Document:

EX-10.4

 

Exhibit 10.4

FIFTH THIRD BANK

MASTER EQUIPMENT LEASE AGREEMENT

This Master Equipment Lease Agreement (this “Master Lease”) dated as of October 1, 2004 is

made by and between THE FIFTH THIRD LEASING COMPANY, an Ohio corporation, having an office at 38

Fountain Square Plaza, Cincinnati, Ohio 45263 (“Lessor”), and DENTAL CARE PLUS, INC., a corporation

organized under the laws of the State of Ohio and having a principal place of business at 100

Crowne Pointe Place, Cincinnati, Hamilton County, OH 45241 (“Lessee”).

TERMS AND CONDITIONS OF LEASE

     1. Lease. Subject to the terms and conditions set forth herein, Lessor and Lessee shall
execute and deliver Equipment Schedules pursuant to this Master Lease (each, an “Equipment
Schedule”) and pursuant to each Equipment Schedule Lessor shall lease to Lessee the equipment and
other property described on such Equipment Schedule (together with all parts, additions and
accessories incorporated therein, and software incorporated therein, the “Equipment”). Each
Equipment Schedule will incorporate by reference this Master Lease and will specify certain terms
relating to the leasing of the Equipment (this Master Lease as incorporated into each Equipment
Schedule, a “Lease”). Each Equipment Schedule, together with this Master Lease, shall constitute a
separate and enforceable Lease In the event that any term of any Equipment Schedule conflicts with
or is inconsistent with any term of this Master Lease, the terms of the Equipment Schedule shall
govern As used herein, the term “Item of Equipment,” as it relates to any Equipment, shall have the
meaning specified in the Equipment Schedule relating to such Equipment and if no such meaning is
specified therein, “Item of Equipment” shall mean the Equipment as a whole.

     2. Term. With respect to any Item of Equipment, unless otherwise specified on an Equipment
Schedule, the initial term of lease shall commence on the earlier of (a) the date an Acceptance
Certificate (as defined in Section 5) is executed with respect to such Item of Equipment, and (b)
unless the Lessee rejects such Item of Equipment in a written notice to Lessor, ten (10) days after
delivery of such Item of Equipment (the “Delivery and Acceptance Date”) and, unless earlier
terminated as provided herein, shall expire on the Expiration Date (as defined in the Equipment
Schedule relating to such Item of Equipment); provided, however, that the Base Lease Term or the
then applicable Renewal Term shall be automatically extended for successive one month periods until
either (a) the end of the Notice Period (as defined below) or (b) Lessor demanding return of the
Equipment. As used herein, “Notice Period” shall mean the period ending on the latest of (i) the
Expiration Date, (ii) one hundred eighty (180) days after the delivery by Lessee of its final
written notice of its election to purchase or return the Equipment or to determine the Fair Market
Value or Fair Market Rental Value, as applicable, in accordance with the options set forth in the
Equipment Schedule and (iii) one hundred eighty (180) days after the delivery by Lessee of its
election to return the Equipment. Lessee shall pay Basic Rent at the then current rate for each
month during the automatic renewal term. As used herein, “Term” shall mean, collectively, the
period from the Delivery and Acceptance Date to the Expiration Date and all Renewal Terms (as
defined in the Equipment Schedule relating to such Equipment); provided, however, that this Master
Lease shall be effective from and after the date of execution hereof. All obligations of Lessee
under Sections 17 and 18 hereof shall survive the expiration, cancellation or other termination of
the Term. Provided that no Default or Event of Default (each as defined in Section 16) has occurred
and is continuing, neither Lessor nor anyone claiming by, through or under Lessor, shall not
interfere with Lessee’s quiet use and possession of the Equipment.

     3. Rent. Lessee shall pay Lessor for the leasing of the Equipment hereunder the periodic
rental payments (“Basic Rent”) on the dates (each a “Rent Payment Date”) and in the amounts set
forth in the Equipment Schedule. Basic Rent together with all other additional amounts as may from
time to time be payable under this Lease and the other Lease Documents (as defined in Section 4) is
referred to

 

 

herein as “Rent”). Rent shall be due whether or not Lessee has received any notice that such
payments are due. All Rent shall be paid to Lessor at its address set forth in the Equipment
Schedule, or as otherwise directed by Lessor in writing. If any Rent is not paid when due (or
within 10 days thereafter), Lessee shall pay to Lessor a late payment fee equal to five percent
(5%) of the amount of such Rent.

     4. Net Lease. Each Lease shall constitute a non-cancelable net lease, it being the intention
of the parties that all costs, expenses and liability associated with the Equipment or its lease
shall be borne by Lessee. Lessee’s obligation to pay Rent and otherwise to perform its obligations
under this Lease and each other document and agreement executed in connection with this Lease
(together with the
Lease, collectively, the “Lease Documents”) shall be irrevocable, absolute and unconditional
and shall not be subject to defense, counterclaim, set-off, diminution, abatement or recoupment for
any reason whatsoever, and Lessee waives all rights to terminate or surrender this Lease for any
reason except as expressly set forth in this Lease, including, without limitation, defect in the
Equipment or non-performance by Lessor. All Rent shall be paid without reduction or deduction
whatsoever, including any reduction or deduction for any Tax (as defined in Section 18).

     5. Acceptance. Upon delivery of the Equipment, Lessee shall promptly inspect and test such
Equipment and, if acceptable to Lessee, accept such Equipment and deliver to Lessor a certificate
of acceptance, in form and substance reasonably satisfactory to Lessor (“Acceptance Certificate”).
Lessee represents that it has selected both (a) the Equipment, and (b) the manufacturer, vendor or
other supplier of the Equipment (the “Supplier”) without assistance from Lessor and either is a
party to, or has received a copy of, each agreement and document by which Lessor acquired the
Equipment or the right to possession and use of the Equipment (including any documents or
agreements with the Supplier (collectively, the “Supply Contract”)) prior to the Delivery and
Acceptance Date. Lessee hereby assumes the risks, burdens, and obligations to any manufacturer or
vendor of any Item of Equipment on account of nondelivery, nonacceptance or nonperformance of the
Equipment. Lessee’s execution and delivery of an Acceptance Certificate shall be conclusive
evidence as between Lessor and Lessee that the Items of Equipment referred to therein are
acceptable for all purposes hereof.

     6. Disclaimer of Warranties. THE EQUIPMENT IS BEING LEASED TO THE LESSEE BY THE LESSOR “AS IS,
WHERE IS”. LESSOR DOES NOT MAKE, HAS NOT MADE, SHALL NOT BE DEEMED TO MAKE OR HAVE MADE, AND
EXPRESSLY DISCLAIMS TO LESSEE ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, WRITTEN OR
ORAL, WITH RESPECT T THE EQUIPMENT LEASED HEREUNDER OR ANY COMPONENT THEREOF, INCLUDING, WITHOUT
LIMITATION, ANY WARRANTY AS TO DESIGN, COMPLIANCE WITH ANY LAW, RULE SPECIFICATION, OR CONTRACT
PERTAINING THERETO, QUALITY OF MATERIALS OR WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY PURPOSE,
USE OR OPERATION SAFETY, PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, OR TITLE, IT BEING AGREED
THAT ALL SUCH RISKS, AS BETWEEN LESSOR AND LESSEE, ARE TO BE BORNE BY LESSEE. Notwithstanding the
foregoing, Lessee shall be entitled to the benefit of any applicable manufacturer’s warranties
received by Lessor and, to the extent assignable, such warranties are hereby assigned by Lessor to
Lessee for the term of the applicable Equipment Schedule.

     7. Conditions Precedent. The obligation of Lessor to purchase the Equipment and to lease the
same to Lessee shall be subject to satisfaction (or waiver by Lessor) of each of the following
conditions, prior to the Delivery and Acceptance Date with respect to such Equipment: (a) Lessor
shall have received each of the following documents, in form and substance satisfactory to Lessor:
(i) the Equipment Schedule relating to such Equipment duly executed by Lessee; (ii) an Acceptance
Certificate for each Item of Equipment duly executed by Lessee; (iii) if requested by Lessor, an
assignment Lessee’s rights under the Supply Contract in form and substance acceptable to Lessor and
consent executed by Lessee and the Supplier; (iv) the original bills of sale evidencing chain of
title from the manufacturer or supplier to the Lessor relating to the Equipment to be leased
hereunder; (v) a certificate of the secretary or assistant secretary of Lessee dated the date of
such Equipment Schedule certifying (A) the incumbency of each of the officers executing the
applicable Lease Documents, (B) a copy of the articles or certificate of incorporation, by-laws or
code of regulations, and other applicable organizational documents of Lessee and (C) copies of any
other documents evidencing the authorization of the

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corporate officers on behalf of the Lessee to execute, deliver and perform this Lease and each
other Lease Document; (vi) a certificate dated the date of such Equipment Schedule of the president
or chief financial officer of Lessee certifying that, to the best of Lessee’s knowledge, no Default
or Event of Default has occurred and is continuing and no Event of Loss (as defined in Section 11)
has occurred with respect to any Equipment identified in such Equipment Schedule; (vii) if
requested by Lessor, an opinion of legal counsel to Lessee in form and substance satisfactory to
Lessor; and (viii) such other documents or agreements as may be required by the terms of the
Equipment Schedule or as Lessor may reasonably request; (b) Lessor shall have the right (by
assignment or otherwise) to purchase the Equipment identified in the applicable Equipment Schedule
for a price not to exceed the Lessor’s Capitalized Cost (as identified in such Equipment Schedule)
and on terms and conditions otherwise reasonably satisfactory to the Lessor; (c) Lessor shall have
received evidence of the filing of Uniform Commercial Code financing statements or other records
relating to such Equipment in form and substance satisfactory to Lessor in the jurisdiction in
which Lessee is a registered organization and such other jurisdiction as Lessor may reasonably
request; (d) Lessor shall have received evidence of insurance policies covering the Equipment which
comply with the requirements of Section 10, hereof; (e) the representations and warranties of the
Lessee contained herein and in each of the Lease Documents shall be true and correct on and as of
the Delivery and Acceptance Date both with and without giving effect to the transactions
contemplated by the applicable Lease; (f) no Default or Event of Default shall have occurred and be
continuing or result
from the transactions contemplated by the Lease; (g) Lessee shall have paid the fees and reasonable
out-of-pocket expenses of Lessor (including the fees and expenses of counsel to the Lessor and any
filing or recordation fees) incurred in connection with the negotiation, execution and delivery of
the Equipment Schedule and other Lease Documents relating thereto; and (h) no material adverse
change in the existing or prospective financial condition or results of operations of Lessee or any
guarantor of Lessee’s obligations hereunder (a “Guarantor”) which may affect the ability of Lessee
to perform its obligations under the Lease Documents, or the ability of any Guarantor to perform
its obligations under any Guaranty, shall have occurred since the date of the most recent audited
financial statements of Lessee delivered to Lessor.

     8. Use and Maintenance; Alterations.

          (a) Lessee covenants and agrees that it: (i) shall use the Equipment solely in the conduct of
its business, for the purpose, and in the manner, for which the Equipment was designed; (ii) shall
operate, maintain, service and repair the Equipment, and maintain all records and other materials
relating thereto, (A) in accordance and consistent with (1) the Supplier’s maintenance and
operating manuals or service agreements, whenever furnished or entered into, including any
subsequent amendments or replacements thereof, delivered by the Supplier or other service provider
to the Lessee (including requiring all components, fuels and fluids installed in or used on the
Equipment to meet the standards specified by the Supplier from time to time), (2) the requirements
of all applicable insurance policies, (3) the Supply Contract, so as to preserve all of Lessee’s
and Lessor’s rights thereunder, including all rights to any warranties, indemnities or other rights
or remedies, and (4) all applicable laws; and (B) without limiting the foregoing, so as to cause
the Equipment to be in good repair and operating condition and in at least the same condition as
when delivered to Lessee hereunder, except for ordinary wear and tear resulting despite Lessee’s
full compliance with the terms hereof; (iii) shall not discriminate against the Equipment with
respect to scheduling of maintenance, parts or service; (iv) shall not change the location of any
Equipment as specified in the Equipment Schedule without written notice to Lessor; and shall not
locate the Equipment outside of the United States without the prior consent of Lessor and (v) to
the extent requested by Lessor, shall cause each Item of the Equipment to be continually marked, in
a plain and distinct manner, with the name of Lessor followed by the words “Owner and Lessor,” or
other appropriate words designated by Lessor on labels furnished by Lessor. If the location for any
Equipment specified in the Equipment Schedule is a facility leased by Lessee or owned by Lessee
subject to one or more mortgage liens, upon the request of Lessor, Lessee will obtain a real
property waiver or waivers in form and substance satisfactory to Lessor from the lessors or
mortgagees of such facility.

          (b) Lessee, at its own cost and expense, will promptly replace all parts, appliances, systems,
components, instruments and other equipment (“Parts”) incorporated in, or installed on, the

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Equipment which may from time to time become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or permanently rendered unfit for use for any reason whatsoever;
provided, however, that Lessee shall not be required to replace any Part or Parts that are not
material to the normal and customary operation of the Equipment. In addition, in the ordinary
course of maintenance, service repair, overhaul or testing, Lessee may remove any Parts, whether or
not worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use, provided that Lessee shall replace such Parts as promptly as practicable.
All replacement Parts shall be free and clear of all Liens (as defined in Section 8(c)) and shall
be in as good an operating condition as, and shall have a value and utility at least equal to, the
Parts replaced, assuming such replaced Parts were in the condition and repair required to be
maintained by the terms hereof. Any replacement Part installed, of incorporated on, the Equipment
shall be considered an accession to such Equipment and title to such replacement Part shall
immediately vest in Lessor without cost or expense to Lessor.

          (c) Lessee will keep the Equipment and its interest therein free and clear of all liens,
claims, mortgages, charges and encumbrances of any type regardless of how arising (“Liens”) other
than any Lien arising out of claims against Lessor not relating to the lease of the Equipment to
Lessee (“Permitted Liens”). Lessee will defend, at its own expense, Lessor’s title to the Equipment
from all such Liens. If any Lien shall attach to any item of Equipment, Lessee will provide written
notification to Lessor within ten (10) days after Lessee receives notice of any such attachment
stating the full particulars thereof and the location of such Equipment on the date of such
notification. Notwithstanding the foregoing, in the event that any Lien is released within thirty
(30) days after Lessee has been notified of the existence of the Lien, Lessee shall not be in
breach of this Section.

          (d) At its sole option, Lessee may make any alteration, modification or attachment to the
Equipment deemed appropriate by Lessee, provided that such alteration, modification, attachment is
of a type which is readily removable without damage to the Equipment, does not decrease the value,
condition, utility or useful life of the Equipment or cause such Equipment to become “limited use
property” (as defined in Revenue Procedure 2001-28, 2001-19 I.R.B. 1156 or any successor
publication or Treasury Regulation
issued pursuant to the Internal Revenue Code of 1986 (as amended, supplemented or modified
from time to time, the “Code”)), a fixture (as defined in the Uniform Commercial Code as in effect
in any applicable jurisdiction), or real property or affect the insurability or impair any
manufacturer’s warranty with respect to the Equipment. All alterations, modifications and
attachments of whatsoever kind or nature made to any item of Equipment that cannot be removed
without damaging or reducing the functional capability, economic value or insurability of the item
of Equipment or impairing any manufacturer’s warranty shall only be made with the prior written
consent of the Lessor and shall be deemed to be part of the Equipment. Under no circumstance shall
any non-severable alteration, modification or attachment be subjected by Lessee to any encumbrance
other than this Lease.

     9. Assignment and Sublease. Lessee shall not sublease or otherwise relinquish possession of
any Item of Equipment, or assign, transfer or encumber its rights, interests or obligations
hereunder or under any Equipment Schedule executed pursuant hereto unless expressly permitted
pursuant to the terms of the Equipment Schedule relating to such Equipment. No assignment, transfer
or sublease, in any event, shall relieve Lessee of, and Lessee shall remain primarily liable for,
its obligations under each Lease Document.

