the Closing Date as set forth in Schedule 5.9 hereto), so long as the aggregate amount of Indebtedness secured by all such Liens (exclusive of asset securitizations) does not exceed for all Companies at any time an aggregate amount equal to fifteen percent (15%) of Consolidated Total Assets, based upon the financial statements of the Borrower for the most recently completed fiscal quarter; or


(h)    any financing statement filed on a Company to evidence the sale of accounts receivable of such Company pursuant to Section 5.12(i) hereof.


Section 5.10.  Regulations T, U and X.  No Company shall take any action that would result in any non‐compliance of the Term Loan with Regulations T, U or X, or any other applicable regulation, of the Board of Governors of the Federal Reserve System.


Section 5.11.  Investments, Loans and Guaranties.  No Company shall, without the prior written consent of the Administrative Agent and the Required Lenders, (a) create, acquire or hold any Subsidiary, (b) make or hold any investment in any stocks, bonds or securities of any kind, (c) be or become a party to any joint venture or other partnership, (d) make or keep outstanding any advance or loan to any Person, or (e) be or become a Guarantor of any kind (other than a Guarantor of Payment under the Loan Documents); provided that this Section 5.11 shall not apply to the following:


(i)    any endorsement of a check or other medium of payment for deposit or collection through normal banking channels or similar transaction in the normal course of business;


(ii)    any investment in direct obligations of the United States of America or in certificates of deposit issued by a member bank (having capital resources in excess of One Hundred Million Dollars ($100,000,000)) of the Federal Reserve System;


(iii)    any investment in commercial paper or securities that at the time of such investment is assigned a AAA rating (or its equivalent) in accordance with the rating systems employed by either Moody’s or Standard & Poor’s;


(iv)    the holding of each of the Subsidiaries listed on Schedule 6.1 hereto, and the creation, acquisition and holding of any new Subsidiary after the Closing Date so long as 

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such new Subsidiary shall have been created, acquired or held in accordance with the terms and conditions of this Agreement;


(v)    loans to a Credit Party from a Company that are not prohibited under Section 5.8 hereof;


(vi)    any guaranty by a Company of Indebtedness of another Company so long as such Indebtedness is permitted pursuant to Section 5.8 hereof;


(vii)    any loans by a Company to, investments by a Company in, guaranties by a Company of Indebtedness of, and Letters of Credit issued to or for the benefit of, a Credit Party;  


(viii)    any loans by a Company (that is not a Credit Party) to, investments by a Company (that is not a Credit Party) in, and guaranties by a Company (that is not a Credit Party) of Indebtedness of, another Company;  


(ix)    the holding of any stock or equity interest that remains following the sale or other disposition of a Company (or a majority interest therein) permitted by Section 5.12 hereof;


(x)    any advance or loan to an employee, agent or similar Person of or consultant to a Company as an advance on payroll payments, commissions, travel, relocation expenses and other items in the ordinary course of business, so long as all such advances and loans from all Companies aggregate not more than the maximum principal sum of Five Million Dollars ($5,000,000) at any time outstanding;


(xi)    the creation of a Subsidiary for the purpose of making an Acquisition permitted by Section 5.13 hereof or the holding of any Subsidiary as a result of an Acquisition made pursuant to Section 5.13 hereof, and investments therein, so long as, in each case, such Acquisition is permitted under Section 5.13 hereof and such Subsidiary becomes a Guarantor of Payment promptly following such Acquisition if required by Section 5.19 hereof;


(xii)    any loan by a Company to, or guaranty by a Company of Indebtedness of, or investment of a Company in the stock (or other debt or equity instruments) of, a Person (other than a Company), so long as the aggregate amount of all such loans, guaranties and investments of all Companies does not exceed, at any time, an aggregate amount equal to twenty percent (20%) of Consolidated Net Worth, based upon the financial statements of the Companies for the most recently completed fiscal quarter; provided that, (A) at such time as an investment results in an Acquisition and the acquired Person becomes a Guarantor of Payment, the amount of such investment shall be excluded from the aforesaid calculation, and (B) any such loan, guaranty or investment made at a time when it was permitted under this subpart (xii) shall continue to be permitted regardless of subsequent reductions in Consolidated Net Worth;



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(xiii)    Permitted Foreign Subsidiary Loans, Guaranties and Investments;


(xiv)    the creation, acquisition or holding of any Domestic Subsidiary so long as such Domestic Subsidiary, if required pursuant to Section 5.19 hereof, becomes a Guarantor of Payment in accordance with Section 5.19 hereof, and, subject to the restriction in subsection (xiii) above, the creation, acquisition or holding of any Foreign Subsidiary;


(xv)    any investments may be made pursuant to the Borrower Investment Policy;


(xvi)    the creation, acquisition, holding and capitalization of Special Purpose Subsidiaries in connection with the establishment and performance of asset securitizations permitted under this Agreement, together with Indebtedness of a Credit Party owing to a Special Purpose Subsidiary in connection therewith; 


(xvii)    guaranties that constitute Indebtedness permitted under Section 5.8 hereof;


(xviii)    (A) overdue accounts receivable from customers converted into promissory notes pursuant to customer workout arrangements entered into in the ordinary course of business, and (B) investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with or judgments against, customers and suppliers, in each case in the ordinary course of business; or


(xix)    guaranties by a Company of operating leases (other than Capitalized Lease Obligations) or of other obligations that do not constitute Indebtedness, in each case entered into by a Subsidiary in the ordinary course of business.


For purposes of this Section 5.11, the amount of any investment in equity interests shall be based upon the initial amount invested and shall not include any appreciation in value or return on such investment.


Section 5.12.  Merger and Sale of Assets.  No Company shall merge or consolidate with any other Person, or sell, lease or transfer or otherwise dispose of all or a substantial part of its assets to any Person, except that, if no Default or Event of Default shall then exist or immediately thereafter shall begin to exist:


(a)    a Domestic Subsidiary may merge or consolidate with (i) the Borrower (provided that the Borrower shall be the continuing or surviving Person) or (ii) any one or more Guarantors of Payment (provided that a Guarantor of Payment shall be the continuing or surviving Person);


(b)    a Domestic Subsidiary may sell, lease, transfer or otherwise dispose of any of its assets to (i) the Borrower or (ii) any Guarantor of Payment;


(c)    a Company (other than a Credit Party) may merge, consolidate or amalgamate (as the case may be) with or sell, lease, transfer or otherwise dispose of any of its assets to any other Company;



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(d)    a Foreign Subsidiary may merge or amalgamate with a Credit Party provided that a Credit Party, or if applicable, the Borrower, shall be the continuing or surviving Person;


(e)    a Foreign Subsidiary may sell, lease, transfer or otherwise dispose of any of its assets to a Credit Party;


(f)    any Company may sell, lease, transfer or otherwise dispose of any of its assets to any Person (in addition to any such sale, lease, transfer or disposal to the Borrower or a Guarantor of Payment) so long as the aggregate amount of all such assets sold, leased, transferred or otherwise disposed of by all Companies in any fiscal year of the Borrower does not exceed an amount equal to ten percent (10%) of the rolling two-year average (as calculated on a quarterly basis and divided by eight) of Consolidated Total Assets; provided that any sale, transfer or disposition of fixed assets shall be excluded from such calculation so long as the proceeds are reinvested in similar fixed assets within one year from such sale, transfer or disposition (for clarification purposes, the exclusion from the calculation shall not occur until the reinvestment date);


(g)    Acquisitions may be effected in accordance with the provisions of Section 5.13 hereof;


(h)    any Company may enter into (or have existing on the Closing Date) asset securitization financing programs to the extent permitted under Sections 5.8(b) and 5.9(f) hereof; and


(i)    if requested by a customer of a Company, such Company shall be permitted to participate in such customer’s supply financing program whereby such Company may sell all of its accounts receivable from such customer to a third party financial institution on terms comparable to other vendors participating in such supply financing program, so long as there shall be no credit recourse to such Company with respect to such accounts receivable after such sale.


Section 5.13.  Acquisitions.  No Company shall effect an Acquisition; provided, however, that a Company may effect an Acquisition so long as:
    
(a)    in the case of an Acquisition that involves a merger, amalgamation or other combination with the Borrower, the Borrower shall be the surviving entity;


(b)    in the case of an Acquisition that involves a merger, amalgamation or other combination with a Credit Party (other than the Borrower), a Credit Party shall be the surviving entity;


(c)    the Companies shall be in full compliance with the Loan Documents both prior to and after giving pro forma effect to such Acquisition; and


(d)    no Default or Event of Default shall exist prior to or, after giving pro forma effect to such Acquisition, thereafter shall begin to exist.


Section 5.14.  Notice.  The Borrower shall cause a Financial Officer to promptly notify the Administrative Agent and the Lenders, in writing, whenever: 

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(a)    a Default or Event of Default may occur hereunder or any representation or warranty made in Article VI hereof or elsewhere in this Agreement or in any Related Writing may for any reason cease in any material respect to be true and complete; or


(b)    the Borrower learns of a litigation or proceeding against the Borrower before a court, administrative agency or arbitrator that, if successful, could reasonably be expected to have a Material Adverse Effect.


Section 5.15.  Environmental Compliance.  Each Company shall comply in all material respects with any and all Environmental Laws and Environmental Permits including, without limitation, all Environmental Laws in jurisdictions in which such Company owns or operates a facility or site, arranges for disposal or treatment of hazardous substances, solid waste or other wastes, accepts for transport any hazardous substances, solid waste or other wastes or holds any interest in real property or otherwise.  The Borrower shall furnish to the Administrative Agent and the Lenders, promptly after receipt thereof, a copy of any notice such Company may receive from any Governmental Authority or private Person, or otherwise, that any material litigation or proceeding pertaining to any environmental, health or safety matter has been filed or is threatened against such Company, any real property in which such Company holds any interest or any past or present operation of such Company.  No Company shall allow the release or disposal of hazardous waste, solid waste or other wastes on, under or to any real property in which any Company holds any ownership interest or performs any of its operations, in violation of any material provision of an Environmental Law.  As used in this Section 5.15, “litigation or proceeding” means any demand, claim, notice, suit, suit in equity action, administrative action, investigation or inquiry whether brought by any Governmental Authority or private Person, or otherwise.  The Borrower shall defend, indemnify and hold the Administrative Agent and the Lenders harmless against all properly documented costs, expenses, claims, damages, penalties and liabilities of every kind or nature whatsoever (including attorneys’ fees) arising out of or resulting from the noncompliance of any Company with any Environmental Law.  Such indemnification shall survive any termination of this Agreement.


Section 5.16.  Affiliate Transactions.  No Company shall, directly or indirectly, enter into or permit to exist any transaction or series of transactions (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate (other than a Company that is a Credit Party) on terms that shall be less favorable to such Company than those that might be obtained at the time in a transaction with a Person that is not an Affiliate; provided that the foregoing shall not prohibit (a) the payment of customary and reasonable directors’ fees to directors who are not employees of a Company or an Affiliate; (b) any transaction between a Company (if a Credit Party) and an Affiliate (if a Credit Party or a Foreign Subsidiary), and any transaction between Companies that are not Credit Parties, in each case which the Borrower reasonably determines in good faith is beneficial to the Companies as a whole and that is not entered into for the purpose of hindering the exercise by the Administrative Agent or the Lenders of their rights or remedies under this Agreement; (c) any employment agreement, employee benefit plan, stock option plan, officer, director, consultant or employee indemnification agreement (and the payment of indemnities and fees pursuant to such arrangements) or any similar arrangement entered 

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into by a Company in the ordinary course of business; (d) loans to employees or officers to the extent permitted under this Agreement; (e) loans and investments in Foreign Subsidiaries permitted under Section 5.11 hereof; or (f) any transaction in respect of which the Borrower delivers to the Administrative Agent (for delivery to the Lenders) a letter addressed to the Board of Directors of the Borrower from an account, appraisal or investment banking firm, in each case of nationally recognized standing that is (i) in the good faith determination of the Borrower qualified to render such letter, and (ii) reasonably satisfactory to the Administrative Agent, which letter states that such transaction is on terms that are no less favorable to the Borrower or such Subsidiary, as applicable, than would be obtained in a comparable arm’s-length transaction with a Person that is not an Affiliate.


