Document:

Third Amendment to Loan and Security Agreement

  EXHIBIT 10.1
 THIRD AMENDMENT TO
SECOND AMENDED AND RESTATED
LOAN AND SECURITY
AGREEMENT
          THIS THIRD AMENDMENT (this “Amendment”) to the Second Amended and Restated Loan and Security Agreement is entered into as of the
30th day of June, 2002, by and between PECO II, Inc. (the “Borrower”), and The Huntington National Bank (the “Bank”).
 RECITALS:
          A.       As of October 22, 1999, the Borrower and the Bank executed a certain Second Amended and Restated Loan and
Security Agreement that was amended by a certain First Amendment to Second Amended and Restated Loan and Security Agreement, dated as of April 28, 2000, and by a certain Second Amendment to Second Amended and Restated Loan and Security Agreement,
dated as of December 29, 2000 (as so amended, the “Loan Agreement”), setting forth the terms of certain extensions of credit to the Borrower; and
          B.       As of October 22, 1999, the Borrower executed and delivered to the Bank, inter alia, an amended and restated revolving note in the
original principal sum of Ten Million Dollars ($10,000,000.00) that was amended and restated by a certain Second Amended and Restated Revolving Note, dated April 28, 2000, in the original principal amount of up to Twenty Million Dollars
($20,000,000) and was further amended and restated by a certain Third Amended and Restated Revolving Note, dated As of April 30, 2002, in the original principal amount of up to Twenty Million Dollars ($20,000,000) (hereinafter the “Revolving
Note” or the “Note”); and
          C.       In connection with the obligations evidenced by Loan
Agreement and the Note, and at various times (prior to, as of the date of, and after the date of, the execution of the Loan Agreement), the Borrower executed and delivered to the Bank certain other loan documents, promissory notes, consents,
assignments, agreements and instruments in connection with the indebtedness referred to in the Loan Agreement (all of the foregoing, together with the Note and the Loan Agreement, are hereinafter collectively referred to as the “Loan
Documents”); and
          D.       The Borrower has requested that the Bank amend and modify certain terms
and covenants in the Loan Agreement, and the Bank is willing to do so upon the terms and conditions contained herein.
          NOW, THEREFORE, in consideration of the
mutual covenants, agreements and promises contained herein, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties hereto for themselves and their successors and assigns do hereby agree,
represent and warrant as follows:
          1.       Definitions. All capitalized
terms not otherwise defined herein shall have the meanings ascribed to such terms in the Loan Agreement.
          2.       Section 1, “The Loan,” of the Loan Agreement is hereby amended to recite in its entirety as follows:

	 	         1.       The Loans

	 	         The Bank, subject to the terms and conditions hereof, will extend credit to the Borrower up to the aggregate principal sum of $10,000,000 (the
“Loans”).	

          3.       Section 1.1, “The Revolving
Loan” of the Loan Agreement is hereby amended to recite in its entirety as follows:

	 	         1.1.    The Revolving Loan.

    
 
	 	         The Bank will extend a revolving credit facility to the Borrower under which the Bank shall make, subject to the terms and conditions hereof, loans and advances on a
revolving basis up to the principal sum of $10,000,000 (the “Revolving Loan”).	

          4.       Section 3.3, “Prepayment
Fee,” of the Loan Agreement is hereby amended to recite in its entirety as follows:

	 	         3.3      Prepayment Fee.

	 	         The Borrower shall have the option at all times to permanently cancel or prepay the Revolving Loan, in whole or in part, by providing to the Bank 60 days prior written
notice of the effective date and amount of such cancellation or prepayment, subject to the terms and conditions of this paragraph. On the effective date of any such cancellation and/or prepayment of any portion of the Loans prior to June 30, 2004,
the Borrower shall pay to the Bank a cancellation/prepayment fee equal to one percent (1%) of the maximum principal balance of the Revolving Loan to be cancelled or prepaid. 	

          5.       Section 3.4, “Terms of
Repayment,” of the Loan Agreement is hereby amended to recite in its entirety as follows:

	 	         3.4      Terms of Repayment.

	 	         The Loans shall be evidenced by a commercial promissory note or by one or more commercial promissory notes subsequently executed in substitution therefor, each in
substantially the form set forth in Exhibits A-1 attached to the Third Amendment to Amended and Restated Loan and Security Agreement dated as of June 30, 2002. Repayment of the Loans shall be made in
accordance with the terms of the commercial promissory notes then outstanding pursuant to this Agreement.	

          6.       Section 4.7, “Books and
Records,” of the Loan Agreement is hereby deleted in its entirety and a new Section 4.1, “Grant of Security Interest,” Section 4.2, “Representations and Covenants Regarding the Collateral,” Section 4.3, “Lockbox and Collection of Accounts,” Section 4.4, “Cash
Collection Account,” Section 4.6, “Collateral Insurance,” Section 4.7, “Books and Records,” Section 4.8,
“Collateral Administration,” Section 4.9, “Preservation and Disposition of Collateral,” Section 4.10, “No
Duty,” Section 4.11, “Financing Statements,” Section 4.12, “Bank’s Appointment as Attorney-In-Fact,”
Section 4.13, “Remedies of Default,” and Section 4.14, “Grant of Security Interests by Subsidiaries,” are hereby added to the Loan
Agreement and shall recite in their entirety as follows:

	 	         4.       Security Agreement

	 	         4.1      Grant of Security Interest.

	 	         To secure the prompt payment and performance to the Bank of the Obligations, the Borrower hereby grants, pledges, conveys and assigns to the Bank continuing security
interests in and lien upon the following property and interests in property, whether the Borrower’s interest therein be as owner, co-owner, lessee, consignee, secured party or otherwise, and whether the same be now owned or existing or
hereafter arising or acquired, and wherever located, together with all substitutions, replacements, additions and accessions therefor or thereto, all documents, negotiable documents, documents of title, warehouse	

    
 
	 	receipts, storage receipts, dock receipts, dock warrants, express bills, freight bills, airbills, bills of lading, and other documents relating thereto, all products thereof and all cash and non-cash proceeds thereof
including, but not limited to, notes, drafts, checks, instruments, insurance proceeds, indemnity proceeds, warranty and guaranty proceeds (herein the “Proceeds”): (a) all inventory including, but not limited to, all goods, merchandise and
other personal property furnished under any contract of service or intended for sale or lease, all parts, supplies, raw materials, work in process, finished goods, goods in transit, materials used or consumed, and repossessed and returned goods
(herein the “Inventory”); and (b) all accounts, accounts receivable, contract rights, chattel paper, electronic chattel paper, general intangibles, payment intangibles, income or other tax refunds, letter of credit rights and proceeds of
letters of credit, preference recoveries and all claims in respect of any transfers of any kind, all transfers by States and governmental units of States, proceeds of insurance, eminent domain and condemnation awards, choses in actions, instruments,
negotiable documents, notes, promissory notes, supporting obligations and other forms of obligations and property securing rights to payment, drafts, acceptances and other forms of obligations, all books, records, ledger cards, computer programs,
and other documents or property, including without limitation such items which are evidencing or relating to the accounts and inventory and including, but not limited to, any of the foregoing arising from or in connection with the sale, lease or
other disposition of Inventory (herein the “Accounts”) (all of the Accounts, the Inventory and the Proceeds herein are collectively termed the “Collateral”).	

	 		Notwithstanding any other provision of this Agreement, (i) the security interest hereby granted shall not attach, and shall not become enforceable, until the date (on or after July 31, 2002) as of which the
Borrower’s Tangible Net Worth shall first fall below $90,000,000.00 (such event hereafter being referred to as the “Springing Event”), at which time such security interest shall attach and become enforceable without further notice or
action required on the part of any party, and (ii) except for the provisions of Section 4.7, which are presently effective, the rights and remedies of the Bank and the affirmative and negative obligations of Borrower under Sections 4.1 through and
including 4.13 herein shall not arise and become enforceable until the occurrence of the Springing Event, at which time such obligations shall arise and become enforceable without further notice or action required on the part of any
party.

	 		The security interests hereby granted are to secure the prompt and full payment and complete performance of all Obligations to the Bank. “Obligations” means all loans, advances, indebtedness, debts, obligations,
covenants, and duties owing, arising, due or payable from the Borrower to the Bank of any kind or nature, present or future, whether or not evidenced by any promissory note, note, draft, letter of credit, guaranty , instrument or document , whether
arising under this Agreement or any of the other loan documents or otherwise and whether direct or indirect (including any acquired by assignment), absolute or contingent, primary or secondary, liquidated or unliquidated, due or to become due, now
existing and arising hereafter and however acquired or incurred, (including principal, interest, late charges, collection costs, attorneys’ fees and other amounts chargeable to the Borrower under this Agreement or under any other loan
document), and any and all supplements, renewals of or substitutes therefor. The absence of any reference to this Agreement in any documents, instruments or agreements evidencing or relating to any Obligation secured hereby shall not limit or be
construed to limit the scope or applicability of this Agreement.

    
 
	 	         4.2      Representations and Covenants Regarding the Collateral.

	 	         The Borrower represents and warrants that except for the security interests granted hereby, any liens set forth in Exhibit B, and liens permitted by this Agreement,
the Borrower is, or as to Collateral arising or to be acquired after the date hereof, shall be, the sole and exclusive owner, lessee, or licensee, as the case may be, of the Collateral, and the Collateral is and shall remain free from any and all
liens, security interests, encumbrances, claims and interests, and no security agreement, financing statement, equivalent security or lien instrument or continuation statement covering any of the Collateral is on file or of record in any public
office. The Borrower shall not create, permit or suffer to exist, shall take such action as is necessary to remove, any claim to or interest in or lien or encumbrance upon the Collateral except the security interest granted hereby and any liens or
encumbrances set forth in Exhibit B, and shall defend the right, title and interest of the Bank in and to the Collateral against all claims and demands of all persons and entities at any time claiming the same or any interest therein. The Borrower
shall (a) maintain its principal place of business and chief executive office at the address set forth in paragraph 10.1 of this Agreement, and the records concerning the Collateral shall be kept at that address unless the Bank shall give its prior
written consent otherwise; (b) keep the Collateral at the locations set forth in Exhibit C attached hereto and maintain no other place of business or place where Collateral is located, except as shown in Exhibit C attached hereto; and (c) deliver to
the Bank at least thirty (30) days prior to the occurrence of any of the following events, written notice of such impending events: (i) a change in the principal place of business or chief executive office; (ii) the opening or closing of any place
of business; or (iii) a change in name, identity or corporate structure.	

	 	         4.3      Lockbox and Collection of Accounts.

	 	         The Borrower shall cause all of its accounts to be collected through a lockbox arrangement with the Bank and shall execute a lockbox agreement in form and substance
satisfactory to the Bank. The Borrower shall notify all existing account debtors to remit payments to the address specified in such lockbox agreement, and all invoices rendered after the date hereof shall bear such address. The Bank at any time
after the occurrence of a Pending Default may notify account debtors on any Collateral that the Collateral has been assigned to the Bank and shall be paid to the Bank through the lockbox or otherwise. Upon request of the Bank at any time after the
occurrence of a Pending Default, the Borrower agrees to notify such account debtors and indicate on all billings that the accounts are payable to the Bank.	