     10. Insurance.

          (a) Lessee shall provide, maintain and pay for insurance coverage with respect to the
Equipment, insuring against, among other things, the loss, theft, damage, or destruction of the
Equipment, in an amount not less than the Stipulated Loss Value (as defined in the applicable
Equipment Schedule) of such Equipment at any time; and public liability and property damage with
respect to the use or operation of the Equipment, in the amounts set forth in the applicable
Equipment Schedule. All insurance against loss shall name Lessor as the sole loss payee and all
liability insurance shall name Lessor and its Assignees (as defined in Section 20) and their
subsidiaries and affiliated companies, and their successors and assigns as additional insureds. All
of such insurance shall be in form (including all endorsements required by Lessor), and with
companies, reasonably satisfactory to Lessor.

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          (b) All policies of insurance required hereunder shall (i) provide that any cancellation,
expiration, lapse, or material modification shall not be effective as to the Lessor for a period of
thirty (30) days after receipt by Lessor of written notice thereof; (ii) provide that premiums may
be paid by the Lessor, but without liability on the part of the Lessor for such premiums; (iii) be
primary without any right of set-off or right of contribution from any other insurance carried by
the Lessor; (iv) contain breach of warranty provisions providing that, in respect of the interests
of the Lessor, the insurance shall not be invalidated by any action, inaction or breach of
warranty, declaration, or condition by the Lessee or any other person or by any fact or information
known to Lessor; and (v) waive any right of subrogation against Lessor. Prior to the Delivery and
Acceptance Date for any Item of Equipment, and thereafter, not less than 15 days prior to each
renewal or replacement of such insurance, Lessee will deliver to Lessor certificates issued by the
insurance carriers thereunder evidencing the insurance required to be maintained pursuant to this
Lease.

          (c) The proceeds (if any) of the insurance maintained by Lessee that are received with respect
to the loss or damage of any Equipment, shall be applied and paid first, to Lessor for any amount
then due and payable by Lessee under this Lease, second, if an Event of Loss (as defined in, and
subject to, Section 11) has occurred, to Lessor for the payment of Stipulated Loss Value or,
otherwise, if such loss or damage does not constitute an Event of Loss, to Lessee for its
reasonable, documented, out-of-pocket costs to repair or replace such item of Equipment pursuant to
Section 11(b)(i), to the extent that such repairs or replacements were necessitated by the
occurrence of the loss for which such proceeds were paid, third, to Lessee to reimburse Lessee for
any Stipulated Loss Value actually paid to, and retained by Lessor and fourth, any excess to
Lessor. Proceeds of any liability insurance shall promptly be paid to the party entitled thereto.

     11. Risk of Loss; Damage to Equipment.

          (a) Lessee shall bear the entire risk of loss and damage to any and all Items of Equipment
from any cause whatsoever, whether or not insured against, during the Term until the Equipment is
returned to Lessor in accordance with Section 14 hereof. No loss or damage shall relieve Lessee of
the obligation to pay Rent or of any other obligation under this Lease. An “Event of Loss” shall be
deemed to have occurred with respect to any Item of Equipment if such Item of Equipment or any
material part thereof has been lost, stolen, requisitioned or condemned by any governmental
authority, damaged beyond repair or damaged in such a manner that results in an insurance
settlement on the basis of an actual or arranged total loss.

          (b) Upon any loss or damage to any Item of Equipment not constituting an Event of Loss, Lessee
will promptly, and in any event within thirty (30) days of such loss or damage (or such longer
period as to which the parties shall mutually agree), place such Item of Equipment in good
condition and repair as required by the terms of this Lease. If an Event of Loss to any Item of
Equipment has
occurred, Lessee shall immediately notify Lessor of same, and at the option of Lessee, Lessee
shall: (i) not more than thirty (30) days following such Event of Loss (or such longer period as
Lessor shall determine in its sole discretion) replace such Item of Equipment with replacement
equipment (acceptable to Lessor) in as good condition and repair, and with the same value remaining
useful economic life and utility, as such replaced Item of Equipment immediately preceding the
Event of Loss (assuming that such replaced Item of Equipment was in the condition required by this
Lease), which replacement equipment shall immediately, and without further act, be deemed to
constitute Items of Equipment and be fully subject to this Lease as if originally leased hereunder
and shall be free and clear of all Liens; or (ii) pay to Lessor on the next succeeding Rent Payment
Date the sum of (A) all Rent due and owing hereunder with respect to such Item of Equipment (at the
time of such payment) including all Basic Rent payable on such Rent Payment Date plus (B) the
Stipulated Loss Value as of such Rent Payment Date with respect to such Item of Equipment. Upon
Lessor’s receipt of the payment required under subsection (ii) above, Lessee shall be entitled to
Lessor’s interest in such Item of Equipment, in its then condition and location “as is” and “where
is”, without any representations or warranties, express or implied.

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     12. Financial, Other Information and Notices.

          (a) Lessee shall maintain a standard and modern system for accounting and shall furnish to
Lessor:

     (i) Within sixty (60) days after the end of each quarter, a copy of Lessee’s internally
prepared consolidated financial statements for that quarter and for the year to date in a form
reasonably acceptable to Lessor, prepared and certified as complete and correct, subject to
changes resulting from year-end adjustments, by the chief financial officer of Lessee.

     (ii) Within one hundred twenty (120) days after the end of each fiscal year, a copy of
Lessee’s consolidated year end financial statements audited by a firm of independent certified
public accountants acceptable to Lessor (which acceptance shall not be unreasonably withheld) and
accompanied by an audit opinion of such accountants without qualification.

All such financial statements shall be prepared in accordance with generally accepted accounting
principles, consistently applied.

          (b) Lessee shall provide prompt written notice to Lessor (i) of any Event of Default (ii) of
any loss or damage to any Item of Equipment or any Event of Loss with respect to any Item of
Equipment, and (iii) any existing or threatened investigation, claim or action by any governmental
authority which could adversely affect the Equipment or this Lease.

          (c) Lessee shall furnish such other information as Lessor may reasonably request from time to
time relating to the Equipment, this Lease or the operation or condition of Lessee including,
without limitation, such additional financial statements of the Lessee for such periods as Lessor
may request; provided that Lessee shall have a reasonable amount of time to have such financial
statements prepared.

     13. Inspections. Lessor may from time to time during Lessee’s normal business hours, and, so
long as no Default or Event of Default is continuing, upon not less than five (5) days written
notice to Lessee, inspect the Equipment and Lessee’s records with respect thereto. Lessee shall
cooperate with Lessor in scheduling such inspection and in making the Equipment available for
inspection by Lessor or its designee at a single location as reasonably specified by Lessee. Lessee
will, upon reasonable written request, provide a report on the condition of the Equipment, a record
of its maintenance and repair, a summary of all items suffering an Event of Loss, a certificate of
no Event of Default, or such other information or evidence of compliance with Lessee’s obligations
under the Lease as Lessor may reasonably request.

     14. Condition Upon Return. At the expiration of the Term, unless Lessee has elected to
purchase the Equipment in accordance with the terms of the Equipment Schedule, Lessee shall
promptly, at its own cost and expense: (a) return the Equipment in the condition required to be
maintained under Section 8(a) hereof; (b) if de-installation, disassembly or crating is required,
cause such Items of Equipment to be de-installed, disassembled and crated by an authorized
manufacturer’s representative or such other service person as is reasonably satisfactory to Lessor;
and (c) return such Items of Equipment in the condition and in the manner specified in the
Equipment Schedule (collectively, the “Return Condition”). The Equipment, as returned, will include
related maintenance logs, operating manuals, and other related materials. All operating manuals for
the Equipment must be returned to Lessor in a usable condition and containing all pages. If lost or
destroyed, Lessee shall, at its own expense, provide replacement operating manuals. Lessor may, but
is not required to, inspect the Equipment prior to its return. If Lessor determines that the
Equipment does not conform to the Return Condition, Lessor will promptly notify Lessee of such
determination specifying the repairs or refurbishments needed to place the Equipment in the Return
Condition. Lessor may, at its option, either require Lessee to effect such repairs or itself effect
such
repairs. In either case, all costs associated with any repairs and inspections will be paid by
Lessee. Until Lessee has returned the Equipment in compliance with the requirements of this Lease,
the Lease shall continue in full force and effect and Lessee shall continue to pay Rent

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notwithstanding any expiration or termination of the Term through and including the date on which
the Equipment is accepted for return by Lessor as conforming with the Return Condition.

     15. Lessee’s Representations and Warranties. Lessee represents and warrants as of the date of
execution and delivery of this Master Lease and each Equipment Schedule as follows: (a) Lessee is a
corporation organized under the laws of the State of Ohio, having a principal place of business at
100 Crowne Pointe Place, Cincinnati, Hamilton County, Ohio, 45241, duly organized, validly existing
under the laws of the jurisdiction of its organization with full power to enter into and to pay and
perform its obligations under the Equipment Schedule and this Lease as incorporated therein by
reference, and is duly qualified or licensed in all other jurisdictions where its failure to so
qualify would adversely affect the conduct of its business or its ability to perform any of its
obligations under or the enforceability of this Lease; (b) each Equipment Schedule, this Master
Lease and all other Lease Documents have been duly authorized, executed and delivered by Lessee,
are valid, legal and binding obligations of Lessee, are enforceable against Lessee in accordance
with their terms and do not and will not contravene any provisions of or constitute a default under
Lessee’s organization documents, any agreement to which it is a party or by which it or any of its
property is bound, or any applicable law, regulation or order of any governmental authority; (c)
Lessor’s right, title and interest in and to the Equipment and the Rent therefrom will vest in
Lessor upon Lessee’s acceptance of the Equipment for lease hereunder and will not be affected or
impaired by the terms of any agreement or instrument by which Lessee or any of its property is
bound; (d) no approval of, or filing with, any governmental authority or other person is required
in connection with Lessee’s entering into, or the payment or performance of its obligations under,
this Lease and the other Lease Documents; (e) there are no suits or proceedings pending or, to the
knowledge of Lessee, threatened, before any court or governmental agency against or affecting
Lessee which, if decided adversely to Lessee, would adversely affect the conduct of its business or
its ability to perform any of its obligations under or the enforceability of this Lease; (f) the
financial statements of Lessee which have been delivered to Lessor have been prepared in accordance
with generally accepted accounting principles consistently applied, and fairly present Lessee’s
financial condition and the results of its operations as of the date of and for the period covered
by such statements (subject to customary year-end adjustments), and since the date of such
statements there has been no material adverse change in such financial condition or operations; (g)
Lessee’s full and correct legal name is set forth on the signature page hereof and Lessee will not
change its legal name or the location of its jurisdiction of organization without giving to Lessor
at least thirty (30) days prior written notice thereof; (h) the Equipment will always be used for
business or commercial, and not personal, purposes; (i) Lessee is not in default under any
obligation for borrowed money, for the deferred purchase price of property or any lease agreement
which, either individually or in the aggregate, would have a material adverse effect on the
condition of its business or its ability to perform any of its obligations under or the
enforceability of this Lease; and (j) Lessee is, and will remain, in full compliance with all laws
and regulations applicable to it including without limitation, (i) ensuring that no person who owns
a controlling interest in or otherwise controls Lessee is or shall be (A) listed on the Specially
Designated National and Blocked Person List maintained by the Office of Foreign Assets Control
(“OFAC”), Department of the Treasury and/or any other similar lists maintained by OFAC pursuant to
any authorizing statute, executive order or regulations or (C) 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 order and (ii) compliance with all applicable Bank
Secrecy Act (“BSA”) laws, regulations and government guidance on BSA compliance and on the
prevention and detection of money laundering violations.

Lessee’s representations and warranties shall survive termination or expiration of the Lease.

     16. Events of Default and Remedies.

          (a) Each of the following events constitutes an “Event of Default” hereunder and any event
that, with the passage of time or the giving of notice, or both, would constitute an Event of
Default shall constitute a “Default” hereunder: (i) Lessee fails to pay any Rent when due under
this Lease and such failure continues for a period of ten (10) days; (ii) any representation or
warranty made by Lessee in the Lease or in any other Lease Document shall at any time prove to have
been incorrect in any material respect as and when made; (iii) Lessee fails (A) to obtain and
maintain the insurance coverage required

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herein; or (B) fails to materially observe or perform any other covenant, condition or agreement
under this Lease and, in the case of
clause (B), such failure continues unremedied for a period of fifteen (15) days after written
notice thereof by Lessor to Lessee; (iv) Lessee or any Guarantor shall have consolidated with,
merged with or into, or conveyed, sold or otherwise transferred all or substantially all of its
assets or shall have failed to maintain its corporate existence; (v) Lessee or any Guarantor (A)
ceases doing business as a going concern; (B) makes an assignment for the benefit of creditors or
admits in writing its inability to pay its debts as they mature or generally fails to pay its debts
as they become due; (C) initiates any voluntary bankruptcy, reorganization, insolvency or similar
proceeding; (D) fails to obtain the discharge of any bankruptcy, reorganization, insolvency or
similar proceeding initiated against it by others within sixty (60) days of the date such
proceedings were initiated; (E) requests or consents to the appointment of a trustee, custodian or
receiver or other officer with similar powers for itself or a substantial part of its property; or
(F) a trustee, custodian or receiver or other officer with similar powers is appointed for itself
or for a substantial part of its property; (vi) Lessee fails to return the Equipment or fails to
return the Equipment in the required condition at the expiration of the Term; or (vii) if Lessee’s
obligations are guaranteed by any other party, an “Event of Default” (under and as defined in the
Guaranty executed by such Guarantor) shall occur.

          (b) Upon the occurrence of an Event of Default, Lessor may exercise any one or more of the
following remedies and any additional rights and remedies permitted by law (none of which shall be
exclusive) and shall be entitled to recover all its reasonable costs and expenses and attorneys’
fees in enforcing its rights and remedies:

          (i) Lessee shall, upon demand, assemble or cause to be assembled any o all of the Equipment
at a location designated by Lessor; and/or to return promptly, at Lessee’s expense, any or all of
the Equipment to Lessor at such location, in the condition and otherwise in accordance with all
of the terms of Section 14 hereof; and/or

          (ii) Lessor may itself or by its agents enter upon the premises of Lessee or any other
location where the Equipment is located and take possession of and render unusable by Lessee any
or all of the Equipment, wherever it may be located, without any court order or other process of
law and without liability for any damages occasioned by such taking of possession; and/or

          (iii) Sell, re-lease or otherwise dispose of any or all of the Equipment, whether or not in
Lessor’s possession, at public or private sale with or without notice to Lessee, with the right
of Lessor to purchase and apply the net proceeds of such disposition, after deducting all costs
of such disposition (including but not limited to costs of transportation, possession, storage,
refurbishing, advertising and brokers’ fees), to the obligations of Lessee under this Lease, with
Lessee remaining liable for any deficiency and with any excess being retained by Lessor, or
retain any and all of the Equipment; and/or

          (iv) Cancel such Equipment Schedule as to any or all of the Equipment; and/or

          (v) Proceed by appropriate court action, either at law or in equity (including an action for
specific performance), to enforce performance by Lessee or to recover damages associated with
such Event of Default; or exercise any other right or remedy available to Lessor at law or in
equity; and/or

          (vi) By offset, recoupment or other manner of application, apply any security deposit,
monies held in deposit or other sums then held by Lessor or any affiliate of Lessor, and with
respect to which Lessee has an interest, against any obligations of Lessee arising under this
Lease or any other Lease Document, whether or not Lessee has pledged, assigned or granted a
security interest to Lessor in any or all such sums as collateral for said obligations.

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          (c) In addition to the foregoing, Lessee shall pay to Lessor on demand the sum of (i) any and
all Rent which is then due or which has accrued to the date of demand and (ii) an amount equal to
the Stipulated Loss Value (as set forth in the related Equipment Schedule) as of the Rent Payment
Date on or immediately preceding the date of demand for the Items of Equipment as Lessor shall
specify. The Lessor and Lessee agree that Lessor shall be entitled to such amount as damages for
loss of bargain and not as a penalty and that such amount is reasonable in light of the anticipated
harm to Lessor caused by an Event of Default.