Section 5.17.  Use of Proceeds.  The Borrower’s use of the proceeds of the Term Loan shall be for the Target Company Acquisition and related costs and expenses.


Section 5.18.  Corporate Names.  The Borrower shall not change its corporate name and no Credit Party shall change its state or jurisdiction of organization, unless, in each case, the Borrower shall have provided the Administrative Agent and the Lenders with prompt written notice thereof.


Section 5.19.  Subsidiary Guaranties.  Each Subsidiary (that is not a Dormant Subsidiary, a Special Purpose Subsidiary, a CFC or a Subsidiary that is held directly or indirectly by a CFC) created, acquired or held subsequent to the Closing Date, shall, within ten Business Days after such Subsidiary is created or acquired, execute and deliver to the Administrative Agent, for the benefit of the Lenders, a Guaranty of Payment (or a Guaranty of Payment Joinder) of all of the Obligations, such agreement to be prepared by the Administrative Agent and in form and substance acceptable to the Administrative Agent, along with any such other supporting documentation, corporate governance and authorization documents, and an opinion of counsel as may be deemed necessary or advisable by the Administrative Agent and the Required Lenders; provided that:


(a)    a Subsidiary shall not be required to execute such Guaranty of Payment so long as (i) the total assets of such Subsidiary shall be less than Ten Million Dollars ($10,000,000), and (ii) the aggregate of the total assets of all such Subsidiaries with total asset values of less than Ten Million Dollars ($10,000,000) and which have not executed a Guaranty of Payment does not exceed the aggregate amount of Twenty Million Dollars ($20,000,000).  In the event that the total assets of any Subsidiary that shall not be a Guarantor of Payment shall be at any time equal to or greater than Ten Million Dollars ($10,000,000) (or the foregoing Twenty Million Dollars ($20,000,000) shall be exceeded), the Borrower shall provide the Administrative Agent and the Lenders with prompt written notice of such asset value;


(b)    with respect to a Subsidiary required to execute a Guaranty of Payment pursuant to this Section 5.19, if (i) the total assets of such Subsidiary shall be less than Fifteen Million Dollars ($15,000,000), and (ii) the aggregate of the total assets of all such Subsidiaries shall be less than Thirty Million Dollars ($30,000,000), then such Subsidiary may delay the delivery to the Administrative Agent of such Guaranty of Payment and ancillary documentation until the first quarterly financial reporting date of the Borrower with respect to the quarterly period in which such Subsidiary was created, acquired or experienced an increase in amount of assets;



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(c)    if any Subsidiary that has been classified as a Dormant Subsidiary, a Special Purpose Subsidiary, a CFC or a Subsidiary that is held directly or indirectly by a CFC, ceases to be a Dormant Subsidiary, a Special Purpose Subsidiary, a CFC or a Subsidiary that is held directly or indirectly by a CFC, the Borrower shall provide to the Administrative Agent prompt written notice thereof, and shall provide, with respect to such Subsidiary, all of the documents referenced in this Section 5.19;    
    
(d)    with respect to a Foreign Subsidiary that is not a CFC (or owned by a CFC), if the Administrative Agent, in its reasonable discretion, after consultation with the Borrower, determines that the cost of delivery of any such Guaranty of Payment is illegal, impractical or cost-prohibitive, then the Administrative Agent may agree to forego (until such time as the Administrative Agent determines it is no longer illegal, impractical or cost-prohibitive in light of the circumstances to do so) the delivery of such Guaranty of Payment; and


(e)     notwithstanding anything in this Section 5.19 to the contrary, (i) any Company that is a Guarantor of the obligations under any Material Indebtedness Agreement of the Borrower, and (ii) subject to Section 5.19(a) and (b) hereof, any Domestic Subsidiary that is the parent of a Foreign Subsidiary, shall also be required to execute a Guaranty of Payment pursuant to this Section 5.19, unless otherwise agreed to in writing by the Administrative Agent.


Section 5.20.  Guaranties Under Senior Unsecured Indebtedness.  No Company shall be or become a primary obligor or Guarantor of any senior unsecured Indebtedness incurred under a Material Indebtedness Agreement unless such Company is also a Guarantor of Payment under this Agreement prior to or substantially concurrently therewith.


Section 5.21.  Further Assurances.  The Borrower shall, and shall cause each other Credit Party to, promptly upon request by the Administrative Agent, or the Required Lenders through the Administrative Agent, (a) correct any material defect or error that may be discovered in any Loan Document or in the execution or acknowledgment thereof, and (b) do, execute, acknowledge and deliver any and all such further acts, deeds, certificates, assurances and other instruments as the Administrative Agent, or the Required Lenders through the Administrative Agent, may reasonably require from time to time in order to carry out more effectively the purposes of the Loan Documents.




ARTICLE VI.  REPRESENTATIONS AND WARRANTIESARTICLE 


Section 6.1.  Corporate Existence; Subsidiaries; Foreign Qualification.  


(a)    Each Company is duly organized, validly existing, and in good standing (or comparable concept in the applicable jurisdiction) under the laws of its state or jurisdiction of incorporation or organization, and is duly qualified and authorized to do business and is in good standing (or comparable concept in the applicable jurisdiction) as a foreign entity in each jurisdiction where the character of its property or its business activities makes such qualification necessary, except where the failure to so qualify could not reasonably be expected to cause or result in a Material Adverse Effect.



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(b)    As of the Closing Date, Schedule 6.1 hereto sets forth (i) each Company, (ii) each Company’s state or jurisdiction of organization, and (iii) each Person that owns the stock or other equity interest of each Company (other than the Borrower).


Section 6.2.  Corporate Authority.  Each Credit Party has the right and power and is duly authorized and empowered to enter into, execute and deliver the Loan Documents to which it is a party and to perform and observe the provisions of the Loan Documents.  The Loan Documents to which each Credit Party is a party have been duly authorized and approved by such Credit Party’s board of directors or other governing body, as applicable, and are the legal, valid and binding obligations of such Credit Party, enforceable against such Credit Party in accordance with their respective terms, except as enforceability thereof may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and by equitable principles (regardless of whether enforcement is sought in equity or at law).  The execution, delivery and performance of the Loan Documents do not conflict with, result in a breach in any of the provisions of, constitute a default under, or result in the creation of a Lien (other than Liens permitted under Section 5.9 hereof) upon any assets or property of any Company under the provisions of, such Company’s Organizational Documents or any material agreement to which such Company is a party.
    
Section 6.3.  Compliance with Laws and Contracts.  Each Company:


(a)    holds all material permits, certificates, licenses, orders, registrations, franchises, authorizations, and other approvals from any Governmental Authority necessary for the conduct of its business and is in compliance in all material respects with all applicable laws relating thereto;


(b)    is in compliance in all material respects with all federal, state, local, or foreign applicable statutes, rules, regulations, and orders including, without limitation, those relating to environmental protection, occupational safety and health, and equal employment practices, except where the failure to be in compliance could not reasonably be expected to have or results in a Material Adverse Effect;


(c)    is not in material violation of or in default under any agreement to which it is a party or by which its assets are subject or bound, except with respect to any violation or default that could not reasonably be expected to have or result in a Material Adverse Effect;


(d)    has ensured that no Person who owns a controlling interest in a Company or otherwise controls a Company is (i) listed on the Specially Designated Nationals and Blocked Person List maintained by the Office of Foreign Assets Control (“OFAC”), Department of the Treasury, or any other similar lists maintained by OFAC pursuant to any authorizing statute, executive order or regulation, or (ii) a Person designated under Section 1(b), (c) or (d) of Executive Order No. 13224 (September 23, 2001), any related enabling legislation or any other similar executive orders; 


(e)    is in material compliance with all applicable Bank Secrecy Act (“BSA”) and anti-money laundering laws and regulations; and


(f)    is in compliance, in all material respects, with the Patriot Act.

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Section 6.4.  Litigation and Administrative Proceedings.  Except as disclosed on Schedule 6.4 hereto, there are (a) no lawsuits, actions, investigations, examinations or other proceedings pending or threatened against any Company, or in respect of which any Company may have any liability, in any court or before or by any Governmental Authority, arbitration board, or other tribunal that could reasonably be expected to have a Material Adverse Effect, (b) no orders, writs, injunctions, judgments, or decrees of any court or Governmental Authority to which any Company is a party or by which the property or assets of any Company are bound that could reasonably be expected to have a Material Adverse Effect, and (c) no grievances, disputes, or controversies outstanding with any union or other organization of the employees of any Company, or threats of work stoppage, strike, or pending demands for collective bargaining that could reasonably be expected to have a Material Adverse Effect.


Section 6.5.  Title to Assets.  Each Credit Party has good title to and ownership of all property it purports to own, which property is free and clear of all Liens, except those permitted under Section 5.9 hereof.


Section 6.6.  Liens and Security Interests.  On and after the Closing Date, except for Liens permitted pursuant to Section 5.9 hereof, (a) there is and will be no financing statement or similar notice of Lien outstanding covering any personal property of any Company; (b) there is and will be no mortgage or charge outstanding covering any real property of any Company; and (c) no real or personal property of any Company is subject to any Lien of any kind. 


Section 6.7.  Tax Returns.  All federal, state, provincial and local tax returns and other reports required by law to be filed in respect of the income, business, properties and employees of each Company have been filed and all taxes, assessments, fees and other governmental charges that are due and payable have been paid, except as otherwise permitted herein or where the failure to do so could not reasonably be expected to cause or result in a Material Adverse Effect.  The provision for taxes on the books of each Company is adequate, in all material respects, for all years not closed by applicable statutes and for the current fiscal year.


Section 6.8.  Environmental Laws.  Each Company is in compliance, in all material respects, with all Environmental Laws, including, without limitation, all Environmental Laws in all jurisdictions in which any Company owns or operates, or has owned or operated, a facility or site, arranges or has arranged for disposal or treatment of hazardous substances, solid waste or other wastes, accepts or has accepted for transport any hazardous substances, solid waste or other wastes or holds or has held any interest in real property or otherwise.  No litigation or proceeding arising under, relating to or in connection with any Environmental Law or Environmental Permit is pending or, to the best knowledge of each Company, threatened, against any Company, any real property in which any Company holds or has held an interest or any past or present operation of any Company that could reasonably be expected to have a Material Adverse Effect.  No release, threatened release or disposal of hazardous waste, solid waste or other wastes is occurring, or has occurred (other than those that are currently being remediated in accordance with Environmental Laws), on, under or to any real property in which any Company holds any interest or performs any of its operations, in violation of any Environmental Law that could reasonably be expected to have a Material Adverse Effect.  As used in this Section 6.8, “litigation or proceeding” means any demand, claim, notice, 

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suit, suit in equity, action, administrative action, investigation or inquiry whether brought by any Governmental Authority or private Person, or otherwise.


