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pncrfa83118

                                            EXECUTION VERSION           RECEIVABLES FINANCING AGREEMENT                  Dated as of August 31, 2018                        by and among                  AIT RECEIVABLES LLC,                       as Borrower,   THE PERSONS FROM TIME TO TIME PARTY HERETO,               as Lenders and as Group Agents,           PNC BANK, NATIONAL ASSOCIATION,                  as Administrative Agent,       APPLIED INDUSTRIAL TECHNOLOGIES, INC.,                     as initial Servicer,                                                        and               PNC CAPITAL MARKETS LLC,                     as Structuring Agent                   

 

                            TABLE OF CONTENTS                                                                           Page   ARTICLE I DEFINITIONS        SECTION 1.01.     Certain Defined Terms ................................................................... 1        SECTION 1.02.     Other Interpretative Matters ......................................................... 30  ARTICLE II TERMS OF THE LOANS        SECTION 2.01.     Loan Facility ................................................................................ 31        SECTION 2.02.     Making Loans; Repayment of Loans ........................................... 32        SECTION 2.03.     Interest and Fees .......................................................................... 33        SECTION 2.04.     Records of Loans ......................................................................... 34        SECTION 2.05.     Selection of Interest Rates and Tranche Periods.......................... 34        SECTION 2.06.     Defaulting Lenders....................................................................... 34        SECTION 2.07.     Successor LMIR or Adjusted LIBOR Index ................................ 35  ARTICLE III SETTLEMENT PROCEDURES AND PAYMENT PROVISIONS        SECTION 3.01.     Settlement Procedures .................................................................. 36        SECTION 3.02.     Payments and Computations, Etc ................................................ 39  ARTICLE IV INCREASED COSTS; FUNDING LOSSES; TAXES; ILLEGALITY                 AND SECURITY INTEREST        SECTION 4.01.     Increased Costs ............................................................................ 39        SECTION 4.02.     Funding Losses ............................................................................ 41        SECTION 4.03.     Taxes ............................................................................................ 41        SECTION 4.04.     Inability to Determine Adjusted LIBOR or LMIR; Change                          in Legality .................................................................................... 45        SECTION 4.05.     Security Interest ........................................................................... 45  ARTICLE V CONDITIONS TO EFFECTIVENESS AND CREDIT EXTENSIONS        SECTION 5.01.     Conditions Precedent to Effectiveness and the Initial Credit                          Extension...................................................................................... 46        SECTION 5.02.     Conditions Precedent to All Credit Extensions ........................... 47        SECTION 5.03.     Conditions Precedent to All Releases .......................................... 47  ARTICLE VI REPRESENTATIONS AND WARRANTIES        SECTION 6.01.     Representations and Warranties of the Borrower ........................ 48        SECTION 6.02.     Representations and Warranties of the Servicer .......................... 54  ARTICLE VII COVENANTS                                         -i-       

 

                            TABLE OF CONTENTS                                    (continued)                                                                          Page         SECTION 7.01.     Covenants of the Borrower .......................................................... 58        SECTION 7.02.     Covenants of the Servicer ............................................................ 66        SECTION 7.03.     Separate Existence of the Borrower ............................................. 72  ARTICLE VIII ADMINISTRATION AND COLLECTION OF RECEIVABLES        SECTION 8.01.     Appointment of the Servicer ........................................................ 76        SECTION 8.02.     Duties of the Servicer................................................................... 77        SECTION 8.03.     Collection Account Arrangements ............................................... 78        SECTION 8.04.     Enforcement Rights ..................................................................... 78        SECTION 8.05.     Responsibilities of the Borrower ................................................. 80        SECTION 8.06.     Servicing Fee ............................................................................... 80  ARTICLE IX EVENTS OF DEFAULT        SECTION 9.01.     Events of Default ......................................................................... 80  ARTICLE X THE ADMINISTRATIVE AGENT        SECTION 10.01.    Authorization and Action ............................................................. 84        SECTION 10.02.    Administrative Agent’s Reliance, Etc.......................................... 85        SECTION 10.03.    Administrative Agent and Affiliates ............................................ 85        SECTION 10.04.    Indemnification of Administrative Agent .................................... 85        SECTION 10.05.    Delegation of Duties .................................................................... 85        SECTION 10.06.    Action or Inaction by Administrative Agent ............................... 86        SECTION 10.07.    Notice of Events of Default; Action by Administrative                          Agent ............................................................................................ 86        SECTION 10.08.    Non-Reliance on Administrative Agent and Other Parties .......... 86        SECTION 10.09.    Successor Administrative Agent .................................................. 87        SECTION 10.10.    Structuring Agent ......................................................................... 87  ARTICLE XI THE GROUP AGENTS        SECTION 11.01.    Authorization and Action ............................................................. 87        SECTION 11.02.    Group Agent’s Reliance, Etc ....................................................... 88        SECTION 11.03.    Group Agent and Affiliates .......................................................... 88        SECTION 11.04.    Indemnification of Group Agents ................................................ 88        SECTION 11.05.    Delegation of Duties .................................................................... 89        SECTION 11.06.    Notice of Events of Default ......................................................... 89                                        -ii-      107601465\V-7                                                                    

 

                            TABLE OF CONTENTS                                    (continued)                                                                          Page         SECTION 11.07.    Non-Reliance on Group Agent and Other Parties........................ 89        SECTION 11.08.    Successor Group Agent................................................................ 89        SECTION 11.09.    Reliance on Group Agent............................................................. 90  ARTICLE XII INDEMNIFICATION        SECTION 12.01.    Indemnities by the Borrower ....................................................... 90        SECTION 12.02.    Indemnification by the Servicer ................................................... 93  ARTICLE XIII MISCELLANEOUS        SECTION 13.01.    Amendments, Etc ......................................................................... 94        SECTION 13.02.    Notices, Etc .................................................................................. 95        SECTION 13.03.    Assignability; Addition of Lenders .............................................. 95        SECTION 13.04.    Costs and Expenses ...................................................................... 99        SECTION 13.05.    No Proceedings; Limitation on Payments.................................... 99        SECTION 13.06.    Confidentiality ........................................................................... 100        SECTION 13.07.    GOVERNING LAW .................................................................. 101        SECTION 13.08.    Execution in Counterparts.......................................................... 102        SECTION 13.09.    Integration; Binding Effect; Survival of Termination ............... 102        SECTION 13.10.    CONSENT TO JURISDICTION ............................................... 102        SECTION 13.11.    WAIVER OF JURY TRIAL ...................................................... 103        SECTION 13.12.    Ratable Payments ....................................................................... 103        SECTION 13.13.    Limitation of Liability................................................................ 103        SECTION 13.14.    Intent of the Parties .................................................................... 104        SECTION 13.15.    USA Patriot Act ......................................................................... 104        SECTION 13.16.    Right of Setoff............................................................................ 104        SECTION 13.17.    Severability ................................................................................ 104        SECTION 13.18.    Mutual Negotiations................................................................... 104        SECTION 13.19.    Captions and Cross References .................................................. 105                                             -iii-     107601465\V-7                                                                    

 

                            TABLE OF CONTENTS                                    (continued)                                                                          Page   EXHIBITS   EXHIBIT A  –            Form of Loan Request  EXHIBIT B  –            Form of Reduction Notice  EXHIBIT C               Form of Assignment and Acceptance Agreement  EXHIBIT D  –            Form of Assumption Agreement  EXHIBIT E  –            Credit and Collection Procedures  EXHIBIT F  –            Form of Information Package  EXHIBIT G  –            Form of Compliance Certificate  EXHIBIT H  –            Closing Memorandum  EXHIBIT I               Form of Interim Report   SCHEDULES   SCHEDULE I        –     Commitments  SCHEDULE II       –     Lock-Boxes, Collection Accounts and Collection Account Banks  SCHEDULE III      –     Notice Addresses  SCHEDULE IV       –     Excluded Obligors  SCHEDULE V        –     Subject Originators                                           -iv-      107601465\V-7                                                                    

 

          This RECEIVABLES FINANCING AGREEMENT (as amended, restated, supplemented  or otherwise modified from time to time, this “Agreement”) is entered into as of August 31, 2018  by and among the following parties:               (i)   AIT  RECEIVABLES  LLC,  a  Delaware  limited  liability  company, as        Borrower (together with its successors and assigns, the “Borrower”);               (ii)  the  Persons  from  time  to  time  party  hereto  as  Lenders  and as  Group        Agents;               (iii) PNC  BANK,  NATIONAL  ASSOCIATION  (“PNC”),  as  Administrative        Agent;               (iv)  APPLIED INDUSTRIAL TECHNOLOGIES, INC., an Ohio corporation,        in its individual capacity (“Applied Industrial”) and as initial servicer (in such capacity,        together with its successors and assigns in such capacity, the “Servicer”); and               (v)  PNC  CAPITAL  MARKETS  LLC,  a  Pennsylvania  limited  liability        company, as Structuring Agent.                            PRELIMINARY STATEMENTS         The  Borrower  has  acquired,  and  will  acquire  from  time  to  time, Receivables  from  the  Originator(s) pursuant to the Purchase and Sale Agreement.  The Borrower has requested that the  Lenders  make  Loans  from  time  to  time  to  the  Borrower,  on  the  terms,  and  subject  to  the  conditions set forth herein, secured by, among other things, the Receivables.         In  consideration  of  the  mutual  agreements,  provisions  and  covenants  contained  herein,  the sufficiency of which is hereby acknowledged, the parties hereto agree as follows:                                    ARTICLE I                                                                           DEFINITIONS         SECTION 1.01.   Certain  Defined  Terms.   As  used  in  this  Agreement,  the  following  terms  shall  have  the  following  meanings  (such  meanings  to  be  equally  applicable  to  both  the  singular and plural forms of the terms defined):         “Account Control Agreement” means each agreement, in form and substance satisfactory  to  the  Administrative  Agent,  among  the  Borrower,  the  Servicer  (if  applicable),  the  Administrative  Agent  and  a  Collection  Account  Bank,  governing  the  terms  of  the  related  Collection Accounts that (i) provides the Administrative Agent with control within the meaning  of the UCC over the deposit accounts subject to such agreement and (ii) by its terms, may not be  terminated or canceled by the related Collection Account Bank without the written consent of the  Administrative Agent or upon no less than sixty (60) calendar days’ prior written notice to the  Administrative  Agent,  as  the  same  may  be  amended,  restated,  supplemented  or  otherwise  modified from time to time.      