          (d) If Lessee pays the full amount referred to in Section 16(c) to Lessor prior to the
termination of this Lease as it relates to such Items of Equipment, title to the relevant Equipment
shall immediately vest in Lessee without representation or warranty by Lessor. If Lessee fails to
pay such amount and Lessor subsequently sells, releases or otherwise disposes of such Items of
Equipment, the amount due from Lessee under Section 16(c) shall be reduced by an amount equal to
(i) the actual cash proceeds received and retained by Lessor upon any sale or disposition or (ii)
if Lessor leases such Equipment by a lease agreement substantially similar to this Lease, the
present value of the rents (discounted at the Prime Rate as announced by Fifth Third Bank and in
effect at the time of demand plus
2.00%) payable under such subsequent Lease for the remaining Term of this Lease (without
regard to any Renewal Terms other than the then current Renewal Term (if applicable)), in each
case, net of all costs and expenses incurred in connection with such sale, disposition or lease
including any incidental damages.

          (e) A cancellation or termination hereunder shall occur only upon written notice by Lessor to
Lessee, and only with respect to such Items of Equipment as Lessor specifically elects to cancel or
terminate by such notice. Except as to any such Items of Equipment with respect to which there is a
cancellation or termination, this Lease shall remain in full force and effect and Lessee shall be
and remain liable for the full performance of all its obligations under this Lease.

          (f) Lessee shall indemnify, defend and hold Lessor harmless for any loss, personal injury
(including death), or damage to property, suffered by Lessor, its employees or any of its agents in
connection with its entry onto the premises of Lessee. Each of the rights and remedies of Lessor
hereunder and under the other Lease Documents is in addition to all of its other rights and
remedies hereunder, under the other Lease Documents and under applicable law and nothing in this
Lease or any other Lease Document shall be construed as limiting any such right or remedy. Lessor’s
failure to exercise or delay in exercising any right, power or remedy available to Lessor shall not
constitute a waiver or otherwise affect or impair its rights to the future exercise of any such
right, power or remedy. Waiver by Lessor of any Event of Default shall not be a waiver by Lessor of
any other or subsequent Events of Default.

     17. General Indemnification. Lessee shall pay, and shall indemnify and hold Lessor, its
directors, officers, agents, employees, successors and assigns (each an “Indemnitee”) harmless on
an after-tax basis from and against, any and all liabilities, causes of action, claims, suits,
penalties, damages, losses, costs or expenses (including attorneys’ fees), obligations,
liabilities, demands and judgments, and Liens, of any nature whatsoever (collectively, a
“Liability”) arising out of or in any way related to: (a) the Lease Documents, (b) the manufacture,
purchase, ownership, title, selection, acceptance, rejection, possession, lease, sublease,
operation, use, maintenance, documenting, inspection, control, loss, damage, destruction, removal,
storage, surrender, sale, use, condition, delivery, nondelivery, return or other disposition of or
any other matter relating to any Item of Equipment or any part or portion thereof (including, in
each case and without limitation, latent or other defects, whether or not discoverable, any claim
for patent, trademark or copyright infringement) and any and all Liabilities in any way relating to
or arising out of injury to persons, properties or the environment or any and all Liabilities based
on strict liability in tort, negligence, breach of warranties or violations of any regulatory law
or requirement, (c) a failure to comply fully with applicable law, (d) Lessee’s failure to perform
any covenant, or Lessee’s breach of any representation or warranty, hereunder and (e) the failure
of the Equipment under the laws of the jurisdiction(s) in which it is to be located, to consist
solely of personal property and not fixtures; provided, that the foregoing indemnity shall not
extend to the Liabilities to the extent resulting from the gross negligence or willful misconduct
of an Indemnitee.

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     18. General Tax Indemnification. Lessee shall pay when due and shall indemnify and hold each
Indemnitee harmless from and against (on an after-tax basis) any and all taxes, fees, withholdings,
levies, imposts, duties, assessments and charges of any kind and nature (“Taxes”) arising out of or
related to this Lease or any other Lease Document, together with interest and penalties thereon and
including, without limitation, sales, use, gross receipts, personal property, real property, real
estate excise, ad valorem, business and occupational, value added, leasing, leasing use,
documentary, stamp or other taxes imposed upon or against any Indemnitee, Lessee or any Equipment
by any governmental authority with respect to any Equipment or the manufacturing, ordering, sale,
purchase, shipment, delivery, acceptance or rejection, ownership, titling, registration, leasing,
subleasing, possession, use, operation, removal, return or other dispossession thereof or upon the
rents, receipts or earnings arising therefrom or upon or with respect to this Lease, whether
payable at the inception of a Lease, during the Term thereof or at the expiration thereof,
excepting only all federal, state and local taxes on or measured by Lessor’s net income. Whenever
this Lease or any other Lease Document terminates as to any Item of Equipment, Lessee shall, upon
written request by Lessor, advance to Lessor the amount estimated by Lessor to be the personal
property or other taxes on such Item of Equipment which are not yet payable, but for which Lessee
is responsible. Lessor shall, at Lessee’s request, provide Lessee with Lessor’s method of
computation of any estimated taxes. Except as otherwise provided in the Equipment Schedule relating
to any Equipment, upon receipt of any tax bill relating to such Equipment from a relevant taxing
authority, Lessor will pay the Tax identified on such tax bill. Lessee will, on demand, (a)
reimburse Lessor for the amount of such Tax paid to such taxing authority and (b) pay to Lessor a
fee (as identified by Lessor from time to time) relating to the administration of such payment.

     19. Ownership. Title to the Equipment shall at all times remain in Lessor, and Lessee shall
acquire no ownership, title, property, right, equity or interest in the Equipment other than its
leasehold interest solely as Lessee subject to all the terms and conditions hereof. This Lease, is
intended to be a “finance lease” solely for the purposes of Article 2A of the Uniform Commercial
Code as that term is defined in Article 2A of the Uniform Commercial Code. To the extent permitted
by applicable law, Lessee (a) waives any and
all rights and remedies of Lessee under Sections 2A-508 through 2A-522 of the Uniform
Commercial Code and (b) any rights now or hereafter conferred by statute or otherwise to recover
incidental or consequential damages from Lessor for any breach or any other reason whatsoever. If,
notwithstanding the express intent of the parties, a court of competent jurisdiction determines
that any Equipment Schedule is not a “finance lease”, the parties agree that in such event (i) (A)
in order to secure the prompt payment of Rent under and with respect to this Lease, and the
performance and observant by Lessee of all the agreements, covenants and provisions hereof
(collectively, the “Obligations”), Lease hereby grants to Lessor a first priority security interest
in all of Lessee’s right, title and interest in the following (whether now existing or hereafter
created and whether now owned or hereafter acquired): (1) the Equipment (including, without
limitation, all inventory, equipment, fixtures or other property comprising the same), and general
intangibles relating thereto, (2) additions, attachments, accessories and accessions thereto
whether or not furnished by the Supplier of such Equipment, (3) all subleases (including the right
to receive any payment thereunder and the right to make any election or determination or give any
consent or waiver thereunder), chattel paper, accounts, security deposits and bills of sale
relating thereto, (4) any and all substitutions, replacements or exchanges for any such Equipment
or other collateral, and (5) any and all products and proceeds of any collateral hereunder
(including all insurance and requisition proceeds and all other payments of any kind with respect
to the Equipment and other collateral in and against which a security interest is granted
hereunder) and (B) Lessee agrees that with respect to the Equipment, in addition to all of the
other rights and remedies available to Lessor hereunder upon the occurrence of an Event of Default,
Lessor shall have all of the rights and remedies of a secured party under the Uniform Commercial
Code; and (ii) the original principal amount of the obligations hereunder shall be an amount equal
to the Lessor’s Capitalized Cost, and that such principal amount shall accrue interest at the
lesser of (x) the maximum lawful rate permitted by applicable law or (y) the implicit interest rate
reflecting Lessor’s financial assumptions at the time of the execution of the Lease (including any
assumed residual value at the end of the Term as determined by Lessor). Lessee hereby authorizes
Lessor to file, solely at the expense of Lessee, any Uniform Commercial Code financing statements
or other similar documents that Lessor reasonably deems necessary or advisable to protect its
interest. Lessee agrees promptly to execute and deliver to Lessor such further documents or other

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assurances, and to take such further action, including obtaining landlord and mortgagee waivers, as
Lessor may from time to time reasonably request.

     20. Assignment by Lessor. Lessor may at any time assign, grant a security interest in, or
otherwise dispose of (individually or collectively, a “transfer”), all or any portion of its
rights, title or interests in, to and under this Lease, any Equipment Schedule or any Item of
Equipment, together or separately, to one or more persons or entities (each, an “Assignee”). Upon
any such transfer, this Lease shall remain in full force and effect. If Lessee is given notice of
any such transfer, it shall acknowledge receipt thereof in writing and execute, or otherwise
authenticate, such further instruments as may be reasonably requested by Assignee with respect to
such transfer, including without limitation, a consent certifying certain material facts and
circumstances related to this Lease and the Equipment. Unless otherwise expressly agreed by
Assignee, Assignee shall not assume any of the obligations of Lessor under this Lease. Upon written
notice to Lessee of an assignment, Lessee agrees to pay the Rent with respect to the Items of
Equipment covered by such assignment to such Assignee in accordance with the instructions specified
in such notice and Lessee shall not assert against Assignee any defense, counterclaim or offset
that Lessee may have against Lessor. All obligations and liabilities of Lessee to Lessor under this
Lease (including, without limitation, any schedules, exhibits, riders or other attachments attached
hereto or otherwise incorporated herein) are also hereby made for the express benefit of Assignee.

     21. Miscellaneous.

          (a) Lessee shall pay all costs and expenses of Lessor, including, without limitation,
reasonable attorneys’ and other professional fees, the fees of any collection agencies and
appraisers and all other costs and expenses related to any sale or re-lease of the Equipment
(including storage costs), incurred by Lessor in the preparation, negotiation and execution of this
Lease or any amendment or supplement hereto, enforcing any of the terms, conditions or provisions
hereof and in protecting Lessor’s rights hereunder.

          (b) This Lease shall be governed by and construed in accordance with the laws of the State of
Ohio. Any judicial proceeding arising out of or relating to this Lease may be brought in any court
of competent jurisdiction in Hamilton County, Ohio and each of the parties hereto (i) accepts the
nonexclusive jurisdiction of such courts and any related appellate court and agrees to be bound by
any judgment rendered by any such court in connection with any such proceeding and (ii) waives any
objection it may now or hereafter have as to the venue of any such proceeding brought in such court
or that such court is an inconvenient forum. EACH OF THE LESSEE AND LESSOR HEREBY WAIVES THE RIGHT
TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING ARISING OUT OF OR IN AN WAY RELATING TO THIS LEASE,
ANY EQUIPMENT SCHEDULE, OR ANY OTHER LEASE DOCUMENT AND ANY ASSIGNMENT, SUBLEASE OR OTHER DOCUMENT
EXECUTED IN CONNECTION THEREWITH.

          (c) All notices delivered hereunder shall be in writing (including facsimile) and shall be
delivered to the following addresses:

	 	 	 	 	 	 	 
	 	 	if to Lessee:	 	 
	 
	 	 	 	 	 	 
	 	 	Dental Care Plus, Inc.

100 Crowne Pointe Place

Cincinnati, OH 45241	 	 
	 

	 	Attention:	 	 	 	 
	 

	 	Facsimile:
	 	 

	 	 
	 

	 	 	 	 

	 	 

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if to Lessor:

The Fifth Third Leasing Co.

38 Fountain Square Plaza

MD10904A

Cincinnati, Ohio 45263

Attn: Sales Support Manager

Facsimile: (513) 534-6706

          (d) Lessee acknowledges and agrees that time is of the essence with respect to its performance
under the Lease Documents. Any failure of Lessor to require strict performance by Lessee or any
waiver by Lessor of any provision herein shall not be construed as a consent or waiver of any
provision of this Lease. This Lease shall be binding upon, and inure to the benefit of, the parties
hereto, their permitted successors and assigns.

          (e) This Lease, together with all other Lease Documents, constitutes the entire understanding
or agreement between Lessor and Lessee with respect to the leasing of the Equipment, and supercedes
all prior agreements, representations and understandings relating to the subject matter hereof.
Neither this Lease nor any other Lease Document may be amended except by a written instrument
signed by Lessor and Lessee.

          (f) This Lease may be executed in any number of counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.

          (g) Any provision of this Lease which is 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, and any such prohibition or
unenforceability shall not invalidate or render unenforceable such provision in any other
jurisdiction. Captions are intended for convenience or reference only, and shall not be construed
to define, limit or describe the scope or intent of any provisions hereof.

     IN WITNESS WHEREOF, Lessor and Lessee have executed this Master Lease as of the day and year
first above written.

	 	 	 	 	 	 	 
	 	 	LESSOR:	 	 
	 
	 	 	 	 	 	 
	 	 	THE FIFTH THIRD LEASING COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Christopher S. Bell
 

Christopher S. Bell
	 	 
	 

	 	Title:
	 	Assistant Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	LESSEE:	 	 
	 
	 	 	 	 	 	 
	 	 	DENTAL CARE PLUS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Robert C. Hodgkins, Jr.
 

Robert C. Hodgkins, Jr.
	 	 
	 

	 	Title:
	 	Vice President & CFO	 	 

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[5/3 LOGO] FIFTH THIRD BANK

Equipment Schedule — No. 001

Dated January 31, 2005

To Master Equipment Lease Agreement

Dated as of October 1, 2004

	 	 	 
	Lessor:

	 	THE FIFTH THIRD LEASING COMPANY,

an Ohio corporation
	 
	 	 
	Lessee:

	 	DENTAL CARE PLUS, INC.

All of the terms of the Master Equipment Lease Agreement dated as of October 1, 2004 (as amended,
supplemented or modified from time to time, the “Master Lease”) between Lessee and Lessor are
incorporated by reference herein. Capitalized terms used, and not otherwise defined, herein shall
have the meanings ascribed thereto in the Master Lease. This Equipment Schedule as it incorporates
the terms of the Master Lease and each schedule, exhibit and rider attached hereto is referred to
as this “Lease.” This Equipment Schedule, and the Master Lease, as incorporated herein shall
constitute a separate and enforceable lease. If any term of any schedule, exhibit or rider hereto
conflicts with or is inconsistent with any term of this Equipment Schedule or the Master Lease, the
terms of such schedule, exhibit or rider shall govern.

	1.	 	Equipment.

This Equipment Schedule relates to the Equipment described on Schedule I hereto (collectively, the
“Equipment”).

	2.	 	Financial Terms.

          (a) Base Lease Term Commencement Date: January 31, 2005

          (b) Base Lease Term: 36 months

          (c) Rent Payment Dates: February 28, 2005 and on the same day of each month thereafter during
the Term.

          (d) Expiration Date: January 31, 2008

          (e) Lessor’s Capitalized Cost: $145,226.19

          (f) Rent: The Base Term Rental Factor is 0.0305982 (or $4,443 67 per month as of the Base
Lease Term Commencement Date). The Base Term Rental Factor has been determined based on an interest
rate swap rate for a term corresponding to the maturity of this Lease as quoted in the Federal
Reserve Statistical H15 Release and (B) such Base Term Rental Factor may be adjusted up or down (as
appropriate) by Lessor based upon a

 

 

corresponding interest rate swap rate quoted in such Release as in effect on the Delivery and
Acceptance Date. Lessor will provide Lessee with notice of any such adjustment.

          (g) Equipment Location(s): As specified on Schedule 1. Lessee shall not use, or permit any the
Equipment to be used, predominately outside the United States within the meaning of Section
168(g)(1)(A) of the Code except under the circumstances described in Section 168(g)(4) of the Code,
if applicable to the Equipment

          (h) The Stipulated Loss Value for the Equipment shall be equal to Lessor’s Capitalized Cost
for such Equipment multiplied by the applicable percentage amount for the relevant date set forth
on Schedule 2 attached hereto.

          (i) Pursuant to Section 18 of the Master Lease, on or prior to the Delivery and Acceptance
Date, Lessee will execute and deliver a Tax Payment Certification in the form of Exhibit A hereto.

          (j) Lessee’s federal taxpayer identification number is 31-1185262 and Lessee’s state charter
or organizational identification number is 668728.

	3.	 	Rent and Tax Payments.

          (a) On each Rent Payment Date during the Base Lease Term, Lessee shall pay (i) as Basic Rent
for the Equipment, the product of the Base Term Rental Factor and Lessor’s Capitalized Cost for the
Equipment and (ii) in respect of Taxes scheduled to become due, such amounts monthly (or at such
other interval as Lessor may deem appropriate) as Lessor determines will be due and payable. In
addition to the foregoing, on the Base Lease Term Commencement Date Lessee shall pay to Lessor as
interim rent for each day from the Delivery and Acceptance Date to the Base Lease Term Commencement
Date, the sum of (A) $148.12, as daily rent and (B) such amounts daily in respect of Taxes as
Lessor determines will be due and payable.