Section 6.9.  Continued Business. There exists no actual, pending, or, to the Borrower’s knowledge, any threatened termination, cancellation or limitation of, or any modification or change in the business relationship of any Company and any customer or supplier, or any group of customers or suppliers, which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and there exists no present condition or state of facts or circumstances that could reasonably be expected to have a Material Adverse Effect or prevent a Company from conducting such business or the transactions contemplated by this Agreement in substantially the same manner in which it was previously conducted.


Section 6.10.  Employee Benefits Plans.  Schedule 6.10 hereto identifies each ERISA Plan as of the Closing Date.  No ERISA Event has occurred or is expected to occur with respect to an ERISA Plan.  Full payment has been made of all amounts that a Controlled Group member is required, under applicable law or under the governing documents, to have 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 providing benefits under the ERISA Plan.  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 in all material respects 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 any Pension Plan (other than with respect to the Detroit Ball Bearing Company Union Employees’ Retirement Plan), the “accumulated benefit obligation” of Controlled Group members with respect to the Pension Plan (as determined in accordance with Statement of Accounting Standards No. 87, “Employers’ Accounting for Pensions”) does not exceed the fair market value of Pension Plan assets.


Section 6.11.  Consents or Approvals.  No consent, approval or authorization of, or filing, registration or qualification with, any Governmental Authority or any other Person is required to be obtained or completed by any Company in connection with the execution, delivery or performance of any of the Loan Documents, that has not already been obtained or completed.

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Section 6.12.  Solvency.  The Borrower has received consideration that is the reasonably equivalent value of the obligations and liabilities that the Borrower has incurred to the Administrative Agent and the Lenders.  The Borrower is not insolvent as defined in any applicable state, federal or relevant foreign statute, nor will the Borrower be rendered insolvent by the execution and delivery of the Loan Documents to the Administrative Agent and the Lenders.  The Borrower is not engaged or about to engage in any business or transaction for which the assets retained by it are or will be an unreasonably small amount of capital, taking into consideration the obligations to the Administrative Agent and the Lenders incurred hereunder.  The Borrower does not intend to, nor does it believe that it will, incur debts beyond its ability to pay such debts as they mature.


Section 6.13.  Financial Statements.  The audited Consolidated financial statements of the Borrower for the fiscal year ended June 30, 2013 and the unaudited Consolidated financial statements of the Borrower for the fiscal quarter ended December 31, 2013, furnished to the Administrative Agent and the Lenders, are true and complete, have been prepared in accordance with GAAP, and fairly present in all material respects the financial condition of the Companies as of the dates of such financial statements and the results of their operations for the periods then ending. 


Section 6.14.  Regulations.  No Company is engaged principally or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying any “margin stock” (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System of the United States of America).  Neither the granting of the Term Loan (or any conversion thereof) nor the use of the proceeds of the Term Loan will violate, or be inconsistent with, the provisions of Regulation T, U or X or any other Regulation of such Board of Governors.


Section 6.15.  Material Agreements.  Except as disclosed on Schedule 6.15 hereto, as of the Closing Date, no Company is a party to any (a) debt instrument (excluding the Loan Documents); (b) lease (capital, operating or otherwise), whether as lessee or lessor thereunder; or (c) collective bargaining agreement; that, as to subsections (a) through (c) above, if violated, breached, or terminated for any reason, would have or would be reasonably expected to have a Material Adverse Effect.


Section 6.16.  Intellectual Property.  Each Company owns, possesses, or has the right to use, all of the patents, patent applications, industrial designs, designs, trademarks, service marks, copyrights and licenses, and rights with respect to the foregoing, necessary for the conduct of its business without any known material conflict with the rights of others.


Section 6.17.  Insurance.  The Companies maintain with financially sound and reputable insurers insurance with coverage and limits as required by law and as is customary with Persons engaged in the same businesses as the Companies.


Section 6.18.  Accurate and Complete Statements.  Neither the Loan Documents nor any written statement made by any Company in connection with any of the Loan Documents contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained therein or in the Loan Documents not misleading.  After due inquiry by the 

44






Borrower, there is no known fact that any Company has not disclosed to the Administrative Agent and the Lenders that has or is likely to have a Material Adverse Effect.


Section 6.19.  Defaults.  No Default or Event of Default exists, nor will any begin to exist immediately after the execution and delivery hereof.




ARTICLE VII.  EVENTS OF DEFAULT


Any of the following specified events shall constitute an Event of Default (each an “Event of Default”):


Section 7.1.  Payments.  If (a) the interest on the Term Loan, any fee, or any other Obligation not listed in subpart (b) hereof, shall not be paid in full when due and payable or within three Business Days thereafter, or (b) the principal of the Term Loan shall not be paid in full when due and payable.


Section 7.2.  Special Covenants.  If any Company shall fail or omit to perform and observe Section 5.7, 5.8, 5.9, 5.11, 5.12 or 5.13 hereof.


Section 7.3.  Other Covenants.  If any Company shall fail or omit to perform and observe any agreement or other provision (other than those referred to in Section 7.1 or 7.2 hereof) contained or referred to in this Agreement or any other Related Writing that is on such Company’s part to be complied with, and that Default shall not have been fully corrected within thirty (30) days after the giving of written notice thereof to the Borrower by the Administrative Agent or any Lender that the specified Default is to be remedied.


Section 7.4.  Representations and Warranties.  If any representation, warranty or statement made in or pursuant to this Agreement or any other Related Writing or any other material information furnished by any Company to the Administrative Agent or the Lenders, or any thereof, shall be false or erroneous in any material respect.


Section 7.5.  Cross Default.  If any Company shall default in the payment of principal or interest due and owing under any Material Indebtedness Agreement or upon any other obligation for payment of Indebtedness in excess of the aggregate, for all such obligations of all such Companies, of Twenty Million Dollars ($20,000,000), beyond any period of grace provided with respect thereto or in the performance or observance of any other agreement, term or condition contained in any Material Indebtedness Agreement, if the effect of such default is to allow the acceleration of the maturity of such Indebtedness or to permit the holder thereof to cause such Indebtedness to become due prior to its stated maturity.


Section 7.6.  ERISA Default.  The occurrence of one or more ERISA Events that (a) the Required Lenders determine could reasonably be expected to have a Material Adverse Effect, or (b) results in a Lien on any of the assets of any Company, to the extent that the aggregate of all such Liens for all Companies exceeds One Million Dollars ($1,000,000).



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Section 7.7.  Change in Control.  If any Change in Control shall occur.


Section 7.8.  Money Judgment.  A final judgment or order for the payment of money shall be rendered against any Company by a court of competent jurisdiction, that remains unpaid or unstayed and undischarged for a period (during which execution shall not be effectively stayed) of thirty (30) days after the date on which the right to appeal has expired, provided that such occurrence shall constitute an Event of Default only if the aggregate of all such judgments, for all such Companies, shall exceed Twenty Million Dollars ($20,000,000) (less any amount that will be covered by the proceeds of insurance and is not subject to dispute by the insurance provider).


Section 7.9.  Validity of Loan Documents.  If (a) any material provision, in the reasonable opinion of the Administrative Agent, of any Loan Document shall at any time for any reason cease to be valid, binding and enforceable against any Credit Party; (b) the validity, binding effect or enforceability of any Loan Document against any Credit Party shall be contested by any Credit Party; (c) any Credit Party shall deny that it has any or further liability or obligation under any Loan Document; or (d) any Loan Document shall be terminated, invalidated or set aside, or be declared ineffective or inoperative or in any way cease to give or provide to the Administrative Agent and the Lenders any material benefits purported to be created thereby.


Section 7.10.  Solvency.  If any Company (other than a Foreign Subsidiary with aggregate assets of less than Two Million Dollars ($2,000,000), a Special Purpose Subsidiary or a Dormant Subsidiary) shall (a) except as permitted pursuant to Section 5.5 or 5.12 hereof, discontinue business; (b) generally not pay its debts as such debts become due; (c) make a general assignment for the benefit of creditors; (d) apply for or consent to the appointment of an interim receiver, a receiver, a receiver and manager, an administrator, a sequestrator, a monitor, a custodian, a trustee, an interim trustee, a liquidator, an agent or any other similar official of all or a substantial part of its assets or of such Company; (e) be adjudicated a debtor or insolvent or have entered against it an order for relief under the Bankruptcy Code, or under any other bankruptcy insolvency, liquidation, winding-up, corporate or similar statute or law, foreign, federal, state or provincial, in any applicable jurisdiction, now or hereafter existing, as any of the foregoing may be amended from time to time, or other applicable statute for jurisdictions outside of the United States, as the case may be; (f) file a voluntary petition under the Bankruptcy Code or seek relief under any bankruptcy or insolvency or analogous law in any jurisdiction outside of the United States, or file a proposal or notice of intention to file such petition; (g) have an involuntary proceeding under the Bankruptcy Code filed against it and the same shall continue undismissed for a period of sixty (60) days from commencement of such proceeding or case; (h) file a petition, an answer, an application or a proposal seeking reorganization or an arrangement with creditors or seeking to take advantage of any other law (whether federal, provincial or state, or, if applicable, other jurisdiction) relating to relief of debtors, or admit (by answer, by default or otherwise) the material allegations of a petition filed against it in any bankruptcy, reorganization, insolvency or other proceeding (whether federal, provincial or state, or, if applicable, other jurisdiction) relating to relief of debtors; (i) suffer or permit to continue unstayed and in effect for thirty (30) consecutive days any judgment, decree or order entered by a court of competent jurisdiction, that approves a petition or an application or a proposal seeking its reorganization or appoints an interim receiver, a receiver and manager, an administrator, custodian, trustee, interim trustee or liquidator of all or a substantial part of its assets, 

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or of such Company; or (j) take, or omit to take, any action in order thereby to effect any of the foregoing.




ARTICLE VIII.  REMEDIES UPON DEFAULT


Notwithstanding any contrary provision or inference herein or elsewhere:


Section 8.1.  Optional Defaults.  If any Event of Default referred to in Section 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8 or 7.9 hereof shall occur, the Administrative Agent may, with the consent of the Required Lenders, and shall, at the written request of the Required Lenders, give written notice to the Borrower to accelerate the maturity of all of the Obligations (if the Obligations are not already due and payable), whereupon all of the Obligations shall become and thereafter be immediately due and payable in full without any presentment or demand and without any further or other notice of any kind, all of which are hereby waived by the Borrower.


Section 8.2.  Automatic Defaults.  If any Event of Default referred to in Section 7.10 hereof shall occur the principal of and interest then outstanding on the Term Loan, and all of the other Obligations, shall thereupon become and thereafter be immediately due and payable in full (if the Obligations are not already due and payable), all without any presentment, demand or notice of any kind, which are hereby waived by the Borrower.


Section 8.3.  Offsets.  If there shall occur or exist any Event of Default referred to in Section 7.10 hereof or if the maturity of the Obligations is accelerated pursuant to Section 8.1 or 8.2 hereof, each Lender shall have the right at any time to set off against, and to appropriate and apply toward the payment of, any and all of the Obligations then owing by the Borrower to such Lender (including, without limitation, any participation purchased or to be purchased pursuant to Section 8.4 hereof), whether or not the same shall then have matured, any and all deposit (general or special) balances and all other indebtedness then held or owing by such Lender (including, without limitation, by branches and agencies or any affiliate of such Lender, wherever located) to or for the credit or account of the Borrower, all without notice to or demand upon the Borrower or any other Person, all such notices and demands being hereby expressly waived by the Borrower.
 