 

          “Adjusted LIBOR” means with respect to any Tranche Period, the interest rate per annum  determined by the applicable Group Agent by dividing (the resulting quotient rounded upwards,  if necessary, to the nearest 1/100th of 1% per annum) (i) the rate of interest determined by such  Group Agent in accordance with its usual procedures (which determination shall be conclusive  absent manifest error) to be the rate per annum for deposits in Dollars as reported on the Reuters  Screen LIBOR01 Page or any other page that may replace such page from time to time for the  purpose of displaying offered rates of leading banks for London interbank deposits in Dollars for  such Tranche Period (or on any successor or substitute page of such service, or any successor to  or substitute for such service, providing rate quotations comparable to those currently provided  on such page of such service, as determined by such Group Agent from time to time for purposes  of  providing  quotations  of  interest  rates  applicable  to  dollar deposits  in  the  London  interbank  market) at or about 11:00 a.m. (London time) on the Business Day which is two (2) Business  Days prior to the first day of such Tranche Period for an amount comparable to the Portion of  Capital to be funded at Adjusted LIBOR during such Tranche Period, by (ii) a number equal to  1.00 minus the Euro-Rate Reserve Percentage; provided, however, that with respect to the initial  Tranche Period for a Loan that is not advanced on a Monthly Settlement Date, Adjusted LIBOR  shall  be  the  interest  rate  per  annum  equal  to  LMIR  for  each  day  during  such  initial  Tranche  Period from the date that such Loan is made pursuant to  Section 2.01 until the next-occurring  Monthly Settlement  Date.  The calculation of Adjusted  LIBOR  may also be expressed by the  following formula:                           Composite of London interbank offered rates shown on                          Reuters Screen LIBOR01 Page                          or appropriate successor        Adjusted LIBOR =                                  1.00 - Euro-Rate Reserve Percentage         Adjusted LIBOR shall be adjusted on the effective date of any change in the Euro-Rate  Reserve  Percentage  as  of such  effective  date.   The  applicable  Group Agent shall give prompt  notice  to  the  Borrower  of  Adjusted  LIBOR  as  determined  or  adjusted  in  accordance  herewith  (which determination shall be conclusive absent manifest error).  Notwithstanding the foregoing,  if  Adjusted  LIBOR  as  determined herein  would  be  less  than  zero (0.00),  such  rate  shall  be  deemed to be zero percent (0.00%) for purposes of this Agreement.         “Administrative Agent” means PNC, in its capacity as contractual representative for the  Credit  Parties,  and  any  successor  thereto  in  such  capacity  appointed  pursuant  to  Article  X  or  Section 13.03(g).         “Adverse Claim” means any ownership interest or claim, mortgage, deed of trust, pledge,  lien,  security  interest,  hypothecation,  charge  or  other  encumbrance  or  security  arrangement  of  any nature whatsoever, whether voluntarily or involuntarily given, including, but not limited to,  any conditional sale or title retention arrangement, and any assignment, deposit arrangement or  lease  intended  as,  or  having  the  effect  of,  security  and  any  filed  financing  statement  or  other  notice of any of the foregoing (whether or not a lien or other encumbrance is created or exists at  the time of the filing); it being understood that any of the foregoing in favor of, or assigned to,  the Administrative Agent (for the benefit of the Secured Parties) shall not constitute an Adverse  Claim.                                         2   107601465\V-7                                                                    

 

          “Advisors” has the meaning set forth in Section 13.06(c).         “Affected  Person”  means  each  Credit  Party,  each  Program  Support  Provider,  each  Liquidity Agent and each of their respective Affiliates.         “Affiliate”  means,  as  to  any  Person:  (a)  any  Person  that,  directly  or  indirectly,  is  in  control of, is controlled by or is under common control with such Person or (b) who is a director  or officer:  (i) of such Person or (ii) of any Person described in clause (a), except that, in the case  of each Conduit Lender, Affiliate shall mean the holder(s) of its Capital Stock or membership  interests, as the case may be.  For purposes of this definition, control of a Person shall mean the  power, direct or indirect, whether or not exercised:  (x) to vote 25% or more of the securities  having ordinary voting power for the election of directors or managers of such Person or (y) to  direct  or  cause  the  direction  of  the  management  and  policies  of  such  Person,  in  either  case  whether by ownership of securities, contract, proxy or otherwise.         “Aggregate  Capital”  means,  at  any  time  of  determination,  the  aggregate  outstanding  Capital of all Lenders at such time.         “Aggregate  Interest”  means,  at  any  time  of  determination,  the  aggregate  accrued  and  unpaid Interest on the Loans of all Lenders at such time.         “Agreement” has the meaning set forth in the preamble to this Agreement.         “Anti-Terrorism Laws” means any Applicable Law relating to terrorism financing, trade  sanctions programs and embargoes, import/export licensing, money laundering or bribery, and  any regulation, order, or directive promulgated, issued or enforced pursuant to such Applicable  Laws, all as amended, supplemented or replaced from time to time.         “Applicable Law” means, with respect to any Person, (x) all provisions of law, statute,  treaty,  constitution,  ordinance,  rule,  regulation,  ordinance,  requirement,  restriction,  permit,  executive  order,  certificate,  decision,  directive  or  order  of  any  Governmental  Authority  applicable to such Person or any of its property and (y) all judgments, injunctions, orders, writs,  decrees and awards of all courts and arbitrators in proceedings or actions in which such Person is  a  party  or  by  which  any  of  its  property  is  bound.   For  the  avoidance  of  doubt,  FATCA  shall  constitute an “Applicable Law” for all purposes of this Agreement.         “Applied Industrial” has the meaning set forth in the preamble to this Agreement.         “Assignment  and  Acceptance  Agreement”  means  an  assignment  and  acceptance  agreement entered into by a Committed Lender, an Eligible Assignee, such Committed Lender’s  Group Agent and the Administrative Agent, and, if required, the Borrower, pursuant to which  such  Eligible  Assignee  may  become  a  party  to  this  Agreement,  in  substantially  the  form  of  Exhibit C hereto.         “Assumption Agreement” has the meaning set forth in Section 13.03(i).         “Attorney Costs” means and includes all fees, costs, expenses and disbursements of any  law firm or other external counsel and all disbursements of internal counsel.                                         3   107601465\V-7                                                                    

 

          “Bankruptcy Code” means the United States Bankruptcy Reform Act of 1978 (11 U.S.C.  § 101, et seq.), as amended from time to time.         “Base Rate” means, for any day and any Lender, a fluctuating interest rate per annum as  shall be in effect from time to time, which rate shall be at all times equal to the greater of:               (a)   the rate of interest in effect for such day as publicly announced from time        to time by the applicable Group Agent or its Affiliate as its “reference rate” or “prime        rate”, as applicable.  Such “reference rate” or “prime rate” is set by the applicable Group        Agent  or  its  Affiliate  based  upon  various  factors,  including  such  Person’s  costs  and        desired return, general economic conditions and other factors, and is used as a reference        point for pricing some loans, which may be priced at, above or below such announced        rate, and is not necessarily the lowest rate charged to any customer; and               (b)  a half percent (0.50%) per annum above the latest Federal Funds Rate.         “Borrower” has the meaning specified in the preamble to this Agreement.         “Borrower Indemnified Amounts” has the meaning set forth in Section 12.01(a).         “Borrower Indemnified Party” has the meaning set forth in Section 12.01(a).         “Borrower  Obligations”  means  all  present  and  future  indebtedness,  reimbursement  obligations,  and  other  liabilities  and  obligations  (howsoever  created,  arising  or  evidenced,  whether direct or indirect, absolute or contingent, or due or to become due) of the Borrower to  any Credit Party, Borrower Indemnified Party and/or any Affected Person, arising under or in  connection  with  this  Agreement  or  any  other  Transaction  Document  or  the  transactions  contemplated hereby or thereby, and shall include, without limitation, all Capital and Interest on  the  Loans,  all  Fees  and  all  other  amounts  due  or  to  become  due under  the  Transaction  Documents  (whether  in  respect  of  fees,  costs,  expenses,  indemnifications  or  otherwise),  including,  without  limitation,  interest,  fees  and  other  obligations  that  accrue  after  the  commencement  of  any  Insolvency  Proceeding  with  respect  to  the  Borrower  (in  each  case  whether or not allowed as a claim in such proceeding).         “Borrower’s Net Worth” means, at any time of determination, an amount equal to (i) the  Outstanding  Balance  of  all  Pool  Receivables  at  such  time,  minus  (ii)  the  sum  of  (A)  the  Aggregate  Capital  at  such  time,  plus  (B)  the  Aggregate  Interest  at  such  time,  plus  (C)  the  aggregate  accrued  and  unpaid  Fees  at  such  time,  plus  (D)  the  aggregate  outstanding  principal  balance  of  all  Subordinated  Notes  at  such  time,  plus  (E)  the  aggregate  accrued  and  unpaid  interest  on  all  Subordinated  Notes  at  such  time,  plus  (F)  without  duplication,  the  aggregate  accrued and unpaid other Borrower Obligations at such time.         “Borrowing Base” means, at any time of determination, the amount equal to the lesser of  (a) the Facility Limit and (b) an amount equal to (i) the Net Receivables Pool Balance at such  time, minus (ii) the Total Reserves at such time.                                           4   107601465\V-7                                                                    

 

          “Borrowing Base Deficit” means,  at  any time of determination, the amount, if any, by  which (a) the Aggregate Capital at such time, exceeds (b) the Borrowing Base at such time, or, in  each case, if such day is not a Business Day, then the immediately preceding Business Day.          “Breakage  Fee”  means  (i)  for  any  Interest  Period  for  which  Interest  is  computed  by  reference to the CP Rate, LMIR, or Adjusted LIBOR and a reduction of Capital is made for any  reason on any day other than a Settlement Date or (ii) to the extent that the Borrower shall for  any reason, fail to borrow on the date specified by the Borrower in connection with any request  for  funding  pursuant  to  Article  II  of  this  Agreement,  the  amount, if any, by which (A) the  additional  Interest  (calculated without taking into account  any  Breakage  Fee  or any  shortened  duration of such  Interest Period pursuant  to  the  definition thereof)  which  would  have  accrued  during  such  Interest  Period  (or,  in  the  case  of  clause  (i)  above,  until  the  maturity  of  the  underlying Note) on the reductions of Capital relating to such Interest Period had such reductions  not  been  made  (or,  in  the  case  of  clause  (ii)  above,  the  amounts  so  failed  to  be  borrowed  or  accepted  in  connection  with  any  such  request  for  funding  by  the  Borrower),  exceeds  (B)  the  income, if any, received by the applicable Lender from the investment of the proceeds of such  reductions of Capital (or such amounts failed to be borrowed by the Borrower).  A certificate as  to  the  amount  of  any  Breakage  Fee  (including  the  computation  of  such  amount)  shall  be  submitted by the affected Lender (or applicable Group Agent on its behalf) to the Borrower and  shall be conclusive and binding for all purposes, absent manifest error.         “Business Day” means any day (other than a Saturday or Sunday) on which:  (a) banks  are not authorized or required to close in Pittsburgh, Pennsylvania, or New York City, New York  and (b) if this definition of “Business Day” is utilized in connection with Adjusted LIBOR or  LMIR, dealings are carried out in the London interbank market.         “Capital” means, with respect to any Lender, without duplication, the aggregate amounts  paid  to,  or  on  behalf  of,  the  Borrower  in  connection  with  all  Loans  made  by  such  Lender  pursuant to Article II, as reduced from time to time by Collections distributed and applied on  account of such Capital pursuant to Section 3.01; provided, that if such Capital shall have been  reduced by any  distribution and thereafter all or a portion  of such distribution is  rescinded or  must otherwise be returned for any reason, such Capital shall be increased by the amount of such  rescinded or returned distribution as though it had not been made.         “Capital Stock” means, with respect to any Person, any and all common shares, preferred  shares,  interests,  participations,  rights  in  or  other  equivalents  (however  designated)  of  such  Person’s  capital  stock,  partnership  interests,  limited  liability  company  interests,  membership  interests or other equivalent interests and any rights (other than debt securities convertible into or  exchangeable for capital stock), warrants or options exchangeable for or convertible into such  capital stock or other equity interests.         “Change in Control” means the occurrence of any of the following:               (a)   Applied  Industrial  ceases  to  own,  directly,  100%  of  the  issued  and        outstanding Capital Stock and all other equity interests of the Borrower free and clear of        all Adverse Claims;                                          5   107601465\V-7                                                                    

 