	4.	 	Certain Tax Matters.

          (a) Lessee represents and warrants that (i) beginning in Lessor’s taxable year which includes
the date of acceptance by Lessee of the Equipment and at all times during the Term, Lessor shall be
entitled to take the maximum deductions for depreciation allowable pursuant to Section 167(a) or
any successor provision of the Code and that the deductions for depreciation of the Equipment shall
be determined as provided in Section 168 (including, without limitation, Section 166(a)) or any
successor provision of the Code and shall be based on Lessor’s Capitalized Cost for the Equipment
(the “Depreciation Deduction”), (ii) the applicable “recovery period” for the Equipment as provided
in Section 168(c) or any successor provision of the Code shall be as indicated on Schedule 1, (iii)
Lessor shall be entitled to take the maximum deductions pursuant to Section 163 or any successor
provision of the Code, with respect to interest payable on Lessor’s borrowing (if any) in
connection with the acquisition or financing of Equipment (the “Interest Deduction” and together
with the Depreciation Deduction, the “Tax Benefits”), and (iv) Lessor will not be required to
Include in its gross income at any time during the Term any amount with respect to the transactions
contemplated by the Lease Documents other than (A) Basic Rent as such amounts accrue in accordance
with the terms of the Lease, (B) the amount of any income or gain resulting from the payment of
Stipulated Lass Value or from the loss, sale or other disposition of the Equipment, (C) amounts
paid by Lessee on an after-tax basis, and (D) amounts identified as interest.

2

 

          (b) If, as a result of (i) the inaccuracy of any of the representations or warranties set
forth in Section 4(a), (ii) any change in applicable law, (iii) the breach by Lessee of any of its
covenants or agreements in this Lease, (iv) any act or omission of Lessee or any affiliate of
Lessee, or (v) the sale or other disposition of any Item of Equipment or any interest therein after
the occurrence of an Event of Default, there shall be a disallowance, elimination, reduction,
disqualification, recapture or other change in whole or in part of the Depreciation Deduction or
Interest Deduction, including without limitation a change in the Depreciation Deduction schedule (a
“Tax Loss”), Lessee shall, upon request by Lessor and subject to the provisions of this Section 4,
pay to Lessor on each Rent Payment Date, commencing with the first such date following written
notice to Lessee by Lessor of such Tax Loss, such additional Rent as shall be in amounts which
shall cause Lessor’s after tax economic yield and after tax cash flow (computed on the same
assumptions, including without limitation, the tax rates and discount rates utilized by Lessor in
connection with this Lease) to equal the economic yield and cash flows that would have been
realized by Lessor if such Tax Loss had not occurred. If the date of the Tax Loss with respect to
any Equipment occurs following the termination of the Lease with respect to such Equipment, said
additional Rent shall be payable in a lump sum on demand. In addition to the amounts payable as
provided above, Lessee will also pay any interest additions to tax and, penalties (except additions
to tax and penalties caused by the gross negligence or willful misconduct of Lessor) paid or
payable with respect to the Tax Loss or on account of having claimed the deduction giving rise to
such Tax Loss. For purposes of this Section 4, the term “Lessor” shall include any Assignee and any
affiliated group within the meaning of Section 1504 or any successor provision of the Code, of
which Lessor or Assignee, respectively is a member if consolidated returns are filed for such
affiliated group for Federal income tax purposes.

          (c) For the purpose of this Section 4, a Tax Loss shall occur upon the earliest of (i) the
happening of any event which may cause such Tax Loss, (ii) the payment by Lessor to the Internal
Revenue Service of the tax increase resulting from such Tax Loss, or (iii) the adjustment of the
tax return of Lessor to reflect such Tax Loss. A certificate of an officer of Lessor describing
such Tax Loss in reasonable detail shall be conclusive evidence of the amount and date of such Tax
Loss (absent manifest error).

          (d) Lessee shall not be required to make any payment pursuant to the provisions of this
Section 4 in respect of any Tax Loss which results from any one or more of the following causes:
(i) the failure of Lessor to have sufficient Income to benefit from such Depreciation Deductions or
Interest Deductions, (ii) failure of Lessor to claim in a timely and proper manner (including
making all appropriate permissible elections under the Code) any permissible deductions and
treatment of income and deductions in its income tax returns for the appropriate years, or (iii)
application or imposition of a minimum tax.

          (e) If the Internal Revenue Service proposes an adjustment in any item of income, gain, loss,
deduction or credit which if agreed to by Lessor would result in a Tax Loss, Lessor hereby agrees
to take such action in connection with contesting such proposed adjustment as Lessee shall
reasonably request in writing from time to time, provided that: (i) within thirty (30) days after
notice by Lessor to Lessee of such claim, Lessee shall have requested that such proposed adjustment
be contested, (ii) before undertaking, at Lessee’s request, any administrative appeals,
proceedings, hearings or conferences with the Internal Revenue Service or any judicial resolution
or any other such action in respect of such proposed adjustment, Lessor shall have been furnished
by Lessee with an opinion of a law firm reasonably acceptable to Lessor, to the effect that Lessee
is more likely than not to prevail in contesting such proposed adjustment, (iii) Lessee shall have
indemnified or provided for the indemnification of Lessor in a

3

 

manner reasonably satisfactory to Lessor for all expenses which Lessor may incur as the result
of contesting such proposed adjustment and hereby agrees to pay or reimburse Lessor for (in
addition to all other Indemnification under this Lease), on demand, all actual and reasonable costs
and expenses which Lessor may incur in connection with contesting such proposed adjustment,
including. without limitation, reasonable attorneys’ and accountants’ fees, expenses and
disbursements, (iv) at such lime as judicial resolution is available and appropriate, If Lessor
elects to pay the Tax claimed and sue for a refund in the appropriate court, Lessee shall have paid
the full amount of such Tax, (v) Lessor need not appeal any adverse judicial determination by any
such court or any administration agency, and (vi) Lessor has determined that such proposed
adjustment or any proposed contest does not involve a risk of criminal liability or of the toss of
use or possession or the forfeiture, seizure, confiscation or sale of any Equipment. Lessor may
elect not to contest such proposed adjustment or imposition, despite a request by Lessee pursuant
to clause (i) of this Section 4(e) that a proposed adjustment be contested; provided that, if
Lessor so elects despite such a request by Lessee, Lessee shall be relieved of all its
indemnification obligations in respect of any such Tax Loss resulting from such proposed
adjustment. In the case of any such proposed adjustment referred to above, Lessor agrees promptly
to notify Lessee in writing of such proposed adjustment and agrees not to make payment of the Tax
claimed, if such payment has been demanded, prior to the earlier of (A) the date such amount is due
and (B) thirty (30) days after the giving of such notice and agrees to give to Lessee any relevant
information relating to such proposed adjustment which may be particularly within the knowledge of
Lessor. If Lessee has paid any Tax on behalf of Lessor pending a suit for a refund, Lessor will
promptly remit to Lessee any refund received by Lessor as a result of such proceeding (net of any
amounts due and payable pursuant to this Lease). Notwithstanding any other provision of this Lease,
including this Section, Lessor shall have the affirmative control of any contest litigation.

	5.	 	Insurance

The amount of public liability insurance including personal injury and property damage required to
be maintained by Lessee pursuant to Section 10(a) of the Master Lease is $1,000,000.00 per
occurrence.

	6.	 	Early Expiration

          (a) Early Expiration Dates. Each Rent Payment Date falling within an Early Expiration
Period designated below is called an “Early Expiration Date” and corresponds to an Early
Termination Option fee expressed as a percentage of Lessor’s Capitalized Cost as follows:

	 	 	 	 	 
	Early Expiration Period 	 	Early Termination Option
	January 2006
	 	 	57.23	%

          So long as (i) no Default or Event of Default has occurred and (ii) this Lease shall not have
been earlier terminated, on the Early Expiration Date specified above, Lessee may exercise with
respect to all but not less than all of the Equipment an option specified in this Section 6.

          (b) Termination Option. Lessee shall have the right, upon the terms and conditions
set forth below, to terminate this Lease and return all but not less than all of the Equipment on
such Early Expiration Date, and pay to Lessor, in cash on such Early Expiration Date, a

4

 

termination fee equal to the Early Termination Option percentage times Lessor’s Capitalized
Cost and corresponding to the Early Expiration Date specified above, plus all Rent then due and
payable pursuant to this Lease (including Basic Rent due on such Early Expiration Date); provided
that Lessee gives Lessor written notice of Lessee’s intent to exercise such right not less than one
hundred eighty (180) days and not more than two hundred seventy (270) days prior to the applicable
Early Expiration Date. Failure to provide notice within such period shall terminate any right of
Lessee to terminate this Lease pursuant to this Section. If Lessee exercises its right to terminate
this Lease and return the Equipment in accordance with the terms hereof, Lessee shall return the
Equipment not later than the applicable Early Expiration Date in the condition required by Section
14 of the Master Lease and Section (a) hereof.

	7.	 	End of Term

Upon the expiration of the Term, Lessee shall exercise with respect to all, but not less than all,
of the Equipment one of the following options in accordance with the terms hereof:

          (a) Purchase Option. So long as (i) no Default or Event of Default has occurred and
(ii) this Lease shall not have been earlier terminated, Lessee shall have the right upon the terms
and conditions set forth below, to purchase all but not less than all of the Equipment upon
expiration of the Term, for a price equal to the Fair Market Value for the Equipment (plus all
Taxes (including all sales and use Taxes) payable in connection with such purchase) provided that
Lessee gives Lessor written notice of Lessee’s intent to exercise such right not less than one
hundred eighty (180) days and not more than two hundred seventy (270) days prior to the end of the
Term. Failure to provide notice within such period shall terminate any right of Lessee to purchase
the Equipment pursuant to this Section. “Fair Market Value shall mean (A) the amount agreed
upon between Lessor and Lessee not less than ninety (90) days prior to the end of the Term or (B)
if not so agreed, shall be determined not later than the end of the Term by an independent
appraiser upon whom Lessor and Lessee may mutually agree, or, failing such agreement, the average
appraised value of three independent appraisers, one of whom shall be selected by Lessor, the
second by Lessee and the third by the first two so selected which determination shall be binding
upon Lessee and Lessor. In determining the Fair Market Value, each such appraiser shall determine
the value which would be obtained in an arm’s length transaction between an informed and willing
buyer-user and an Informed and willing seller under no compulsion to sell such Equipment, assuming
the Equipment to be in the condition required to be maintained and returned pursuant to the Lease.
In such determination of Fair Market Value, (w) the costs of removal of the Equipment from its
present location shall not be a deduction from such value, (x) if the Equipment is installed, the
value shall be determined on an Installed basis, (y) such purchase shall be on an “as-is, where-is”
basis and without warranty or representations, except that Lessor shall warrant that the Equipment
is free, clear or unencumbered of all Liens arising by, through or under Lessor except for such
Liens that Lessee is required to remove pursuant to the terms of the Lease and (z) the purchase
price shall be payable in cash. The fees and expenses of all such appraisers shall be paid by
Lessee. If Lessee exercises its right to purchase the Equipment in accordance with the terms
hereof, upon payment of the purchase price and all other amounts then due and payable under this
Lease, Lessor will deliver to Lessee a bill of sale transferring title to the Equipment to Lessee
on an “as-is, where-is” basis without representation or warranty of any kind except that Lessor
shall warrant that the Equipment is free, clear and unencumbered of all Liens arising by, through
or under Lessor except for such Liens that Lessee is required to remove pursuant to the terms of
the Lease.

5

 

If Lessee and Lessor are unable to agree upon the Fair Market Value of the Equipment prior to the
date ninety (90) days prior to the end of the Base Lease Term or applicable Renewal Term,
notwithstanding any election to purchase the Equipment, subject to Section 2 of the Master Lease,
by delivery of written notice not less than the date ninety (90) days prior to the end of the Base
Lease Term or the applicable Renewal Term, Lessee may either (I) terminate its election to purchase
the Equipment by delivering written notice of its irrevocable election to return the Equipment or
(Il) irrevocably elect to determine the Fair Market Value in accordance with clause (2) of the
definition thereof. Failure to provide such notice shall constitute an election by Lessee to seek a
negotiated determination of the Fair Market Value but shall not impose any additional obligation on
Lessor. If Lessor and Lessee are unable to agree upon the Fair Market Value of the Equipment prior
to the end of the Base Lease Term of the applicable Renewal Term, notwithstanding any election to
purchase the Equipment, subject to Section 2 of the Master Lease, by delivery of written notice not
later than the end of the Base Lease Term or the applicable Renewal Term, Lessee may either (I)
terminate its election to purchase the Equipment by delivering written notice of its irrevocable
election to return the Equipment or (II) irrevocably elect to determine the Fair Market Value in
accordance with clause (2) of the definition thereof.

          (b) Return Option. If Lessee fails to purchase the Equipment pursuant to the
provisions of the preceding Section, Lessee shall return the Equipment to Lessor in accordance with
the terms of this Section 7(b) and Section 14 of the Master Lease

     (i) At the expiration of the Term, Lessee shall return all, but not less than all, of
the Equipment. Lessee shall provide Lessor with not less than one hundred eighty (180) days
prior written notice of its intent to return the Equipment (“Notice of Return”). Such Notice
of Return will contain a detailed inventory of the Equipment and all components thereof,
including a listing of the model and serial number of all components comprising the
Equipment and will identify the then current location of the Equipment.

     (ii) On or before the expiration of the Term, Lessee shall return the Equipment, at
Lessee’s cost and expense, to any location(s) designated by Lessor. The Equipment will be
transported in accordance with manufacturer’s recommendations and applicable government
laws, rules and regulations,

     (iii) Upon delivery of the Equipment, Lessee shall deliver all maintenance records and
other similar documents pertaining to the Equipment and, to the extent Lessor is not the
owner of such records, title thereto will immediately vest In Lessor.

     (iv) At least sixty (60) days prior to the scheduled return and redelivery of the
Equipment, Lessee shall, at its own cost and expense, provide Lessor with a report from a
certified manufacturer or dealer of the Equipment, or such other qualified party reasonably
acceptable to Lessor, stating that such person has performed an inspection and testing of
the Equipment and that such Equipment is in the condition required by the Lease.

     (v) Upon return, the Equipment shall be:

     (A) cleaned or steam-cleaned as applicable and treated with respect to rust,
corrosion and appearance In accordance with manufacturer’s recommendations and
consistent with the best practices of dealers in used equipment similar to the
Equipment;

6

 

     (B) free of all advertising end insignia placed thereon by Lessee;

     (C) mechanically and structurally sound, capable of performing the functions
for which it was originally designed and able to operate within the original
specifications and tolerances with no loss of power and, if applicable, no excessive
emission of exhaust at ignition or starting of the machinery;

     (D) accompanied by a detailed inventory of the Equipment and all components
thereof, including a listing of the model and serial number of all components
comprising the Equipment;

     (E) accompanied by a current set of all manuals, blueprints, process flow
diagrams, equipment configuration diagrams and other data reasonably requested by
Lessor: and

     (F) accompanied by a certificate of the manufacturer or of a maintenance
provider acceptable to Lessor that the Equipment qualifies for the manufacturers
used equipment maintenance program (if any) and all manufacturers and maintenance
provider’s warranties (if any).

     (vi) In addition and without limiting the foregoing, upon return the Equipment shall
comply with the following conditions:

     (A) [NOT APPLICABLE]

     (vii) If Lessee is required to return the Equipment, or any portion of the Equipment,
prior to the scheduled expiration of the Term as a result of an Event of Default or the
cancellation or termination of this Lease in accordance with the terms hereof, Lessee shall
return such Equipment in the condition required by and in accordance with the terms of this
Section 6(a); provided that any requirement in this Section 6(a) to provide notice prior to
taking any required action, or to take any action within a period specified prior to the
scheduled expiration of the Term, shall not be applicable and Lessee shall be required to
comply with such provisions on demand.