Section 8.4.  Equalization Provisions.  Each Lender agrees with the other Lenders that, if it at any time shall obtain any Advantage over the other Lenders, or any thereof, in respect of the Obligations (except under Article III hereof), such Lender shall purchase from the other Lenders, for cash and at par, such additional participation in the Obligations as shall be necessary to nullify the Advantage.  If any such Advantage resulting in the purchase of an additional participation as aforesaid shall be recovered in whole or in part from the Lender receiving the Advantage, each such purchase shall be rescinded, and the purchase price restored (but without interest unless the Lender receiving the Advantage is required to pay interest on the Advantage to the Person recovering the Advantage from such Lender) ratably to the extent of the recovery.  Each Lender further agrees with the other Lenders that, if it at any time shall receive any payment for or on behalf of the Borrower (or through any Guarantor of Payment) on any Indebtedness owing by the Borrower to that Lender (whether by voluntary payment, by realization upon security, by reason of offset of any deposit or other Indebtedness, by counterclaim or cross action, by enforcement of any right under 

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any Loan Document, or otherwise), it shall apply such payment first to any and all Indebtedness owing by the Borrower to that Lender pursuant to this Agreement (including, without limitation, any participation purchased or to be purchased pursuant to this Section 8.4 or any other section of this Agreement).  Each Credit Party agrees that any Lender so purchasing a participation from the other Lenders, or any thereof, pursuant to this Section 8.4 may exercise all of its rights of payment (including the right of set‐off) with respect to such participation as fully as if such Lender were a direct creditor of such Credit Party in the amount of such participation.


Section 8.5.  Other Remedies.  The remedies in this Article VIII are in addition to, and not in limitation of, any other right, power, privilege, or remedy, either in law, in equity, or otherwise, to which the Lenders may be entitled.  The Administrative Agent shall exercise the rights under this Article VIII and all other collection efforts on behalf of the Lenders and no Lender shall act independently with respect thereto, except as otherwise specifically set forth in this Agreement.


Section 8.6.  Application of Proceeds.


(a)    Payments Prior to Exercise of Remedies.  Prior to the exercise by the Administrative Agent, on behalf of the Lenders, of remedies under this Agreement or the other Loan Documents, all monies received by the Administrative Agent shall be applied, unless otherwise required by the terms of the other Loan Documents or by applicable law, to the Term Loan (provided that the Administrative Agent shall have the right at all times to apply any payment received from the Borrower first to the payment of all obligations (to the extent not paid by the Borrower) incurred by the Administrative Agent pursuant to Section 10.5 hereof.  


(b)    Payments Subsequent to Exercise of Remedies.  After the exercise by the Administrative Agent or the Required Lenders of remedies under this Agreement or the other Loan Documents, all monies received by the Administrative Agent shall be applied, unless otherwise required by the terms of the other Loan Documents or by applicable law, as follows:


(i)    first, to the payment of all obligations (to the extent not paid by the Borrower) incurred by the Administrative Agent pursuant to Section 10.5 hereof;


(ii)    second, to the payment pro rata of (A) interest then accrued and payable on the Term Loan, (B) any fees then accrued and payable to the Administrative Agent;


(iii)    third, for payment of principal outstanding on the Term Loan, on a pro rata basis to the Lenders, based upon each such Lender’s Commitment Percentage; and


(iv)    finally, any remaining surplus after all of the Obligations have been paid in full, to the Borrower or to whomsoever shall be lawfully entitled thereto.


ARTICLE IX.  THE ADMINISTRATIVE AGENT


The Lenders authorize KeyBank and KeyBank hereby agrees to act as agent for the Lenders in respect of this Agreement upon the terms and conditions set forth elsewhere in this Agreement, and upon the following terms and conditions: 



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Section 9.1.  Appointment and Authorization.  Each Lender hereby irrevocably appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers hereunder as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto.  Neither the Administrative Agent nor any of its affiliates, directors, officers, attorneys or employees shall (a) be liable for any action taken or omitted to be taken by it or them hereunder or in connection herewith, except for its or their own gross negligence or willful misconduct (as determined by a final judgment of a court of competent jurisdiction), or be responsible in any manner to any of the Lenders for the effectiveness, enforceability, genuineness, validity or due execution of this Agreement or any other Loan Documents, (b) be under any obligation to any Lender to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions hereof or thereof on the part of the Borrower or any other Company, or the financial condition of the Borrower or any other Company, or (c) be liable to any of the Companies for consequential damages resulting from any breach of contract, tort or other wrong in connection with the negotiation, documentation, administration or collection of the Term Loan or any of the Loan Documents. 


Section 9.2.  Note Holders.  The Administrative Agent may treat the payee of any Note as the holder thereof (or, if there is no Note, the holder of the interest as reflected on the books and records of the Administrative Agent) until written notice of transfer shall have been filed with the Administrative Agent, signed by such payee and in form satisfactory to the Administrative Agent.


Section 9.3.  Consultation With Counsel.  The Administrative Agent may consult with legal counsel selected by the Administrative Agent and shall not be liable for any action taken or suffered in good faith by the Administrative Agent in accordance with the opinion of such counsel.


Section 9.4.  Documents.  The Administrative Agent shall not be under any duty to examine into or pass upon the validity, effectiveness, genuineness or value of any Loan Document or any other Related Writing furnished pursuant hereto or in connection herewith or the value of any collateral obtained hereunder, and the Administrative Agent shall be entitled to assume that the same are valid, effective and genuine and what they purport to be.


Section 9.5.  Administrative Agent and Affiliates.  KeyBank and its affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory, underwriting or other business with the Companies and Affiliates as though KeyBank were not the Administrative Agent hereunder and without notice to or consent of any Lender.  Each Lender acknowledges that, pursuant to such activities, KeyBank or its affiliates may receive information regarding any Company or any Affiliate (including information that may be subject to confidentiality obligations in favor of such Company or such Affiliate) and acknowledge that the Administrative Agent shall be under no obligation to provide such information to other Lenders.  With respect to the Term Loan, KeyBank and its affiliates shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though KeyBank were not the Administrative Agent, and the terms “Lender” and “Lenders” include KeyBank and its affiliates, to the extent applicable, in their individual capacities.


Section 9.6.  Knowledge or Notice of Default.  The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless the 

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Administrative Agent has received written notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”.  In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders.  The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all Lenders); provided that, unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable, in its discretion, for the protection of the interests of the Lenders.


Section 9.7.  Action by Administrative Agent.  Subject to the other terms and conditions hereof, so long as the Administrative Agent shall be entitled, pursuant to Section 9.6 hereof, to assume that no Default or Event of Default shall have occurred and be continuing, the Administrative Agent shall be entitled to use its discretion with respect to exercising or refraining from exercising any rights that may be vested in it by, or with respect to taking or refraining from taking any action or actions that it may be able to take under or in respect of, this Agreement.  The Administrative Agent shall incur no liability under or in respect of this Agreement by acting upon any notice, certificate, warranty or other paper or instrument believed by it to be genuine or authentic or to be signed by the proper party or parties, or with respect to anything that it may do or refrain from doing in the reasonable exercise of its judgment, or that may seem to it to be necessary or desirable in the premises.  Without limiting the foregoing, no Lender shall have any right of action whatsoever against the Administrative Agent as a result of the Administrative Agent’s acting or refraining from acting hereunder in accordance with the instructions of the Required Lenders.


Section 9.8.  Release of Guarantor of Payment.  In the event of a transfer of assets permitted by Section 5.12 hereof (or otherwise permitted pursuant to this Agreement) where the proceeds of such transfer are applied in accordance with the terms of this Agreement to the extent required to be so applied, or in the event of a merger, consolidation, dissolution or similar event, permitted pursuant to this Agreement, the Administrative Agent, at the request and expense of the Borrower, is hereby authorized by the Lenders to release a Guarantor of Payment in connection with such permitted transfer or event.


Section 9.9.  Delegation of Duties.   The Administrative Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys‐in‐fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties.  The Administrative Agent shall not be responsible for the negligence or misconduct of any agent or attorney‐in‐fact that it selects in the absence of gross negligence or willful misconduct, as determined by a final judgment of a court of competent jurisdiction.


Section 9.10.  Indemnification of Administrative Agent.  The Lenders agree to indemnify the Administrative Agent (to the extent not reimbursed by the Borrower) ratably, according to their respective Commitment Percentages, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including attorneys’ fees and expenses) or disbursements of any kind or nature whatsoever that may be imposed on, incurred by 

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or asserted against the Administrative Agent in its capacity as agent in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted by the Administrative Agent with respect to this Agreement or any other Loan Document, provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including attorneys’ fees and expenses) or disbursements resulting from the Administrative Agent’s gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction, or from any action taken or omitted by the Administrative Agent in any capacity other than as agent under this Agreement or any other Loan Document.  No action taken in accordance with the directions of the Required Lenders shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section 9.10.  The undertaking in this Section 9.10 shall survive repayment of the Term Loan, cancellation of the Term Notes, if any, any foreclosure under, or modification, release or discharge of, any or all of the Loan Documents, termination of this Agreement and the resignation or replacement of the agent.


Section 9.11.  Successor Administrative Agent.  The Administrative Agent may resign as agent hereunder by giving not fewer than thirty (30) days prior written notice to the Borrower and the Lenders.  If the Administrative Agent shall resign under this Agreement, then either (a) the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders (with the consent of the Borrower so long as an Event of Default does not exist and which consent shall not be unreasonably withheld), or (b) if a successor agent shall not be so appointed and approved within the thirty (30) day period following the Administrative Agent’s notice to the Lenders of its resignation, then the Administrative Agent shall appoint a successor agent that shall serve as agent until such time as the Required Lenders appoint a successor agent.  Upon its appointment, such successor agent shall succeed to the rights, powers and duties as agent, and the term “Administrative Agent” means such successor effective upon its appointment, and the former agent’s rights, powers and duties as agent shall be terminated without any other or further act or deed on the part of such former agent or any of the parties to this Agreement.


Section 9.12.  Administrative Agent May File Proofs of Claim.  In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Credit Party, (a) the Administrative Agent (irrespective of whether the principal of the Term Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise, to (i) file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Term Loan, and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders and the Administrative Agent) allowed in such judicial proceedings, and (ii) collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and (b) any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the 

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Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, and any other amounts due the Administrative Agent.  Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.


Section 9.13.  No Reliance on Administrative Agent’s Customer Identification Program.  Each Lender acknowledges and agrees that neither such Lender, nor any of its affiliates, participants or assignees, may rely on the Administrative Agent to carry out such Lender’s or its affiliate’s, participant’s or assignee’s customer identification program, or other obligations required or imposed under or pursuant to the Patriot Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other anti‐terrorism law, including any programs involving any of the following items relating to or in connection with the Borrower, its Affiliates or agents, the Loan Documents or the transactions hereunder: (a) any identity verification procedures, (b) any record keeping, (c) any comparisons with government lists, (d) any customer notices or (e) any other procedures required under the CIP Regulations or such other laws.