                (b)   Applied Industrial ceases to own, directly or indirectly, 100% of the issued        and  outstanding  Capital  Stock,  membership  interests  or  other  equity  interests  of  any        Originator free and clear of all Adverse Claims;               (c)   any  Subordinated  Note  shall  at  any  time  cease  to  be  owned  by  an        Originator, free and clear of all Adverse Claims; or               (d)  with respect to Applied Industrial:                     (i)   any “person” or “group” (within the meaning of Sections 13(d) and              14(d)(2) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule              13d-3 under the Exchange Act), directly or indirectly, of thirty-five percent (35%)              or  more  of  the  voting  power  of  the  then  outstanding  Capital  Stock  of  Applied              Industrial  entitled  to  vote  generally  in  the  election  of  the  directors  of  Applied              Industrial;                     (ii)  during any period of twelve (12) consecutive calendar months, the              board of directors of Applied  Industrial  shall cease to  have  as  a majority of its              members individuals who either: (i) were directors of Applied Industrial  on the              first day of such period or (ii) were elected or nominated for election to the board              of directors of Applied Industrial at the recommendation of or other approval by              at least a majority of the directors then still in office at the time of such election or              nomination  who  were  directors  of  Applied  Industrial  on  the  first  day  of  such              period, or whose election or nomination for election was so approved; or                     (iii)  Applied  Industrial  consolidates  with  or  merges  into  another              corporation (other than a Subsidiary of Applied Industrial) or conveys, transfers              or  leases  all  or  substantially  all  of  its  property  to  any  person  (other  than  a              Subsidiary of Applied Industrial), or any corporation (other than a Subsidiary of              Applied Industrial) consolidates with or merges into Applied Industrial, in either              event pursuant to a transaction in which the outstanding Capital Stock of Applied              Industrial is reclassified or changed into or exchanged for cash, securities or other              property.         “Change in Law” means the occurrence, after the Closing Date (or with respect to any  Lender, if later, the date on which such Lender becomes a Lender), of any of the following: (a)  the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law,  rule, regulation or treaty or in the administration, interpretation, implementation or application  thereof  by  any  Governmental  Authority  or  (c)  the  making  or  issuance  of  any  request,  rule,  guideline or directive (whether or not having the force of law) by any Governmental Authority;  provided that notwithstanding anything herein to the contrary, (w) the final rule titled Risk-Based  Capital Guidelines; Capital Adequacy Guidelines; Capital Maintenance: Regulatory Capital;  Impact of Modifications to Generally Accepted Accounting Principles; Consolidation of Asset- Backed Commercial Paper Programs; and Other Related Issues, adopted by the United States  bank regulatory agencies  on December 15, 2009, (x) the Dodd-Frank Wall Street Reform and  Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in  connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank                                         6   107601465\V-7                                                                    

 

    for International Settlements, the Basel Committee on Banking Supervision (or any successor or  similar authority) or the United States or foreign regulatory authorities, in each case pursuant to  the agreements reached by the Basel Committee on Banking Supervision in “Basel III: A Global  Regulatory  Framework  for  More  Resilient  Banks  and  Banking  Systems”  (as  amended,  supplemented or otherwise modified or replaced from time to time), shall in each case be deemed  to be a “Change in Law”, regardless of the date enacted, adopted or issued.         “Closing Date” means August 31, 2018.         “Code” means the Internal Revenue Code of 1986, as amended, reformed or otherwise  modified from time to time.         “Collateral” has the meaning set forth in Section 4.05(a).         “Collection  Account”  means  each  account  listed  on  Schedule  II  to  this  Agreement  (as  such schedule may be modified from time to time in connection with the closing or opening of  any Collection Account in accordance with the terms hereof), in each case, in the name of the  Borrower and maintained at a bank or other financial institution acting as a Collection Account  Bank pursuant to an Account Control Agreement for the purpose of receiving Collections.         “Collection Account Bank” means any of the banks or other financial institutions holding  one or more Collection Accounts.         “Collections” means, with respect to any Pool Receivable:  (a) all funds that are received  by any Originator, the Borrower, the Servicer or any other Person on their behalf in payment of  any amounts owed in respect of such Pool Receivable (including purchase price, finance charges,  interest and all other charges), or applied to amounts owed in respect of such Pool Receivable  (including insurance payments and net proceeds of the sale or other disposition of repossessed  goods  or  other  collateral  or  property  of  the  related  Obligor  or  any  other  Person  directly  or  indirectly liable for the payment of such Pool Receivable and available to be applied thereon),  (b) all  Deemed Collections, (c) all proceeds of  all Related Security with respect  to  such Pool  Receivable and (d) all other proceeds of such Pool Receivable.         “Commitment”  means,  with  respect  to  any  Committed  Lender  (including  a  Related  Committed Lender), the maximum aggregate amount which such Person is obligated to lend or  pay hereunder on account of all Loans, on a combined basis, as set forth on Schedule I or in the  Assumption  Agreement  or  other  agreement  pursuant  to  which  it  became  a  Lender,  as  such  amount  may  be  modified  in  connection  with  any  subsequent  assignment  pursuant  to  Section  13.03 or in connection with a reduction in the Facility Limit pursuant to Section 2.02(e).  If the  context  so  requires,  “Commitment”  also  refers  to  a  Committed  Lender’s  obligation  to  make  Loans hereunder in accordance with this Agreement.         “Committed Lenders” means PNC and each other Person that is or becomes a party to  this Agreement in the capacity of a “Committed Lender”.         “Concentration  Percentage”  means  (a)  for  any  Group  A  Obligor,  twenty  percent  (20.00%), (b) for any Group B Obligor, fifteen percent (15.00%), (c) for any Group C Obligor,  ten percent (10.00%) and (d) for any Group D Obligor, five percent (5.00%).                                         7   107601465\V-7                                                                    

 

          “Concentration Reserve Percentage” means, at any time of determination, the largest of:  (a) the sum of the five (5) largest Obligor Percentages of the Group D Obligors, (b) the sum of  the three (3) largest Obligor Percentages of the Group C Obligors, (c) the sum of the two (2)  largest Obligor Percentage of the Group B Obligors and (d) the largest Obligor Percentage of the  Group A Obligors.         “Conduit Lender” means each commercial paper conduit that is or becomes a party to this  Agreement in the capacity of a “Conduit Lender”.         “Contract”  means,  with  respect  to  any  Receivable,  any  and  all  contracts,  instruments,  agreements, leases, invoices, notes or other writings pursuant to which such Receivable arises or  that  evidence  such  Receivable  or  under  which  an  Obligor  becomes  or  is  obligated  to  make  payment in respect of such Receivable.         “Controlled  Group”  means  all  members  of  a  controlled  group  of  corporations  or  other  business  entities  and  all  trades  or  businesses  (whether  or  not incorporated)  under  common  control which, together with Parent or any of its Subsidiaries, are treated as a single employer  under Section 414 of the Code.         “Covered Entity” means (a) each of Borrower, the Servicer, each Originator, the Parent  and each of Parent’s Subsidiaries and (b) each Person that, directly or indirectly, is in control of a  Person described in clause (a) above.  For purposes of this definition, control of a Person shall  mean the direct or indirect (x) ownership of, or power to vote, 25% or more of the issued and  outstanding equity interests having ordinary voting power for the election of directors of such  Person or other Persons performing similar functions for such Person, or (y) power to direct or  cause  the  direction  of  the  management  and  policies  of  such  Person  whether  by  ownership  of  equity interests, contract or otherwise.         “CP Rate” means, for any Conduit Lender and for any Interest Period for any Portion of  Capital  (a)  the  per  annum  rate  equivalent  to  the  weighted  average  cost  (as  determined  by  the  applicable Group Agent and which shall include commissions of placement agents and dealers,  incremental carrying costs incurred with respect to Notes of such Person maturing on dates other  than those on which corresponding funds are received by such Conduit Lender, other borrowings  by such Conduit Lender (other than under any Program Support Agreement) and any other costs  associated with the issuance of Notes) of or related to the issuance of Notes that are allocated, in  whole or in part, by the applicable Conduit Lender to fund or maintain such Portion of Capital  (and which may be also allocated in part to the funding of other assets of such Conduit Lender);  provided, however, that if any component of such rate is a discount rate, in calculating the “CP  Rate” for such Portion of Capital for such Interest Period, the applicable Group Agent shall for  such component use the rate resulting from converting such discount rate to an interest bearing  equivalent rate per annum; provided, further, that notwithstanding anything in this Agreement or  the other Transaction Documents to the contrary, the Borrower agrees that any amounts payable  to Conduit Lenders in respect of Interest for any Interest Period with respect to any Portion of  Capital  funded by such  Conduit  Lenders at  the  CP Rate shall include an amount equal  to  the  portion of the face amount of the outstanding Notes issued to fund or maintain such Portion of  Capital that corresponds to the portion of the proceeds of such Notes that was used to pay the  interest component of maturing Notes issued to fund or maintain such Portion of Capital, to the                                         8   107601465\V-7                                                                    

 

    extent that such Conduit Lenders had not received payments of interest in respect of such interest  component prior to the maturity date of such maturing Notes (for purposes of the foregoing, the  “interest component” of Notes equals the excess of the face amount thereof over the net proceeds  received by such Conduit Lender from the issuance of Notes, except that if such Notes are issued  on an interest-bearing basis its “interest component” will equal the amount of interest accruing  on  such  Notes  through  maturity)  or  (b)  any  other  rate  designated as the “CP Rate” for such  Conduit Lender in the Assumption Agreement or other document pursuant to which such Person  becomes  a  party  as  a  Conduit  Lender  to  this  Agreement,  or  any  other  writing  or  agreement  provided by such Conduit Lender to the Borrower, the Servicer and the applicable Agent from  time to time.  The “CP Rate” for any Conduit Lender for any day while an Event of Default has  occurred and is continuing shall be an interest rate equal to the greater of (i) 2.50% per annum  above the Base Rate and (ii) 2.50% per annum above the “CP Rate” calculated without giving  effect to such Event of Default.          “Credit Agreement” means that certain Credit Agreement, dated as of January 31, 2018,  by and among Applied Industrial, KeyBank National Association and the lenders listed on the  signature  pages  thereof,  as  may  be  further  amended,  restated,  supplemented  or  otherwise  modified from time to time solely to the extent all of the Group Agents remain parties thereto  after  the  effectiveness  of  such  amendment,  restatement,  supplement  or  modification.   For  the  avoidance of doubt, to the extent any Group Agent is no longer a party to the Credit Agreement,  references herein to the “Credit Agreement” shall be deemed to refer to the Credit Agreement as  in effect as of the last date on which all Group Agents are parties thereto.         “Credit and Collection Procedures” means, as the context may require, those receivables  credit and collection policies and historical practices of the Originators and/or Servicer in effect  on the Closing Date and described in Exhibit E, as modified in compliance with this Agreement.         “Credit Extension” means the making of any Loan.         “Credit Party” means each Lender, the Administrative Agent and each Group Agent.         “Credit Risk Retention Rules” means (i) Section 15G of the Securities Exchange Act of  1934,  as  amended,  and  (ii)  Articles  404  410  of  the  EU  Capital  Requirements  Regulation  (including Article 122a of the Banking Consolidation Directive), in each case, together with the  rules and regulations thereunder.         “Days’ Sales Outstanding” means, for any Fiscal Month, an amount computed as of the  last day of such Fiscal Month equal to:  (a) the average of the Outstanding Balance of all Pool  Receivables as of the last day of each of the three (3) most recent Fiscal Months ended on the  last day of such Fiscal Month, divided by (b) (i) the aggregate initial Outstanding Balance of all  Pool Receivables  generated by the Originators during the three (3) most recent Fiscal Months  ended on the last day of such Fiscal Month, divided by (ii) ninety (90).         “Debt” means, as to any Person at any time of determination, any and all indebtedness,  obligations  or  liabilities  (whether  matured  or  unmatured,  liquidated  or  unliquidated,  direct  or  indirect,  absolute  or  contingent,  or  joint  or  several)  of  such Person  for  or  in  respect  of:   (i)  borrowed  money,  (ii)  amounts  raised  under  or  liabilities  in  respect  of  any  bonds,  debentures,                                         9   107601465\V-7                                                                    