	 	         4.4      Cash Collection Account.

	 	         Upon the occurrence and during the continuance of a Pending Default, the collections through the lockbox arrangement shall be deposited into a cash collection account
maintained with the Bank (the “Cash Collection Account”), over which the Bank alone shall have the power of withdrawal. Upon the occurrence and during the continuance of a Pending Default, if the Borrower makes collections on any of the
Collateral, it shall hold in trust for the Bank the proceeds received from collections, and turn over all checks, drafts, cash and other remittances and proceeds to the Bank each business day in the exact form in which they are received, together
with a collection report in form acceptable to the	

    
 
	 	Bank. Said proceeds shall be deposited in the Cash Collection Account. The Bank in its discretion may apply the whole or any part of the collected funds on deposit in the Cash Collection Account against the principal or
interest of the Loans or any other indebtedness or Obligations, and any portion of said funds on deposit in the Cash Collection Account which the Bank elects not to apply to the Obligations may be paid over and deposited by Bank to the
Borrower’s commercial account.

	 		4.5       Application of Proceeds from Collection of Accounts; Setoff; Government Accounts; Perfection; Lien Notation.

	 	         All amounts received by the Bank representing payment of Accounts or proceeds from the sale of Inventory or of the Collateral may be applied by the Bank to the payment
of the Obligations in such order of preference as the Bank may determine. The Borrower also authorizes the Bank at any time, without notice, to appropriate and apply any balances, credits, deposits, accounts or money of the Borrower in the
Bank’s possession, custody or control to the payment of any of the Obligations whether or not the Obligations are due or matured. If any of the Accounts arise out of contracts with or orders from the United States or any department, agency or
instrumentality thereof, the Borrower shall immediately (i) notify the Bank thereof in writing and (ii) execute any instrument and take any steps which the Bank deems necessary pursuant to the Federal Assignment of Claims Act of 1940, as amended (41
U.S.C. Section 15) in order that all money due and to become due under such contract or order shall be assigned to the Bank. The Borrower agrees to execute, deliver, file and record all such notices, affidavits, assignments, financing statements and
other instruments as shall in the judgment of the Bank be necessary or desirable to evidence, validate and perfect the security interest of the Bank in the Accounts. If certificates of title are issued or outstanding with respect to any Inventory,
the Borrower will cause the interest of the Bank to be properly noted thereon at the Borrower’s expense.	

	 	         4.6      Collateral Insurance.

	 	         The Borrower shall have and maintain insurance at all times with respect to all Inventory insuring against risks of fire (including so-called extended coverage),
explosion, theft, sprinkler leakage and such other casualties as the Bank may designate, containing such terms, in such form, for such amounts, for such periods and written by such companies as may be satisfactory to the Bank, and each such policy
shall contain a clause or endorsement satisfactory to the Bank that names the Bank as additional insured and lender loss payee, as its interests may appear, that provides that no act, default or breach of warranty or condition of the insured or any
other person shall affect the right of the Bank to recover under such policy or policies of insurance or to pay any premium in whole or in part relating thereto, and that provides for thirty (30) days’ written minimum notice of cancellation or
alteration to the Bank. The Borrower shall deliver to the Bank certified copies of all policies of insurance and evidence of the payment of all premiums therefor. The Borrower hereby irrevocably appoints the Bank (and any of the Bank’s
officers, employees or agents designated by the Bank) as attorney-in-fact in obtaining and canceling such insurance and in making, settling and adjusting all claims under such policies of insurance, endorsing any check, draft, instrument or other
item of payment for the proceeds of such policies of insurance and for making all determinations and decisions with respect to such policies of insurance; provided, however, that the Bank shall not exercise the	

    
 
	 	power of attorney granted by this section until and unless (a) an Event of Default shall have occurred or (b) an event of loss shall have occurred and the Bank in good faith deems that the Borrower is not diligently
pursuing its claims. In the event of failure to provide insurance as herein provided, the Bank may, at its option, provide such insurance, and the Borrower shall pay to the Bank, upon demand, the cost thereof. Should said sum not be paid to the Bank
upon demand, interest shall accrue thereon from the date of demand until paid in full at the highest rate set forth in any document or instrument evidencing any of the Obligations.	

	 	         4.7      Books and Records.

	 	         The Borrower shall (a) at all times keep accurate and complete records of its personal property in accordance with GAAP, including without limitation, a perpetual
inventory and complete and accurate stock records, and at all reasonable times and from time to time, shall allow the Bank, by or through any of its officers, agents, attorneys or accountants, to examine, inspect and make extracts from such books
and records and to arrange for verification of the Borrower’s accounts directly with account debtors or by other methods and to examine and inspect the personal property of the Borrower wherever located, and (b) upon request of the Bank,
provide the Bank with copies of agreements with, purchase orders from, and invoices to, the account debtors, and copies of all shipping documents, delivery receipts, and such other documentation and information relating to the Borrower’s
accounts as the Bank may require.	

	 	         4.8      Collateral Administration.

	 	         The Borrower (a) shall promptly perform, on request of the Bank, such acts as the Bank may determine to be necessary or advisable to create, perfect, maintain,
preserve, protect and continue the perfection of any lien and security interest provided for in this Agreement or otherwise to carry out the intent of this Agreement, including, without limitation, (i) obtaining waivers or other similar documents
reasonably necessary to permit the enforcement of the remedies of the Bank hereunder, (ii) delivering to the Bank warehouse receipts covering any portion of the Inventory located in warehouses and for which warehouse receipts are issued, (iii)
transferring Inventory to warehouses designated by the Bank or leasing warehouses containing the Inventory to the Bank or its designee, (iv) delivering to the Bank copies, and originals upon the Bank’s request, of all letters of credit on which
the Borrower is named beneficiary, and (v) if any Inventory is at any time in the possession or control of a warehouseman, bailee or any agent, notifying such person of the Bank’s lien and security interest in the Collateral and, upon the
Bank’s request, instructing such persons to hold all Collateral for the Bank’s account subject to the Bank’s instruction; (b) shall not (i) extend, amend or otherwise modify the terms of any Account, (ii) amend, modify or waive any
term or condition of any contractual obligation related thereto or (iii) redate any invoice or sale or make sales on extended dating beyond that customary in the Borrower’s industry; provided, however, that the Borrower may extend, amend or
otherwise modify the terms of any Account in the ordinary course of business; and (c) if there are any disputes with any of the Accounts, shall notify the Bank promptly and resolve or settle such dispute at no expense or detriment to the
Bank.	

	 	         4.9      Preservation and Disposition of Collateral.

    
 
	 	         The Borrower shall (a) obtain, prior to the placement of any Collateral in or upon any leased or mortgaged real property, a waiver from the lessor and/or the
mortgagee, as the case may be, with respect to the rights (whether present or future) of the lessor or mortgagee with respect to that Collateral; (b) advise the Bank promptly, in writing and in reasonable detail, (i) of any material encumbrance or
claim asserted against any of the Collateral; (ii) of any material change in the composition of the Collateral; and (iii) of the occurrence of any other event that would have a material adverse effect upon the aggregate value of the Collateral or
upon the security interest of the Bank; (c) not sell or otherwise dispose of the Collateral, except for the Inventory as otherwise permitted by this Agreement; (d) keep the Collateral in good condition and shall not misuse, abuse, secrete, waste or
destroy any of the same; and (e) not use the Collateral in violation of any statute, ordinance, regulation, rule, decree or order. At its option, the Bank may discharge taxes, liens, security interests or other encumbrances at any time levied or
placed on the Collateral and may pay for the maintenance and preservation of the Collateral. The Borrower agrees to reimburse the Bank upon demand for any payment made or any expense incurred (including reasonable attorneys’ fees) by the Bank
pursuant to the foregoing authorization. Should said sum not be paid to the Bank upon demand, interest shall accrue thereon, from the date of demand until paid in full, at the highest rate set forth in any document or instrument evidencing any of
the Obligations.	

	 	         4.10    No Duty.

	 	         The Bank shall have no duty as to the collection or protection of Collateral or any income therefrom, nor as to the preservation of rights against prior parties, nor
as to the preservation of any right pertaining thereto, beyond the safe custody of any Collateral in the possession of the Bank.	

	 	         4.11    Financing Statements.

	 	         The Borrower hereby authorizes the Bank to file financing statements describing the Collateral, and any necessary future amendments thereto, in any and all public
offices in which the Bank deems such filing to be necessary or desirable. In addition, at the request of the Bank, the Borrower shall join with the Bank in executing, delivering and filing one or more financing statements and any necessary future
amendments thereto in a form satisfactory to the Bank and shall pay the cost of filing the same in all public offices wherever filing is deemed by the Bank to be necessary or desirable. The Borrower also agrees to cooperate with the Bank in
obtaining control with respect to Collateral consisting of letter of credit rights, electronic chattel paper and any other Collateral with respect to which perfection of a security interest therein may be obtained by control.	

	 	         4.12    Bank’s Appointment as Attorney-in-Fact.

	 	         The Borrower hereby irrevocably constitutes and appoints the Bank and any officer or agent thereof, with full power of substitution, as the Borrower’s true and
lawful attorney-in-fact with full irrevocable power and authority in its place and stead and in its name or in the Bank’s own name, from time to time in the Bank’s discretion, for the purpose of carrying out the terms of this Agreement, to
take any and all appropriate action and to execute any and all documents and instruments that may be necessary or desirable to accomplish the purposes of this Agreement and, without limiting the generality of the foregoing, hereby grants
to	

    
 
	 	the Bank the power and right, on behalf of the Borrower, without notice to or assent: (a) to execute, file and record all such financing statements, certificates of title and other certificates of registration and
operation and similar documents and instruments as the Bank may deem necessary or desirable to protect, perfect and validate the Bank’s security interest in the Collateral; (b) to receive, collect, take, indorse, sign, and deliver in the
Borrower’s or the Bank’s name, any and all checks, notes, drafts, or other documents or instruments relating to the Collateral; and (c) upon the occurrence of an Event of Default, (i) to notify postal authorities to change the address for
delivery of the Borrower’s mail to an address designated by the Bank, (ii) to open such mail delivered to the designated address, (iii) to sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications and notices in connection with accounts and other documents relating to the Collateral; (iv) to commence and prosecute any suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and to enforce any other right in respect of any Collateral; (v) to defend any suit, action or proceeding brought with respect to any Collateral; (vi) to negotiate, settle, compromise or
adjust any account, suit, action or proceeding described above and, in connection therewith, to give such discharges or releases as the Bank may deem appropriate; and (vii) generally, to sell, transfer, pledge, make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though the Bank were the absolute owner thereof for all purposes, and to do, at the Bank’s option, at any time or from time to time, all acts and things which the Bank deems
necessary to protect, preserve or realize upon the Collateral and the Bank’s security interest therein, in order to effect the intent of this Agreement.	

	 		The Borrower hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable. The powers conferred upon
the Bank hereunder are solely to protect its interests in the Collateral and shall not impose any duty upon the Bank to exercise any such powers. The Bank shall be accountable only for amounts that the Bank actually receives as a result of the
exercise of such powers and neither the Bank nor any of its officers, directors, employees or agents shall be responsible to the Borrower for any act or failure to act, except for the Bank’s own gross negligence or willful misconduct, as
determined by a final non-appealable judgment by a court of competent jurisdiction.