Except as expressly modified hereby, all terms and provisions of the Master Lease shall remain in
full force and effect. This Equipment Schedule is not binding or effective with respect to the
Master Lease or Equipment until executed on behalf of Lessor and Lessee by authorized
representatives of Lessor and Lessee, respectively.

[Remainder of page intentionally left blank. Signature page follows.]

7

 

     IN WITNESS WHEREOF, Lessee and Lessor have caused this Equipment Schedule to be executed by
their duly authorized representatives as of the date first above written.

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	LESSOR:	 	LESSEE:	 	 
	 
	THE FIFTH THIRD LEASING COMPANY	 	DENTAL CARE PLUS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	Name:	 	Name:	 	 
	Title:	 	Title:	 	 

THIS LEASE MAY BE EXECUTED IN SEVERAL COUNTERPARTS AND TO THE EXTENT, IF ANY, THAT THIS LEASE
CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN
ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS LEASE MAY BE PERFECTED THROUGH THE
TRANSFER OF POSSESSION OF ANY COUNTERPART OTHER THAT THE ORIGINAL COUNTERPART, WHICH SHALL BE
IDENTIFIED AS THE CHATTEL PAPER ORIGINAL ON THE SIGNATURE PAGE THEREOF. THIS IS THE CHATTEL PAPER
ORIGINAL.

CHATTEL PAPER ORIGINAL

8

 

     IN WITNESS WHEREOF; Lessee and Lessor have caused this Equipment Schedule to be executed by
their duly authorized representatives as of the date first above written.

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	LESSOR:	 	LESSEE:	 	 
	 
	THE FIFTH THIRD LEASING COMPANY	 	DENTAL CARE PLUS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	Name:	 	Name:	 	 
	Title:	 	Title:	 	 

THIS LEASE MAY BE EXECUTED IN SEVERAL COUNTERPARTS AND TO THE EXTENT, IF ANY, THAT THIS LEASE
CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN
ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS LEASE MAY BE PERFECTED THROUGH THE
TRANSFER OF POSSESSION OF ANY COUNTERPART OTHER THAT THE ORIGINAL COUNTERPART, WHICH SHALL BE
IDENTIFIED AS THE CHATTEL PAPER ORIGINAL ON THE SIGNATURE PAGE THEREOF. THIS IS NOT THE CHATTEL
PAPER ORIGINAL.

9

 

SCHEDULE 1

TO

EQUIPMENT SCHEDULE No. 001

DESCRIPTION OF EQUIPMENT

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Sales Tax,	 	 	 	 
	Manuf. and/or	 	Description of Equipment	 	 	 	 	 	 	 	 	 	Delivery,	 	 	 	 
	Vendor Name &	 	and MACRS Depreciation	 	 	 	 	 	Per Item Cost	 	Installation &	 	Invoice	 	Equipment
	Invoice No.	 	Recovery Period	 	Quantity	 	(If applicable)	 	Other Charges	 	Total	 	Location
	CDW DIRECT

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	100 Crowne
	Invoices #’s:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Pointe Place,
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Cincinnati
	PC99588

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	OH 45241
	PC99908

PA31649

PA37406

PA77114

	 	Various Computer Hardware	 	 	1	 	 	$	11,061.69	 	 	$	0.00	 	 	$	11,061.69	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Dell

	 	Various Computer Hardware	 	 	1	 	 	$	123,759.74	 	 	$	0.00	 	 	$	123,759.74	 	 	100 Crowne
	Invoices #’s:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Pointe Place,
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Cincinnati
	C17955392

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	OH 45241
	B80647045

B55978726

B55194350

B50515140

B50691372

B52782871

B52613093

B53061868

B52612682

B52612836

B51597221

B51865595

B52183692

B57015364

B57407327

B54879813

B54244397

B54351916
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Capitalized Sales Tax
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	10,404.96	 	 	 
	Total:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	145,226.19	 	 	 

 

 

SCHEDULE 2

TO

EQUIPMENT SCHEDULE No. 001

RENT PAYMENT DATE

STIPULATED LOSS VALUE PERCENTAGES

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Stipulated Loss Value
	Payment Number	 	Rent Payment Date	 	Percentage
	1
	 	 	2/28/2005	 	 	 	102.16	 
	2
	 	 	3/31/2005	 	 	 	99.58	 
	3
	 	 	4/30/2005	 	 	 	96.98	 
	4
	 	 	5/31/2005	 	 	 	94.38	 
	5
	 	 	6/30/2005	 	 	 	91.76	 
	6
	 	 	7/31/2005	 	 	 	89.14	 
	7
	 	 	8/31/2005	 	 	 	86.50	 
	8
	 	 	9/30/2005	 	 	 	83.85	 
	9
	 	 	10/31/2005	 	 	 	81.20	 
	10
	 	 	11/30/2005	 	 	 	78.52	 
	11
	 	 	12/31/2005	 	 	 	75.84	 
	12
	 	 	1/31/2006	 	 	 	73.15	 
	13
	 	 	2/28/2006	 	 	 	70.44	 
	14
	 	 	3/31/2006	 	 	 	67.72	 
	15
	 	 	4/30/2006	 	 	 	64.99	 
	16
	 	 	5/31/2006	 	 	 	62.24	 
	17
	 	 	6/30/2006	 	 	 	59.48	 
	18
	 	 	7/31/2006	 	 	 	56.71	 
	19
	 	 	8/31/2006	 	 	 	53.93	 
	20
	 	 	9/30/2006	 	 	 	51.13	 
	21
	 	 	10/31/2006	 	 	 	48.32	 
	22
	 	 	11/30/2006	 	 	 	45.49	 
	23
	 	 	12/31/2006	 	 	 	42.66	 
	24
	 	 	1/31/2007	 	 	 	39.81	 
	25
	 	 	2/28/2007	 	 	 	36.94	 
	26
	 	 	3/31/2007	 	 	 	34.06	 
	27
	 	 	4/30/2007	 	 	 	31.17	 
	28
	 	 	5/31/2007	 	 	 	28.27	 
	29
	 	 	6/30/2007	 	 	 	25.36	 
	30
	 	 	7/31/2007	 	 	 	22.44	 
	31
	 	 	8/31/2007	 	 	 	19.50	 
	32
	 	 	9/30/2007	 	 	 	16.55	 
	33
	 	 	10/31/2007	 	 	 	13.59	 
	34
	 	 	11/30/2007	 	 	 	10.62	 
	35
	 	 	12/31/2007	 	 	 	7.64	 
	36
	 	 	1/31/2008	 	 	 	4.64	 

NOTE: THE SLV PERCENTAGE DOES NOT INCLUDE RENT DUE ON EACH APPLICABLE RENT PAYMENT DATE. LESSEE IS
REQUIRED TO PAY ALL RENT DUE ON THE APPLICABLE PAYMENT DATE.

 

 

EXHIBIT A

TAX PAYMENT CERTIFICATION

Reference is made to the Master Equipment Lease Agreement dated as of October 1, 2004 between
DENTAL CARE PLUS, INC. and THE FIFTH THIRD LEASING COMPANY and Equipment Schedule No. 001 thereto
(collectively, the “Lease”). Capitalized terms used, and not otherwise defined, herein shall have
the meaning ascribed thereto in the Lease.

	1.	 	Lessee acknowledges and agrees that it:

	 	(a)	 	will declare, when listing property to taxing authorities, the Equipment as
LEASED equipment only;
	 
	 	(b)	 	will immediately notify Lessor of any change in location of this Equipment; and
	 
	 	(c)	 	will reimburse Lessor on demand for any Taxes paid by Lessor assessed on the
Equipment.

	2.	 	Lessee represents and warrants with respect to the Equipment that:

	 	(a)	 	Lessor’s acquisition of, and the leasing pursuant to this Lease of, the
Equipment is exempt from all sales, use and similar taxes imposed upon or payable by
either Lessor or Lessee as a result of the acquisition, use or rental of such
Equipment, and Lessee has furnished to Lessor an appropriate tax exemption certificate
or other documentation (which must be satisfactory to Lessor) evidencing such
exemption;
	 
	 	(b)	 	to the extent that the acquisition, use or rental of such Equipment is not
exempt from all sales, use and similar taxes, Lessee has complied and will continue to
comply with its obligations under the Lease to reimburse Lessor for full amount of such
taxes; and
	 
	 	(c)	 	any tax exemption certificates, or any similar documentation, furnished to
Lessor by Lessee claiming any exemption, abatement or exception to sales, use or
similar tax, shall be true, accurate and complete in all respects and Lessor is
entitled to rely thereon in not remitting or paying any such tax.

Lessee agrees to indemnify and hold Lessor harmless from and against all losses, costs and expenses
(including penalties, interest and alt reasonable attorneys’ fees and disbursements) incurred as a
result of any breach of, or inaccuracy In the making of, any of the foregoing representations and
warranties, or the failure of Lessor or Lessee to obtain the benefit of any claimed tax exemption,
abatement or exception.

[Remainder of page intentionally left blank. Signature page follows.]

 

 

     IN WITNESS WHEREOF, Lessee has caused this Certification to be duty executed as of January
___, 2005.

	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	LESSEE:

DENTAL CARE PLUS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 	 	Name:	 	 
	 	 	Title:	 	 

 

 

[5/3 LOGO] FIFTH THIRD BANK

Equipment Schedule — No. 002

Dated January 31, 2005

To Master Equipment Lease Agreement

Dated As Of October 1, 2004

	 	 	 
	Lessor:

	 	THE FIFTH THIRD LEASING COMPANY,
	 

	 	an Ohio corporation
	 
	 	 
	Lessee:

	 	DENTAL CARE PLUS, INC.

All of the terms of the Master Equipment Lease Agreement dated as of October 1, 2004 (as amended,
supplemented or modified from time to time, the “Master Lease”) between Lessee and Lessor are
incorporated by reference herein. Capitalized terms used, and not otherwise defined, herein shall
have the meanings ascribed thereto in the Master Lease. This Equipment Schedule as it incorporates
the terms of the Master Lease and each schedule, exhibit and rider attached hereto is referred to
as this “Lease”. This Equipment Schedule, and the Master Lease, as incorporated herein shall
constitute a separate and enforceable lease. If any term of any schedule, exhibit or rider hereto
conflicts with or is inconsistent with any term of this Equipment Schedule or the Master Lease, the
terms of such schedule, exhibit or rider shall govern.

	1.	 	Equipment.

This Equipment Schedule relates to the Equipment described on Schedule 1 hereto (collectively, the
“Equipment”).

	2.	 	Financial Terms.

     (a) Base Lease Term Commencement Date: January 31, 2005

     (b) Base Lease Term: 48 months

     (c) Rent Payment Dates: February 28, 2005 and on the same day of each month thereafter during
the Term.

     (d) Expiration Date: January 31, 2009

     (e) Lessor’s Capitalized Cost: $822,850.00

     (f) Rent: The Base Term Rental Factor is 0.02351714 (or $19,351.08 per month as of the Base
Lease Term Commencement Date). The Base Term Rental Factor has been determined based on an interest
rate swap rate for a term corresponding to the maturity of this Lease as quoted in the Federal
Reserve Statistical H15 Release and (B) such Base Term Rental Factor may be adjusted up or down (as
appropriate) by Lessor based upon a corresponding interest rate swap rate quoted in such Release as
in effect on the Delivery and Acceptance Date. Lessor will provide Lessee with notice of any such
adjustment,

1

 

     (g) Equipment Location(s): As specified on Schedule 1.

     (h) Pursuant to Section 18 of the Master Lease, on or prior to the Delivery and Acceptance
Date, Lessee will execute and deliver a Tax Payment Certification in the form of Exhibit A hereto.

     (i) Lessee’s federal taxpayer identification number is 31-1185262 and Lessee’s state charter
or organizational identification number is 668728.

	3.	 	Rent and Tax Payments.

          (a) On each Rent Payment Date during the Base Lease Term, Lessee shall pay (i) as Basic Rent
for the Equipment, the product of the Base Term Rental Factor and Lessor’s Capitalized Cost for the
Equipment and (ii) in respect of Taxes scheduled to become due, such amounts monthly (or at such
other interval as Lessor may deem appropriate) as Lessor determines will be due and payable. In
addition to the foregoing, on the Base Lease Term Commencement Date, Lessee shall pay to Lessor as
interim rent for each day from the Delivery and Acceptance Date to the Base Lease Term Commencement
Date, the sum of (A) $645.04, as daily rent and (B) such amounts daily in respect of Taxes as
Lessor determines will be due and payable.

	4.	 	Tax, Interest and Security.

          (a) For federal and state income tax purposes, Lessor and Lessee agree that Lessee will be
considered the owner of the Equipment. Accordingly, Lessor agrees (i) not to take actions or
positions inconsistent with Lessee as owner of the Equipment on or with respect to its federal
income tax return, and (ii) not to claim any tax benefits available to an owner of the Equipment on
or with respect to its federal or state income tax return. The foregoing undertakings by Lessor
shall not be violated by Lessor’s taking a tax position inconsistent with the foregoing to the
extent such position is required by law or to the extent such position is taken without gross
negligence on the part of Lessor. Lessor shall in no event be liable to Lessee if Lessee fails to
secure any of the tax benefits available to the owner of the Equipment.

          (b) Nothing contained in the Lease Documents shall require Lessee at any time to pay interest
at a rate exceeding the maximum permissible rate under applicable law. To the extent that any Rent
is characterized as interest and if such interest payable by Lessee on any date would exceed the
maximum amount permitted by applicable law, such interest payment shall automatically be reduced to
such maximum amount permitted. Any interest actually received for any period in excess of such
maximum amount permitted for such period shall be held by Lessor as security for the obligations of
Lessee under this Lease.

          (c) To the extent permitted by applicable law, Lessee waives any rights now or hereafter
conferred by statute or otherwise to recover incidental or consequential damages from Lessor for
any breach or any other reason whatsoever. In order to secure the prompt payment of Rent under and
with respect to this Lease, and the performance and observance by Lessee of all the agreements,
covenants and provisions hereof (collectively, the “Obligations”), Lessee hereby grants to Lessor a
first priority security interest in all of Lessee’s right, title and interest in the following
(whether now existing or hereafter created and whether now owned or hereafter acquired): (i) the
Equipment (including, without limitation, all inventory, equipment, fixtures or other property
comprising the same), and general intangibles relating thereto, (ii) additions, attachments,
accessories and accessions thereto whether or not furnished by the Supplier of

2

 

such Equipment, (iii) all subleases (including the right to receive any payment thereunder and
the right to make any election or determination or give any consent or waiver thereunder), chattel
paper, accounts, security deposits and bills of sale relating thereto, (iv) any and all
substitutions, replacements or exchanges for any such Equipment or other collateral, and (v) any
and all products and proceeds of any collateral hereunder (including all insurance and requisition
proceeds and all other payments of any kind with respect to the Equipment and other collateral in
and against which a security interest is granted hereunder). Lessee agrees that with respect to the
Equipment, in addition to all of the other rights and remedies available to Lessor hereunder upon
the occurrence of an Event of Default, Lessor shall have all of the rights and remedies of a
secured party under the Uniform Commercial Code. Lessee further agrees that the original principal
amount of the obligations hereunder shall be an amount equal to Lessor’s Capitalized Cost, and that
such principal amount shall accrue interest at the implicit interest rate reflecting Lessor’s
financial assumptions at the time of the execution of the Lease (including any outstanding balance
at the end of the Base Lease Term as reflected by the purchase price for the Equipment at the end
of the Base Lease Term set forth in Section 6). Lessee hereby authorizes Lessor to file, solely at
the expense of Lessee, any Uniform Commercial Code financing statements or other similar documents
that Lessor reasonably deems necessary or advisable to protect its interest. Lessee agrees promptly
to execute and deliver to Lessor such further documents or other assurances, and to take such
further action, including obtaining landlord and mortgagee waivers, as Lessor may from time to time
reasonably request.

	5.	 	Insurance.

The amount of public liability insurance including personal injury and property damage required to
be maintained by Lessee pursuant to Section 10(a) of the Master Lease is $1,000,000.00 per
occurrence.