 

    notes, note purchase, acceptance or credit facility, or other similar instruments or facilities, (iii)  reimbursement  obligations  (contingent  or  otherwise)  under  any  letter  of  credit,  (iv)  any  other  transaction  (including  production  payments  (excluding  royalties),  installment  purchase  agreements,  forward  sale  or  purchase  agreements,  capitalized  leases  and  conditional  sales  agreements) having the commercial effect of a borrowing of money entered into by such Person  to finance its operations or capital requirements (but not including accounts payable incurred in  the ordinary course of such Person’s business payable on terms customary in the trade), (v) all  net obligations of such Person in respect of interest rate on currency hedges or (vi) any Guaranty  of any such Debt.         “Deemed Collections” has the meaning set forth in Section 3.01(d).         “Defaulting Lender” means any Lender that (a) has failed, within two (2) Business Days  of the date required to be funded or paid, to (i) fund any portion of its Loans or (ii) pay over to  any  Credit  Party  any  other  amount  required  to  be  paid  by  it  hereunder,  unless,  in  the  case  of  clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the  result  of  such  Lender’s  good  faith  determination  that  a  condition  precedent  to  funding  (specifically identified and including the particular default, if any) has not been satisfied, (b) has  notified the Borrower or any Credit Party in writing, or has made a public statement to the effect,  that  it  does  not  intend  or  expect  to  comply  with  any  of  its  funding  obligations  under  this  Agreement (unless such writing or public statement indicates that such position is based on such  Lender’s  good  faith  determination  that  a  condition  precedent  (specifically  identified  and  including  the  particular  default,  if  any)  to  funding  a  Loan  under  this  Agreement  cannot  be  satisfied)  or  generally  under  other  agreements  in  which  it  commits  to  extend  credit,  (c)  has  failed, within three (3)  Business  Days  after request  by a Credit Party, acting in  good faith, to  provide a certification in writing from an authorized officer of such Lender that it will comply  with its obligations (and is financially able to meet such obligations) to fund prospective Loans  under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant  to  this  clause (c) upon such Credit Party’s  receipt  of such certification in  form  and substance  satisfactory to it and the Administrative Agent, or (d) has become the subject of an Insolvency  Proceeding.          “Default Ratio” means  the ratio (expressed as  a  percentage and rounded to  the nearest  1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each Fiscal  Month by dividing:  (a) the aggregate Outstanding Balance of all Pool Receivables that became  Defaulted  Receivables  during  such  Fiscal  Month,  by  (b)  the  aggregate  initial  Outstanding  Balance  of all  Pool  Receivables  generated  by  the  Originators  during the month that is  six (6)  Fiscal Months before such Fiscal Month.         “Defaulted Receivable” means a Receivable:               (a)   as to which any payment, or part thereof, remains unpaid for one hundred        fifty one (151) calendar days or more from the original due date for such payment;               (b)   without  duplication,  as  to  which  any  payment,  or  part  thereof, remains        unpaid  for  less  than  or  equal  to  one  hundred  fifty  one  (151)  calendar  days  from  the        original  due  date  for  such  payment  and,  consistent  with  the  Credit  and  Collection                                         10   107601465\V-7                                                                    

 

          Procedures,  is  or  should  be  written  off  the  applicable  Originator’s  or  the Borrower’s        books as uncollectible; or               (c)   without  duplication,  as  to  which an  Insolvency  Proceeding  shall have        occurred  with  respect  to  the  Obligor  thereof  or  any  other  Person  obligated  thereon  or        owning any Related Security with respect thereto;         provided,  however,  that  in  each  case  above  such  amount  shall  be  calculated  without        giving  effect  to  any  netting  of credits  that  have  not  been  matched  to  a  particular        Receivable for the purposes of aged trial balance reporting.         “Delinquency  Ratio”  means  the  ratio  (expressed  as  a  percentage  and  rounded  to  the  nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed as of the last day of each  Fiscal  Month  by  dividing:   (a)  the  sum  of  (I)  the  aggregate  Outstanding  Balance  of  all  Pool  Receivables that  were  Delinquent  Receivables on such day,  plus (II) the aggregate  amount of  Deemed  Collections  as  of  such  date  with  respect  to  such  Delinquent  Receivables,  by  (b)  the  aggregate Outstanding Balance of all Pool Receivables on such day.          “Delinquent Receivable” means a Receivable as to which any payment, or part thereof,  remains unpaid for ninety one (91) calendar days or more from the original due date for such  payment; provided, however, that such amount shall be calculated without giving effect to any  netting of credits that have not been matched to a particular Receivable for the purposes of aged  trial balance reporting.         “Dilution  Horizon  Ratio”  means,  for  any  Fiscal  Month,  the  ratio  (expressed  as  a  percentage  and  rounded  to  the  nearest  1/100th  of  1%,  with  5/1000th  of  1%  rounded  upward)  computed  as  of  the  last  day  of  such  Fiscal  Month  by  dividing:  (a)  the  aggregate  initial  Outstanding  Balance  of  all  Pool  Receivables  generated  by  the  Originators  during  such  Fiscal  Month, by (b) the Net Receivables Pool Balance as of the last day of such Fiscal Month.  Within  thirty (30) calendar days of the completion and the receipt by the Administrative Agent of the  results of any annual audit or field exam of the Receivables  and the servicing and origination  practices of the Servicer and the Originators, the numerator of the Dilution Horizon Ratio may be  adjusted by the Administrative Agent upon not less than five (5) Business Days’ notice to the  Borrower  to  reflect  such  number  of  Fiscal  Months  as  the  Administrative  Agent  reasonably  believes  best  reflects  the business  practices  of the Servicer and  the Originators  and  the  actual  amount of dilution and Deemed Collections that occur with respect to Pool Receivables based on  the weighted average dilution lag calculation completed as part of such audit or field exam.         “Dilution Ratio” means the ratio (expressed as a percentage and rounded to the nearest  1/100th of 1%, with 5/1000th of 1% rounded upward), computed as of the last day of each Fiscal  Month by dividing:  (a) the aggregate amount of Deemed Collections during such Fiscal Month,  by  (b)  the  aggregate  initial  Outstanding  Balance  of  all  Pool  Receivables  generated  by  the  Originators during the prior Fiscal Month.         “Dilution  Reserve  Percentage”  means,  on  any  day,  the  product  of  (a)  the  Dilution  Horizon Ratio multiplied by (b) the sum of (i) 2.25 times the average of the Dilution Ratios for  the twelve (12) most recent Fiscal Months and (ii) the Dilution Volatility Component.                                          11   107601465\V-7                                                                    

 

          “Dilution Volatility Component” means, for any Fiscal Month, the product (expressed as  a percentage and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) of  (a) the positive difference, if any, between:  (i) the highest Dilution Ratio for any Fiscal Month  during the twelve (12) most recent Fiscal Months and (ii) the arithmetic average of the Dilution  Ratios for such twelve (12) Fiscal Months times (b) the quotient of (i) the highest Dilution Ratio  for any Fiscal Month during the twelve (12) most recent consecutive Fiscal Months divided by  (ii) the arithmetic average of the Dilution Ratios for such twelve (12) consecutive Fiscal Months.         “Dollars” and “$” each mean the lawful currency of the United States of America.         “Eligible  Assignee”  means  (i)  any  Committed  Lender  or  any  of  its  Affiliates,  (ii)  any  Person managed by a Committed Lender or any of its Affiliates and (iii) any other financial or  other institution.         “Eligible Foreign Obligor” an Obligor that is a corporation or other business organization  that is organized in or that has a head  office (domicile), registered office, and chief executive  office located in a country other than (x) the United States or (y) a Sanctioned Country.         “Eligible In-Transit Receivable” means, at any time, any In-Transit Receivable if (a) the  related goods have been shipped not more than thirty (30) calendar days prior to such date, (b)  the related Originator has not pledged inventory as collateral for any Debt and (c) no inventory  of such Originator is encumbered in any way.         “Eligible Receivable” means, at any time of determination, a Pool Receivable:               (a)   the Obligor of which is: (i) either a U.S. Obligor or an Eligible Foreign        Obligor; (ii) not a Sanctioned Person; (iii) not subject to any Insolvency Proceeding; (iv)        not an Affiliate of the Borrower, the Servicer, the Parent or any Originator; (v) not the        Obligor with respect to Delinquent Receivables with an aggregate Outstanding Balance        exceeding fifty percent (50%) of the aggregate Outstanding Balance of all such Obligor’s        Pool  Receivables;  (vi)  not  a  natural  person;  and  (vii)  not  a  material  supplier  to  any        Originator or an Affiliate of a material supplier;               (b)   for which an Insolvency Proceeding shall not have occurred with respect        to  the  Obligor  thereof  or  any  other  Person  obligated  thereon  or  owning  any  Related        Security with respect thereto;               (c)   that  is  denominated  and  payable  only  in  Dollars  in  the  United  States  of        America, and the Obligor with respect to which has been instructed to remit Collections        in respect thereof directly to a Lock-Box or Collection Account in the United States of        America;               (d)   that  does  not  have  a  due  date  which  is  more  than one  hundred  twenty        (120) calendar days after the original invoice date of such Receivable;                (e)   that arises under a Contract for the sale of goods or services on an arm’s-       length basis in the ordinary course of the applicable Originator’s business;                                          12   107601465\V-7                                                                    

 

                                         (f)   that arises under a duly authorized Contract that is in full force and effect       and that is a legal, valid and binding obligation of the related Obligor, enforceable against       such Obligor in accordance with its terms, except as such enforceability may be limited       by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the       enforcement of creditors’ rights generally and by general principles of equity regardless       of whether enforceability is considered in a proceeding in equity or at law;              (g)   that has been transferred by an Originator to the Borrower pursuant to the       Purchase  and  Sale  Agreement  with  respect  to  which  transfer  all conditions  precedent       under the Purchase and Sale Agreement have been met;               (h)   that,  together  with  the  Contract  related  thereto,  conforms  in  all  material       respects with all Applicable Laws (including any Applicable Laws relating to usury, truth       in  lending,  fair  credit  billing,  fair  credit  reporting,  equal  credit  opportunity,  fair  debt       collection practices and privacy);              (i)   with respect to which all consents, licenses, approvals or authorizations of,       or registrations or declarations with or notices to, any Governmental Authority or other       Person required to be obtained, effected or given by an Originator in connection with the       creation of such Receivable, the execution, delivery and performance by such Originator       of the related Contract or the assignment thereof under the Purchase and Sale Agreement       have been duly obtained, effected or given and are in full force and effect;              (j)   that  is  not  subject  to  any  existing  dispute,  litigation,  right of  rescission,       set-off (including, customer deposits, advance payments (including payments related to       unearned revenues), etc.), counterclaim, hold back defense, any other defense against the       applicable  Originator  (or  any  assignee  of  such  Originator)  or  Adverse  Claim,  and  the       Obligor  of  which  holds  no  right  as  against  the  applicable  Originator  to  cause  such       Originator to  repurchase the  goods  or merchandise, the sale of which shall have  given       rise to such Receivable;              (k)   that  satisfies  all  applicable  requirements  of  the  Credit  and  Collection       Procedures;              (l)   that,  together  with  the  Contract  related  thereto,  has  not  been modified,       waived or restructured since its creation, except as permitted pursuant to Section 8.02(a)       of this Agreement;              (m)   in which the Borrower owns good and marketable title, free and clear of       any Adverse Claims, and that is freely assignable (including without any consent of the       related Obligor or any Governmental Authority);              (n)   for  which  the  Administrative  Agent  (on  behalf  of  the  Secured  Parties)       shall have a valid and enforceable first priority perfected security interest therein and in       the Related Security and Collections with respect thereto, in each case free and clear of       any Adverse Claim;                                         13  107601465\V-7                                                                                 

 