Section 9.14.  Other Agents.  The Administrative Agent shall have the continuing right, in consultation with Borrower, from time to time to designate one or more Lenders (or its or their affiliates) as “syndication agent”, “co-syndication agent”, “documentation agent”, “co-documentation agent”, “book runner”, “lead arranger”, “joint lead arranger”, “arrangers” or other designations for purposes hereof.  Any such designation referenced in the previous sentence or listed on the cover of this Agreement shall have no substantive effect, and any such Lender and its affiliates so referenced or listed shall have no additional powers, duties, responsibilities or liabilities as a result thereof, except in its capacity, as applicable, as the Administrative Agent or a Lender.




ARTICLE X.  MISCELLANEOUS


Section 10.1.  Lenders’ Independent Investigation.  Each Lender, by its signature to this Agreement, acknowledges and agrees that the Administrative Agent has made no representation or warranty, express or implied, with respect to the creditworthiness, financial condition, or any other condition of any Company or with respect to the statements contained in any information memorandum furnished in connection herewith or in any other oral or written communication between the Administrative Agent and such Lender.  Each Lender represents that it has made and shall continue to make its own independent investigation of the creditworthiness, financial condition and affairs of the Companies in connection with the extension of credit hereunder, and agrees that the Administrative Agent has no duty or responsibility, either initially or on a continuing basis, to provide any Lender with any credit or other information with respect thereto (other than such notices as may be expressly required to be given by the Administrative Agent to the Lenders hereunder), whether coming into its possession before the first Credit Event hereunder or at any time or times thereafter.  Each Lender further represents that it has reviewed each of the Loan Documents.



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Section 10.2.  No Waiver; Cumulative Remedies.  No omission or course of dealing on the part of the Administrative Agent, any Lender or the holder of any Term Note (or, if there is no Term Note, the holder of the interest as reflected on the books and records of the Administrative Agent) in exercising any right, power or remedy hereunder or under any of the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder or under any of the Loan Documents.  The remedies herein provided are cumulative and in addition to any other rights, powers or privileges held under any of the Loan Documents or by operation of law, by contract or otherwise.


Section 10.3.  Amendments, Waivers and Consents.  


(a)    General Rule.  No amendment, modification, termination, or waiver of any provision of any Loan Document nor consent to any variance therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders and the Borrower and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.


(b)    Exceptions to the General Rule.  Notwithstanding the provisions of subsection (a) of this Section 10.3:


(i)    Consent of Affected Lenders Required.  No amendment, modification, waiver or consent shall (A) extend or increase any Lender’s portion of the Term Loan without the written consent of such Lender, (B) extend the date scheduled for payment of any principal of or interest on the Term Loan without the written consent of each Lender directly affected thereby, (C) reduce the principal amount of the Term Loan or the stated rate of interest thereon (provided that the institution of the Default Rate or post default interest and a subsequent removal of the Default Rate or post default interest shall not constitute a decrease in interest rate pursuant to this Section 10.3), without the consent of each Lender directly affected thereby, (D) change the manner of pro rata application of any payments made by the Borrower to the Lenders hereunder, without the consent of each Lender directly affected thereby, (E) without the unanimous consent of the Lenders, change any percentage voting requirement, voting rights, or the Required Lenders definition in this Agreement, (F) without the unanimous consent of the Lenders, release the Borrower or any Guarantor of Payment, except in connection with a transaction specifically permitted hereunder, or (G) without the unanimous consent of the Lenders, amend this Section 10.3 or Section 8.4 hereof.


(ii)    Provisions Relating to Special Rights and Duties.  No provision of this Agreement affecting the Administrative Agent in its capacity as such shall be amended, modified or waived without the consent of the Administrative Agent.  The Administrative Agent Fee Letter may be amended or modified by the Administrative Agent and the Borrower without the consent of any other Lender. 


(iii)    Technical and Conforming Modifications.  Notwithstanding the foregoing, technical and conforming modifications to the Loan Documents may be made with the consent of the Borrower and the Administrative Agent (A) if such modifications are not adverse to the Lenders and are requested by Governmental Authorities, (B) to cure any 

53






ambiguity, defect or inconsistency, or (C) to the extent necessary to integrate an Additional Term Loan Facility pursuant to Section 2.9 hereof.


(c)    Replacement of Non‐Consenting Lender.  If, in connection with any proposed amendment, waiver or consent hereunder, the consent of all Lenders is required, but only the consent of Required Lenders is obtained, (any Lender withholding consent as described in this subsection (c) being referred to as a “Non‐Consenting Lender”), then, so long as the Administrative Agent is not the Non‐Consenting Lender, the Administrative Agent may (and shall, if requested by the Borrower), at the sole expense of the Borrower, upon notice to such Non‐Consenting Lender and the Borrower, require such Non‐Consenting Lender to assign and delegate, without recourse (in accordance with the restrictions contained in Section 10.10 hereof) all of its interests, rights and obligations under this Agreement to a financial institution acceptable to the Administrative Agent and the Borrower that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that such Non‐Consenting Lender shall have received payment of an amount equal to the outstanding principal of its portion of the Term Loan, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from such financial institution (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts, including any breakage compensation under Article III hereof).


(d)    Generally.  Notice of amendments, waivers or consents ratified by the Lenders hereunder shall be forwarded by the Administrative Agent to all of the Lenders.  Each Lender or other holder of a Term Note, or if there is no Term Note, the holder of the interest as reflected on the books and records of the Administrative Agent (or interest in the Term Loan) shall be bound by any amendment, waiver or consent obtained as authorized by this Section 10.3, regardless of its failure to agree thereto. 


Section 10.4.  Notices.  All notices, requests, demands and other communications provided for hereunder shall be in writing and, if to the Borrower, mailed or delivered to it, addressed to it at the address specified on the signature pages of this Agreement, if to the Administrative Agent or a Lender, mailed or delivered to it, addressed to the address of the Administrative Agent or such Lender specified on the signature pages of this Agreement, or, as to each party, at such other address as shall be designated by such party in a written notice to each of the other parties.  All notices, statements, requests, demands and other communications provided for hereunder shall be deemed to be given or made when delivered (if received during normal business hours on a Business Day, such Business Day or otherwise the following Business Day), or two Business Days after being deposited in the mails with postage prepaid by registered or certified mail, addressed as aforesaid, or sent by facsimile or electronic communication, in each case of facsimile or electronic communication with telephonic confirmation of receipt, except that telephonic confirmation is not required when notice is being provided under Section 5.3(d) hereof.  All notices hereunder shall not be effective until received.  For purposes of Article II hereof, the Administrative Agent shall be entitled to rely on telephonic instructions from any person that the Administrative Agent in good faith believes is an Authorized Officer, and the Borrower shall hold the Administrative Agent and each Lender harmless from any loss, cost or expense resulting from any such reliance.



54






Section 10.5.  Costs, Expenses and Documentary Taxes.  The Borrower agrees to pay on demand all reasonable and properly documented costs and expenses of the Administrative Agent, including but not limited to (a) syndication, administration, travel and out‐of‐pocket expenses, including but not limited to attorneys’ fees and expenses, of the Administrative Agent in connection with the preparation, negotiation and closing of the Loan Documents and the administration of the Loan Documents, and the collection and disbursement of all funds hereunder and the other instruments and documents to be delivered hereunder, (b) extraordinary expenses of the Administrative Agent in connection with the administration of the Loan Documents and the other instruments and documents to be delivered hereunder, and (c) the reasonable fees and out‐of‐pocket expenses of special counsel for the Administrative Agent, with respect to the foregoing, and of local counsel, if any, who may be retained by said special counsel with respect thereto.  The Borrower also agrees to pay on demand all properly documented costs and expenses of the Administrative Agent and the Lenders, including reasonable attorneys’ fees and expenses, in connection with the restructuring or enforcement of the Obligations, this Agreement or any other Related Writing.  In addition, the Borrower shall pay any and all properly documented stamp, transfer, documentary and other taxes, assessments, charges and fees payable or determined to be payable in connection with the execution and delivery of the Loan Documents, and the other instruments and documents to be delivered hereunder, and agrees to hold the Administrative Agent and each Lender harmless from and against any and all liabilities with respect to or resulting from any delay in paying or failure to pay such taxes or fees, other than those liabilities resulting from the gross negligence or willful misconduct of the Administrative Agent, or, with respect to amounts owing to a Lender, such Lender, in each case as determined by a final judgment of a court of competent jurisdiction.  All obligations provided for in this Section 10.5 shall survive any termination of this Agreement.


Section 10.6.  Indemnification.  The Borrower agrees to defend, indemnify and hold harmless the Administrative Agent and the Lenders (and their respective affiliates, officers, directors, attorneys, agents and  employees) from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including attorneys’ fees) or disbursements of any kind or nature whatsoever that may be imposed on, incurred by or asserted against the Administrative Agent or any Lender in connection with any investigative, administrative or judicial proceeding (whether or not such Lender or the Administrative Agent shall be designated a party thereto) or any other claim by any Person relating to or arising out of any Loan Document or any actual or proposed use of proceeds of the Term Loan or any of the Obligations, or any activities of any Company or its Affiliates; provided that no Lender nor the Administrative Agent shall have the right to be indemnified under this Section 10.6 for its own  gross negligence or willful misconduct, as determined by a final judgment of a court of competent jurisdiction.  All obligations provided for in this Section 10.6 shall survive any termination of this Agreement.


Section 10.7.  Obligations Several; No Fiduciary Obligations.  The obligations of the Lenders hereunder are several and not joint.  Nothing contained in this Agreement and no action taken by the Administrative Agent or the Lenders pursuant hereto shall be deemed to constitute the Administrative Agent or the Lenders a partnership, association, joint venture or other entity.  No default by any Lender hereunder shall excuse the other Lenders from any obligation under this Agreement; but no Lender shall have or acquire any additional obligation of any kind by reason of such default.  The relationship between the Borrower and the Lenders with respect to the Loan 

55






Documents and the other Related Writings is and shall be solely that of debtor and creditors, respectively, and neither the Administrative Agent nor any Lender shall have any fiduciary obligation toward any Credit Party with respect to any such documents or the transactions contemplated thereby.


Section 10.8.  Execution in Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, and by facsimile or other electronic signature, each of which counterparts 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.


Section 10.9.  Binding Effect; Borrower’s Assignment.  This Agreement shall become effective when it shall have been executed by the Borrower, the Administrative Agent and each Lender and thereafter shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent and each of the Lenders and their respective successors and permitted assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Administrative Agent and all of the Lenders.


Section 10.10.  Lender Assignments.


(a)    Assignments of Commitments.  Each Lender shall have the right at any time or times to assign to an Eligible Transferee (other than to a Lender that shall not be in compliance with this Agreement), without recourse, all or a percentage of all of the following: (i) such Lender’s portion of the Term Loan, (ii) such Lender’s Term Note, and (iii) such Lender’s interest in any participation purchased pursuant to Section 8.4 hereof.


(b)    Prior Consent.  No assignment may be consummated pursuant to this Section 10.10 without the prior written consent of the Borrower and the Administrative Agent (other than an assignment by any Lender to any affiliate of such Lender which affiliate is an Eligible Transferee and either wholly-owned by a Lender or is wholly-owned by a Person that wholly owns, either directly or indirectly, such Lender, or to another Lender), which consent of the Borrower and the Administrative Agent shall not be unreasonably withheld (a failure of the Borrower to approve a distressed debt fund or vulture fund shall not be deemed to be unreasonable so long as the Leverage Ratio for the most recently completed four fiscal quarters of the Borrower shall be less than 3.00 to 1.00); provided that the consent of the Borrower shall not be required if, at the time of the proposed assignment, any Default or Event of Default shall then exist.  Anything herein to the contrary notwithstanding, any Lender may at any time make a collateral assignment of all or any portion of its rights under the Loan Documents to a Federal Reserve Bank, and no such assignment shall release such assigning Lender from its obligations hereunder.