	 	         4.13    Remedies on Default.

	 	         Upon the occurrence of an Event of Default, the Bank shall have the rights and remedies of a secured party under this Agreement, under any other instrument or
agreement securing, evidencing or relating to the Obligations and under the laws of the State of Ohio or any other applicable state law. Without limiting the generality of the foregoing, the Bank shall have the right to take possession of the
Collateral and all books and records relating to the Collateral and for that purpose the Bank may enter upon any premises on which the Collateral or books and records relating to the Collateral or any part thereof may be situated and remove the same
therefrom. Except for the notices specified below of time and place of public sale or disposition or time after which a private sale or disposition is to occur, the Borrower expressly agrees that the Bank, without demand of performance or other
demand, advertisement or notice of any kind to or upon the Borrower or any other person or entity (all and each of which	

    
 
	 	demands, advertisements and/or notices are hereby expressly waived), may forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option
or options to purchase or sell or otherwise dispose of and deliver the Collateral (or contract to do so), or any part thereof, in one or more parcels at public or private sale or sales, at any of the Bank’s offices or elsewhere at such prices
as the Bank may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Bank shall have the right upon any such public sale or sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption. The Borrower further agrees, (a) at the Bank’s request, to assemble the Collateral and to make it available to the Bank at such
places as the Bank may reasonably select and (b) to allow the Bank to use or occupy the Borrower’s premises, without charge, for the purpose of effecting the Bank’s remedies in respect of the Collateral. The Bank shall apply the net
proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to the care or safekeeping of any or all of the
Collateral or in any way relating to the rights of the Bank hereunder, including reasonable attorneys’ fees and legal expenses, to the payment in whole or in part of the Obligations, in such order as the Bank may elect, and only after so paying
over such net proceeds and after the payment by the Bank of any other amount required by any provision of law, need the Bank account for the surplus, if any. To the extent permitted by applicable law, the Borrower waives all claims, damages and
demands against the Bank arising out of the repossession, retention, sale or disposition of the Collateral and agrees that the Bank need not give more than 10 days’ notice pursuant to the terms of this Agreement of the time and place of any
public sale or of the time after which a private sale may take place and that such notice is reasonable notification of such matters. The Borrower shall remain liable for any deficiency if the proceeds of any sale or disposition of the Collateral
are insufficient to pay all amounts to which the Bank is entitled and shall also be liable for the costs of collecting any of the Obligations or otherwise enforcing the terms thereof or of this Agreement, including reasonable attorneys’
fees.	

	 	         4.14    Grant of Security Interests by Subsidiaries.

	 	         The Borrower shall cause PECO II Global Services, Inc. to grant to the Bank security interests in its accounts receivable and inventory upon terms substantially
similar to those set forth in Sections 4.1 through 4.13 above.

          7.       Section 7.1,
“Payment of Taxes and Claims,” of the Loan Agreement is hereby amended to recite in its entirety as follows:

	 	         7.1      Payment of Taxes and Claims.

	 	         The Borrower shall, and shall cause each of its Subsidiaries to, pay (a) all taxes, estimated payments, assessments and governmental charges or levies imposed upon it
or its property or assets or in respect of any of its franchises, businesses, income or property before any penalty or interest accrues thereon; and (b) all claims of materialmen, mechanics, carriers, warehousemen, landlords, bailees and other like
persons, (including, without limitation, claims for labor, services, materials and supplies) for sums which have become due and payable and which by law have or may become a lien or encumbrance upon any of its	

    
 
	 	property or assets, prior to the time when any penalty or fine shall be incurred with respect thereto; provided, however,
that no such taxes, assessments and governmental charges referred to in clause (a) above or claims referred to in clause (b) above are required to be paid if being contested in good faith by the
Borrower or one of its Subsidiaries, by appropriate proceedings diligently instituted and conducted, without danger of any material risk to the Collateral or the Bank’s interest therein, without any of the same becoming a lien upon the
Collateral, and if such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP, shall have been made therefor. 	

          8.       Section 7.2, “Maintenance of
Properties and Corporate Existence,” of the Loan Agreement is hereby amended to recite in its entirety as follows:

	 	         7.2      Maintenance of Properties and Corporate Existence. 

	 	         The Borrower shall, and shall cause each of its Subsidiaries to (a) maintain its property in good condition and make all renewals, replacements, additions, betterments
and improvements thereto which it deems necessary; (b) maintain, with financially sound and reputable insurers, insurance with respect to its properties and business against such casualties and contingencies, of such types (including but not limited
to fire and casualty, public liability, products liability, larceny, embezzlement or other criminal misappropriation insurance) and in such amounts as is customary in the case of entities of established reputations engaged in the same or a similar
business and similarly situated, with each such policy of insurance containing a clause or endorsement satisfactory to the Bank that names the Bank as additional insured and lender loss payee, as its interest may appear, and that provides that no
act, default or breach of warranty or condition of the Borrower, any of its Subsidiaries, or any other person shall affect the right of the Bank to recover under such policy or policies of insurance or to pay any premium in whole or in part relating
thereto, in such amounts as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated; (c) reflect in its financial statements adequate accruals and appropriations to reserves
and keep and maintain proper books of record and account in which entries in conformity with GAAP shall be made of all dealings and transactions in relation to its businesses and activities, including, without limitation, transactions and other
dealings with respect to the Collateral;(d) do or cause to be done all things necessary (i) to preserve and keep in full force and effect its existence, rights and franchises, and (ii) to maintain its
status as a corporation duly organized and existing and in good standing under the laws of the state of its incorporation; (e) conduct continuously and operate actively its business and take all actions necessary to enforce and protect the validity
of any intellectual property; and (f) not be in violation of any laws, ordinances, or governmental rules and regulations or fail to obtain any licenses, permits, franchises or other governmental authorizations necessary to the ownership of its
properties or to the conduct of its business, which violation or failure to obtain might have a Material Adverse Effect.	

          9.       Section 7.3, “Restriction on
Fundamental Changes; Conduct of Business,” of the Loan Agreement is hereby amended to recite in its entirety as follows:

	 	         7.3     Restriction on Fundamental Changes; Conduct of Business.

    
 
	 	Neither the Borrower nor any of its Subsidiaries shall (a) enter into any merger or consolidation, or liquidate, wind up or dissolve (or suffer any liquidation or dissolution), or convey, lease, sell, transfer or
otherwise dispose of, in one transaction or a series of transactions, all or substantially all of the business or property of Borrower or any of its Subsidiaries, whether now or hereafter acquired, (b) except with respect to Subsidiaries of the
Borrower permitted by the Bank, enter into limited liability companies, partnerships or joint ventures with any other entity, (c) acquire all or substantially all of the assets or business of any other company, person or entity, (d) create or
acquire or permit to exist any Subsidiaries, except for Apex Telecommunications Manufacturing, Inc., a New Hampshire corporation and wholly-owned subsidiary of the Borrower, PECO II Texas, L.P., a Delaware limited partnership, PECO
Telecommunications LLC, a Delaware limited liability company, PECO Powering LLC, a Delaware limited liability company, PECO II Global Services, Inc., a Delaware corporation and wholly-owned subsidiary of the Borrower, and Telecom Global Services de
Mexico; (e) conduct business under any other tradenames other than without the prior written consent of the Bank, or (f) engage in any business other than the businesses engaged in by the Borrower on the date hereof and any business or activities
which are substantially similar or related thereto. A “Subsidiary” of the Borrower or any other person means (i) any corporation more than fifty percent (50%) of the outstanding security having ordinary voting power of which shall at the
time be owned or controlled, directly or indirectly, by such person or by one or more of its subsidiaries or by such person and one or more of its subsidiaries, or (ii) any partnership, association, joint venture or similar business organization
more than fifty percent (50%) of the ownership interest have ordinary voting power of which shall at the time be so owned or controlled.	

          10.      Section 7.4, “Sale of
Assets,” of the Loan Agreement is hereby amended to recite in its entirety as follows:

	 	         7.4      Sale of Assets.

	 	         The Borrower shall not, and shall not permit any of its Subsidiaries to, sell, assign, lease, convey or otherwise dispose of any property, whether now owned or
hereafter acquired, or any income of profits therefrom, or enter into any agreement to do so, except: (a) the sale or transfer of Inventory in the ordinary course of business; (b) the disposition of obsolete equipment in the ordinary course of
business not to exceed $500,000.00 in any twelve month period, provided, however, that the Borrower shall provide the Bank prior written notice of such sale or disposition, containing a specific description of the equipment to be sold and the sale
price of the same, or (c) the disposition of equipment outside the ordinary course of business with the prior written consent of and upon satisfaction of such conditions deemed necessary or desirable by the Bank. Notwithstanding the foregoing, the
Borrower shall not, and shall not permit any of its Subsidiaries to, sell, assign, or encumber, except to the Bank, any of its Accounts or notes receivable and further shall not permit any of its Inventory (or Inventory of any of its Subsidiaries)
to be sold or transferred on consignment or acquire or possess any of its Inventory, or permit any of its Subsidiaries to acquire any of its inventory, on consignment.	

          11.      Section 7.5, “Negative
Pledge,” of the Loan Agreement is hereby amended to recite in its entirety as follows:

    
 
	 	         7.5      Negative Pledge.

	 	         The Borrower will not, and will not allow any of its Subsidiaries to, cause or permit or permit to exist or agree or consent to cause or permit in the future (upon the
happening of a contingency or otherwise), any of its real or personal property, or any of the real or personal property of any of its Subsidiaries, whether now owned or hereafter acquired, to become subject to a lien or encumbrance, except: (i)
liens in connection with deposits required by workers’ compensation, unemployment insurance, social security and other like laws; (ii) taxes, assessments, reservations, exceptions, encroachments, easements, rights of way, covenants, conditions,
restrictions, leases and other similar title exceptions or encumbrances affecting real property, provided they do not in the aggregate materially detract from the value of said property or materially
interfere with its use in the ordinary conduct of business; (iii) inchoate liens arising under ERISA to secure the contingent liability of the Borrower; (iv) liens as set forth in Exhibit B attached to
this Agreement; (v) purchase money liens (including the interest of a lessor under a capitalized lease) securing Permitted Purchase Money Indebtedness, provided that such liens shall apply only to the property of the Borrower or Subsidiary, as the
case may be, purchased under such capitalized lease; and (vi) liens in favor of the Bank. In addition, the Borrower will not, and will not permit any Subsidiary to, grant or agree to provide in the future (upon the happening of a contingency or
otherwise), a “negative pledge” or other covenant or agreement similar to this Section 7.5 in favor of any other lender, creditor or third party.	