                (o)   that (x) constitutes an “account” or “general intangible” (as defined in the        UCC), (y) is not evidenced by instruments or chattel paper and (z) does not constitute, or        arise from the sale of, as extracted collateral (as defined in the UCC);               (p)   that is neither a Defaulted Receivable nor a Delinquent Receivable;               (q)   for  which  no  Originator,  the  Borrower,  the  Parent  or  the  Servicer  has        established any offset or netting arrangements with the related Obligor in connection with        the ordinary course of payment of such Receivable;               (r)   that,  other  than  for  Eligible  In-Transit  Receivables,  represents  amounts        earned and payable by the Obligor that are not subject to the performance of additional        services  by  the  Originator  thereof  or  by  the  Borrower  and  the  related  goods  or        merchandise shall have  been shipped  and/or services  performed; provided, that if such        Receivable is subject to the performance of additional services, only the portion of such        Receivables attributable to such additional services shall be excluded;               (s)   which (i) does not arise from a sale of accounts made as part of a sale of a        business  or  constitute  an  assignment  for  the  purpose  of  collection  only,  (ii)  is  not  a        transfer  of  a  single  account  made  in  whole  or  partial  satisfaction  of  a  preexisting        indebtedness or an assignment of a right to payment under a contract to an assignee that        is also obligated to perform under the contract and (iii) is not a transfer of an interest in or        an assignment of a claim under a policy of insurance;               (t)   which does not relate to the sale of any consigned goods or finished goods        which have incorporated any consigned goods into such finished goods;                (u)   that,  other  than  for  Eligible  In-Transit  Receivables,  represents  amounts        that have been recognized as revenue by the applicable Originator on its financial books        and records under GAAP; and               (v)   that,  if  such  Receivable  is  an  In-Transit  Receivable,  is  an  Eligible  In-       Transit Receivable.         “ERISA”  means  the  Employee  Retirement  Income  Security  Act  of  1974,  as  amended  from time to time, and any rule or regulation issued thereunder.         “ERISA Affiliate” means, with respect to any Person, any corporation, trade or business  which together with the Person is a member of a controlled group of corporations or a controlled  group of trades or businesses and would be deemed a “single employer” within the meaning of  Sections 414(b), (c), (m) of the Code or Section 4001(b) of ERISA.         “Euro-Rate Reserve Percentage” means, the maximum effective percentage in effect on  such  day  as  prescribed  by  the  Board  of  Governors  of  the  Federal  Reserve  System  (or  any  successor) for determining the reserve requirements (including without limitation, supplemental,  marginal, and emergency reserve requirements) with respect to eurocurrency funding (currently  referred to as “Eurocurrency Liabilities”).                                          14   107601465\V-7                                                                    

 

          “Event  of  Default”  has  the  meaning  specified  in Section  9.01.   For  the  avoidance  of  doubt, any Event of Default that occurs shall be deemed to be continuing at all times thereafter  unless and until waived in accordance with Section 13.01.         “Excess Concentration” means the sum of the following amounts, without duplication:               (a)   the sum  of the amounts calculated for each of the Obligors equal  to  the        excess (if any) of (i) the aggregate Outstanding  Balance of the Eligible Receivables of        such  Obligor,  over (ii)  the  product  of  (x)  such  Obligor’s  Concentration  Percentage,        multiplied by (y) the aggregate Outstanding Balance of all Eligible Receivables then in        the Receivables Pool; plus               (b)   the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible        Receivables, the Obligors of which are Eligible Foreign Obligors, over (ii) the product of        (x)  one  percent  (1.00%),  multiplied  by  (y)  the  aggregate  Outstanding  Balance  of  all        Eligible Receivables then in the Receivables Pool; plus               (c)   the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible        Receivables as to which any payment, or part thereof, remain unpaid for sixty one (61) to        ninety  (90)  calendar  days  from  the  original  due  date  for  such  payment,  over  (ii)  the        product of (x) five percent (5.00%), multiplied by (y) the aggregate Outstanding Balance        of all Eligible Receivables then in the Receivables Pool; plus               (d)   the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible        Receivables that have a due date which is between ninety one (91) to one hundred twenty        (120)  calendar  days  after  the  original  invoice  date  of  such  Receivable,  over  (ii)  the        product  of  (x)  twelve  and  one  half  percent  (12.50%),  multiplied  by  (y)  the  aggregate        Outstanding Balance of all Eligible Receivables then in the Receivables Pool; plus               (e)   the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible        In-Transit Receivables, over (ii) the product of (x) one percent (1.00%), multiplied by (y)        the  aggregate  Outstanding  Balance  of  all  Eligible  Receivables  then  in  the  Receivables        Pool; plus               (f)   the excess (if any) of (i) the aggregate Outstanding Balance of all Eligible        Receivables,  the Obligors  of which  are  the  federal  government  of the United States  of        America or any political subdivision, department, affiliate, agency or other entity thereof        (which, for the avoidance of doubt, does not include any state or local government body        or any political subdivision, department, affiliate, agency or other entity thereof), over (ii)        the  product  of  (x)  two  percent  (2.00%),  multiplied  by  (y)  the  aggregate  Outstanding        Balance of all Eligible Receivables then in the Receivables Pool.          “Exchange Act” means the Securities Exchange Act of 1934, as amended or otherwise  modified from time to time.         “Excluded Obligor” means each Obligor listed on Schedule IV, which schedule may be  amended, modified, restated, supplemented or replaced from time to time with the consent of the  Administrative Agent and the Majority Group Agents.                                         15   107601465\V-7                                                                    

 

          “Excluded  Receivable”  means  any  Receivable,  the  Obligor  of  which  is  an  Excluded  Obligor.         “Excluded Taxes” means any of the following Taxes imposed on or with respect to an  Affected Person or required to be withheld or deducted from a payment to an Affected Person:  (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes and  branch  profits  Taxes,  in  each  case,  (i)  imposed  as  a  result  of such  Affected  Person  being  organized  under  the  laws  of,  or  having  its  principal  office  or,  in  the  case  of  any  Lender,  its  applicable  lending  office  located  in,  the  jurisdiction  imposing  such  Tax  (or  any  political  subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, U.S.  federal  withholding  Taxes  imposed  on  amounts  payable  to  or  for the  account  of  such  Lender  with respect to an applicable interest in the Loans or Commitment pursuant to a law in effect on  the date on which (i) such Lender makes a Loan or its Commitment or (ii) such Lender changes  its lending office, except in each case to the extent that amounts with respect to such Taxes were  payable either to such Lender’s assignor immediately before such Lender became a party hereto  or  to  such  Lender  immediately  before  it  changed  its  lending  office  and  (c)  any  U.S.  federal  withholding Taxes imposed pursuant to FATCA.         “Facility  Limit”  means  one  hundred  seventy  five  million  dollars  ($175,000,000) as  reduced or increased from time to time pursuant to Section 2.02(e).  References to the unused  portion of the Facility Limit shall mean, at any time of determination, an amount equal to (x) the  Facility Limit at such time, minus (y) the Aggregate Capital.         “FATCA”  means  Sections  1471  through  1474  of  the  Code,  as  of  the  date  of  this  Agreement  (or  any  amended  or  successor  version  that  is  substantively  comparable  and  not  materially  more  onerous  to  comply  with)  and  any  current  or  future  regulations  or  official  interpretations thereof.         “Federal  Funds  Rate”  means,  for  any  day,  the  per  annum  rate  set  forth  in  the  weekly  statistical  release  designated  as  H.15(519),  or  any  successor  publication,  published  by  the  Federal Reserve Board (including any such successor, “H.15(519)”) for such day opposite the  caption “Federal Funds (Effective).”  If on any relevant day such rate is not yet published in H.  15(519), the rate for such day will be the rate set forth in the daily statistical release designated  as  the  Composite  3:30  p.m.  Quotations  for  U.S.  Government  Securities,  or  any  successor  publication, published by the Federal Reserve Bank of New York (including any such successor,  the “Composite 3:30 p.m. Quotations”) for such day under the caption “Federal Funds Effective  Rate.”  If on any relevant day the appropriate rate is not yet published in either H.15(519) or the  Composite 3:30 p.m. Quotations, the rate for such day will be the arithmetic mean as determined  by  the  Administrative  Agent  of  the  rates  for  the  last  transaction  in  overnight  Federal  funds  arranged  before  9:00  a.m.  (New  York  time)  on  that  day  by  each  of  three  leading  brokers  of  Federal funds transactions in New York City selected by the Administrative Agent.         “Federal Reserve Board” means the Board of Governors of the Federal Reserve System,  or any entity succeeding to any of its principal functions.         “Fee Letter” has the meaning specified in Section 2.03(a).                                          16   107601465\V-7                                                                    

 

          “Fees” has the meaning specified in Section 2.03(a).         “Final Maturity Date” means the date that (i) is thirty (30) calendar days following the  Scheduled  Termination  Date  or  (ii)  such  earlier  date  on  which  the  Loans  become  due  and  payable pursuant to Section 9.01.         “Final  Payout  Date”  means  the  date  on  or  after  the  Termination  Date  when  (i)  the  Aggregate Capital and Aggregate Interest have been paid in full, (ii) all Borrower Obligations  shall  have  been  paid  in  full,  (iii)  all  other  amounts  owing  to the  Credit  Parties  and  any  other  Borrower  Indemnified  Party  or  Affected  Person  hereunder  and  under  the  other  Transaction  Documents have been paid in full and (iv) all accrued Servicing Fees have been paid in full.         “Financial Officer” of any Person means, the chief executive officer, the chief financial  officer, the chief accounting officer, the principal accounting officer, the controller, the treasurer  or the assistant treasurer of such Person.         “Fiscal Month” means each calendar month.         “Fitch”  means  Fitch,  Inc.  and  any  successor  thereto  that  is  a  nationally  recognized  statistical rating organization.         “GAAP”  means  generally  accepted  accounting  principles  in  the  United  States  of  America, consistently applied.         “Governmental Authority” means the government of the United States of America or any  other  nation,  or  of  any  political  subdivision  thereof,  whether state  or  local,  and  any  agency,  authority,  instrumentality,  regulatory  body,  court,  central  bank  or  other  entity  exercising  executive,  legislative,  judicial,  taxing,  regulatory  or  administrative  powers  or  functions  of  or  pertaining to government (including any supra-national bodies such as the European Union or  the European Central Bank).         “Group”  means,  (i)  for  any  Conduit  Lender,  such  Conduit  Lender,  together  with  such  Conduit Lender’s Related Committed Lenders and related Group Agent, (ii) for PNC, PNC as a  Committed Lender and as a Group Agent, (iii) for any other Lender that does not have a Related  Conduit Lender, such Lender, together with such Lender’s related Group Agent and each other  Lender for which such Group Agent acts as a Group Agent hereunder.         “Group A Obligor” means any Obligor (or its parent or majority owner, as applicable, if  such  Obligor  is  not  rated)  with  a  short-term  rating  of  at  least:   (a)  “A-1”  by  S&P,  or  if  such  Obligor does not have a short-term rating from S&P, a rating of “A+” or better by S&P on such  Obligor’s,  its  parent’s,  or  its  majority  owner’s  (as  applicable)  long-term  senior  unsecured  and  uncredit-enhanced debt securities, and (b) “P 1” by Moody’s, or if such Obligor does not have a  short-term rating from Moody’s, “Al” or better by Moody’s on such Obligor’s, its parent’s or its  majority  owner’s  (as  applicable)  long-term  senior  unsecured  and  uncredit-enhanced  debt  securities;  provided, that if an Obligor  (or its  parent  or majority  owner,  as  applicable, if such  Obligor is not rated) receives a split rating from S&P and Moody’s, then such Obligor (or its  parent  or  majority  owner,  as  applicable)  shall  be  deemed  to  have  the  higher  rating,  and  such  deemed rating shall be used for the purposes of whether such rating satisfies clauses (a) and (b)                                         17   107601465\V-7                                                                    