(c)    Minimum Amount.  Each such assignment shall be in a minimum amount of the lesser of Five Million Dollars ($5,000,000) of the assignor’s portion of the Term Loan and interest herein, or the entire amount of the assignor’s portion of the Term Loan and interest herein.


(d)    Assignment Fee.  Unless the assignment shall be to an affiliate of the assignor or the assignment shall be due to merger of the assignor or for regulatory purposes, either the assignor or the assignee shall remit to the Administrative Agent, for its own account, an administrative fee of Three Thousand Five Hundred Dollars ($3,500).

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(e)    Assignment Agreement.  Unless the assignment shall be due to merger of the assignor or a collateral assignment for regulatory purposes, the assignor shall (i) cause the assignee to execute and deliver to the Borrower and the Administrative Agent an Assignment Agreement, and (ii) execute and deliver, or cause the assignee to execute and deliver, as the case may be, to the Administrative Agent such additional amendments, assurances and other writings as the Administrative Agent may reasonably require.


(f)    Non-U.S. Assignee.  If the assignment is to be made to an assignee that is organized under the laws of any jurisdiction other than the United States or any state thereof, the assignor Lender shall cause such assignee, at least five Business Days prior to the effective date of such assignment, (i) to represent to the assignor Lender (for the benefit of the assignor Lender, the Administrative Agent and the Borrower) that under applicable law and treaties no taxes will be required to be withheld by the Administrative Agent, the Borrower or the assignor with respect to any payments to be made to such assignee in respect of the Term Loan hereunder, (ii) to furnish to the assignor Lender (and, in the case of any assignee registered in the Register (as defined below), the Administrative Agent and the Borrower) either U.S. Internal Revenue Service Form W‐8ECI or U.S. Internal Revenue Service Form W‐8BEN, as applicable (wherein such assignee claims entitlement to complete exemption from U.S. federal withholding tax on all payments hereunder), and (iii) to agree (for the benefit of the assignor, the Administrative Agent and the Borrower) to provide to the assignor Lender (and, in the case of any assignee registered in the Register, to the Administrative Agent and the Borrower) a new Form W‐8ECI or Form W‐8BEN, as applicable, upon the expiration or obsolescence of any previously delivered form and comparable statements in accordance with applicable U.S. laws and regulations and amendments duly executed and completed by such assignee, and to comply from time to time with all applicable U.S. laws and regulations with regard to such withholding tax exemption.


(g)    Deliveries by Borrower.  Upon satisfaction of all applicable requirements specified in subsections (a) through (f) above, the Borrower shall execute and deliver (i) to the Administrative Agent, the assignor and the assignee, any consent or release (of all or a portion of the obligations of the assignor) required to be delivered by the Borrower in connection with the Assignment Agreement, and (ii) to the assignee and the assignor, if applicable, an appropriate Term Note or Term Notes.  After delivery of the new Term Note or Term Notes, the assignor’s Term Note or Term Notes, if any, being replaced shall be returned to the Borrower marked “replaced”.


(h)    Effect of Assignment.  Upon satisfaction of all applicable requirements set forth in subsections (a) through (g) above, and any other condition contained in this Section 10.10, (i) the assignee shall become and thereafter be deemed to be a “Lender” for the purposes of this Agreement, (ii) the assignor shall be released from its obligations hereunder to the extent that its interest has been assigned, (iii) in the event that the assignor’s entire interest has been assigned, the assignor shall cease to be and thereafter shall no longer be deemed to be a “Lender” and (iv) the signature pages hereto and Schedule 1 hereto shall be automatically amended, without further action, to reflect the result of any such assignment.


(i)    Administrative Agent to Maintain Register.  Administrative Agent shall maintain at the address for notices referred to in Section 10.4 hereof a copy of each Assignment Agreement 

57






delivered to it and a register (the “Register”) for the recordation of the names and addresses of the Lenders, and principal amount of the Term Loan owing to, each Lender from time to time.  The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register as the owner of the Term Loan recorded therein for all purposes of this Agreement.  The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice.


Section 10.11.  Sale of Participations.  Any Lender may, in the ordinary course of its commercial banking business and in accordance with applicable law, at any time sell participations to one or more Eligible Transferees (each a “Participant”) in all or a portion of its rights or obligations under this Agreement and the other Loan Documents (including, without limitation, all or a portion of the Term Loan and participations owing to it and the Term Note, if any, held by it); provided that:


(a)    any such Lender’s obligations under this Agreement and the other Loan Documents shall remain unchanged;


(b)    such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations;


(c)    the parties hereto shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and each of the other Loan Documents; 


(d)    such Participant shall be bound by the provisions of Section 8.4 hereof, and the Lender selling such participation shall obtain from such Participant a written confirmation of its agreement to be so bound; and


(e)    no Participant (unless such Participant is itself a Lender) shall be entitled to require such Lender to take or refrain from taking action under this Agreement or under any other Loan Document, except that such Lender may agree with such Participant that such Lender will not, without such Participant’s consent, take action of the type described as follows:


(i)    increase the portion of the participation amount of any Participant over the amount thereof then in effect without the written consent of each Participant affected thereby; or


(ii)    reduce the principal amount of or extend the time for any payment of principal of the Term Loan, or reduce the rate of interest or extend the time for payment of interest on the Term Loan, or reduce the commitment fee, without the written consent of each Participant affected thereby.


The Borrower agrees that any Lender that sells participations pursuant to this Section 10.11 shall still be entitled to the benefits of Article III hereof, notwithstanding any such transfer; provided that 

58






the obligations of the Borrower shall not increase as a result of such transfer and the Borrower shall have no obligation to any Participant.


Section 10.12.  Patriot Act Notice.  Each Lender, and the Administrative Agent (for itself and not on behalf of any other party), hereby notifies the Credit Parties that, pursuant to the requirements of the Patriot Act, such Lender and the Administrative Agent are required to obtain, verify and record information that identifies the Credit Parties, which information includes the name and address of each of the Credit Parties and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Credit Parties in accordance with the Patriot Act.  The Borrower shall provide, to the extent commercially reasonable, such information and take such actions as are reasonably requested by the Administrative Agent or a Lender in order to assist the Administrative Agent or such Lender in maintaining compliance with the Patriot Act.


Section 10.13.  Severability of Provisions; Captions; Attachments.  Any provision of this Agreement that shall be prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.  The several captions to sections and subsections herein are inserted for convenience only and shall be ignored in interpreting the provisions of this Agreement.  Each schedule or exhibit attached to this Agreement shall be incorporated herein and shall be deemed to be a part hereof.


Section 10.14.  Investment Purpose.  Each of the Lenders represents and warrants to the Borrower that such Lender is entering into this Agreement with the present intention of acquiring any Term Note issued pursuant hereto (or, if there is no Term Note, the interest as reflected on the books and records of the Administrative Agent) for investment purposes only and not for the purpose of distribution or resale, it being understood, however, that each Lender shall at all times retain full control over the disposition of its assets.


Section 10.15.  Entire Agreement.  This Agreement, any Term Note and any other Loan Document or other agreement, document or instrument attached hereto or executed on or as of the Closing Date integrate all of the terms and conditions mentioned herein or incidental hereto and supersede all oral representations and negotiations and prior writings with respect to the subject matter hereof.


Section 10.16.  Confidentiality.  The Administrative Agent and each Lender shall hold all Confidential Information in accordance with the customary procedures of the Administrative Agent or such Lender for handling confidential information of this nature, and in accordance with safe and sound banking practices.  Notwithstanding the foregoing, the Administrative Agent or any Lender may in any event make disclosures of, and furnish copies of Confidential Information (a) to another agent under this Agreement or another Lender; (b) when reasonably required by any bona fide transferee or participant in connection with the contemplated transfer of any portion of the Term Loan or participation therein (provided that each such prospective transferee or participant shall have an agreement for the benefit of the Borrower with such prospective transferor Lender or participant containing substantially similar provisions to those contained in this Section 10.16); (c) to the parent corporation or other affiliates of the Administrative Agent or such Lender, and to their respective auditors and attorneys; and (d) as required or requested by any Governmental Authority 

59






or representative thereof, or pursuant to legal process, provided, that, unless specifically prohibited by applicable law or court order, the Administrative Agent or such Lender, as applicable, shall notify the chief financial officer of the Borrower of any request by any Governmental Authority or representative thereof (other than any such request in connection with an examination of the financial condition of the Administrative Agent or such Lender by such Governmental Authority), and of any other request pursuant to legal process, for disclosure of any such non-public information prior to disclosure of such Confidential Information.  In no event shall the Administrative Agent or any Lender be obligated or required to return any materials furnished by or on behalf of any Company.  The Borrower hereby agrees that the failure of the Administrative Agent or any Lender to comply with the provisions of this Section 10.16 shall not relieve the Borrower of any of the obligations to the Administrative Agent and the Lenders under this Agreement and the other Loan Documents.


Section 10.17.  General Limitation of Liability.  No claim may be made by any Credit Party, any Lender, the Administrative Agent or any other Person against the Administrative Agent or any other Lender or the affiliates, directors, officers, employees, attorneys or agents of any of them for any damages other than actual compensatory damages in respect of any claim for breach of contract or any other theory of liability arising out of or related to the transactions contemplated by this Agreement or any of the other Loan Documents, or any act, omission or event occurring in connection therewith; and the Borrower, each Lender and the Administrative Agent hereby, to the fullest extent permitted under applicable law, waive, release and agree not to sue or counterclaim upon any such claim for any special, consequential or punitive damages, whether or not accrued and whether or not known or suspected to exist in their favor; provided that nothing in this Section 10.17 shall be construed to limit or negate the Borrower’s indemnification of the Administrative Agent and the Lenders from claims by any Person pursuant to Section 10.6 hereof. 


Section 10.18.  No Duty.  All attorneys, accountants, appraisers, consultants and other professional persons (including the firms or other entities on behalf of which any such Person may act) retained by the Administrative Agent or any Lender with respect to the transactions contemplated by the Loan Documents shall have the right to act exclusively in the interest of the Administrative Agent or such Lender, as the case may be, and shall have no duty of disclosure, duty of loyalty, duty of care, or other duty or obligation of any type or nature whatsoever to the Borrower, any other Companies, or any other Person, with respect to any matters within the scope of such representation or related to their activities in connection with such representation.  The Borrower agrees, on behalf of itself and its Subsidiaries, not to assert any claim or counterclaim against any such persons with regard to such matters, all such claims and counterclaims, now existing or hereafter arising, whether known or unknown, foreseen or unforeseeable, being hereby waived, released and forever discharged.


Section 10.19.  Legal Representation of Parties.  The Loan Documents were negotiated by the parties with the benefit of legal representation and any rule of construction or interpretation otherwise requiring this Agreement or any other Loan Document to be construed or interpreted against any party shall not apply to any construction or interpretation hereof or thereof.



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Section 10.20.  Governing Law; Submission to Jurisdiction.  


(a)    Governing Law.  This Agreement, each of the Term Notes and any other Related Writing (except as otherwise set forth in any Loan Document executed by a Foreign Subsidiary) shall be governed by and construed in accordance with the laws of the State of Ohio and the respective rights and obligations of the Borrower, the Administrative Agent, and the Lenders shall be governed by Ohio law, without regard to principles of conflicts of laws.