          12.      Section 7.6, “Indebtedness,” of the Loan Agreement is hereby amended to recite in its entirety as follows:

	 	         7.6      Indebtedness.

	 	         The Borrower, on a consolidated basis, will not directly or indirectly create, incur, assume or otherwise become or remain liable with respect to any Indebtedness,
except (a) the Loans; (b) secured or unsecured purchase money Indebtedness (including capitalized leases) incurred by the Borrower to finance the acquisition of fixed assets, if (i) such Indebtedness has a scheduled maturity and is not due on
demand, (ii) such Indebtedness in the aggregate does not exceed the sum of $1,000,000.00 outstanding at any time, (iii) such Indebtedness does not exceed the purchase price of the items being purchased, and (iv) such Indebtedness is not secured by
any property or assets other than the item or items being purchased (“Permitted Purchase Money Indebtedness”); (c) other Indebtedness owing to the Bank; and (d) Indebtedness incurred in connection with industrial development revenue bond
financing involving the Borrower or any its Subsidiaries in which the Bank has issued a letter of credit. “Indebtedness,” as applied to the Borrower or any other entity shall mean, at any
time, (a) all indebtedness, obligations or other liabilities (other than accounts payable arising in the ordinary course of the Borrower’s business payable on terms customary in the trade) which in accordance with GAAP should be classified upon
the Borrower’s balance sheet as liabilities, including, without limitation (i) for borrowed money or evidenced by debt securities, debentures, acceptances, notes or other similar instruments, and any accrued interest, fees and charges relating
thereto, (ii) under profit payment agreements or in respect of obligations to redeem, repurchase or exchange any securities or to pay dividends in respect of any stock, (iii) with respect to letters of credit issued, (iv) to pay the deferred
purchase price of property or services, 	

    
 
	 	except accounts payable and accrued expenses arising in the ordinary course of business, or (v) in respect of capital leases; (b) all indebtedness, obligations or other liabilities secured by a lien on any property,
whether or not such indebtedness, obligations or liabilities are assumed by the owner of the same; and (c) all indebtedness, obligations or other liabilities in respect of interest rate contracts and currency agreements, net of liabilities owed by
the counterparties thereon.	

          13.      Section 7.7, “Contingent
Obligations,” of the Loan Agreement is hereby amended to recite in its entirety as follows:

	 	         7.7      Contingent Obligations.

	 	         The Borrower shall not, and shall not permit any its Subsidiaries to, directly or indirectly create or become liable with respect to any Contingent Obligation, except
(a) recourse obligations resulting from the indorsement of negotiable instruments for collection in the ordinary course of business, (b) those permitted existing Contingent Obligations set forth on Schedule 7.7 attached hereto not to exceed the
amounts set forth in such Schedule, and any extensions or renewals thereof, (c) the guaranty of certain obligations of the Borrower’s wholly-owned subsidiary, Apex Telecommunications Manufacturing, Inc. (“Apex”) to the Bank, which
guaranty is evidenced by a certain Guaranty Agreement dated as of September 1, 1999, as the same may be modified, amended or restated from time to time, (d) Contingent Obligations in favor of the Bank; (e) Contingent Obligations incurred in
connection with industrial development revenue bond financing involving the Borrower or any of its Subsidiaries in which the Bank has issued a letter of credit; (f) obligations, warranties and indemnities not relating to Indebtedness, which have
been or are undertaken or made in the ordinary course of business, and (g) Contingent Obligations with respect to surety, appeal and performance bonds obtained by the Borrower or any its Subsidiaries. “Contingent Obligations” means any
agreement, undertaking or arrangement by which the Borrower or any of its Subsidiaries assumes, guaranties, endorses, agrees to provide funding, or otherwise becomes or is contingently liable upon the obligation or liability of any other person,
partnership, corporation, limited liability company or other.	

          14.      Section 7.8, “Loans and Advances;
Investments” of the Loan Agreement is hereby amended to recite in its entirety as follows:

	 	         7.8     Loans and Advances; Investments.

	 	         The Borrower shall not, and shall not permit any of its Subsidiaries to, directly or indirectly make or own any Investment except: (a) bonds or other obligations of
the United States of America, certificates of deposit issued by commercial banks, and commercial paper rated at least A-1 or P-1 and having a maturity of not more than one year; (b) loans or advances to employees of the Borrower, which loans and
advances shall not in the aggregate exceed $100,000.00 outstanding at any time, (c) Investments in Subsidiaries, which Investments shall not exceed the amount of such Investments as of the date of execution of that certain Third Amendment to Second
Amended and Restated Loan and Security Agreement, dated as of June 30, 2002, and (d) any other Investment not to exceed the aggregate amount of $20,000 outstanding at any time. “Investment” means any loan, advance, extension of credit
(other than 	

    
 
	 		accounts receivable arising in the ordinary course of business on terms customary in the trade), deposit account, contribution of capital or transfer of any assets to any other entity or any investment in, or purchase or
other acquisition of, the stock, partnership interests, ownership interests in any limited liability company, notes, debentures, or other securities of any other entity made by the Borrower.

          15.      Section 7.10, “Acquisition of Capital Stock,” of the
Loan Agreement is hereby amended to recite in its entirety as follows:

	 	         7.10    Acquisition of Capital Stock.

	 	         Within fifteen (15) days after any such redemption or acquisition, the Borrower shall provide written notice to Bank of any direct or indirect redemption or
acquisition of any of its own capital stock, or of any warrants or any securities for its capital stock. Notwithstanding the foregoing, no such redemption or acquisition shall be made if, after giving effect to such redemption or acquisition, a
Pending Default would exist under this Agreement.	

          16.      Section 7.12, “Transactions with
Affiliates,” of the Loan Agreement is hereby amended to recite in its entirety as follows:

	 	         7.12    Transactions with Affiliates.

	 	         The Borrower shall not, and shall not permit any of its Subsidiaries to, except as otherwise expressly permitted herein, directly or indirectly enter into or permit to
exist any of the following: (i) make any investment in an Affiliate; (ii) transfer, sell, lease, assign or otherwise dispose of any asset to any Affiliate (other than the Borrower), (iii) merge into or consolidate with or purchase or acquire assets
from any Affiliate; (iv) repay any Indebtedness to any Affiliate, except for intercompany Indebtedness incurred in the ordinary course of business; (v) pay any royalties or license fees to any Affiliate (other than the Borrower); (vi) pay any
management or consulting fees to any Affiliate (other than the Borrower); (vii) other than transactions in favor of the Borrower, enter into any other transaction directly or indirectly with or for the benefit of any Affiliate (including, without
limitation, guaranties and assumptions of obligations of any such Affiliate) except in each case for transactions (A) in the ordinary course of business and (B) either on a basis no less favorable to
the Borrower or its Subsidiary as would be obtained in a comparable arm’s length transaction with a person, entity or corporation not an Affiliate, or in the case of compensation payable to any officer or director of the Borrower or its
Subsidiary, in an amount approved by the Board of Directors of the Borrower or its Subsidiary. An “Affiliate” of a person shall mean any individual, partnership, corporation, or other entity which, directly or indirectly, is in control of,
is controlled by, or is under common control with such person, or is a family member of any of the foregoing individuals related by birth or marriage. For the purposes of this definition, “control” of such entity shall mean the power,
directly or indirectly, to vote 5% or more of the securities, units or other measures having ordinary voting power for the election of directors, management committees, or similar committees of such entity, or the power to direct or cause the
direction of the management and policies of such entity, whether by contract or otherwise.	

    
           17.      Section 7.13,
“Book Net Worth,” Section 7.14, “Leverage Ratio,” Section 7.15, “Current Ratio,” Section 7.16, “Capital Expenditures,” and Section 7.17, “Operating Lease Rentals,” of the Loan Agreement are here by
deleted in their entirety.
          18.      A new Section 7.13, “Tangible Net
Worth,” is hereby added to the Loan Agreement and shall recite in its entirety as follows:

	 	         7.13    Tangible Net Worth.

	 	         The Borrower, on a consolidated basis, shall maintain at all times a Tangible Net Worth of not less than $85,000,000.	

	 		“Tangible Net Worth” means, at the time of each determination, shareholders’ equity, minus the sum of all of the following: (i) the excess of cost over the value of net assets of purchased businesses,
rights, and other similar intangibles, (ii) organizational expenses, (iii) intangible assets (to the extent not reflected in the foregoing), (iv) goodwill, (v) deferred charges or deferred financing costs, (vi) loans or advances to and/or accounts
or notes receivable from Affiliates, (vii) leasehold improvements, (viii) non-compete agreements, and (ix) any other asset not directly related to the operation of the business of the Borrower. 

          19.      A new Section 7.14, “Liquidity Ratio,” is hereby added
to the Loan Agreement and shall recite in its entirety as follows:

	 	         7.14    Liquidity Ratio.

	 	         The Borrower, on a consolidated basis, shall maintain at all times a ratio (the “Liquidity Ratio”) of (a) Liquidity to (b) the Committed Amount of not less
than 1.25 to 1.00. 	

	 	         “Committed Amount” means, as of the date of determination, the maximum principal amount that may be advanced under the Loans.	

	 	         “Liquidity” means, as of the date of determination, the sum of (i) the Borrower’s cash, plus (ii)
Marketable Securities. 	

	 	         “Marketable Securities” means, as of the date of determination, the sum of the Borrower’s 	

	 	          (i)      marketable direct obligations issued or unconditionally guaranteed by the United States government and backed by
the full faith and credit of the United States government; 

	 	          (ii)    domestic and Eurodollar certificates of deposit and time deposits, bankers’ acceptances and floating rate certificates
of deposit issued by any commercial bank organized under the laws of the United States, any state thereof, the District of Columbia, any foreign bank, or its branches or agencies (fully protected against currency fluctuations), which, at the time of
acquisition, are rated A-l (or better) by Standard & Poor’s Corporation (or its successors) or P-l (or better) by Moody’s Investors Service, Inc. (or its successors);

	 	          (iii)   commercial paper of United States and foreign banks and bank holding companies and their subsidiaries and United States and
foreign finance, 

    
 
	 	commercial industrial or utility companies which, at the time of acquisition, are rated A-1 (or better) by Standard & Poor’s Corporation (or its successors) or P-l (or better) by Moody’s Investors Service,
Inc. (or its successors);	

	 	          (iv)    marketable direct obligations of any State of the United States of America or any political subdivision of any such State
given on the date of such investment the highest credit rating by Moody’s Investor Service, Inc. (or its successors) and Standard & Poor’s Corporation (or its successors); and 

	 	          (v)      money market funds organized under the laws of the United States or any state thereof that invests in any of the
investments identified under clauses (i), (ii), (iii) and (iv) of this definition;

	 		provided, that the maturities of any such obligations, certificates or instruments referred to in clauses (i) through (v) shall not exceed one hundred eighty (180)
days.