 

    above.   Notwithstanding  the  foregoing,  any  Obligor  that  is  a  Subsidiary  of  an  Obligor  that  satisfies the definition of “Group A Obligor” shall be deemed to be a Group A Obligor and shall  be aggregated with the Obligor that satisfies such definition for the purposes of determining the  “Concentration Reserve Percentage”, the “Concentration Reserve” and clause (i) of the definition  of “Excess Concentration” for such Obligors, unless such deemed Obligor separately satisfies the  definition of “Group A Obligor”, “Group B Obligor”, or “Group C Obligor”, in which case such  Obligor  shall  be  separately  treated  as  a  Group  A  Obligor,  a  Group  B  Obligor  or  a  Group  C  Obligor, as the case may be, and shall be aggregated and combined for such purposes with any of  its Subsidiaries that are Obligors.         “Group Agent” means each Person acting as agent on behalf of a Group and designated  as the Group Agent for such Group on the signature pages to this Agreement or any other Person  who  becomes  a  party  to  this  Agreement  as  a  Group  Agent  for  any Group  pursuant  to  an  Assumption Agreement, an Assignment and Acceptance Agreement or otherwise in accordance  with this Agreement.         “Group Agent’s Account” means, with respect to any Group, the account(s) from time to  time designated in writing by the applicable Group Agent to the Borrower and the Servicer for  purposes of receiving payments to or for the account of the members of such Group hereunder.         “Group B Obligor” means an Obligor (or its parent or majority owner, as applicable, if  such Obligor is not rated) that is not a Group A Obligor, with a short-term rating of at least:  (a)  “A-2”  by  S&P,  or  if  such  Obligor  does  not  have  a  short-term  rating  from  S&P,  a  rating  of  “BBB+” to “A” by S&P on such Obligor’s, its parent’s or its majority owner’s (as applicable)  long-term senior unsecured and uncredit-enhanced debt securities, and (b) “P 2” by Moody’s, or  if such Obligor does not have a short-term rating from Moody’s, “Baal” to “A2” by Moody’s on  such Obligor’s, its parent’s or its majority owner’s (as applicable) long-term senior unsecured  and  uncredit-enhanced  debt  securities;  provided,  that  if  an  Obligor  (or  its  parent  or  majority  owner, as applicable, if such Obligor is not rated) receives a split rating from S&P and Moody’s,  then such Obligor (or its parent or majority owner, as applicable) shall be deemed to have the  higher  rating,  and  such  deemed  rating  shall  be  used  for  the  purposes  of  whether  such  rating  satisfies  clauses  (a)  and  (b)  above.   Notwithstanding  the  foregoing,  any  Obligor  that  is  a  Subsidiary of an Obligor that satisfies the definition of “Group B Obligor” shall be deemed to be  a Group B Obligor and shall be aggregated with the Obligor that satisfies such definition for the  purposes of determining the “Concentration Reserve Percentage”, the “Concentration Reserve”  and clause (i) of the definition of “Excess Concentration” for such Obligors, unless such deemed  Obligor separately satisfies the definition of “Group A Obligor”, “Group B Obligor”, or “Group  C  Obligor”,  in  which  case  such  Obligor  shall  be  separately  treated  as  a  Group  A  Obligor,  a  Group  B  Obligor  or  a  Group  C  Obligor,  as  the  case  may  be,  and  shall  be  aggregated  and  combined for such purposes with any of its Subsidiaries that are Obligors.         “Group C Obligor” means an Obligor (or its parent or majority owner, as applicable, if  such Obligor is not rated) that is not a Group A Obligor or a Group B Obligor, with a short-term  rating of at least:  (a) “A-3” by S&P, or if such Obligor does not have a short-term rating from  S&P, a rating of “BBB-”  to  “BBB”  by  S&P on  such  Obligor’s,  its  parent’s  or  its  majority  owner’s  (as applicable) long-term senior unsecured and uncredit-enhanced debt securities,  and  (b)  “P  3”  by  Moody’s,  or  if  such  Obligor  does  not  have  a  short-term  rating  from  Moody’s,                                         18   107601465\V-7                                                                    

 

    “Baa3”  to  “Baa2”  by  Moody’s  on  such  Obligor’s,  its  parent’s  or its  majority  owner’s  (as  applicable) long-term senior unsecured and uncredit-enhanced debt securities; provided, that if  an Obligor (or its parent or majority owner, as applicable, if such Obligor is not rated) receives a  split  rating  from  S&P  and  Moody’s,  then  such  Obligor  (or  its  parent  or  majority  owner,  as  applicable) shall be deemed to have the higher rating, and such deemed rating shall be used for  the  purposes  of  whether  such  rating  satisfies  clauses  (a)  and  (b)  above.   Notwithstanding  the  foregoing, any Obligor that is a Subsidiary of an Obligor that satisfies the definition of “Group C  Obligor” shall be deemed to be a Group C Obligor and shall be aggregated with the Obligor that  satisfies such definition for the purposes of determining the “Concentration Reserve Percentage”,  the “Concentration Reserve” and clause (i) of the definition of “Excess Concentration” for such  Obligors, unless such deemed Obligor separately satisfies the definition of “Group A Obligor”,  “Group  B  Obligor”,  or  “Group  C  Obligor”,  in  which  case  such  Obligor  shall  be  separately  treated as a Group A Obligor, a Group B Obligor or a Group C Obligor, as the case may be, and  shall  be  aggregated  and  combined  for  such  purposes  with  any  of its  Subsidiaries  that  are  Obligors.         “Group Commitment” means, with respect to any Group, at any time of determination,  the aggregate Commitments of all Committed Lenders within such Group.         “Group D Obligor” means any Obligor that is not a Group A Obligor, Group B Obligor  or Group C Obligor; provided, that any Obligor (or its parent or majority owner, as applicable, if  such Obligor is unrated) that is not rated by both Moody’s and S&P shall be a Group D Obligor.         “Guaranty” of any Person means any obligation of such Person guarantying or in effect  guarantying any Debt, liability or obligation of any other Person in any manner, whether directly  or indirectly, including any such liability arising by virtue of partnership agreements, including  any agreement to indemnify or hold harmless any other Person, any performance bond or other  surety  ship  arrangement  and  any  other  form  of  assurance  against  loss,  except  endorsement  of  negotiable or other instruments for deposit or collection in the ordinary course of business.         “Indemnified Taxes” means (a) Taxes, other than Excluded Taxes, imposed on or with  respect to any payment made by or on account of any obligation of the Borrower or any of its  Affiliates  under  any  Transaction  Document  and  (b)  to  the  extent  not  otherwise  described  in  clause (a) above, Other Taxes.         “Independent Director” has the meaning set forth in Section 7.03(c).         “Information Package” means a report, in substantially the form of Exhibit F.         “Insolvency Proceeding” means  (a) any  case,  action  or proceeding before any  court or  other  Governmental  Authority  relating  to  bankruptcy,  reorganization,  insolvency,  liquidation,  receivership, dissolution, winding-up or relief of debtors or (b) any general assignment for the  benefit of creditors of a Person, composition, marshaling of assets for creditors of a Person, or  other, similar arrangement in respect of its creditors generally or any substantial portion of its  creditors,  in  each  of  clauses  (a)  and  (b)  undertaken  under  U.S.  Federal,  state  or  foreign  law,  including the Bankruptcy Code.         “Intended Tax Treatment” has the meaning set forth in Section 13.14.                                         19   107601465\V-7                                                                    

 

          “Interest”  means,  for  each  Loan  for  any  day  during  any  Interest  Period  (or  portion  thereof), the amount of interest accrued on the Capital of such Loan during such Interest Period  (or portion thereof) in accordance with Section 2.03(b).         “Interest Period” means, with respect to each Loan, (a) before the Termination Date:  (i)  initially, the period commencing on the date such Loan is made pursuant to Section 2.01 (or in  the case of any fees payable hereunder, commencing on the Closing Date) and ending on (but not  including)  the  next  Monthly  Settlement  Date  and  (ii)  thereafter,  each  period  commencing  on  such Monthly Settlement Date and ending on (but not including) the next Monthly Settlement  Date and (b) on and after the Termination Date, such period (including a period of one day) as  shall  be  selected  from  time  to  time  by  the  Administrative  Agent  (with  the  consent  or  at  the  direction of the Majority Group Agents) or, in the absence of any such selection, each period of  thirty (30) calendar days from the last day of the preceding Interest Period.         “Interest Rate” means, for any day in any Interest Period for any Loan (or any portion of  Capital thereof):               (a)   if  such  Loan  (or  such  portion  of  Capital  thereof)  is  being funded  by  a        Conduit Lender on such day through the issuance of Notes, the applicable CP Rate; or               (b)  if such Loan (or such portion of Capital thereof) is being funded by any        Lender  on  such  day  other  than  through  the  issuance  of  Notes  (including,  without        limitation,  if  a  Conduit  Lender  is  then  funding  such  Loan  (or  such  portion  of  Capital        thereof) under a Program Support Agreement, or if a Committed Lender is then funding        such  Loan  (or  such  portion  of  Capital  thereof)),  then  LMIR  or  Adjusted  LIBOR,  as        determined pursuant to Section 2.05, provided, however, that the Interest Rate applicable        to any LIBOR Loan that is not advanced on a Monthly Settlement Date shall be LMIR        for each day during the initial Interest Period applicable to such Loan from the date such        Loan is made pursuant to Section 2.01 until the next occurring Monthly Settlement Date.   provided, however, that the “Interest Rate” for each Loan and any day while an Event of Default  has occurred and is continuing shall be an interest rate per annum equal the sum of two and a  half percent (2.50)% per annum plus the greater of (i) the interest rate per annum determined for  such Loan and such day pursuant to clause (a) or (b) above, as applicable, and (ii) the Base Rate  in  effect  on such day;  provided,  further, that no provision  of this Agreement shall require the  payment or permit the collection of Interest in excess of the maximum permitted by Applicable  Law; provided, further, however, that Interest for any Loan shall not be considered paid by any  distribution to the extent that at any time all or a portion of such distribution is rescinded or must  otherwise be returned for any reason.         “Interim Report” means a report, in substantially the form of Exhibit I.         “In-Transit Receivable” means, at any time, any Receivable arising in  connection with  the sale of any goods or merchandise that as of such time, have been shipped but not delivered to  the related Obligor.         “Investment Company Act” means the Investment Company Act of 1940, as amended or  otherwise modified from time to time.                                         20   107601465\V-7                                                                    

 

          “Lenders” means the Conduit Lenders and the Committed Lenders.         “Leverage  Ratio”  shall  have  the  same  meaning  attributed  to  such  term  in  the  Credit  Agreement.         “LIBOR Loan” means a Loan accruing Interest at Adjusted LIBOR.         “LIBOR Termination Date” has the meaning set forth in Section 2.07(a).         “Linked Account” means any deposit account which is or could be linked to a Collection  Account by a controlled balance arrangement.         “Liquidity Agent” means any bank or other financial institution acting as agent for the  various Liquidity Providers under each Liquidity Agreement.         “Liquidity  Agreement”  means  any  agreement  entered  into  in  connection  with  this  Agreement pursuant to which a Liquidity Provider agrees to make purchases or advances to, or  purchase assets from, any Conduit Lender in order to provide liquidity for such Conduit Lender’s  Loans.         “Liquidity Provider” means each bank or other financial institution that provides liquidity  support to any Conduit Lender pursuant to the terms of a Liquidity Agreement.         “LMIR”  means  for  any  day  during  any  Interest Period,  the  interest  rate  per  annum  determined  by  the  applicable  Group Agent  (which  determination  shall  be  conclusive  absent  manifest error) by dividing (i) the one-month Eurodollar rate for Dollar deposits as reported on  the Reuters Screen LIBOR01 Page or any other page that may replace such page from time to  time for the purpose of displaying offered rates of leading banks for London interbank deposits  in Dollars, as of 11:00 a.m. (London time) on such day, or if such day is not a Business Day,  then the immediately preceding Business Day (or if not so reported, then as determined by the  Administrative  Agent  from  another  recognized  source  for  interbank  quotation),  in  each  case,  changing when and  as such rate changes,  by (ii) a number equal to 1.00 minus the Euro-Rate  Reserve  Percentage  on  such  day.   The  calculation  of  LMIR  may  also  be  expressed  by  the  following formula:                           One-month Eurodollar rate for Dollars                          shown on Reuters Screen LIBOR01 Page              LMIR    =                                                                                              1.00 - Euro-Rate Reserve Percentage         LMIR  shall  be  adjusted  on  the  effective  date  of  any  change  in  the  Euro-Rate  Reserve  Percentage  as  of  such  effective  date.   Notwithstanding  the  foregoing,  if  LMIR  as  determined  herein would be less than zero (0.00), such rate shall be deemed to be zero percent (0.00%) for  purposes of this Agreement.          “Loan” means any loan made by a Lender pursuant to Section 2.01.                                          21   107601465\V-7                                                                    

 