(b)    Submission to Jurisdiction.  The Borrower hereby irrevocably submits to the non‐exclusive jurisdiction of any Ohio state or federal court sitting in Cleveland, Ohio, over any action or proceeding arising out of or relating to this Agreement, the Obligations or any other Related Writing (except as otherwise set forth in any Loan Document executed by a Foreign Subsidiary), and the Borrower hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such Ohio state or federal court.  The Borrower, on behalf of itself and its Subsidiaries, hereby irrevocably waives, to the fullest extent permitted by law, any objection it may now or hereafter have to the laying of venue in any action or proceeding in any such court as well as any right it may now or hereafter have to remove such action or proceeding, once commenced, to another court on the grounds of FORUM NON CONVENIENS or otherwise.  The Borrower agrees that a final, non-appealable judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.


[Remainder of page left intentionally blank]




    









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JURY TRIAL WAIVER.  TO THE EXTENT PERMITTED BY LAW, THE BORROWER, THE ADMINISTRATIVE AGENT AND EACH LENDER WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG THE BORROWER, THE ADMINISTRATIVE AGENT AND THE LENDERS, 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. 


IN WITNESS WHEREOF, the parties have executed and delivered this Credit Agreement at Cleveland, Ohio as of the date first set forth above.






	
		
	 
	APPLIED INDUSTRIAL TECHNOLOGIES, INC.

	Address:  One Applied Plaza
	 

	Cleveland, Ohio 44115
	 

	Attention:  Chief Financial Officer
	By: /s/ Mark O.  Eisele                                         

	 
	Vice President-Chief Financial Officer

	 
	& Treasurer

	 
	 


























































Signature Page 1 of 5 to
Credit Agreement



















	
		
	 
	KEYBANK NATIONAL ASSOCIATION 

	Address:  127 Public Square
	as the Administrative Agent and as a Lender

	Cleveland, Ohio 44114-1306
	 

	Attention:  Institutional Bank
	By: /s/ Brian Fox                                        

	 
	Brian Fox

	 
	Vice President

	 
	 














































































Signature Page 2 of 5 to
Credit Agreement















	
		
	 
	U.S. BANK NATIONAL ASSOCIATION

	Address:  1350 Euclid Avenue, 11th Floor
	 

	Cleveland, Ohio 44115
	 

	Attention:  Christine C. Gencer
	By: /s/ Christine C. Gencer                        

	 
	Name:  Christine C. Gencer

	 
	Title:  Vice President

	 
	 






















































































Signature Page 3 of 5 to
Credit Agreement















	
		
	 
	PNC BANK, NATIONAL ASSOCIATION

	Address:  1900 East Ninth Street
	 

	Cleveland, Ohio 44114
	 

	Attention:  Joseph G. Moran
	By:  /s/ Joseph G. Moran                                    

	 
	Name:  Joseph G. Moran

	 
	Title:  Senior Vice President

	 
	 
























































































Signature Page 4 of 5 to
Credit Agreement















	
		
	 
	JPMORGAN CHASE BANK, N.A.

	Address:  10 South Dearborn
	 

	Chicago, Illinois  60603
	 

	Attention:  Robert S. Sheppard
	By:   /s/ Anthony A. Eastman                      

	 
	Name:  Anthony A. Eastman

	 
	Title:  Vice President

	 
	 






















































































Signature Page 5 of 5 to
Credit Agreement













SCHEDULE 1


COMMITMENTS OF LENDERS


	
				
	LENDERS
	TERM LOAN COMMITMENT PERCENTAGE
	

TERM LOAN
COMMITMENT
AMOUNT
	MAXIMUM AMOUNT

	KeyBank National Association
	26.67%
	$26,666,667
	$26,666,667

	U.S. Bank National Association
	26.67%
	$26,666,667
	$26,666,667

	PNC Bank, National Association
	26.66%
	$26,666,666
	$26,666,666

	JPMorgan Chase Bank, N.A.
	20.00%
	$20,000,000
	$20,000,000

	Total Commitment Amount
	100%
	$100,000,000    
	$100,000,000         














































































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SCHEDULE 2


GUARANTORS OF PAYMENT




Domestic Subsidiaries


Applied Industrial Technologies - CA LLC, a Delaware limited liability company
Applied Industrial Technologies - Capital Inc., a Delaware corporation
Applied Industrial Technologies -- PA LLC, a Pennsylvania limited liability company 
Applied Industrial Technologies - Dixie, Inc., a Tennessee corporation
Bearings Pan American, Inc., an Ohio corporation
ESI Acquisition Corporation d/b/a Engineered Sales, Inc., an Ohio corporation
Air Draulics Engineering Co., a Tennessee corporation
A&H Fluid Technologies, Inc., an Alabama corporation
Applied Fluid Power Holdings, LLC, an Ohio limited liability company
Bay Advanced Technologies, LLC, an Ohio limited liability company
Carolina Fluid Components, LLC, an Ohio limited liability company
DTS Fluid Power, LLC, an Ohio limited liability company
FluidTech, LLC, an Ohio limited liability company
HydroAir Hughes, LLC, an Ohio limited liability company
Power Systems, LLC, an Ohio limited liability company
Applied Maintenance Supplies & Solutions, LLC, an Ohio limited liability company
AIT International Inc., an Ohio corporation
Applied US, L.P., a Delaware limited partnership
Bearing Sales & Services Inc., a Washington corporation
Air-Hydraulic Systems, Inc., a Minnesota corporation 
Applied Industrial Technologies - PACIFIC LLC, a Delaware limited liability company
Spencer Fluid Power, Inc., an Ohio corporation




Foreign Subsidiaries


Applied Luxembourg, S.à.r.l., a limited liability company organized under the laws of Luxembourg
Applied Nova Scotia Company, an unlimited liability company organized under the laws of Nova Scotia, Canada
Applied Canada Holdings, ULC, an unlimited liability company organized under the laws of Nova Scotia, Canada 
Applied Northern Holdings, ULC, an unlimited liability company organized under the laws of Nova Scotia, Canada


















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EXHIBIT A
FORM OF
TERM NOTE
$____________                                        Cleveland, Ohio
April 25, 2014
FOR VALUE RECEIVED, the undersigned, APPLIED INDUSTRIAL TECHNOLOGIES, INC., an Ohio corporation (the “Borrower”), promises to pay to the order of _________ (“Lender”) at the main office of KEYBANK NATIONAL ASSOCIATION, as the Administrative Agent, as hereinafter defined, 127 Public Square, Cleveland, Ohio 44114‐1306 the principal sum of


_______________________________ AND 00/100............................................................    DOLLARS


in lawful money of the United States of America in consecutive principal payments as set forth in the Credit Agreement (as hereinafter defined).


As used herein, “Credit Agreement” means the Credit Agreement dated as of April 25, 2014, among the Borrower, the Lenders, as defined therein, and KeyBank National Association, as the administrative agent for the Lenders (the “Administrative Agent”), as the same may from time to time be amended, restated or otherwise modified.  Each capitalized term used herein that is defined in the Credit Agreement and not otherwise defined herein shall have the meaning ascribed to it in the Credit Agreement.


The Borrower also promises to pay interest on the unpaid principal amount of the Term Loan from time to time outstanding, from the date of the Term Loan until the payment in full thereof, at the rates per annum that shall be determined in accordance with the provisions of Section 2.3(a) of the Credit Agreement.  Such interest shall be payable on each date provided for in such Section 2.3(a); provided that interest on any principal portion that is not paid when due shall be payable on demand.
    
The portions of the principal sum hereof from time to time representing Base Rate Interest Segments and Eurodollar Interest Segments, interest owing thereon, and payments of principal and interest of any thereof, shall be shown on the records of Lender by such method as Lender may generally employ; provided that failure to make any such entry shall in no way detract from the obligations of the Borrower under this Note or the Credit Agreement.


If this Note shall not be paid at maturity, whether such maturity occurs by reason of lapse of time or by operation of any provision for acceleration of maturity contained in the Credit Agreement, the principal hereof and the unpaid interest thereon shall bear interest, pursuant to the terms of the Credit Agreement, until paid, at a rate per annum equal to the Default Rate.  All payments of principal of and interest on this Note shall be made in immediately available funds.


This Note is one of the Term Notes referred to in the Credit Agreement and is entitled to the benefits thereof.  Reference is made to the Credit Agreement for a description of the right of the undersigned to anticipate payments hereof, the right of the holder hereof to declare this Note due prior to its stated maturity, and other terms and conditions upon which this Note is issued.






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Except as expressly provided in the Credit Agreement, the Borrower expressly waives presentment, demand, protest and notice of any kind.  This Note shall be governed by and construed in accordance with the laws of the State of Ohio, without regard to conflicts of laws provisions.


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


	
		
	 
	APPLIED INDUSTRIAL TECHNOLOGIES, INC.


By: ___________________________________
Name: _________________________________
Title: __________________________________






































































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EXHIBIT B
FORM OF
NOTICE OF INTEREST SEGMENT SELECTION


_______________________, 20____


KeyBank National Association, as the Administrative Agent
127 Public Square
Cleveland, Ohio 44114-1306
Attention:  Institutional Bank




Ladies and Gentlemen:


The undersigned, APPLIED INDUSTRIAL TECHNOLOGIES, INC., an Ohio corporation (the “Borrower”), refers to the Credit Agreement, dated as of April 25, 2014 (as the same may from time to time be amended, restated or otherwise modified, the “Credit Agreement”, the terms defined therein being used herein as therein defined), among the undersigned, the Lenders, as defined in the Credit Agreement, and KEYBANK NATIONAL ASSOCIATION, as the administrative agent for the Lenders (the “Administrative Agent”), and hereby gives you notice, pursuant to Section 2.5 of the Credit Agreement that the Borrower hereby requests an Interest Segment under the Credit Agreement, and in connection therewith sets forth below the information relating to the Interest Segment (the “Proposed Interest Segment”) as required by Section 2.5 of the Credit Agreement:


(a)    The Business Day of the Proposed Interest Segment is __________, 20__.


(b)    The amount of the Proposed Interest Segment is $_______________.


(c)    The Proposed Interest Segment is to be a Base Rate Interest Segment ____ / Eurodollar Interest Segment ___.
(Check one.)


(d)    If the Proposed Interest Segment is a Eurodollar Interest Segment, the Interest Period requested is one month ___, two months ___, three months ___, 
six months ____.
(Check one.)


The undersigned hereby certifies on behalf of the Borrower that the following statements are true on the date hereof, and will be true on the date of the Proposed Interest Segment:


(i)    no event has occurred and is continuing, or would result from such Proposed Interest Segment, or the application of proceeds therefrom, that constitutes a Default or Event of Default; and














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(ii)    the conditions set forth in Section 2.5 and Article IV of the Credit Agreement have been satisfied.


	
		
	 
	APPLIED INDUSTRIAL TECHNOLOGIES, INC.