          20.      Schedule 6.6, “Schedule of Litigation and Pending or Threatened
Claims,” and Exhibits B and C to the Loan Agreement are hereby amended to recite in their entirety as set forth in Schedule 6.6, and in Exhibits B and C, respectively, to this Amendment.
          21.      Conditions of Effectiveness. This Amendment shall become effective as of June 30,
2002, upon satisfaction of all of the following conditions precedent:
                   (a)         The Bank shall have received two duly executed originals of this Amendment, a duly executed copy of the Fourth Amended and Restated Revolving Note, and such other
certificates, instruments, documents, and agreements as may be required by the Bank, each of which shall be in form and substance satisfactory to the Bank and its counsel; and
                   (b)         The representations contained in the
immediately following paragraph shall be true and accurate.
          22.      Representations. The Borrower represents and warrants that after giving effect to this Amendment (a) each and every one of the representations and warranties made by or on behalf of the Borrower in the Loan Agreement or the Loan Documents is true and
correct in all respects on and as of the date hereof, except to the extent that any of such representations and warranties related, by the expressed terms thereof, solely to a date prior hereto; (b) the Borrower has duly and properly performed,
complied with and observed each of its covenants, agreements and obligations contained in the Loan Agreement and Loan Documents; and (c) no event has occurred or is continuing, and no condition
exists which would constitute an Event of Default or a Pending Default. 
          23.      Amendment to Loan
Agreement. (a) Upon the effectiveness of this Amendment, each reference in the Loan Agreement to “Second Amended and Restated Loan and Security Agreement,” “Loan and Security Agreement,” “Loan
Agreement,” “Agreement,” the prefix “herein,” “hereof,” or words of similar import, and each reference in the Loan Documents to the Loan Agreement, shall mean and be a reference to the Loan Agreement as amended
hereby. (b) Except as modified herein, all of the representations, warranties, terms, covenants and conditions of the Loan Agreement, the Loan Documents and all other agreements executed in connection therewith shall remain as written originally and
in full force and effect in accordance with their respective terms, and nothing herein shall affect, modify, limit or impair any of the rights and powers which the Bank may have thereunder. The amendment set forth herein shall be limited precisely
as provided for herein, and shall not be deemed to be a waiver of, amendment of, consent to or modification of any of the Bank’s rights under or of any other term or provisions of the Loan Agreement, any Loan Document, or other agreement
executed in connection therewith, or of any term or provision of any other instrument referred to therein or herein or of any transaction or future action on the part of the Borrower which would require the consent of the Bank, including, without
limitation, waivers of Events of Default which may exist after giving effect hereto. The Borrower ratifies and confirms each term, provision, condition and

   
  covenant set forth in the Loan Agreement and the Loan Documents and acknowledges that the agreement set forth therein continue to be
legal, valid and binding agreements, and enforceable in accordance with their respective terms.
          24.      Authority. The Borrower hereby represents and warrants to the Bank that (a) the Borrower has legal power and authority to execute and deliver the within Amendment; (b) the officer executing the within Amendment on
behalf of the Borrower has been duly authorized to execute and deliver the same and bind the Borrower with respect to the provisions provided for herein; (c) the execution and delivery hereof by the Borrower and the performance and observance by the
Borrower of the provisions hereof do not violate or conflict with the articles of incorporation, regulations or by-laws of the Borrower or any law applicable to the Borrower or result in the breach of any provision of or constitute a default under
any agreement, instrument or document binding upon or enforceable against the Borrower; and (d) this Amendment constitutes a valid and legally binding obligation upon the Borrower in every respect.
          25.      Counterparts. This Amendment may be executed in two or more counterparts, each of
which, when so executed and delivered, shall be an original, but all of which together shall constitute one and the same document. Separate counterparts may be executed with the same effect as if all parties had executed the same counterparts.

          26.      Costs and Expenses. The Borrower agrees to pay on demand in accordance
with the terms of the Loan Agreement all costs and expenses of the Bank in connection with the preparation, reproduction, execution and delivery of this Amendment and all other loan documents entered into in connection herewith, including the
reasonable fees and out-of-pocket expenses of the Bank’s counsel with respect thereto.
          27.      Governing Law. This Amendment shall be governed by and construed in accordance with the law of the State of Ohio.
 [The remainder of this page is intentionally left
blank.]
          IN WITNESS WHEREOF, the Borrower and the Bank have hereunto set their hands as of the date first set forth above.

		 	THE BORROWER:
	 	 	
 PECO II, INC.
	
	 	By: 	 
 /s/ JOHN C. MAAG
				 

	
	 	Its: 	 Chief Financial Officer/Treasurer
				 

	
	 	By: 	
 
				 

	
	 	Its: 	
 
				 

	 	 	 	 

		 	THE BANK:
	 	 	
THE HUNTINGTON NATIONAL BANK 
	
	 	By: 	
 /s/ Jeffrey Clawson
				

	
	 	Its: 	 Assistant Vice President
				

	 	 	 	 

  
  SCHEDULE 6.6
 Schedule of Litigation and Pending or Threatened Claims
 Claim in the approximate amount of $3,000,000 against Borrower’s predecessor in interest, Thornton Communications, Inc., which claim is the subject of a proceeding in Civil Action No. 33383, Chancery Court for Washington County, Johnson
City, Tennessee.

    
  EXHIBIT A-1
 THE HUNTINGTON NATIONAL BANK
Fourth Amended and
Restated Revolving Note
 City Office ______________________ Division __________________ Branch __________ x Secured
 Account No.
_________________________________ Note No. _____________________ o Unsecured
 Account Name PECO II, Inc.
 x Corporation
                                  o Partnership
                                   o
Individual/Proprietorship
 o Other ______________________________________________________________________________________
 $10,000,000
                                        
          Galion, Ohio
                                        
     As of June 30, 2002
                   FOR VALUE RECEIVED, the undersigned promises to pay to the
order of THE HUNTINGTON NATIONAL BANK (hereinafter called the “Bank,” which term shall include any holder hereof) at such place as the Bank may designate or, in the absence of such designation, at any of the Bank’s offices, the sum of
Ten Million Dollars ($10,000,000) or so much thereof as shall have been advanced by the Bank at any time and not thereafter repaid (hereinafter referred to as “Principal Sum”) together with interest as hereinafter provided and payable at
the time and in the manner hereinafter provided. The proceeds of the loan evidenced hereby may be advanced, repaid and readvanced in partial amounts during the term of this revolving note (this “Note”) and prior to maturity. Each such
advance shall be made to the undersigned upon receipt by the Bank of the undersigned’s application therefor and disbursement instructions, which shall be in such form as the Bank shall from time to time prescribe. The Bank shall be entitled to
rely on any oral or telephonic communication requesting an advance and/or providing disbursement instructions hereunder, which shall be received by it in good faith from anyone reasonably believed by the Bank to be the undersigned, or the
undersigned’s authorized agent. The undersigned agrees that all advances made by the Bank will be evidenced by entries made by the Bank into its electronic data processing system and/or internal memoranda maintained by the Bank. The undersigned
further agrees that the sum or sums shown on the most recent printout from the Bank’s electronic data processing system and/or on such memoranda shall be rebuttably presumptive evidence of the amount of the Principal Sum and of the amount of
any accrued interest.
          This Note is executed and the advances contemplated hereunder are to be made pursuant to a Second Amended and Restated Loan and
Security Agreement by and between the undersigned and the Bank dated October 22, 1999 (as amended, restated, modified or otherwise supplemented from time to time, herein the “Loan Agreement”), to which reference is hereby made for a more
complete statement of the terms and conditions contained therein. Terms defined in the Loan Agreement and not otherwise defined herein are used herein with the meanings ascribed to such terms in the Loan Agreement.
          This Note is given in substitution for, and replacement of, that certain Third Amended and Restated Revolving Note dated as of as of April 30, 2002, in the original
principal sum of $20,000,000, and not as a novation thereof.

    
  INTEREST
          Prior to maturity, interest
will accrue on the unpaid balance of the Principal Sum at a variable rate of interest per annum, as selected by the undersigned in accordance with this Note (hereinafter called the “Contract Rate”), which shall change in the manner set
forth below, equal to:

	 		(1)    the Prime Commercial Rate (as hereinafter defined) minus 0.50 percentage points (the “Prime Rate”); or

	 		(2)    2.00 percentage points in excess of the Daily LIBOR (as hereinafter defined).

          Initially, interest shall accrue hereunder based upon the Daily LIBOR. The undersigned shall give the Bank written notice of each request to change the interest index from the Daily LIBOR to the Prime Commercial Rate, or vice versa, or to
request disbursement of an advance with respect to which interest shall accrue at a rate calculated with reference to the Daily LIBOR, no later than three (3) Banking Days (as hereinafter defined) prior to the date of the proposed change or the
requested date of disbursement, as the case may be. All such written notices shall be directed by the undersigned to the Bank’s officer who is handling the undersigned’s obligations on behalf of the Bank and must be received by the Bank at
least three (3) Banking Days prior to the date of the change or the requested date of disbursement.
          Subject to any maximum or minimum interest rate
limitation specified herein or by applicable law, the Contract Rate shall change automatically without notice to the undersigned immediately on each Banking Day with each change in the Prime Commercial Rate or in the Daily LIBOR or the Reserve
Requirement, as applicable, with any change thereto effective as of the opening of business on the day of the change.
          If the obligation evidenced by this
Note is not paid at maturity, whether maturity occurs by lapse of time, demand, acceleration or otherwise, the unpaid balance of the Principal Sum and any unpaid interest shall, thereafter until paid, bear interest at a rate equal to 2.00 percentage
points in excess of the Contract Rate.
          As used herein, “Prime Commercial Rate” shall mean the rate established by the Bank from time to time based
on its consideration of economic, money market, business and competitive factors, and it is not necessarily the Bank’s most favored rate.
          As used
herein, “Daily LIBOR” shall mean the rate obtained by dividing: (1) actual or estimated per annum rate, or the arithmetic mean of the per annum rates, of interest for deposits in U.S. dollars for one (1) month periods, as offered and
determined by the Bank in its sole discretion based upon information which appears on page LIBOR01, captioned British Bankers Assoc. Interest Settlement Rates, of the Reuters America Network, a service of Reuters America Inc. (or such other page
that may replace that page on that service for the purpose of displaying London interbank offered rates; or, if such service ceases to be available, such other reasonably comparable money rate service as the Bank may select) or upon information
obtained from any other reasonable procedure, on each date the Daily LIBOR is determined; by (2) a percentage (the “Reserve Requirement”) equal to one hundred percent minus the stated maximum rate (expressed as a percentage), if any, of
all reserve requirements (including, without limitation, any marginal, emergency, supplemental, special or other reserves) that is specified on each date the Daily LIBOR is determined by the Board of Governors of the Federal Reserve System (or any
successor agency thereto) for determining the maximum reserve requirement with respect to eurocurrency funding (currently referred to as “Eurocurrency liabilities” in Regulation D of such Board) maintained by a member bank of such System,
or any other regulations or any governmental authority having jurisdiction with respect thereto, all as conclusively determined by the Bank, absent manifest error, such sum to be rounded up, if necessary, to the nearest whole multiple of
one-sixteenth of one percent (1/16 of 1.0%) per annum.