          “Loan Request” means a letter in substantially the form of Exhibit A hereto executed and  delivered by the Borrower to the Administrative Agent and the Group Agents pursuant to Section  2.02(a).         “Lock-Box” means each locked postal box with respect to which a Collection Account  Bank  has  executed  an  Account  Control  Agreement  pursuant  to  which  it  has  been  granted  exclusive access for the purpose of retrieving and processing payments made on the Receivables  and  which  is  listed  on  Schedule II  (as  such  schedule  may  be  modified  from  time  to  time  in  connection with the addition or removal of any Lock-Box in accordance with the terms hereof).         “Loss Horizon Ratio” means, for any Fiscal Month, the ratio (expressed as a percentage  and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) computed, as of  the last day of such Fiscal Month, by dividing: (a) the sum of (i) the aggregate initial Outstanding  Balance  of  all  Pool  Receivables  generated  by  the  Originators  during  the  four  (4)  most  recent  Fiscal Months, plus (ii) the product of (x) the sum of the Loss Horizon Terms Component, plus  five percent (5.00%), and (y) the aggregate initial Outstanding Balance of all Pool Receivables  originated  by  the  Originators  during  the  fifth  (5th)  most  recent  Fiscal  Month;  by  (b)  the  Net  Receivables Pool Balance as of such date.         “Loss Horizon Terms Component” means (a) the Weighted Average Credit Terms of the  most recent Fiscal Month minus thirty (30) divided by (b) thirty (30).         “Loss Reserve Percentage” means, at any time of determination, the product of (a) 2.25,  times  (b)  the  highest  average  of  the  Default  Ratios  for  any  three  consecutive  Fiscal  Months  during the twelve (12) most recent Fiscal Months, times (c) the Loss Horizon Ratio.         “Majority Group Agents” means one or more Group Agents which in its Group, or their  combined  Groups,  as  the  case  may  be,  have  Committed  Lenders  representing  more  than  fifty  percent (50%) of the aggregate Commitments of all Committed Lenders in all Groups (or, if the  Commitments have been terminated, have Lenders representing more than fifty percent (50%) of  the aggregate outstanding Capital held by all the Lenders in all Groups); provided, however, that  in no event shall the Majority Group Agents include fewer than two (2) Group Agents at any  time when there are two (2) or more Groups.          “Material  Adverse  Effect”  means  relative  to  any  Person  (provided  that  if  no  particular  Person is specified, “Material Adverse Effect” shall be deemed to be relative to the Borrower,  the Servicer, the Performance Guarantor and the Originators, individually and in the aggregate)  with respect to any event or circumstance, a material adverse effect on any of the following:         (a)   the assets, operations, business or financial condition of such Person;         (b)  the ability of such Person to perform its obligations under this Agreement or any  other Transaction Document to which it is a party;         (c)   the  validity  or  enforceability  of  this  Agreement  or  any  other  Transaction  Document, or the validity, enforceability, value or collectibility of any material portion of the  Pool Receivables;                                         22   107601465\V-7                                                                    

 

          (d)   the  status,  perfection,  enforceability  or  priority  of  the  Administrative  Agent’s  security interest in the Collateral; or         (e)   the rights and remedies of any Credit Party under the Transaction Documents or  associated with its respective interest in the Collateral.         “Minimum Dilution Reserve Percentage” means, on any day, the product (expressed as a  percentage and rounded to the nearest 1/100 of 1%, with 5/1000th of 1% rounded upward) of (a)  the average of the Dilution Ratios for the twelve (12) most recent Fiscal Months, multiplied by  (b) the Dilution Horizon Ratio.         “Minimum Funding Threshold” means an amount equal to the lesser of (a) seventy five  percent (75%) of the Facility Limit and (b) the Borrowing Base.          “Monthly Settlement Date” means the twenty-fifth (25th) calendar day of each calendar  month (or if such day is not a Business Day, the next occurring Business Day).         “Moody’s”  means  Moody’s  Investors  Service,  Inc.  and  any  successor  thereto  that  is  a  nationally recognized statistical rating organization.         “Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of  ERISA to which the Borrower, the Servicer, any Originator, the Parent or any of their respective  ERISA Affiliates (other than one considered an ERISA Affiliate only pursuant to subsection (m)  or (o) of Section 414 of the Code) is making or accruing an obligation to make contributions, or  has  within  any  of  the  preceding  five  plan  years  made  or  accrued  an  obligation  to  make  contributions.         “Net Receivables Pool Balance” means, at any time of determination:  (a) the aggregate  Outstanding Balance of Eligible Receivables then in the Receivables Pool, minus (b) the Excess  Concentration.         “Notes”  means  short-term  promissory  notes  issued,  or  to  be  issued,  by  any  Conduit  Lender to fund its investments in accounts receivable or other financial assets.         “Obligor” means, with respect to any Receivable, the Person obligated to make payments  pursuant to the Contract relating to such Receivable.         “Obligor Percentage” means, at any time of determination, for each Obligor, a fraction,  expressed as a percentage, (a) the numerator of which is the aggregate Outstanding Balance of  the Eligible Receivables of such Obligor less the amount (if any) then included in the calculation  of the Excess Concentration with respect to such Obligor and (b) the denominator of which is the  aggregate Outstanding Balance of all Eligible Receivables at such time.         “OFAC” means the U.S. Department of Treasury’s Office of Foreign Assets Control.         “Originator”  and  “Originators”  have  the  meaning  set  forth  in  the  Purchase  and  Sale  Agreement,  as  the  same  may  be  modified  from  time  to  time  by  adding  new  Originators  or  removing Originators, in each case with the prior written consent of the Administrative Agent.                                         23   107601465\V-7                                                                    

 

          “Other Connection Taxes” means, with respect to any Affected Person, Taxes imposed as  a  result  of  a  present  or  former  connection  between  such  Affected  Person  and  the  jurisdiction  imposing such Tax (other than connections arising from such Affected Person having executed,  delivered, become a party to, performed its obligations under, received payments under, received  or perfected a security interest under, engaged in any other transaction pursuant to or enforced  any  Transaction  Document,  or  sold  or  assigned  an  interest  in  any  Loan  or  Transaction  Document).         “Other Taxes” means any and all present or future stamp or documentary Taxes or any  other excise or property Taxes, charges or similar levies or fees arising from any payment made  hereunder or from the execution, delivery, filing, recording or enforcement of, or otherwise in  respect  of,  this  Agreement,  the  other  Transaction  Documents  and  the  other  documents  or  agreements to be delivered hereunder or thereunder.         “Outstanding  Balance”  means,  at  any  time  of  determination,  with  respect  to  any  Receivable, the then outstanding principal balance thereof.         “Parent” means Applied Industrial.         “Parent Group” has the meaning set forth in Section 7.03(c).         “Participant” has the meaning set forth in Section 13.03(e).         “Participant Register” has the meaning set forth in Section 13.03(f).         “PATRIOT Act” has the meaning set forth in Section 13.15.         “PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.         “Pension Plan” means a pension plan as defined in Section 3(2) of ERISA that is subject  to Title IV of ERISA with respect to which any Originator, the Borrower or any other member of  the Controlled Group may have any liability, contingent or otherwise.         “Percentage”  means,  at  any  time  of  determination,  with  respect  to  any  Committed  Lender,  a  fraction  (expressed  as  a  percentage),  (a)  the  numerator  of  which  is  (i)  prior  to  the  termination  of  all  Commitments  hereunder,  its  Commitment  at  such  time  or  (ii)  if  all  Commitments hereunder have been terminated, the aggregate outstanding Capital of all Loans  being  funded  by  the  Lenders  in  such  Committed  Lender’s  Group  at  such  time  and  (b)  the  denominator of which is (i) prior to the termination of all Commitments hereunder, the aggregate  Commitments of all Committed Lenders at such time or (ii) if all Commitments hereunder have  been terminated, the aggregate outstanding Capital of all Loans at such time.         “Performance Guarantor” means Applied Industrial.         “Performance Guaranty” means the Performance Guaranty, dated as of the Closing Date,  by the Performance Guarantor in favor of the Administrative Agent for the benefit of the Secured  Parties, as such agreement may be amended, restated, supplemented or otherwise modified from  time to time.                                         24   107601465\V-7                                                                    

 

          “Person” means an individual, partnership, corporation (including a business trust), joint  stock  company,  trust,  unincorporated  association,  joint  venture,  limited  liability  company  or  other entity, or a government or any political subdivision or agency thereof.         “PNC” has the meaning set forth in the preamble to this Agreement.         “Pool Receivable” means a Receivable in the Receivables Pool.         “Portion of Capital” means, with respect to any Lender and its related Capital, the portion  of such Capital being funded or maintained by such Lender by reference to a particular interest  rate basis.         “Program  Support  Agreement”  means  and  includes  any  Liquidity  Agreement  and  any  other agreement entered into by any Program Support Provider providing for:  (a) the issuance of  one or more letters of credit for the account of any Conduit Lender, (b) the issuance of one or  more  surety  bonds  for  which  any  Conduit  Lender  is  obligated  to reimburse  the  applicable  Program Support Provider for any drawings thereunder, (c) the sale by any Conduit Lender to  any Program Support Provider of any Loan (or portions thereof or participation interest therein)  maintained by such Conduit Lender and/or (d) the making of loans and/or other extensions of  credit  to  any  Conduit  Lender  in  connection  with  such  Conduit  Lender’s  receivables- securitization program contemplated in this Agreement, together with any letter of credit, surety  bond or other instrument issued thereunder.         “Program  Support  Provider”  means  and  includes,  with  respect  to  any  Conduit  Lender,  any Liquidity Provider and any other Person (other than any customer of such Conduit Lender)  now or hereafter extending credit or having a commitment to extend credit to or for the account  of,  or  to  make  purchases  from,  such  Conduit  Lender  pursuant  to any  Program  Support  Agreement.         “Purchase and Sale Agreement” means the Purchase and Sale Agreement, dated as of the  Closing Date, among the Servicer, the Originators and the Borrower, as such agreement may be  amended, supplemented or otherwise modified from time to time.         “Purchase and Sale Termination Event” has  the meaning  set  forth  in  the Purchase and  Sale Agreement.         “Rating Agency” mean each of S&P, Fitch and Moody’s (and/or each other rating agency  then rating the Notes of any Conduit Lender).         “Receivable”  means  any  right  to  payment  of  a  monetary  obligation,  whether or  not  earned by performance, owed to any Originator or the Borrower (as assignee of an Originator),  whether  constituting  an  account,  chattel  paper,  payment  intangible,  instrument  or  general  intangible, in each instance arising in connection with the sale of goods that have been or are to  be sold or for services rendered or to be rendered, and includes, without limitation, the obligation  to  pay  any  finance  charges,  fees  and  other  charges  with  respect  thereto.   Any  such  right  to  payment  arising  from  any  one  transaction,  including,  without  limitation,  any  such  right  to  payment  represented  by  an  individual  invoice  or  agreement,  shall  constitute  a  Receivable  separate  from  a  Receivable  consisting  of  any  such  right  to  payment  arising  from  any  other                                         25   107601465\V-7                                                                    