By: __________________________________
Name: ________________________________
Title: _________________________________


























































































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EXHIBIT C
FORM OF
COMPLIANCE CERTIFICATE
For Fiscal Quarter ended ____________________


THE UNDERSIGNED HEREBY CERTIFIES THAT:


(1)    I am the duly elected President or Chief Financial Officer of Applied Industrial Technologies, Inc., an Ohio corporation (the “Borrower”);


(2)    I am familiar with the terms of that certain Credit Agreement, dated as of April 25, 2014, among the Borrower, the lenders party thereto (together with their respective successors and assigns, collectively, the “Lenders”), as defined in the Credit Agreement, and KeyBank National Association, as the Administrative Agent (as the same may from time to time be amended, restated or otherwise modified, the “Credit Agreement”, the terms defined therein being used herein as therein defined), and the terms of the other Loan Documents, and I have made, or have caused to be made under my supervision, a review in reasonable detail of the transactions and condition of the Borrower and its Subsidiaries during the accounting period covered by the attached financial statements;


(3)    The review described in paragraph (2) above did not disclose, and I have no knowledge of, the existence of any condition or event that constitutes or constituted a Default or Event of Default, at the end of the accounting period covered by the attached financial statements or as of the date of this Certificate;


(4)    The representations and warranties made by the Borrower contained in each Loan Document are true and correct in all material respects as though made on and as of the date hereof (except for those representations and warranties that relate to a specific date); and


(5)    Set forth on Attachment I hereto are calculations of the financial covenants set forth in Section 5.7 of the Credit Agreement, which calculations show compliance with the terms thereof.


IN WITNESS WHEREOF, I have signed this certificate the ___ day of _________, 20___.


	
		
	 
	APPLIED INDUSTRIAL TECHNOLOGIES, INC.


By: ___________________________________
Name: _________________________________
Title: __________________________________
























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EXHIBIT D
FORM OF
ASSIGNMENT AND ACCEPTANCE AGREEMENT


This Assignment and Acceptance Agreement (this “Assignment Agreement”) between ______________________ (the “Assignor”) and ______________________ (the “Assignee”) is dated as of ________, 20_.  The parties hereto agree as follows:


1.    Preliminary Statement.  Assignor is a party to a Credit Agreement, dated as of April 25, 2014 (as the same may from time to time be amended, restated or otherwise modified, the “Credit Agreement”), among APPLIED INDUSTRIAL TECHNOLOGIES, INC., an Ohio corporation (the “Borrower”), the lenders party thereto (together with their respective successors and assigns, collectively, the “Lenders” and, individually, each a “Lender”), and KEYBANK NATIONAL ASSOCIATION, as the administrative agent for the Lenders (the “Administrative Agent”).  Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to them in the Credit Agreement.  


2.    Assignment and Assumption.  Assignor hereby sells and assigns to Assignee, and Assignee hereby purchases and assumes from Assignor, an interest in and to Assignor’s rights and obligations under the Credit Agreement, effective as of the Assignment Effective Date (as hereinafter defined), equal to the percentage interest specified on Annex 1 hereto (hereinafter, the “Assigned Percentage”) of Assignor’s right, title and interest in and to (a) any portion of the Term Loan made by Assignor that is outstanding on the Assignment Effective Date, (b) any Term Note delivered to Assignor pursuant to the Credit Agreement, and (c) the Credit Agreement and the other Related Writings.  After giving effect to such sale and assignment and on and after the Assignment Effective Date, Assignee shall be deemed to have a “Commitment Percentage” under the Credit Agreement equal to the Commitment Percentage set forth in subpart II.A on Annex 1 hereto and an Assigned Amount as set forth on subpart I.B of Annex 1 hereto (hereinafter, the “Assigned Amount”).


3.    Assignment Effective Date.  The Assignment Effective Date (the “Assignment Effective Date”) shall be [__________ __, ____] (or such other date agreed to by the Administrative Agent).  On or prior to the Assignment Effective Date, Assignor shall satisfy the following conditions:


(a)    receipt by the Administrative Agent of  this Assignment Agreement, including Annex 1 hereto, properly executed by Assignor and Assignee and accepted and consented to by the Administrative Agent and, if necessary pursuant to the provisions of Section 10.10(b) of the Credit Agreement, by the Borrower; 


(b)    receipt by the Administrative Agent from Assignor of a fee of Three Thousand Five Hundred Dollars ($3,500), if required by Section 10.10(d) of the Credit Agreement; 


(c)    receipt by the Administrative Agent from Assignee of an administrative questionnaire, or other similar document, which shall include (i) the address for notices under the Credit Agreement, (ii) the address of its Lending Office, (iii) wire transfer instructions for delivery of funds by the Administrative Agent, and (iv) such other information as the Administrative Agent shall request; and


(d)    receipt by the Administrative Agent from Assignor or Assignee of any other information required pursuant to Section 10.10 of the Credit Agreement or otherwise necessary to complete the transaction contemplated hereby.


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4.    Payment Obligations.  In consideration for the sale and assignment of the Term Loan hereunder, Assignee shall pay to Assignor, on the Assignment Effective Date, the amount agreed to by Assignee and Assignor.  Any interest, fees and other payments accrued prior to the Assignment Effective Date with respect to the Assigned Amount shall be for the account of Assignor.  Any interest, fees and other payments accrued on and after the Assignment Effective Date with respect to the Assigned Amount shall be for the account of Assignee.  Each of Assignor and Assignee agrees that it will hold in trust for the other party any interest, fees or other amounts which it may receive to which the other party is entitled pursuant to the preceding sentence and to pay the other party any such amounts which it may receive promptly upon receipt thereof.


5.    Credit Determination; Limitations on Assignor’s Liability.  Assignee represents and warrants to Assignor, the Borrower, the Administrative Agent and the Lenders (a) that it is capable of making and has made and shall continue to make its own credit determinations and analysis based upon such information as Assignee deemed sufficient to enter into the transaction contemplated hereby and not based on any statements or representations by Assignor; (b) Assignee confirms that it meets the requirements to be an assignee as set forth in Section 10.10 of the Credit Agreement; (c) Assignee confirms that it is able to fund its portion of the Term Loan as required by the Credit Agreement; (d) Assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement and the other Related Writings are required to be performed by it as a Lender thereunder; and (e) Assignee represents that it has reviewed each of the Loan Documents, and by its signature to this Assignment Agreement, agrees to be bound by and subject to the terms and conditions of the Loan Documents as if it were an original party thereto.  It is understood and agreed that the assignment and assumption hereunder are made without recourse to Assignor and that Assignor makes no representation or warranty of any kind to Assignee and shall not be responsible for (i) the due execution, legality, validity, enforceability, genuineness, sufficiency or collectability of the Credit Agreement or any other Related Writings, (ii) any representation, warranty or statement made in or in connection with the Credit Agreement or any of the other Related Writings, (iii) the financial condition or creditworthiness of the Borrower or any Guarantor of Payment, (iv) the performance of or compliance with any of the terms or provisions of the Credit Agreement or any of the other Related Writings, (v) the inspection of any of the property, books or records of the Borrower, or (vi) the validity, enforceability, perfection, priority, condition, value or sufficiency of any collateral securing or purporting to secure the Term Loan.  Neither Assignor nor any of its officers, directors, employees, agents or attorneys shall be liable for any mistake, error of judgment, or action taken or omitted to be taken in connection with the Term Loan, the Credit Agreement or the other Related Writings, except for its or their own gross negligence or willful misconduct.  Assignee appoints the Administrative Agent to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Administrative Agent by the terms thereof.  


6.    Indemnity.  Assignee agrees to indemnify and hold harmless Assignor against any and all losses, cost and expenses (including, without limitation, attorneys’ fees) and liabilities incurred by Assignor in connection with or arising in any manner from Assignee’s performance or non-performance of obligations assumed under this Assignment Agreement.


7.    Subsequent Assignments.  After the Assignment Effective Date, Assignee shall have the right, pursuant to Section 10.10 of the Credit Agreement, to assign the rights which are assigned to Assignee hereunder, provided that (a) any such subsequent assignment does not violate any of the terms and conditions of the Credit Agreement, any of the other Related Writings, or any law, rule, regulation, order, writ, judgment,


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injunction or decree and that any consent required under the terms of the Credit Agreement or any of the other Related Writings has been obtained, (b) the assignee under such assignment from Assignee shall agree to assume all of Assignee’s obligations hereunder in a manner satisfactory to Assignor, and (c) Assignee is not thereby released from any of its obligations to Assignor hereunder.


8.    Acceptance of Administrative Agent; Notice by Assignor.  This Assignment Agreement is conditioned upon the acceptance and consent of the Administrative Agent and, if necessary pursuant to Section 10.10 of the Credit Agreement, upon the acceptance and consent of the Borrower; provided that the execution of this Assignment Agreement by the Administrative Agent and, if necessary, by the Borrower is evidence of such acceptance and consent.


9.    Entire Agreement.  This Assignment Agreement embodies the entire agreement and understanding between the parties hereto and supersedes all prior agreements and understandings between the parties hereto relating to the subject matter hereof.


10.    Governing Law.  This Assignment Agreement shall be governed by the laws of the State of Ohio, without regard to conflicts of laws.


11.    Notices.  Notices shall be given under this Assignment Agreement in the manner set forth in the Credit Agreement.  For the purpose hereof, the addresses of the parties hereto (until notice of a change is delivered) shall be the address set forth under each party’s name on the signature pages hereof.


12.    Counterparts.  This Assignment Agreement 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.


[Remainder of page intentionally left blank.]




































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14.    JURY TRIAL WAIVER.  EACH OF THE UNDERSIGNED, TO THE EXTENT PERMITTED BY LAW, WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG THE ADMINISTRATIVE AGENT, ANY OF THE LENDERS, AND THE BORROWER, 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 AGREEMENT, INSTRUMENT OR DOCUMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITH OR THE TRANSACTIONS RELATED HERETO.


IN WITNESS WHEREOF, the parties hereto have executed this Assignment Agreement by their duly authorized officers as of the date first above written.


	
		
	



Address: _____________________________


Attn: ________________________________
Phone: ______________________________
Fax: ________________________________
	[NAME OF THE ASSIGNOR]






By: __________________________________
Name: ________________________________
Title: _________________________________

	



Address: _____________________________


Attn: ________________________________
Phone: _______________________________
Fax: _________________________________
	[NAME OF THE ASSIGNEE]






By: ___________________________________
Name: _________________________________
Title: __________________________________






	
		
	Accepted and Consented to this ___ day
of ___, 20__:


KEYBANK NATIONAL ASSOCIATION
   as the Administrative Agent


By: ___________________________________
Name: _________________________________
Title: __________________________________
	Accepted and Consented to this ___ day
of _______, 20__:


APPLIED INDUSTRIAL TECHNOLOGIES, INC.


By: ___________________________________
Name: _________________________________
Title: __________________________________
































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ANNEX 1
TO
ASSIGNMENT AND ACCEPTANCE AGREEMENT


On and after the Assignment Effective Date, after giving effect to all other assignments being made by Assignor on the Assignment Effective Date, the portion of the Term Loan of Assignee, and, if this is less than an assignment of all of Assignor’s interest, Assignor, shall be as follows:




I.     INTEREST BEING ASSIGNED TO ASSIGNEE


A.     Assigned Percentage                    __________%


B.     Assigned Amount                    $__________


II.     ASSIGNEE’S TERM LOAN PORTION (as of the Assignment Effective Date)


A.     Assignee’s Commitment Percentage
under the Credit Agreement                __________%


B.    Assignee’s Term Loan portion             $__________
        


III.     ASSIGNOR’S TERM LOAN PORTION (as of the Assignment Effective Date)


A.     Assignor’s Commitment Percentage
under the Credit Agreement                __________%


B.     Assignor’s Term Loan portion            $__________
              












































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