    
           As used herein, “Banking Day” shall mean any day other than a Saturday or
a Sunday on which banks are open for business in Columbus, Ohio, and on which banks in London, England, settle payments.
          All interest shall be calculated on
the basis of a 360 day year for the actual number of days the Principal Sum or any part thereof remains unpaid. There shall be no penalty for prepayment. The amount of any payment shall first be applied to the payment of any interest which is
due.
          In the event that the Bank reasonably determines that by reason of (1) any change arising after the date of this Note affecting the interbank
eurocurrency market or affecting the position of the Bank with respect to such market, adequate and fair means do not exist for ascertaining the applicable interest rates by reference to which the Daily LIBOR then being determined is to be fixed,
(2) any change arising after the date of this Note in any applicable law or governmental rule, regulation or order (or any interpretation thereof, including the introduction of any new law or governmental rule, regulation or order), or (3) any other
circumstance affecting the Bank or the interbank market (such as, but not limited to, official reserve requirements required by Regulation D of the Board of Governors of the Federal Reserve System), the Daily LIBOR plus the applicable spread shall
not represent the effective pricing to the Bank of accruing interest based upon the Daily LIBOR, then, and in any such event, interest shall accrue hereunder as of the effective date of any such determination at a rate calculated with reference to
the Prime Commercial Rate (as set forth above) and the ability of the undersigned to request that interest accrue hereunder based upon the Daily LIBOR shall be suspended until the Bank shall notify the undersigned that the circumstances causing such
suspension no longer exist.
          In the event that on any date the Bank shall have reasonably determined that accruing interest hereunder based upon the Daily
LIBOR has become unlawful by compliance by the Bank in good faith with any law, governmental rule, regulation or order, then, and in any such event, the Bank shall promptly give notice thereof to the undersigned. In such case, the ability of the
undersigned to request that interest accrue hereunder based upon the Daily LIBOR shall be terminated and, when required by law, interest will accrue hereunder based upon the Prime Commercial Rate.
          If, due to (1) the introduction of or any change in or in the interpretation of any law or regulation, (2) the compliance with any guideline or request from any central
bank or other public authority (whether or not having the force of law), or (3) the failure of the undersigned to pay any amount when required by the terms of this Note, there shall be any loss or increase in the cost to the Bank of accruing
interest hereunder based upon the Daily LIBOR, if applicable, then the undersigned agree that the undersigned shall, from time to time, upon demand by the Bank, pay to the Bank additional amounts sufficient to compensate the Bank for such loss or
increased cost. A certificate as to the amount of such loss or increase cost, submitted to the undersigned by the Bank, shall be conclusive evidence, absent manifest error, of the correctness of such amount.
 MANNER OF PAYMENT
          The Principal Sum shall be due and payable on June 30, 2004, and at maturity, whether by demand, acceleration or otherwise.
Accrued interest shall be due and payable monthly beginning on July 15, 2002, and continuing on the 15th day of each month thereafter, and at maturity, whether by demand, acceleration or otherwise.
 LATE
CHARGE
          Any installment or other payment not made within 10 days of the date such payment or installment is due shall be subject to a late charge equal to
5% of the amount of the installment or payment.

    
  DEFAULT
          Upon the occurrence of any of
the following events:

	 	         (a)    the undersigned fails to make any payment of interest or of the Principal Sum on or before the date such payment is due;	

	 	         (b)    an “Event of Default” under the Loan Agreement shall have occurred;	

 then the Bank may, at its option, without notice or demand, accelerate the maturity of the obligations evidenced hereby, which obligations shall become immediately due and payable. In
the event the Bank shall institute any action for the enforcement or collection of the obligations evidenced hereby, the undersigned agrees to pay all costs and expenses of such action, including reasonable attorneys’ fees, to the extent
permitted by law.
 GENERAL PROVISIONS
          The undersigned, and any indorser, surety, or guarantor, hereby severally
waive presentment, notice of dishonor, protest, notice of protest, and diligence in bringing suit against any party hereto, and consent that, without discharging any of them, the time of payment may be extended an unlimited number of times before or
after maturity without notice. The Bank shall not be required to pursue any party hereto, including any guarantor, or to exercise any rights against any collateral herefor before exercising any other such rights.
          No waiver of any term or condition of this Note shall be effective unless in writing and signed by the party giving or granting the waiver. No amendment of any term or
condition of this Note shall be effective unless in writing and signed by the undersigned and the Bank. No failure or delay on the part of the Bank in exercising any right, power or privilege under this Note, related loan documents or law, nor any
course of dealing, shall operate as a waiver of any such right, power or privilege or preclude any other or further exercise thereof or of any other right, power or privilege.
          The undersigned agrees that, to the extent that the undersigned makes a payment or payments to the Bank, or the Bank receives any proceeds of collateral security, which
payment or payments or proceeds or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to any of the undersigned, its estate, trustee, receiver or any other party,
including without limitation any guarantor, under any bankruptcy or insolvency law, or under any other state or federal law, common law or equitable cause, then to the extent of such payment or repayment, the obligations under this Note, or the part
thereof which has been paid, reduced or satisfied by such amount, shall be reinstated and continued in full force and effect as of the date such initial payment, reduction or satisfaction occurred.
          The obligations evidenced hereby may from time to time be evidenced by another note or notes given in substitution, renewal or extension hereof. Any security interest or
mortgage which secures the obligations evidenced hereby shall remain in full force and effect notwithstanding any such substitution, renewal, or extension.
          The captions used herein are for references only and shall not be deemed a part of this Note. If any of the terms or provisions of this Note shall be deemed unenforceable, the enforceability of the remaining terms and provisions shall not be
affected. This Note shall be governed by and construed in accordance with the law of the State of Ohio, without regard to the conflicts of law principles thereof.

    
  WAIVER OF RIGHT TO TRIAL BY JURY
          THE
UNDERSIGNED HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING UNDER THIS NOTE OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (2) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE UNDERSIGNED OR THE BANK WITH RESPECT TO THIS NOTE OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR
THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND THE UNDERSIGNED HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT
TRIAL WITHOUT A JURY, AND THAT THE UNDERSIGNED OR THE BANK MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE UNDERSIGNED TO THE WAIVER OF THE RIGHT OF THE UNDERSIGNED TO TRIAL BY
JURY.
 WARRANT OF ATTORNEY
          The undersigned authorizes any attorney at law to appear in any Court of Record in the
State of Ohio or in any state or territory of the United States after the above indebtedness becomes due, whether by acceleration or otherwise, to waive the issuing and service of process, and to confess judgment against the undersigned in favor of
the Bank for the amount then appearing due together with costs of suit, and thereupon to waive all errors and all rights of appeal and stays of execution. 

	 WARNING-BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A
COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.

 
 

		 	PECO II, INC.
	
	 	By: 	
 
				

	 	 	Its:	 
				

		 	 
	
	 	By: 	
 
				

	 	 	Its:	 
				

  

    
  EXHIBIT B
 SCHEDULE OF PERMITTED ENCUMBRANCES
 With respect to the Borrower:

	Secured Party	Description of Items	Maximum Amount
of Obligation
	 	 	 
	General Electric Capital Corporation	Copiers and Computers	$     20,000
	 	 	 
	First Federal Savings & Loan	Mortgage on 1376 State Route 529, Galion,
Ohio	$ 1,000,000
	 	 	 
	Banc One Leasing Corporation	Leased Equipment	 
	 	 	 
	IBM Credit Corporation	Computer	$   172,000
	 	 	 
	Strippit, Inc.	Specific Equipment	 
	 	 	 
	The Huntington Leasing Co.	Leased Equipment	 

 
 With respect to Subsidiaries:
 None

    
  EXHIBIT C
 SCHEDULE OF BUSINESS LOCATIONS
 Owned
Locations
 1376 State Route 529
Galion, OH 44833
(Chief Executive Office)
 7060 Huntley Road
Columbus, OH 43229
 12 Simon Street
Nashua, NH 03060
 11240 Petal Street
Dallas, TX 75238
 401 South Airport Blvd.
Aurora, CO 80017
 Leased Locations
 (Pennsylvania Service)
8176
Presidents Drive
Harrisburg, PA 17111
 (Atlanta)
1000 Cobb Place Blvd.
Suite 500-B
Kennesaw, GA 30144
 (Pennsylvania Sales)
2812 Egypt Road
Audubon, PA 19403
  

  
   (Texas)
1414 W. Randol Mill Road
Suite 121
Arlington, TX 76012
 (Bristol)
434 Ash Street
Bristol, TN 37620
 (California)
San Dimas Business Park
300 S.
Walnut Street, Suite 401
San Dimas, CA 91773
 (Wisconsin)
4811 S. 7th Street, Suite 415
Greenfield, WI 53129
 (Bristol - Kansas Office)
525 North Murlen Road, Suite E
Olathe, KS 66062
 (Dallas)
11227 Grader
Garland, TXAgreement between TransMontaigne & Donald Anderson

  Exhibit 10.1
 CONFIDENTIAL
 CHANGE IN CONTROL AGREEMENT
          This Agreement is between TransMontaigne Inc. (“Company”), and Donald H. Anderson (the “Executive”), and shall be effective as of April 12, 2001 (the
“Effective Date”).
          WHEREAS the Board of Directors of the Company (the “Board”) has determined that it is in the best interests of the
Company and its stockholders to assure that the Company will have the continued dedication of the Executive notwithstanding the possibility, threat or occurrence of a Change of Control (as defined in this Agreement) of the Company; and
          WHEREAS, the Board has further determined that in order to diminish the distraction of the Executive attributable to the uncertainties and risks created by a pending or
threatened Change of Control and in order to encourage the Executive’s full attention and dedication to the Company both currently and in the event of any threatened or pending Change in Control, it is appropriate to provide the Executive with
compensation and benefits upon the occurrence of a Change in Control which ensure that the compensation and benefits expectations of the Executive will be met and which are competitive with those of other corporations; and
          WHEREAS in order to accomplish these objectives, the Company and the Executive accordingly desire to enter into this Agreement on the terms and conditions set forth
below;
          NOW, THEREFORE, in consideration of the promises and mutual covenants set forth herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
          1.       Term of
Agreement. The term of this Agreement (the “Term”) shall commence on the Effective Date and shall continue until the third anniversary thereof; provided, however, that on such anniversary date and on each
subsequent anniversary of the Effective Date, the term of this Agreement shall automatically be extended for one additional year unless, not later than ninety (90) days prior to such anniversary date, either party shall have given notice that such
party does not wish to extend the Term; and provided, further, that if an actual or threatened Change in Control (as defined in paragraph 3 below) shall have occurred during the original or any extended Term of this Agreement, then the Term of
this Agreement shall continue for a period twenty-four (24) calendar months beyond the calendar month in which such actual or threatened Change in Control occurs.
          2.       Employment After Change in Control. If the Executive is in the employ of the Company on the date of an actual or threatened Change in Control,
the Company shall continue Executive in its employ for the period commencing on the date of the
      

  actual Change in Control and ending on the last day of the Term of this Agreement (the “Employment Period”). During the Employment Period, the Executive shall hold such position
with the Company and exercise such authority and perform such duties as are substantially commensurate with the Executive’s position, authority and duties immediately prior to the threatened or actual Change in Control. The Executive agrees
that, during the Employment Period, the Executive shall devote his full professional time and attention to the Executive’s duties and perform such duties faithfully and efficiently.
                   Notwithstanding anything in this Agreement to the contrary, if a Change in Control occurs and if the Executive’s
employment with the Company is terminated prior to the date on which the Change in Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (i) was at the request of a third party, who has taken steps
reasonably calculated to effect a Change in Control or (ii) otherwise arose in connection with or anticipation of a Change in Control, then for all purposes of this Agreement, the “Employment Period” shall mean the date immediately prior
to the date of such termination of employment.
          3.       Change in Control. For purposes of this Agreement, an actual “Change in Control” shall be deemed to have occurred if upon the occurrence of any of the following:
                   a.   any “person” or “group” (within the meaning of Sections 13(d) and 14(d)(2) of
the Exchange Act), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
more than 40% of the then outstanding voting stock of the Company without the prior approval of at least two-thirds of the members of the Board who are unaffiliated with such person or group; or
                   b.   at any time during any period of three consecutive years (not including any period prior to the
Effective Date), individuals who at the beginning of such period constitute the Board (and any new director whose election by the Board or whose nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds
of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority thereof; or 
                   c.   the stockholders of the Company approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities
of the surviving entity) at least 80% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders approve a plan of