	6.	 	End Term.

     (a) From and after the first (1st) anniversary of the Base Term Commencement Date, Lessee
shall have the right, (i) so long as no Default or Event of Default has occurred and is continuing
and (ii) this Lease shall not have been earlier terminated, upon the terms and conditions set forth
below, to terminate this Lease on and as of any Rent Payment Date specified by Lessee; provided
that Lessee gives Lessor written notice of Lessee’s intent to exercise such right not less than
ninety (90) days and not more than one hundred eighty (180) days prior to such Rent Payment Date.
On such Rent Payment Date (the “Prepayment Date”) specified by Lessee, Lessee shall pay to Lessor
an amount equal to the sum of (a) all Basic Rent due on such Rent Payment Date together with all
other amounts then due and payable under this Lease and (b) an amount equal to each installment of
Basic Rent payable under the Lease on each Rent Payment Date during the Term after the Prepayment
Date, in each case, discounted from the Rent Payment Date on which such payment would have been due
to the Prepayment Date at a rate per annum equal to the then current yield, as reasonably
determined by Lessor, on United States Treasury securities with a remaining life to maturity equal
to, or approximately equal to, the period from the Prepayment Date to the final Rent Payment Date
during the Term and (c) a prepayment premium equal to five and 0/l00ths percent (5%) of the amount
referred to in clause (b). The amount referred to in clause (c) shall be payable by Lessee as
liquidated damages for the cost of making funds available to Lessee hereunder and not as a penalty.

     (b) Upon payment of such amount to Lessor in accordance with the terms hereof, Lessee will be
deemed to have purchased the Equipment and Lessor will deliver to Lessee a bill

3

 

of sale transferring title to the Equipment to Lessee on an “as-is, where-is” basis without
representation or warranty of any kind except that Lessor shall warrant that the Equipment is free,
clear and unencumbered of all Liens arising by, through or under Lessor except for such Liens that
Lessee is required to remove pursuant to the terms of the Lease.

     (c) Upon the expiration of the Base Lease Term, so long as (i) no Default or Event of Default
has occurred and is continuing and (ii) this Lease shall not have been earlier terminated, Lessee
shall, upon the terms and conditions set forth below, purchase all but not less than all of the
Equipment for a price equal to One Dollar ($1.00) plus all Rent then due and payable pursuant to
this Lease and Taxes (including all sales and use Taxes) payable in connection with such purchase.
Upon the purchase of the Equipment in accordance with the terms hereof, and payment of all other
amounts then due and payable under this Lease, Lessor will deliver to Lessee a bill of sale
transferring title to the Equipment to Lessee on an “as-is”, “where-is” basis without
representation or warranty of any kind except that Lessor shall warrant that the Equipment is free,
clear and unencumbered of all Liens arising by, through or under Lessor except for such Liens that
Lessee is required to remove pursuant to the terms of the Lease.

     (d) Except to the extent otherwise expressly set forth herein in case of a permitted
prepayment in full of all Basic Rent and other obligations due under this Lease, the amount of
Basic Rent or any other obligation required to be paid under this Lease shall not be discounted by
virtue of the fact that such amount may be paid by the Lessee prior to the due date thereof.

	7.	 	Amendments to Master Lease and Additional Lease Provisions

     (a) Section 10(a) of the Master Lease is hereby amended by deleting the words “Stipulated Loss
Value (as defined in the applicable Equipment Schedule) of such Equipment at any time” appearing
therein and inserting in lieu thereof, the words, “Lessor’s Capitalized Cost or such lesser amount
to which Lessor shall reasonably consent.”

     (b) Section 10(c) of the Master Lease is hereby amended by replacing the two references to
“Stipulated Loss Value” with the words “amounts due to Lessor pursuant to Section 11(b)(ii)
following an Event of Loss.”

     (c) Section 11 (b)(ii) of the Master Lease is hereby deleted in its entirety and the following
is hereby inserted in lieu thereof: “(ii) pay to Lessor on the next succeeding Rent Payment Date
(the ‘Loss Payment Date”) the sum of (A) all Rent due and owing hereunder with respect to such Item
of Equipment (at the time of such payment) including all Basic Rent payable on such Rent Payment
Date plus (B) an amount equal to each installment of Basic Rent payable under the Lease on each
Rent Payment Date during the Term after the Loss Payment Date, in each case, discounted from the
Rent Payment Date on which such payment would have been due to the Loss Payment Date at a rate per
annum equal to the then current yield, as reasonably determined by Lessor, on United States
Treasury securities with a remaining life to maturity equal to, or approximately equal to, the
period from the Loss Payment Date to the final Rent Payment Date during the Term.”

     (d) Section 15 of the Master Lease is hereby amended by inserting the following immediately
following clause (j) thereof: “(k) Upon the filing with the Secretary of State of Ohio of a Uniform
Commercial Code financing statement describing Lessor, as secured party, Lessee, as debtor, and the
Equipment as the collateral, Lessor shall have a first priority perfected security interest in the
Equipment leased under this Lease.”

4

 

     (e) Section 16(c) of the Master Lease is hereby deleted in its entirety and the following is
hereby inserted in lieu thereof: “In addition to the foregoing, Lessee shall pay to Lessor on
demand the sum of (i) any and all Rent which is then due or which has accrued to the date of demand
and (ii) an amount equal to each installment of Basic Rent payable under the Lease on each Rent
Payment Date during the Term after the date of demand, in each case, discounted from the Rent
Payment Date on which such payment would have been due to the date of demand at a rate per annum
equal to the then current yield, as reasonably determined by Lessor, on United States Treasury
securities with a remaining life to maturity equal to, or approximately equal to, the period from
the date of demand to the final Rent Payment Date during the Term. Lessor and Lessee agree that
Lessor shall be entitled to such amount as damages for loss of bargain and not as a penalty and
that such amount is reasonable in light of the anticipated harm to Lessor caused by an Event of
Default.”

     (f) Section 19 of the Master Lease is hereby deleted in its entirety and the following is
inserted, in lieu thereof: “19. [INTENTIONALLY OMITTED].”

Except as expressly modified hereby, all terms and provisions of the Master Lease shall remain in
full force and effect. This Equipment Schedule is not binding or effective with respect to the
Master Lease or Equipment until executed on behalf of Lessor and Lessee by authorized
representatives of Lessor and Lessee, respectively.

Remainder of page intentionally left blank. Signature page follows.

5

 

     IN WITNESS WHEREOF, Lessee and Lessor have caused this Equipment Schedule to be executed by
their duly authorized representatives as of the date first above written.

	 	 	 	 	 	 	 	 	 	 	 
	LESSOR:	 	 	 	LESSEE:	 	 
	 
	THE FIFTH THIRD LEASING COMPANY	 	 	 	DENTAL CARE PLUS, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	Name:

	 	 

	 	 
	 	Name:
	 	 

	 	 
	Title:

	 	 	 	 	 	Title:	 	 	 	 

THIS LEASE MAY BE EXECUTED IN SEVERAL COUNTERPARTS AND TO THE EXTENT, IF ANY, THAT THIS LEASE
CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN
ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS LEASE MAY BE PERFECTED THROUGH THE
TRANSFER OF POSSESSION OF ANY COUNTERPART OTHER THAT THE ORIGINAL COUNTERPART, WHICH SHALL BE
IDENTIFIED AS THE CHATTEL PAPER ORIGINAL ON THE SIGNATURE PAGE THEREOF. THIS IS THE CHATTEL PAPER
ORIGINAL.

CHATTEL PAPER ORIGINAL

6

 

     IN WITNESS WHEREOF, Lessee and Lessor have caused this Equipment Schedule to be executed by
their duly authorized representatives as of the date first above written.

	 	 	 	 	 	 	 	 	 	 	 
	LESSOR:	 	 	 	LESSEE:	 	 
	 
	THE FIFTH THIRD LEASING COMPANY	 	 	 	DENTAL CARE PLUS, INC.	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	Name:

	 	 

	 	 
	 	Name:
	 	 

	 	 
	Title:

	 	 	 	 	 	Title:	 	 	 	 

THIS LEASE MAY BE EXECUTED IN SEVERAL COUNTERPARTS AND TO THE EXTENT, IF ANY, THAT THIS LEASE
CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN
ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS LEASE MAY BE PERFECTED THROUGH THE
TRANSFER OF POSSESSION OF ANY COUNTERPART OTHER THAT THE ORIGINAL COUNTERPART, WHICH SHALL BE
IDENTIFIED AS THE CHATTEL PAPER ORIGINAL ON THE SIGNATURE PAGE THEREOF. THIS IS NOT THE CHATTEL
PAPER ORIGINAL.

7

 

SCHEDULE 1

TO

EQUIPMENT SCHEDULE No. 002

DESCRIPTION OF EQUIPMENT

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Sales Tax,	 	 	 	 
	Manuf. and/or	 	 	 	 	 	 	 	 	 	 	 	Delivery,	 	 	 	 
	Vendor Name &	 	 	 	 	 	 	 	Per Item Cost	 	Installation &	 	Invoice	 	Equipment
	Invoice No.	 	Description of Equipment	 	Quantity	 	(If applicable)	 	Other Charges	 	Total	 	Location
	Deniserv, LLC

	 	One (1) Software License
	 	 	1	 	 	$	655,000.00	 	 	$	0.00	 	 	$	655,000.00	 	 	100 Crowne

Pointe Place

Cincinnati,

OH 45241
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Deniserv, LLC

	 	One (1) System Conversion
	 	 	1	 	 	$	100,000.00	 	 	$	0.00	 	 	$	100,000.00	 	 	100 Crowne

Pointe Place

Cincinnati,

OH 45241
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Deniserv, LLC

	 	One (1) Estimated Travel
Expenses
	 	 	1	 	 	$	15,000.00	 	 	$	0.00	 	 	$	15,000.00	 	 	100 Crowne

Pointe Place

Cincinnati,

OH 45241
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Capitalized Sales Tax
	 	 	1	 	 	$	52,850.00	 	 	$	0.00	 	 	$	52,850.00	 	 	100 Crowne

Pointe Place

Cincinnati,

OH 45241
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Doc Fee
	 	 	1	 	 	$	400.00	 	 	$	0.00	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	822,850.00	 	 	 

8

 

Exhibit A

Tax Payment Certification

     Reference is made to the Master Equipment Lease Agreement dated as of October 1, 2004 between
DENTAL CARE PLUS, INC. and THE FIFTH THIRD LEASING COMPANY and Equipment Schedule No. 002 thereto
(collectively, the “Lease”). Capitalized terms used, and not otherwise defined, herein shall have
the meaning ascribed thereto in the Lease.

	1.	 	Lessee acknowledges and agrees that it:

	 	(a)	 	will immediately notify Lessor of any change in location of this Equipment; and
	 
	 	(b)	 	will reimburse Lessor on demand for any Taxes paid by Lessor assessed on the
Equipment.

	2.	 	Lessee represents and warrants with respect to the Equipment that:

	 	(a)	 	Lessor’s acquisition of, and the leasing pursuant to this Lease of, the
Equipment is exempt from all sales, use and similar taxes imposed upon or payable by
either Lessor or Lessee as a result of the acquisition, use or rental of such
Equipment, and Lessee has furnished to Lessor an appropriate tax exemption certificate
or other documentation (which must be satisfactory to Lessor) evidencing such
exemption;
	 
	 	(b)	 	to the extent that the acquisition, use or rental of such Equipment is not
exempt from all sales, use and similar taxes, Lessee has complied and will continue to
comply with its obligations under the Lease to reimburse Lessor for full amount of such
taxes; and
	 
	 	(c)	 	any tax exemption certificates, or any similar documentation, furnished to
Lessor by Lessee claiming any exemption, abatement or exception to sales, use or
similar tax, shall be true, accurate and complete in all respects and Lessor is
entitled to rely thereon in not remitting or paying any such tax.

Lessee agrees to indemnify and hold Lessor harmless from and against all losses, costs and expenses
(including penalties, interest and all reasonable attorneys’ fees and disbursements) incurred as a
result of any breach of, or inaccuracy in the making of, any of the foregoing representations and
warranties, or the failure of Lessor or Lessee to obtain the benefit of any claimed tax exemption,
abatement or exception.

     IN WITNESS WHEREOF, Lessee has caused this Certification to be duly executed as of January
___, 2005.

	 	 	 	 	 	 	 
	 	 	LESSEE:

DENTAL CARE PLUS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 

9EX-10.2

 

Exhibit 10.2

Plan Document

and

Summary Plan Description

of the

Kennametal Inc.

2006 Executive Retirement Plan

(for Designated Officers)

Effective July 31, 2006

 

 

Kennametal Inc.

2006 Executive Retirement Plan

Article I.
— General Provisions

1.1 Establishment and Purpose

     Kennametal Inc. hereby establishes the Kennametal Inc. 2006 Executive Retirement Plan (the
“Plan”) on the terms and conditions hereinafter set forth. The Plan is designed primarily for the
purpose of providing benefits for a select group of highly-compensated management employees of the
Company and is intended to qualify as a “top hat” plan under ERISA §§ 201(2), 301(a)(3) and
401(a)(1).

1.2 Definitions

          (a) “Accrued Benefit” means the benefit earned by a Participant with respect to his or her
Credited Service, as such benefit is determined pursuant to Article II, including, but not limited
to Sections 2.1, 2.2, 2.3, and 2.4.

          (b) “Base Salary” means the Participant’s gross base salary rate (as of the end of each month)
from the Company, before any pre-tax reductions pursuant to the Participant’s elections under IRC
§§ 125 or 402(e)(3) or pursuant to an election to defer base salary under a nonqualified deferred
compensation arrangement.

          (c) “Beneficiary” means the person or persons designated by a Participant as his beneficiary,
or otherwise determined, in accordance with the provisions of Article V.

          (d) “Board” means the Board of Directors of the Company.

          (e) “Cause” means that the Participant:

               (i) shall be guilty of malfeasance, willful misconduct or gross negligence in the performance
of services for the Company;

               (ii) shall not make his or her services available to the Company on a full time basis for any
reason other than arising from Disability or from the Participant’s incapacity due to physical or
mental illness or injury which does not constitute Disability and other than by reason of the fact
that the Participant’s employment has been terminated by the Company prior to a Change in Control
and other than for Cause; or

               (iii) during the period of Participant’s employment by the Company, shall, in any geographic
area in which Kennametal is offering its services and products, without the prior written consent
of the Company:

 

 

	 	a.	 	directly or indirectly engage in, or
	 
	 	b.	 	assist or have an active interest in
(whether as proprietor, partner, investor, shareholder, officer,
director or any type of principal whatsoever), or enter the employ
of, or act as agent for, or advisor or consultant to, any person,
firm, partnership, association, corporation or business
organization, entity or enterprise which is or is about to become
directly or indirectly engaged in,

any business which is competitive with any business of the Company or
any subsidiary or affiliate thereof in which the Participant is or was
engaged; provided, however, that the foregoing provisions of this
definition are not intended to include (or classify as “Cause”) the
Participant’s purchasing, for investment, not in excess of 1% of any
class of stock or other corporate security of any company which is
registered pursuant to Section 12 of the Securities Exchange Act of
1934.

               The Committee shall determine whether or not Cause existed for termination of Participant’s
employment unless the Participant has a written employment agreement with the Company, in which
case the determination shall be made in the manner provided under the Participant’s said employment
agreement.

          (f) “Change in Control” means a change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A promulgated under the Securities Exchange Act of
1934 as in effect on the date hereof (“1934 Act”), or if Item 6(e) is no longer in effect, any
regulations issued by the Securities and Exchange Commission pursuant to the 1934 Act which serve
similar purposes; provided that, without limitation, such a change in control shall be deemed to
have occurred if (i) Kennametal shall be merged or consolidated with any corporation or other
entity other than a merger or consolidation with a corporation or other entity all of whose equity
interests are owned by Kennametal immediately prior to the merger or consolidation, or (ii)
Kennametal shall sell all or substantially all of its operating properties and assets to another
person, group of associated persons, or corporation; or (iii) any “person” (as such term is used in
Sections 13(d) and 14(d) of the 1934 Act), is or becomes a beneficial owner, directly or
indirectly, of securities of Kennametal representing 25% or more of the combined voting power of
Kennametal’s then outstanding securities coupled with or followed by the existence of a majority of
the board of directors of Kennametal consisting of persons other than persons who either were
directors of Kennametal immediately prior to or were nominated by those persons who were directors
of Kennametal immediately prior to such person becoming a beneficial owner, directly or indirectly,
of securities of Kennametal representing 25% or more of the combined voting power of Kennametal’s
then outstanding securities.