2    

    complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.
                   For the purposes of this Agreement, a “threatened Change in Control” means the determination by the Board,
in the exercise of its reasonable business judgment, that a third person has taken steps to effect an actual Change in Control and that such actual Change of Control could occur within 90 days after such determination. 
          4.       Compensation During the Employment Period. During the Employment Period,
the Executive shall be compensated as follows:
                   a.   The Executive shall receive an
annual salary which is not less than his or her annual salary immediately prior to the Employment Period and shall be eligible to receive an increase in annual salary which is not less favorable than increases in salary for the Company’s other
executives with similar responsibilities and performance levels; 
                   b.   the Executive
shall be eligible to participate in short-term and long-term cash-based incentive compensation plans which, in the aggregate, provide bonus opportunities that are not less favorable to the Executive than the greater of (i) the opportunities
provided to the Company’s other executives with similar responsibilities and performance levels; and, (ii) the opportunities provided to the Executive under all such plans in which the Executive was participating prior to the Employment
Period;
                   c.   the Executive shall be eligible to participate in stock option, performance
awards, restricted stock and other equity-based incentive compensation plans (the “Plans”) on a basis not less favorable to the Executive than the greater of the Plans available (i) to the Executive immediately prior to the Employment
Period, or (ii) to other executives of the Company with similar responsibilities and performance levels; and,
                   d.   the Executive shall be eligible to receive employee benefits (including, but not limited to,
tax-qualified and nonqualified savings plan benefits, medical insurance, disability income protection, life insurance coverage and death benefits) and perquisites which are not less favorable to the Executive than (i) the employee benefits and
perquisites provided to the Company’s other executives, or (ii) the employee benefits and perquisites to which the Executive would be entitled under the Company’s employee benefit plans and perquisites as in effect immediately prior
to the Employment Period.
          5.       Termination. For purposes of this
Agreement, “Termination” shall mean termination of the employment of the Executive during the Employment Period (i) by the Company, for any reason other than death or Cause (as described below), or (ii) by resignation of the
Executive for Good Reason. For the purposes of this Agreement, “Good Reason” shall include, but not be limited to, any of the following events:
 3    

                      a.   the assignment to the Executive by the
Company of duties inconsistent with, or a substantial alteration in the nature or status of, the Executive’s responsibilities immediately prior to a Change in Control.
                   b.   a reduction by the Company in the Executive’s compensation or benefits as in effect on the
date of a Change in Control;
                   c.   a relocation of the Company’s principal offices
to a location outside the Denver, Coloradometropolitan area, or the Executive’s relocation to any place other than the Denver, Coloradooffices of the Company, except for reasonably required travel by the Executive on the Company’s
business.
                   d.   any material breach by the Company of any provision of this Agreement, if
such material breach has not been cured within thirty (30) days following written notice of such breach by the Executive to the Company setting forth the nature of the breach;
                   e.   any failure by the Company to obtain the assumption and performance of this Agreement by any
successor (by merger, consolidation or otherwise) or assign by the Company in accordance with paragraph 15(d) of this Agreement; or
                   f.   Executive determines, in his sole discretion, during the Employment Period, that circumstances
have so changed that he is not willing to continue in his position with the Company and elects a Termination of his employment with the Company. 
                   The date of the Executive’s Termination under this paragraph 5 shall be the date specified by the Executive
or the Company, as the case may be, in a written notice to the other party complying with the requirements of paragraph 15(a) below. For purposes of this Agreement, “Cause” shall mean 
                            (1)   the Executive’s material breach of
the terms of this Agreement, if such material breach has not been substantially cured within thirty (30) days following written notice to the Executive from the Company of such breach setting forth with specificity the nature of the violation or, if
cure cannot reasonably be effected within such 30-day period, if the Executive does not commence such cure within such 30-day period and thereafter pursue such cure continuously and with due diligence until cure has been effected;
                            (2)   the Executive’s willful dishonesty
towards, fraud upon, felony crime against, deliberate material injury or material bad faith action with respect to, or deliberate or attempted injury to the Company; or
                            (3)   the Officer’s conviction for any
felony crime (whether in connection with the Company’s affairs or otherwise).
 4    

             6.       Severance Payments. Subject to the provisions of paragraph 9 below, in the event of a Termination described in paragraph 5 above:
                   a.   the Company shall pay the Executive’s unpaid salary, accrued vacation pay and unreimbursed
business expenses through and including the date of Termination; and
                   b.   in addition,
following Executive’s execution of a legal release in a form satisfactory to Company in its sole discretion reasonably exercised and drafted so as to ensure a final, complete and enforceable release of all claims that Executive has or may have
against Company relating to or arising in any way from Executive’s employment with Company and/or the termination thereof, and complete and continuing confidentiality of Company’s proprietary information and trade secrets, the
circumstances of Executive’s separation from Company, and compensation received by Executive in connection with that separation, in lieu of the amount otherwise payable under paragraph 4 above, the Executive shall continue to
receive, at the Company’s expense, medical insurance, disability income protection, life insurance coverage and death benefits, and perquisites in
accordance with subparagraph 4(d) above for a period of 24 months after the date of Termination (under COBRA or through an individual conversion policy, as appropriate) or until Executive becomes eligible for comparable benefits under benefit
plans sponsored by another employer, and shall also be entitled to a lump sum payment in cash no later than ten (10) business days after the date of Termination equal to the sum of:
                            (1)   an amount equal to 2 times the
Executive’s annual salary rate plus 2 times target bonus award in effect immediately prior to the date of Termination.
                            (2)   an amount equal to the assigned target
bonus for the Executive for the year of Termination prorated through the date of Termination.
          7.       Deferred Compensation Plans.
                   a.   For purposes of this paragraph, “deferred compensation plans” shall mean all
nonqualified deferred compensation plans presently maintained by the Company or adopted in the future by the Company. If an actual or threatened Change in Control occurs during the original or any extended Term of this Agreement, the Company shall,
within thirty (30) days after the earlier of the date of such threatened Change in Control or the date of such actual Change in Control, establish a “rabbi trust” and transfer to such “rabbi trust” an amount of cash sufficient to
provide all benefits accrued by the Executive under all deferred compensation plans. Thereafter, the Company will, at least quarterly, transfer to the “rabbi trust” an amount of cash sufficient to provide any additional benefits accrued by
the Executive under all deferred compensation plans. 
                   b.   In the event of a Termination
as set forth in paragraph 5 above: (a) all of the Executive’s benefits, including without limitation matching contributions,
 5    

    under all deferred compensation plans shall be 100% vested, regardless of the Executive’s years of service with the Company and regardless of any vesting
provisions of such deferred compensation plans; (b) the Executive will be entitled to all benefits, including without limitation matching contributions, under all deferred compensation plans for the year in which such Termination occurs,
regardless of any provision in any such deferred compensation plan making such benefits contingent upon employment for a particular portion of the year or as of a particular day in that year or making such benefits contingent upon accrual of a
specific number of hours, days, weeks, or months of service during that year.
                   c.   The
provisions of paragraph 7(b) apply only in the event of a “Termination” as defined in paragraph 5. Under paragraph 5, the term “Termination means terminations of employment of the Executive during the “Employment Period.”
Under paragraph 2, the “Employment Period” commences on the date of an actual Change in Control. Therefore, the provisions of paragraph 7(b) do not apply in the case of a termination of employment of the Executive unless such termination
of employment of the Executive occurs on or after the date of an actual Change in Control and unless such termination of employment of the Executive also meets the other requirements of the definition of the term “Termination” set forth in
Paragraph 5.
          8.       Stock Based Awards. In the event of a
Termination as set forth in paragraph 5 above, the restrictions on any outstanding stock-based awards (including, without limitation, nonqualified stock options, incentive stock options and restricted stock) granted to Executive under any
incentive plan or arrangement shall lapse and such stock-based awards shall become 100% vested, and all stock options and stock appreciation rights granted to Executive shall become immediately exercisable. Notwithstanding anything to the contrary
in the Executive’s stock option agreements with the Company, all such stock options shall be exercisable for a period of twelve (12) months after the date of Termination (but in no event beyond the expiration date applicable to such stock
options)
          9.       Make-Whole Payments. If any payment or benefit to
which the Executive is entitled, whether under this Agreement or otherwise, in connection with a Change in Control or the Executive’s termination of employment (a “Payment”) is subject to any tax under section 4999 of the
Internal Revenue Code of 1986, as amended (the “Code”), or any similar federal or state law (an “Excise Tax”), the Company shall pay to the Executive an additional amount (the “Make Whole-Amount”) which is equal to
(i) the amount of the Excise Tax, plus (ii) the aggregate amount of any interest, penalties, fines or additions to any tax that are imposed in connections with such Excise Tax, plus (iii) all income, excise and other applicable taxes
imposed on the Executive under the laws of any Federal, state or local government or taxing authority by reason of the payments required under clause (i) and clause (ii) and this clause (iii). Notwithstanding any other provisions of this
Agreement, however, such Make Whole-Amount will not be paid to the Executive if the Payment is less than ten (10) percent above the maximum amount that may be paid without incurring Excise Tax; and in such event, the cash severance payments provided
in paragraph 6 above and/or the outplacement services
 6    

    provided in paragraph 10 below, at the Executive’s election, shall be reduced to a level that results in the total Payment being equal to the maximum amount
that may be paid without incurring Excise Tax.
                   a.   For purposes of determining the
Make-Whole Amount, the Executive shall be deemed to be taxed at the highest marginal rate under all applicable local, state, federal and foreign income tax laws for the year in which the Make-Whole Amount is paid. The Make-Whole Amount payable with
respect to an Excise Tax shall be paid by the Company coincident with the Payment with respect to which such Excise Tax relates.
                   b.   All calculations under this paragraph 9 shall be made initially by the Company and the
Company shall provide prompt written notice thereof to the Executive to enable the Executive to timely file all applicable tax returns. Upon request of the Executive, the Company shall provide the Executive with sufficient tax and compensation data
to enable the Executive or his tax advisor to independently make the calculations described in subparagraph (a) above and the Company shall reimburse the Executive for reasonable fees and expenses incurred for any such
verification.
                   c.   If the Executive gives written notice to the Company of any objection
to the results of the Company’s calculations within sixty (60) days of the Executive’s receipt of written notice thereof, the dispute shall be referred for determination to tax counsel selected by the independent auditors of the Company
(“Tax Counsel”). The Company shall pay all reasonable fees and expenses of such Tax Counsel. Pending such determination by Tax Counsel, the Company shall pay the Executive the Make-Whole Amount as determined by the Company in good faith.
The Company shall pay the Executive any additional amount determined by Tax Counsel to be due under this paragraph 9 (together with interest thereon at a rate equal to 120% of the Federal short-term rate compounded dailydetermined under section 1274(d) of the Code) promptly after such determination.
                   d.   The determination by Tax Counsel shall be conclusive and binding upon all parties unless the
Internal Revenue Service, a court of competent jurisdiction, or such other duly empowered governmental body or agency (a “Tax Authority”) determines that the Executive owes a greater or lesser amount of Excise Tax with respect to any
Payment than the amount determined by Tax Counsel.
                   e.   If a Taxing Authority makes a
claim against the Executive which, if successful, would require the Company to make a payment under this paragraph 9, the Executive agrees to contest the claim, with counsel reasonably satisfactory to the Company, on request of the Company,
subject to the following conditions:
                            (1)   The Executive shall notify the Company of any such claim within ten (10) days of becoming aware thereof. In the event that the Company desires the claim to be contested, it shall promptly (but in no event more than thirty
(30) days after the notice from the Executive or such shorter time as the Taxing Authority may
 7    