          (g) “Committee” means the Compensation Committee of the Board, or such other committee
designated by the Board to discharge the duties of the Committee hereunder.

 

 

          (h) “Company” means Kennametal Inc., a Pennsylvania corporation, or any successor thereto.

          (i) “Credited Service” means, except as provided in Section 1.4(c), completed calendar months
of service while a Participant. A Participant’s Credited Service shall begin on the first day of
the month following, or, if earlier, the first day of the month coincident with, the date of the
Participant’s election as an Officer and designation by the Committee as a Participant in the Plan;
provided that the Committee, in its sole and absolute discretion, may specify a different effective
date for the Participant’s Credited Service to begin (though such different specified date shall be
the first day of a calendar month). Except as provided in Section 1.4(c), a Participant’s Credited
Service shall end on the last day of the calendar month preceding, or, if later, the last day of
the calendar month coinciding with, the first to occur of : (a) the termination of the
Participant’s employment with the Company, or (b) the 181st consecutive business day that
Participant shall have been absent from his principal office at the Company’s offices because of
Disability.

          (j) “Disability” means such incapacity due to physical or mental illness or injury, as causes
the Participant to be absent from his principal office at the Company’s offices for the entire
portion of 180 consecutive business days.

          (k) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

          (l) “Final Average Earnings” means

               (i) The annual average of a Participant’s monthly Base Salary plus monthly Target Bonus
amounts (whether or not any bonuses were in fact awarded to the Participant) for the 36 completed
calendar months of Credited Service preceding the date on which Participant’s employment ends
(irrespective of either (a) non accrual of additional benefits, during all or part of such 36
months, based upon Credited Service due to the 500% maximum accrual limit under Section 2.2; or (b)
any forfeiture of 24 months of Credited Service, pursuant to Section 2.5, in calculating his or her
Vested Benefit). In the event a Participant has less than 36 completed calendar months of Credited
Service, then, for purposes of calculating Final Average Earnings, then the Participant’s average
Base Salary plus Target Bonus amounts shall be based on only the actual number of completed
calendar months preceding the date on which the Participant’s Credited Service ends.

               (ii) A Participant’s Final Average Earnings shall be determined without regard to any
limitations on compensation under the IRC, including those under IRC § 401(a)(17).

          (m) “IRC” means the Internal Revenue Code of 1986, as amended, and any successor code or law.

          (n) “Monthly Accrual Rate” has the meaning set forth at Section 2.1.

          (o) “Officer” means a corporate officer of the Company elected by the Board.

 

 

          (p) “Participant” means any individual who has initially satisfied the eligibility
requirements set forth in Section 1.4 and who has an Accrued Benefit under the Plan.

          (q) “Plan” means the plan of nonqualified executive retirement benefits set forth in this
document, as the same may be amended from time to time.

          (r) “Plan Year” means the twelve-month period coinciding with the Company’s fiscal year,
beginning each July 1 and ending on the following June 30.

          (s) “Target Bonus” means the cash award (stated as a percentage of Base Salary) for which the
Participant is eligible under his or her salary classification pursuant to Kennametal Inc.
Management Performance Bonus Plan.

          (t) “Vested Benefit” means the portion, if any, of a Participant’s Accrued Benefit in which
such Participant has earned vested and nonforfeitable rights under the provisions of the Plan,
including, but not limited to, Sections 2.5. Nevertheless, any Participant’s Vested Benefit is
subject to divestment and forfeiture pursuant to Sections 2.6 and 2.7.

     1.3 Administration.

          (a) The Committee shall administer the Plan and have sole and absolute authority and
discretion to decide all matters relating to the administration of the Plan, including, without
limitation, determining the rights and status of Participants or their beneficiaries under the
Plan. The Committee is authorized to interpret the Plan, to adopt administrative rules,
regulations, and guidelines for the Plan, and to correct any defect, supply any omission or
reconcile any inconsistency or conflict in the Plan, and to appoint delegates to carry out
ministerial administrative matters under the Plan. The Committee’s determinations under the Plan
need not be uniform among all Participants, or classes or categories of Participants, and may be
applied to such Participants, or classes or categories of Participants, as the Committee, in its
sole and absolute discretion, considers necessary, appropriate or desirable. All determinations by
the Committee shall be final, conclusive and binding on the Company, the Participant and any and
all interested parties.

          (b) Without limiting the generality of the grant of authority to the Committee under Section
1.3(a), the Committee, in its sole and absolute discretion and with no obligation to apply its
discretion in a uniform manner, shall have full authority to waive a Participant’s satisfaction of
the requirement of Section 2.5(d) that the Participant remain employed with the Company until age
62 to become 100% vested in his or her Accrued Benefit.

          (c) Notwithstanding any provision of the Plan to the contrary, if any benefit provided under
this Plan is subject to the provisions of IRC § 409A and the regulations issued thereunder, the
provisions of the Plan shall be administered, interpreted and construed in a manner intended to
comply with IRC § 409A and the regulations issued thereunder (or such provision shall be
disregarded to the extent that it cannot be so administered, interpreted or construed).

 

 

     1.4 Eligibility and Participation.

          (a) Participation in the Plan is limited to a select group of highly-compensated management
employees as referred to in ERISA §§ 201(2), 301(a)(3) and 401(a)(1). In particular,
participation in the Plan is limited to each key executive of the Company who satisfies the
requirements of either (i) or (ii):

               (i) (A) He or she has been elected an Officer of the Company by the Board on or after July 31,
2006, and (B) he or she has specifically been designated by the Committee as eligible to
participate in the Plan.

               (ii)

a. Pursuant to designation by the Committee, he or she is a current
participant in the Company’s existing Supplemental Executive Retirement
Plan as of July 31, 2006.

b. He or she shall not have attained the age of 56 as of December 31,
2006. And

c. He or she has elected to become a Participant in this Plan effective
as of July 31, 2006 with respect to all of his or her prior service as
an Officer of the Company while a designated participant in the
Company’s existing Supplemental Executive Retirement Plan, as well as
future service as an Officer, and to receive no benefits from the
Company’s existing Supplemental Executive Retirement Plan.

          (b) A Participant in the Plan shall cease to be a Participant upon receiving payment for the
full amount of benefits to which the Participant is entitled under the Plan.

          (c) Notwithstanding the foregoing, the Committee, in its sole and absolute discretion, may
elect to terminate a Participant’s continued participation in the Plan at any time with respect to
accrual of additional benefits after the effective date of the Committee’s action, irrespective of
factors such as, but not limited to, continued employment by the Company, officer status, etc.

Article II.
— Retirement Benefits

     2.1 Monthly Accrual Rate

          A Participant shall accrue benefits under the Plan at a percentage of his or her Final Average
Earnings for each completed calendar month of the Participant’s Credited Service at the applicable
rate set forth below:

 

 

	 	 	 
	Attained Age during the Calendar Month	 	Monthly Accrual
	Less than 46

	 	1.0417% (equivalent to 12.5004% per year)
	46 but less than 51

	 	1.5625% (equivalent to 18.7500% per year)
	51 but less than 56

	 	2.0833% (equivalent to 24.9996% per year)
	56 but less than 59

	 	2.6042% (equivalent to 31.2504% per year)
	59 and up

	 	3.1250% (equivalent to 37.5000% per year)

     The accumulated benefit of a Participant pursuant to the foregoing is such Participant’s
Accrued Benefit.

     2.2 Maximum Accrued Benefit

          Notwithstanding Section 2.1, the maximum accumulated total monthly accruals that any
Participant may earn under Section 2.1, and receive under the Plan, is 500%.

     2.3 Examples of Accrued Benefit Determination

          Example 1: An Officer is designated by the Committee to participate in the Plan effective July
1, 2006. The Participant is then age 38, having been born on January 13, 1968. She will attain
age 46 in January 2014; age 51 in January 2019; age 56 in January 2024; and age 59 in January 2027.
The Participant’s employment terminates on June 27, 2026 and, pursuant to Section 1.2(i), has
Credited Service only through May 31, 2026. Such Participant’s Accrued Benefit under the Plan
would be calculated as a percentage of her Final Average Earnings, as follows:

	 	 	 	 	 
	7-1-2006 to 12-31-2013 = 90 months x 1.0417% =
	 	 	93.7530	%
	1-1-2014 to 12-31-2018 = 60 months x 1.5625% =
	 	 	93.7500	%
	1-1-2019 to 12-31-2023 = 60 months x 2.0833% =
	 	 	124.9980	%
	1-1-2024 to   5-31-2026 = 29 months x 2.6042% =
	 	 	75.5218	%
	 	 
	Total Accrued Benefit
	 	 	388.02	%of Final Average Earnings

          Example 2: An Officer is designated by the Committee to participate in the Plan effective as
of July 1, 2006. The Participant is then age 50, having been born on January 25, 1956. He will
attain age 51 in January 2007; age 56 in January 2012; and age 59 in January 2015. The
Participant’s employment terminates on December 31, 2022, when he is 66. Such Participant’s
Accrued Benefit under the Plan would be calculated as a percentage of his Final Average Earnings,
as follows:

	 	 	 	 	 
	7-1-2006 to 12-31-2006 =   6 months x 1.5625% =
	 	 	9.3750	%
	1-1-2007 to 12-31-2011 = 60 months x 2.0833% =
	 	 	124.9980	%
	1-1-2012 to 12-31-2014 = 36 months x 2.6042% =
	 	 	93.7512	%
	1-1-2015 to   3-31-2022 = 87 months x 3.1250% =
	 	 	271.8750	%
	 	 
	Total Accrued Benefit
	 	 	500.00	% of Final Average Earnings 

 

 

  Note that, pursuant to Section 2.2, there is no further accrual of benefits once the Accrued
Benefit reaches 500%, based on Credited Service through March 31, 2022.

     2.4 Dollar Amount of Accrued Benefit Not to Decline.

          At no time shall the dollar amount of a Participant’s Accrued Benefit decline below the
amount of such benefit, calculated pursuant to the formula set forth in Section 2.1 and the maximum
limit set forth in Section 2.2, as of the June 30 (the last day of the Plan Year) preceding the
current date of reference.

          Accordingly, and for example, the dollar amount of each Participant’s Accrued Benefit shall be
calculated as of each June 30 pursuant to the formula set forth in Section 2.1 and the maximum
limit set forth in Section 2.2. Should the amount determined pursuant to any such calculation be
less than the amount determined as of the immediately preceding June 30 (notwithstanding the
Participant’s having an additional year of Credited Service as of the date of the current
calculation), then the amount calculated as of the immediately preceding June 30 shall apply for
purposes of the Plan.

          However, the dollar amount of benefits a Participant may be entitled to receive from the Plan
is subject to the provisions of Section 2.5.

     2.5 Vesting of Accrued Benefit.

          Subject to the forfeiture provisions set forth in Sections 2.6 and 2.7:

          (a) A Participant who attains the age of 62 while employed by the Company shall become 100%
vested in his or her Accrued Benefit under the Plan, including any additional Accrued Benefit he or
she may earn by virtue of Credited Service after attaining age 62.

          (b) Prior to attaining age 62 while employed by the Company, a Participant shall, upon
accruing a percentage of Final Average Earnings equal to 150% or higher, become vested in such
Accrued Benefit and future increments thereto.

          (c) A Participant who is employed by the Company on the date of a Change in Control shall
become vested in his or her Accrued Benefit under the Plan, including any additional Accrued
Benefit he or she may earn by virtue of Credited Service after such Change in Control.

          (d) Notwithstanding Sections 2.5(b) and 2.5(c), if the Participant’s employment with the
Company terminates voluntarily or involuntarily (other than for Cause, see Section 2.6) prior to
attainment of age 62, then the Participant shall forfeit the last 24 months of Credited Service
used in calculating his or her Accrued Benefit, and his or her Vested Benefit (if any) shall be
calculated based on his or her accumulated Credited Service percentages, less the last 24 months,
multiplied by his or her Final Average Earnings (determined as of the date of termination of
employment). However, such

 

 

forfeiture of Credited Service shall not apply if the Participant’s
termination of employment is because of his or her death or follows his or her incurring a
Disability.

          (e) The operation of Section 2.5 is illustrated by the following examples:

          Example 1: This example replicates Example 1 in Section 2.3. An Officer is designated by the
Committee to participate in the Plan effective July 1, 2006. The Participant is then age 38,
having been born on January 13, 1968. She will attain age 46 in January 2014; age 51 in January
2019; age 56 in January 2024; and age 59 in January 2027. The Participant’s employment terminates
on June 27, 2026 (other than by reason of Disability or death). Such Participant’s Vested Benefit
under the Plan would be calculated as a percentage of her Final Average Earnings, as follows:

	 	 	 	 	 
	7-1-2006 to 12-31-2013 = 90 months x 1.0417% =
	 	 	93.7530	%
	1-1-2014 to 12-31-2018 = 60 months x 1.5625% =
	 	 	93.7500	%
	1-1-2019 to 12-31-2023 = 60 months x 2.0833% =
	 	 	124.9980	%
	1-1-2024 to   5-31-2024 =   5 months x 2.6042% =
	 	 	13.0210	%
	 	 
	Total Vested Benefit
	 	 	325.52	% of Final Average Earnings 

          Example 2: A Participant has an Accrued Benefit of 148% of Final Average earnings at the time
of her Disability or death. Inasmuch as the Participant’s Accrued Benefit had not reached the
minimum level of 150% required for vesting pursuant to Section 2.5(b), the Participant has no
Vested Benefit under the Plan and nothing is payable to the Participant or, in the case of death,
to the Participant’s Beneficiary.

          Example 3: A Participant has an Accrued Benefit of 148% of Final Average earnings at the time
of the occurrence of a Change in Control. The Participant’s employment terminates immediately
following the Change of Control. The Participants Vested Benefit is calculated based on his
Credited Service at the date of termination of employment reduced by the Accrued Benefit
attributable to the 24 months of Credited Service preceding his termination of employment.

          Example 4: An Officer is designated by the Committee to participate in the Plan effective July
1, 2006. The Participant is then age 32—about to become 33—having been born on July 4, 1973. She
will attain age 46 in July 2019; age 51 in July 2024; age 56 in July 2029; and age 59 in July 2032.
The Participant voluntarily terminates employment on June 30, 2033, when she is age 59. Such
Participant’s Accrued Benefit under the Plan would be calculated as a percentage of her Final
Average Earnings, as follows:

	 	 	 	 	 
	7-1-2006 to 6-30-2019 = 156 months x 1.0417% =
	 	 	162.5052	%
	7-1-2019 to 6-30-2024 =   60 months x 1.5625% =
	 	 	93.7500	%
	7-1-2024 to 6-30-2029 =   60 months x 2.0833% =
	 	 	124.9980	%
	7-1-2029 to 6-30-2032 =   36 months x 2.6042% =
	 	 	93.7512	%
	7-1-2032 to 2-28-2033 =     8 months x 3.1250% =
	 	 	25.0000	%
	   	 
	Total Accrued Benefit (maximum Accrued Benefit)
	 	 	500.00	% of Final Average Earnings

 

 

However, because the Participant’s employment terminated prior to attainment of age 62 and other
than because of her death or following a Disability, her Vested Benefit is calculated as follows:

	 	 	 	 	 
	7-1-2006 to 6-30-2019 = 156 months x 1.0417% =
	 	 	162.5052	%
	7-1-2019 to 6-30-2024 = 60   months x 1.5625% =
	 	 	93.7500	%
	7-1-2024 to 6-30-2029 = 60   months x 2.0833% =
	 	 	124.9980	%
	7-1-2029 to 2-28-2031 = 20   months x 2.6042% =
	 	 	52.0840	%
	 	 
	Total Vested Benefit
	 	 	433.34	% of Final Average Earnings 

     2.6 Forfeiture for Cause

     Notwithstanding anything in this Plan to the contrary, if a Participant’s employment with the
Company terminates on account of Cause (which includes voluntary resignation in lieu of involuntary
termination on account of Cause), no benefits will be payable hereunder. All benefits of any
nature, whether vested or unvested, shall be forfeited and the Participant shall have no further
rights under the Plan.