    specify for responding to such claim) request the Executive contest the claim. The Executive shall not make any payment of any tax which is subject of the claim before
the Executive has given the notice or during the thirty (30) day period thereafter unless the Executive receives written instructions from the Company to make such payment together with an advance of funds sufficient to make the requested payment
plus any amounts payable under this paragraph 9 determined as if such advance were an Excise Tax, in which case the Executive will act promptly in accordance with such instructions.
                            (2)   If the Company so requests, the Executive
will contest the claim by either paying the tax claimed and suing for a refund in the appropriate court or contesting the claim in the United States Tax Court or other appropriate court, as directed by the Company; provided, however, that any
request by the Company for the Executive to pay the tax shall be accompanied by an advance from the Company to the Executive of funds sufficient to make the requested payment plus any amounts payable under this paragraph 9 determined as if such
advance were an Excise Tax. If directed by the Company in writing, the Executive will take all action necessary to compromise or settle the claim, but in no event will the Executive compromise or settle the claim or cease to contest the claim
without the written consent of the Company; provided, however, that the Executive may take any such action if the Executive waives in writing his or her right to a payment under this paragraph 9 for any amounts payable in connection with such
claim. The Executive agrees to cooperate in good faith with the Company in contesting the claim and to comply with any reasonable request from the Company concerning the contest of the claim, including the pursuit of administrative remedies, the
appropriate forum for any judicial proceedings, and the legal basis for contesting the claim. Upon request of the Company, the Executive shall take appropriate appeals of any judgment or decision that would require the Company to make a payment
under this paragraph 9. Provided that the Executive is in compliance with the provisions of this paragraph, the Company shall be liable for and indemnify the Executive against any loss in connection with, and all costs and expenses, including
attorneys’ fees, which may be incurred as a result of, contesting the claim, and shall provide to the Executive, within ten (10) days after each written request therefor by the Executive, cash advances or reimbursement for all such costs and
expenses actually incurred or reasonably expected to be incurred by the Executive as a result of contesting the claim.
                   f.   Should a Tax Authority finally determine that an additional Excise Tax is owed, then the Company
shall pay an additional Make-Whole Amount to the Executive in a manner consistent with this paragraph 9 with respect to any additional Excise Tax and any assessed interest, fines, or penalties. If any Excise Tax as calculated by the Company or
Tax Counsel, as the case may be, is finally determined by a Tax Authority to exceed the amount required to be paid under applicable law, then the Executive shall repay such excess to the Company within thirty (30) days of such determination;
provided that such repayment shall be reduced by the amount of any taxes paid by the Executive on such excess which is not offset by the tax benefit attributable to the repayment.
 8    

             10.      Outplacement Services. If the Executive’s Termination occurs during the Employment Period, the Company shall provide to the Executive, at the Executive’s election, outplacement services of an experienced firm, selected by the Company and acceptable to
the Executive, located not more than thirty miles from the location of Executive’s office immediately prior to the Employment Period, provided that the cost of such services shall not exceed $30,000 and such services shall not extend beyond six
(6) months from the date of Executive’s Termination.
          11.      Deductions and
Withholding. All payments to the Executive under this Agreement will be subject to applicable deductions and withholding of state and federal taxes.
          12.      Confidentiality, Non-Solicitation and Non-Competition. The Executive agrees
that:
                   a.   Except as may be required by the lawful order of a court or agency of
competent jurisdiction, or except to the extent that the Executive has the express written authorization from the Company, the Executive agrees to keep secret and confidential for a period of two years following the termination of Executive’s
employmentall non-public information concerning the Company or any entity in which the Company has a 25% or greater ownership interest (“Company-Related Entity”) which was acquired by or
disclosed to Executive during the course of Executive’s employment with the Company or any Company-Related Entity controlled by the Company, and not to disclose the same, either directly or indirectly, to any other person, firm or business
entity or to use it in any way.
                   b.   While the Executive is employed by the Company or
Company-Related Entity and for a period of one year after the date of the Executive terminates employment for any reason, the Executive covenants and agrees that Executive will not, whether for Executive or for any other person, business,
partnership, association, firm, company or corporation, initiate contact with, solicit, divert or take away any of the customers (entities or individuals from which the Company or any Company-Related Entity receives rents or payments for services)
of the Company or any Company-Related Entity or employees of the Company or any Company-Related Entity in existence from time to time during Executive’s employment with the Company or any Company-Related Entity and at the time of such
initiation, solicitation or diversion.
                   c.   While the Executive is employed by the
Company or any Company- Related Entity, the Executive covenants and agrees that Executive will not, directly or indirectly, engage in, assist, perform services for, plan for, establish or open, or have any financial interest (other than
(i) ownership of 1% or less of the outstanding stock of any corporation listed on the New York or American Stock Exchange or included in the National Association of Securities Dealers Automated Quotation System, or (ii) ownership of
securities in any entity affiliated with the Company) in any person, firm, corporation, or business entity (whether as an employee, officer, director or
 9    

    consultant) that engages primarily in the refined petroleum product terminaling, pipeline transportation or logistical services business.
          13.      Dispute Resolution.
                   a.   Executive and Company agree that in the event of any controversy or claim arising out of this
Agreement, they shall negotiate in good faith to resolve the controversy or claim privately, amicably and confidentially. Each party may consult with counsel in connection with such negotiations.
                   b.   In the event that such controversy or claim cannot be resolved through such good-faith
negotiations, the disputing party may proceed to initiate litigation within thirty (30) days from the date of commencement of such negotiations. In such event, the Company agrees to pay as incurred, to the full extent permitted by law, all legal
fees and expenses which the Executive may reasonably incur as a result of any contest (regardless of the outcome thereof, but not in the case of fees incurred with respect to a claim brought in bad faith by the Executive) initiated by the Company,
the Executive or others regarding the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive with respect to the amount of any
payment pursuant to this Agreement), plus in each case, interest on any delayed payment at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.
          14.      Mitigation and Set-Off. The Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment or otherwise. The Company shall not be entitled to set-off against the amounts payable to the Executive under this Agreement any amounts owed to the Company by the
Executive, or any amounts earned, or which could have been earned, by the Executive after the date of Termination of Executive’s employment with the Company.
          15.      Miscellaneous Provisions. 
                   a.   Notice. Except as otherwise specifically
provided in this Agreement, any notices, requests, demands or other communications provided for by this Agreement shall be sufficient if in writing and if sent by telecopy or facsimile transmission or by hand delivery or registered, certified, or
overnight mail to the Executive at the last address Executive has filed in writing with the Company or, in the case of the Company, to the attention of the Secretary of the Company, at its principal executive offices. Such notices and communications
shall be deemed to have been received on the date of confirmation of receipt, in the case of telecopy or facsimile transmission, or upon the date of delivery thereof or the fifth (5th) business day after the mailing thereof, whichever is earlier, in
the case of the remaining delivery methods.
                            Any
Termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by “Notice of Termination” to the other party hereto given in accordance with the procedures above referenced. For the purposes of

10    

    this Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific Termination provision in this Agreement relied upon, (ii) to
the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for the Executive’s Termination under the provision so indicated, and (iii) if the date of Termination is other than the date of
receipt of such Notice of Termination, specifies the date of Termination, which date shall not be more than thirty (30) days after the giving of such notice. The failure by the Executive or the Company to set forth in the Notice of Termination any
fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of the Executive or the Company, as the case may be, hereunder or preclude the Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive’s or the Company’s rights hereunder.
                   b.   Binding Effect; Assignment. This Agreement shall inure to the benefit of, and shall be binding upon, the parties hereto and their respective successors, assigns, heirs,
and legal representatives. This Agreement may not be assigned by Executive, nor may Executive assign or pledge any of his or her rights, including rights to payment, hereunder. 
                   c.   Governing Law. The provisions of this
Agreement shall be construed in accordance with the laws of the State of Colorado, without application of conflict of laws provisions thereunder.
                   d.   Successors to the Company. The Company
shall require any successor, whether direct or indirect, by purchase, merger, consolidation or otherwise, and whether to all or substantially all of the business and/or assets of the Company, to assume and to expressly perform the obligations of
this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise. Such assumption shall be by an express agreement signed by both the successor Company and the Executive and
shall be reasonably satisfactory to the Executive. If the Company fails to obtain such an express assumption, that shall be a breach of this Agreement and shall entitle the Executive to the same benefits and compensation as he or she would be
entitled to if the Employment Period was terminated under paragraph 5. 
                   e.   Employment Status. Nothing in this Agreement shall be deemed to create an employment agreement between the Company and the Executive providing for the employment of the
Executive by the Company for any fixed period of time, other than as provided in paragraphs 1 and 2. The Executive’s employment is terminable at-will by the Company or the Executive, meaning that either party may terminate the employment
relationship at any time, with or without cause, subject to the provisions of paragraphs 1, 2, and 5. Upon termination of the Executive’s employment prior to the
 11   

    date of a threatened Change in Control, there shall be no further rights under this Agreement. 
                   f.   Entire Agreement. This Agreement contains
the entire agreement between the parties hereto and supersedes all prior agreements and understandings, oral or written, between the parties hereto concerning its subject matter, with respect to the subject matter hereof.
                   g.   Amendments and Waivers. This Agreement may
not be modified or amended except by an instrument or instruments in writing signed by the party against whom enforcement or any such modification or amendment is sought. Either party hereto may, by an instrument in writing, waive compliance by the
other party with any term or provision of this Agreement on the part of such other party hereto to be performed or complied with. The waiver by any party hereto of a breach of any term or provision of this Agreement shall not be construed as a
waiver of any subsequent breach.
                   h.   Construction. Headings in this Agreement are for convenience only and shall not control the meaning of this Agreement. Whenever applicable, masculine and neutral pronouns shall equally apply to the feminine
genders; the singular shall include the plural and the plural shall include the singular. The parties have reviewed and understand this Agreement, and each has had a full opportunity to negotiate the Agreement’s terms and to consult with
counsel of their own choosing. Therefore, the parties expressly waive all applicable common law and statutory rules of construction that any provision of this Agreement should be construed against the Agreement’s drafter, and agree that this
Agreement and all amendments thereto shall be construed as a whole, according to the fair meaning of the language used.
                   i.   Severability. In the event that any
provision or portion of this Agreement shall be determined to be invalid or unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected thereby and shall remain in full force and effect.
                   j.   Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same agreement.
          IN WITNESS WHEREOF, the Executive has hereunto set his or her hand and, pursuant to the authorization from its Board of Directors, the Company has caused these presents to be executed in its name and on its behalf, all as of the day and year
first above written.

	TransMontaigne Inc.	 	 	Donald H. Anderson

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/s/ CORTLANDT S. DIETLER	 	 	
/s/ DONALD H. ANDERSON
	
			

	Cortlandt S. Dietler, Chairman
Date: April 16, 2001	 	 	Donald H. Anderson
Date: April 16, 2001

 13

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