     2.7 Forfeiture for Competition

     Except in the case of a Participant who has become Vested in his or her Accrued Benefit upon
the occurrence of a Change in Control, the payment of a Participant’s Vested Benefit under this
Plan is expressly conditioned upon the non-competition of the Participant with the Company, and his
or her nonsolicitation of customers and/or employees of the Company, for a period of three years
after the Participant leaves the Company. Accordingly, unless the Participant first secures the
written consent of the Board or the Committee, he or she shall not directly or indirectly, as an
officer, director, employee, consultant, agent, partner, joint venturer, proprietor, or other,
engage in or assist any business which is or may become in direct or indirect competition with the
Company or any of its subsidiaries, other than as a mere investor holding not more than one percent
of the equity interest of any such competing enterprise; nor shall he or she solicit customers or
employees of the Company or any of its subsidiaries. In the event that the Committee makes a
good-faith determination that a Participant who is entitled to receive a Vested Benefit under the
Plan, or who has already received a Vested Benefit under the Plan, is or may be violating the
non-competition provisions hereof, it shall immediately notify him or her of such finding in
writing and afford him or her a reasonable opportunity (a period of not less than sixty days) to
rebut such finding, or to desist from such competitive activity. In the event that the Committee
believes that a violation of the non-competition provision continues uncorrected following the
sixty-day period, it shall direct that the Participant (including any Beneficiary claiming through
the Participant) shall forfeit any right to future payment of a Benefit under the Plan, and if the
Participant has already received a Benefit under the Plan, the Committee is authorized and directed
to undertake legal proceedings against the Participant to recover such Benefit.

 

 

Article III.
— Distribution of Benefit

     3.1 Date of Distribution of Benefits

     A Participant’s Vested Benefit shall be paid in a cash lump sum to the Participant (or, as
applicable, the Participant’s Beneficiary) not later than 30 days following first to occur of

          (a) the date of the Participant’s death;

          (b) the date that is six months after the date of the Participant’s termination of employment.

Article IV.
— Funding By Company

     4.1 Unsecured Obligation of Company.

          (a) Any benefit payable pursuant to this Plan shall be paid from the general assets of the
Company. Nothing contained in this Plan and no action taken pursuant to the provisions of this
Plan shall create a trust of any kind or a fiduciary relationship between any Participant (or any
other interested person) and the Company or the Committee, or require the Company to maintain or
set aside any specific funds for the purpose of paying any benefit hereunder. To the extent that a
Participant or any other person acquires a right to receive payments from the Company under this
Plan, such right shall be no greater than the right of any unsecured general creditor of the
Company.

          (b) If the Company maintains a separate fund or makes specific investments, including the
purchase of insurance insuring the life of a Participant, to assure its ability to pay any benefits
due under this Plan, neither the Participant nor the Participant’s Beneficiary shall have any legal
or equitable ownership interest in, or lien on, such fund, policy, investment or any other asset of
the Company. The Company, in its sole discretion, may determine the exact nature and method of
informal funding (if any) of the obligations under this Plan. If the Company elects to maintain a
separate fund or makes specific investments to fund its obligations under this Plan, the Company
reserves the right, in its sole discretion, to terminate such method of funding at any time, in
whole or in part.

Article V.
— Beneficiaries

     5.1 Beneficiary Designations.

     A Participant may designate a Beneficiary under the Plan only by signing an instrument (in
form acceptable to the Committee) and filing the same with the Committee or its delegate prior to
the Participant’s death. In the absence of such a designation and at any other time when there is
no existing Beneficiary designated hereunder, the unpaid value of the Participant’s Vested Benefit
to which a Beneficiary was entitled shall be distributed to the Participant’s surviving spouse, if
any; otherwise to the Participant’s issue per stirpes, if any; otherwise to the Participant’s
estate. A Beneficiary who dies or which ceases to exist shall not be entitled to any part of any
payment

 

 

thereafter to be made to the Participant’s Beneficiary unless the Participant’s designation
specifically provides to the contrary. If two or more persons designated as a Participant’s
Beneficiary are in existence, the amount of any payment to the Beneficiary under this Plan shall be
divided equally among such persons, unless the Participant’s designation specifically provides to
the contrary.

     5.2 Change in Beneficiary.

     A Participant may, at any time and from time to time, change a Beneficiary designation
hereunder without the consent of any existing Beneficiary or any other person. Any change in
Beneficiary shall be made only by an instrument (in form acceptable to the Committee) signed by the
Participant, and any change shall be effective only if signed by the Participant and received by
the Committee or its delegate prior to the death of the Participant.

Article VI.
— Claims Procedures

     6.1 Claims for Benefits.

     The Committee shall determine the rights of any Participant to any benefits hereunder. Any
Participant who believes that he or she has not received the benefits to which he is entitled under
the Plan may file a claim in writing with the Committee. The Committee shall, no later than 90
days after the receipt of a claim (plus an additional period of 90 days if required for processing,
provided that notice of the extension of time is given to the claimant within the first 90-day
period), either allow or deny the claim in writing. If a claimant does not receive written notice
of the Committee’s decision on his claim within the above-mentioned period, the claim shall be
deemed to have been denied in full.

     A denial of a claim by the Committee, wholly or partially, shall be written in a manner
calculated to be understood by the claimant and shall include:

          (a) the specific reasons for the denial;

          (b) specific reference to pertinent Plan provisions on which the denial is based;

          (c) a description of any additional material or information necessary for the claimant to
perfect the claim and an explanation of why such material or information is necessary; and

          (d) an explanation of the claim review procedure and the time limits applicable to such
procedures, including a statement of the claimant’s right to bring a civil action under Section
502(a) of ERISA.

     6.2 Appeal Provisions.

     A claimant whose claim is denied (or his duly authorized representative) may within 60 days
after receipt of denial of a claim file with the Committee a written request for a review of such
claim. If the claimant does not file a request for review of his claim within such 60-day period,
the claimant shall be deemed to have acquiesced in the original decision of the Committee on his
claim, the decision shall become final and the claimant will not be entitled to bring a civil
action under ERISA §

 

 

502(a). If such an appeal is so filed within such 60-day period, the
Committee (or its delegate) shall conduct a full and fair review of such claim. During such
review, the claimant (or the claimant’s authorized representative) shall be given the opportunity
to review all documents that are pertinent to his claim and to submit issues and comments in
writing.

     The Committee (or its delegate) shall mail or deliver to the claimant a written decision on
the matter based on the facts and the pertinent provisions of the Plan within 60 days after the
receipt of the request for review (unless special circumstances require an extension of up to 60
additional days, in which case written notice of such extension shall be given to the claimant
prior to the commencement of such extension). Such decision shall be written in a manner
calculated to be understood by the claimant, shall state the specific reasons for the decision and
the specific Plan provisions on which the decision was based and shall, to the extent permitted by
law, be final and binding on all interested persons. If the decision on review is not furnished to
the claimant within the above-mentioned time period, the claim shall be deemed to have been denied
on review.

     6.3 Further Proceedings

     If a Participant’s claim for benefits is denied in whole or in part, such Participant may file
suit only in a state court located in Westmoreland County, Pennsylvania or federal court located in
Allegheny County, Pennsylvania. Notwithstanding, before such Participant may file suit in a state
or federal court, Participant must exhaust the Plan’s administrative claims procedure. If
any such judicial or administrative proceeding is undertaken, the evidence presented will be
strictly limited to the evidence timely presented to the Plan Administrator. In addition, any such
judicial or administrative proceeding must be filed within six months after the Plan
Administrator’s final decision.

Article VII.
— Miscellaneous

     7.1 Withholding.

     The Company shall have the right to withhold from any benefits payable under the Plan or other
wages payable to a Participant an amount sufficient to satisfy all federal, state and local tax
withholding requirements, if any, arising from or in connection with the Participant’s receipt or
vesting of benefits under the Plan.

     7.2 No Guarantee of Employment.

     Nothing in this Plan shall be construed as guaranteeing future employment to any Participant.
Without limiting the generality of the preceding sentence, except as otherwise set forth in a
written agreement, a Participant continues to be an employee of the Company solely at the will of
the Company, subject to discharge at any time, with or without Cause. The benefits provided for
herein for a Participant shall not be deemed to modify, affect or limit any salary or salary
increases, bonuses, profit sharing or any other type of compensation of a Participant in any manner
whatsoever. Except as otherwise specifically provided herein, nothing contained in this Plan shall
affect the right of a Participant to participate in or be covered by or under any qualified or
nonqualified pension, profit

 

 

sharing, group, bonus or other supplemental compensation, retirement
or fringe benefit Plan constituting any part of the Company’s compensation structure whether now or
hereinafter existing.

     7.3 Payment to Guardian.

     If a benefit payable hereunder is payable to a minor, to a person declared incompetent or to a
person incapable of handling the disposition of his property, the Committee may direct payment of
such benefit to the guardian, legal representative or person having the care and custody of such
minor, incompetent or person. The Committee may require such proof of incompetency, minority,
incapacity or guardianship, as it may deem appropriate prior to distribution of the benefit. Such
distribution shall completely discharge the Company and each subsidiary from all liability with
respect to such benefit.

     7.4 Assignment.

     No right or interest under this Plan of any Participant or Beneficiary shall be assignable or
transferable in any manner or be subject to alienation, anticipation, sale, pledge, encumbrance or
other legal process or in any manner be liable for or subject to the debts or liabilities of the
Participant or Beneficiary.

     7.5 Severability.

     If any provision of this Plan or the application thereof to any circumstance(s) or person(s)
is held to be invalid by a court of competent jurisdiction, the remainder of the Plan and the
application of such provision to other circumstances or persons shall not be affected thereby.

     7.6 Amendment and Termination.

          (a) The Company may at any time (without the consent of any Participant) modify, amend or
terminate any or all of the provisions of this Plan; provided, however, that no modification,
amendment or termination of this Plan shall adversely affect the Accrued Benefit rights of a
Participant under the Plan, determined as of the date of such action, without the consent of such
Participant. Notwithstanding the foregoing or any provision of the Plan to the contrary, the
Company may at any time (without the consent of any Participant) modify, amend or terminate any or
all of the provisions of this Plan to the extent necessary or advisable to conform the provisions
of the Plan with IRC § 409A, the regulations issued thereunder or an exception thereto, regardless
of whether such modification, amendment or termination of this Plan shall adversely affect the
rights of a Participant under the Plan.

          (b) The Committee is authorized, in its sole and complete discretion, to act for the Company
in exercising the Company’s powers of amendment and termination as described in Section 7.6(a).

 

 

     7.7 Exculpation and Indemnification

     The Company shall indemnify and hold harmless the members of the Committee from and against
any and all liabilities, costs and expenses incurred by such persons as a result of any act, or
omission to act, in connection with the performance of such person’s duties, responsibilities and
obligations under the Plan, other than such liabilities, costs and expenses as may result from the
gross negligence, willful misconduct, and/or criminal acts of such persons.

     7.8 Confidentiality.

     In further consideration of the benefits available to each Participant under this Plan, each
Participant shall agree that, except as such may be disclosed in financial statements and tax
returns, or in connection with estate planning, all terms and provisions of this Plan, and any
agreement between the Company and the Participant entered into pursuant this Plan, are and shall
forever remain confidential until the death of Participant; and the Participant shall not reveal
the terms and conditions contained in this Plan or any such agreement at any time to any person or
entity, other than his respective financial and professional advisors unless required to do so by a
court of competent jurisdiction or as otherwise may be required by law.

     7.9 Leave of Absence.

     The Company may, in its sole discretion, permit a Participant to take a leave of absence for a
period not to exceed one year. Any such leave of absence must be approved by the Company. During
this time, the Participant will still be considered to be in the employ of the Company for purposes
of this Plan.

     7.10 Gender and Number.

     For purposes of interpreting the provisions of this Plan, the masculine gender shall be deemed
to include the feminine, the feminine gender shall be deemed to include the masculine, and the
singular shall include the plural unless otherwise clearly required by the context.

     7.11 Governing Law.

     Except as otherwise preempted by the laws of the United States, this Plan shall be governed by
and construed in accordance with the laws of the Commonwealth of Pennsylvania, without giving
effect to its conflict of law provisions.

Article VIII.
— STATEMENT OF ERISA RIGHTS

     Each Participant in the Plan is entitled to certain rights and protections under ERISA. ERISA
provides that all Participants shall be entitled to:

 

 

     Receive Information About the Plan and Benefits

     Examine, without charge, at the Plan Administrator’s office, all documents governing the Plan.

     Obtain, upon written request to the Plan Administrator, copies of documents governing the
operation of the Plan and an updated summary plan description. The Plan Administrator may make a
reasonable charge for the copies.

     Prudent Actions by Plan Fiduciaries

     In addition to creating rights for Participants, ERISA imposes duties upon the people who are
responsible for the operation of the employee benefit plan. The people who operate the Plan,
called “fiduciaries” of the Plan, have a duty to do so prudently and in the interest of
Participants and beneficiaries. No one, including a Participant’s employer or any other person,
may fire such Participant or otherwise discriminate against a Participant in any way to prevent
such Participant from obtaining a welfare benefit or exercising such Participant’s rights under
ERISA. However, this rule neither guarantees continued employment, nor affects the Company’s right
to terminate a Participant’s employment for other reasons.

     Enforce Participant Rights

     If a Participant’s claim for a benefit is denied or ignored, in whole or in part, a
Participant has a right to know why this was done, to obtain copies of documents relating to the
decision without charge, and to appeal any denial, all within certain time schedules.

     Under ERISA, there are steps a Participant can take to enforce the above rights. For
instance, if a Participant requests a copy of Plan documents and does not receive them within 30
days, such Participant may file suit in a Federal court. In such a case, the court may require the
Plan Administrator to provide the materials and pay such Participant up to $110 a day until
Participant receives the materials, unless the materials were not sent because of reasons beyond
the control of the Plan Administrator. If a Participant has a claim for benefits which is denied
or ignored, in whole or in part, such Participant may file suit in a state or Federal court. If a
Participant is discriminated against for asserting such Participant’s rights, such Participant may
seek assistance from the U.S. Department of Labor, or may file suit in a Federal court. The court
will decide who should pay court costs and legal fees. If a Participant is successful the court
may order the person such Participant has sued to pay these costs and fees. If a Participant
loses, the court may order such Participant to pay these costs and fees, for example, if it finds
such Participant’s claim is frivolous.

     Assistance with Participant Questions

     If a Participant has any questions about the Plan, such Participant should contact the Plan
Administrator. If a Participant has any questions about this statement or about such Participant’s
rights under ERISA, or if a Participant needs assistance in obtaining documents from the Plan
Administrator, such Participant should contact the nearest office of the Employee Benefits Security
Administration, U.S. Department of Labor, listed in such Participant’s telephone directory or the

 

 

Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S.
Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. A Participant may also
obtain certain publications about such Participant’s rights and responsibilities under ERISA by
calling the publications hotline of the Employee Benefits Security Administration.

Article IX.
— SUMMARY INFORMATION

       Name of Plan: The name of the plan under which benefits are provided is the
Kennametal Inc. 2006 Executive Retirement Plan

Plan Sponsor: The Sponsor of the Plan is:

Kennametal Inc.

1600 Technology Way

P. O. Box 231

Latrobe, PA 15650-0231

Telephone: (724) 539-5000

Plan Administrator: The Plan Administrator of the Plan is:

The Compensation Committee of the Board of Directors

Kennametal Inc.

1600 Technology Way

P. O. Box 231

Latrobe, PA 15650-0231

Telephone: (724) 539-5000

       Employer Identification Number: The Employer Identification Number (EIN) assigned to
the Plan Sponsor by the Internal Revenue Service is 25-0900168.

       Type of Plan: Nonqualified unfunded deferred compensation plan (“top hat”).

       Type of Administration: The Plan is administered by the Plan Administrator without
use of third party administrators or insurers.

       Funding: Benefits payable under the Plan are provided from the general assets of the
Company.

       Agent for Service of Legal Process: For disputes arising under the Plan, service of
legal process may be made upon the General Counsel of Plan Sponsor.

       Plan Year: The Plan’s fiscal records are kept on a June 30 fiscal year basis (July 1
to June 30).

 

 

 Adopted by order of the Board of Directors.

	 	 	 	 	 	 	 
	 	 	KENNAMETAL INC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Kevin R. Walling	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Kevin R. Walling	 	 
	 

	 	 	 	Vice President and	 	 
	Date: September 11, 2006

	 	 	 	Chief Human Resource Officer

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