 

    transaction.   Notwithstanding  the  foregoing,  “Receivable”  shall  not  include  any  Excluded  Receivables or any Subject Receivables.         “Receivables  Pool”  means,  at  any  time  of  determination,  all  of  the  then  outstanding  Receivables transferred (or purported to be transferred) to the Borrower pursuant to the Purchase  and Sale Agreement prior to the Termination Date.         “Register” has the meaning set forth in Section 13.03(c).         “Related  Committed  Lender”  means  with  respect  to  any  Conduit  Lender,  each  Committed Lender listed as such for each Conduit Lender as set forth on the signature pages of  this Agreement or in any Assumption Agreement.         “Related Conduit Lender” means, with respect to any Committed Lender, each Conduit  Lender  which  is,  or  pursuant  to  any  Assignment  and  Acceptance  Agreement  or  Assumption  Agreement or otherwise pursuant to this Agreement becomes, included as a Conduit Lender in  such  Committed  Lender’s Group,  as  designated  on  its  signature  page  hereto  or  in  such  Assignment and Acceptance Agreement, Assumption Agreement or other agreement executed by  such Committed Lender, as the case may be.         “Related  Rights”  has  the  meaning  set  forth  in Section  1.1  of  the  Purchase  and  Sale  Agreement.         “Related Security” means, with respect to any Receivable:               (a)   all  of  the  Borrower’s  and  each  Originator’s  interest  in  any  goods        (including returned goods), and documentation of title evidencing the shipment or storage        of any goods (including returned goods), the sale of which gave rise to such Receivable;               (b)  all instruments and chattel paper that may evidence such Receivable;               (c)   all other security interests or liens and property subject thereto from time        to  time  purporting  to  secure  payment  of  such  Receivable,  whether  pursuant  to  the        Contract  related  to  such  Receivable  or  otherwise,  together  with  all  UCC  financing        statements or similar filings relating thereto;               (d)   all  of  the  Borrower’s  and  each  Originator’s  rights,  interests  and  claims        under  the  related  Contracts  and  all  guaranties,  indemnities,  insurance  and  other        agreements (including the related Contract) or arrangements of whatever character from        time to time supporting or securing payment of such Receivable or otherwise relating to        such  Receivable,  whether  pursuant  to  the  Contract  related  to  such  Receivable  or        otherwise; and               (e)   all of the Borrower’s rights, interests and claims under the Purchase and        Sale Agreement and the other Transaction Documents.         “Release” has the meaning set forth in Section 3.01(a).                                          26   107601465\V-7                                                                    

 

          “Reportable Compliance Event” means that any  Covered Entity becomes a Sanctioned  Person,  or  is  charged  by  indictment,  criminal  complaint  or  similar  charging  instrument,  arraigned, or custodially detained in connection with any Anti-Terrorism Law or any predicate  crime to any Anti-Terrorism Law, or has knowledge of facts or circumstances to the effect that it  is  reasonably  likely  that  any  aspect  of  its  operations  is  in  actual  or  probable  violation  of  any  Anti-Terrorism Law.         “Reportable Event” means any reportable event as defined in Section 4043(c) of ERISA  or the regulations issued thereunder with respect to a Pension Plan (other than a Pension Plan  maintained  by  an  ERISA  Affiliate  which  is  considered  an  ERISA  Affiliate  only  pursuant  to  subsection (m) or (o) of Section 414 of the Code).         “Representatives” has the meaning set forth in Section 13.06(c).         “Required Capital Amount” means fifteen million dollars ($15,000,000).         “Restricted Payments” has the meaning set forth in Section 7.01(w).         “S&P”  means  Standard  &  Poor’s  Rating  Services,  a  Standard  &  Poor’s Financial  Services LLC business, and any successor thereto that is a nationally recognized statistical rating  organization.         “Sanctioned  Country”  means  a  country  or  territory  that  is  the  subject  or  target  of  a  sanctions  program  maintained  under  any  Anti-Terrorism  Law,  including  any  such  country  identified on the list  maintained by OFAC  and  available at: http://www.treasury.gov/resource- center/sanctions/Programs/Pages/Programs.aspx, or as otherwise published from time to time.         “Sanctioned  Person”  means  (a)  a  person  named  on  the  list  of  “Specially  Designated  Nationals”  or   “Blocked   Persons”  maintained   by   OFAC     available  at:   https://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx,  or  as  otherwise  published  from  time  to  time,  (b)  (i)  an  agency  of  the  government  of  a  Sanctioned  Country, (ii) an organization controlled by a Sanctioned Country or (iii) a person resident in a  Sanctioned Country, to the extent subject to a sanctions program administered by OFAC, or (c)  any individual person, group, regime, entity or thing listed or otherwise recognized as a specially  designated, prohibited, sanctioned or debarred person, group, regime, entity or thing, or subject  to  any  limitations  or  prohibitions  (including  but  not  limited  to  the  blocking  of  property  or  rejection of transactions), under any Anti-Terrorism Law.         “Scheduled Termination Date” means August 31, 2021.          “SEC”  means  the  U.S.  Securities  and  Exchange  Commission  or  any  governmental  agencies substituted therefor.         “Secured Parties” means each Credit Party, each Borrower Indemnified Party and each  Affected Person.         “Securities  Act”  means  the  Securities  Act  of  1933,  as  amended  or  otherwise  modified  from time to time.                                         27   107601465\V-7                                                                    

 

          “Servicer” has the meaning set forth in the preamble to this Agreement.         “Servicer Indemnified Amounts” has the meaning set forth in Section 12.02(a).         “Servicer Indemnified Party” has the meaning set forth in Section 12.02(a).         “Servicing Fee” means the fee referred to in Section 8.06(a) of this Agreement.         “Servicing Fee Rate” means the rate referred to in Section 8.06(a) of this Agreement.         “Settlement Date” means with respect to any Portion of Capital for any Interest Period or  any Interest or Fees, (i) so long as no Event of Default has occurred and is continuing and the  Termination  Date  has  not  occurred,  the  Monthly  Settlement  Date and  (ii)  on  and  after  the  Termination Date or if an Event  of Default has  occurred and is continuing, each day selected  from  time  to  time  by  the  Administrative  Agent  (with  the  consent  or  at  the  direction  of  the  Majority Group Agents) (it being understood that the Administrative Agent (with the consent or  at  the  direction  of  the  Majority  Group  Agents)  may  select  such Settlement  Date  to  occur  as  frequently as daily), or, in the absence of such selection, the Monthly Settlement Date.         “Solvent” means, with respect to any Person and as of any particular date, (i) the present  fair market value (or present fair saleable value) of the assets of such Person is not less than the  total amount required to pay the probable liabilities of such Person on its total existing debts and  liabilities (including contingent liabilities) as they become absolute and matured, (ii) such Person  is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and  commitments as they mature and become due in the normal course of business, (iii) such Person  is  not  incurring  debts  or  liabilities  beyond  its  ability  to  pay  such  debts  and  liabilities  as  they  mature and (iv) such Person is not engaged in any business or transaction, and is not about to  engage in any business or transaction, for which its property would constitute unreasonably small  capital  after  giving  due  consideration  to  the  prevailing  practice  in  the  industry  in  which  such  Person is engaged.         “Structuring Agent” means PNC Capital Markets LLC, a Pennsylvania limited liability  company.         “Subordinated Note” has the meaning set forth in the Purchase and Sale Agreement.         “Subject Originator” means each Person listed on  Schedule V, which schedule may be  amended, modified, restated, supplemented or replaced from time to time with the consent of the  Administrative Agent and the Majority Group Agents.         “Subject  Receivable”  means  any  receivable,  the  originator  of  which  is  a  Subject  Originator.         “Sub-Servicer” has the meaning set forth in Section 8.01(d).         “Subsidiary”  means,  as  to  any  Person,  a  corporation,  partnership,  limited liability  company or other entity of which shares of stock of each class or other interests having ordinary  voting  power  (other  than  stock  or  other  interests  having  such  power  only  by  reason  of  the                                         28   107601465\V-7                                                                    

 

    happening of a contingency) to elect a majority of the Board of Directors or other managers of  such entity are at the time owned, or management of which is otherwise controlled:  (a) by such  Person, (b) by one or more Subsidiaries of such Person or (c) by such Person and one or more  Subsidiaries of such Person.         “Taxes”  means  any  and  all  present  or  future  taxes,  levies,  imposts,  duties,  deductions,  charges  or  withholdings  imposed  by  any  Governmental  Authority  and  all  interest,  penalties,  additions to tax and any similar liabilities with respect thereto.         “Termination Date” means the earliest to occur of (a) the Scheduled Termination Date,  (b)  the  date  on  which  the  “Termination  Date” is  declared  or  deemed  to  have  occurred  under  Section 9.01  and (c) the date selected by the  Borrower on which all Commitments have been  reduced to zero pursuant to Section 2.02(e).         “Total Reserves” means, at any time of determination, an amount equal to the product of  (i)  the  sum  of:   (a)  the  Yield  Reserve  Percentage,  plus  (b)  the  greater  of  (I)  the  sum  of  the  Concentration Reserve Percentage plus the Minimum Dilution Reserve Percentage and (II) the  sum  of  the  Loss  Reserve  Percentage  plus  the  Dilution  Reserve  Percentage,  times  (ii)  the  Net  Receivables Pool Balance at such time.         “Tranche Period” means, with respect to any LIBOR Loan, a period of one, two, three or  six  months  selected  by  the  Borrower  pursuant  to  Section  2.05.  Each  Tranche  Period  shall  commence on a Monthly Settlement Date and end on (but not including) the Monthly Settlement  Date occurring one, two, three or six calendar  months  thereafter, as  selected by the  Borrower  pursuant to Section 2.05; provided, however, that if the date any Loan made pursuant to Section  2.01 is not a Monthly Settlement Date, the initial Tranche Period for such Loan shall commence  on the date such Loan is made pursuant to Section 2.01 and end on the next Monthly Settlement  Date  occurring  after  the  day  in  the  applicable  succeeding  calendar  month  which  corresponds  numerically to  the beginning day of such initial  Tranche Period;  provided, further, that if any  Tranche Period would end after the Termination Date, such Tranche Period (including a period  of one day) shall end on the Termination Date.         “Transaction Documents” means this Agreement, the Purchase and Sale Agreement, the  Account  Control  Agreement(s),  the  Fee  Letter,  each  Subordinated  Note,  the  Performance  Guaranty  and  all  other  certificates,  instruments,  UCC  financing  statements,  reports,  notices,  agreements and documents executed or delivered under or in connection with this Agreement, in  each case as the same may be amended, supplemented or otherwise modified from time to time  in accordance with this Agreement.         “Transaction  Information”  means  any  information  provided  to  any  Rating  Agency,  in  each case, to the extent related to such Rating Agency providing or proposing to provide a rating  of any Notes or monitoring such rating including, without limitation, information in connection  with the Borrower, the Originator, the Servicer or the Receivables.         “UCC”  means  the  Uniform  Commercial  Code  as  from  time  to  time  in  effect  in  the  applicable jurisdiction.                                          29   107601465\V-7                                                                    

 

          “Unmatured Event of Default” means an event that but for notice or lapse of time or both  would constitute an Event of Default.         “Unmatured  Purchase  and Sale  Termination  Event”  has  the  meaning  set  forth  in  the  Purchase and Sale Agreement.         “U.S. Obligor” means an Obligor that is (a) a corporation or other business organization  and  is  organized  under  the  laws  of  the  United  States  of  America  (or  of  a  United  States  of  America  territory,  district,  state,  commonwealth,  or  possession,  including,  without  limitation,  Puerto  Rico  and  the  U.S.  Virgin  Islands)  or  any  political  subdivision  thereof,  (b)  the  federal  government of the United States of America or any political subdivision, department, affiliate,  agency or other entity thereof, and (c) any state or local government body in the United States of  America or any political subdivision, department, affiliate, agency or other entity thereof.         “U.S. Tax Compliance Certificate” has the meaning set forth in Section 4.03(f)(ii)(B)(3).         “Volcker Rule” means Section 13 of the U.S. Bank Holding Company Act of 1956, as  amended, and the applicable rules and regulations thereunder.         “Weighted Average Credit Terms” means, for any Fiscal Month, the weighted average  (weighted based on the Outstanding Balance of all Pool Receivables) payment terms (computed  in days and calculated based on the difference between the original invoice date and the stated  due date for payment) of invoices for all Pool Receivables (other than Delinquent Receivables  and any Receivable that is excluded based on the application of clause (d) of the definition of  Excess Concentration) as of the last day of such Fiscal Month.          “Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete  or  partial  withdrawal  from  such  Multiemployer  Plan,  as  such  terms are defined in Part I of  Subtitle E of Title IV of ERISA.         “Yield Reserve Percentage” means at any time of determination:                     1.50 x DSO x (BR + SFR)                          360         where:               BR    =     the Base Rate;               DSO  =      the  Days’  Sales  Outstanding  for  the  most  recently  ended  Fiscal                          Month; and               SFR  =      the Servicing Fee Rate.         SECTION 1.02.   Other  Interpretative  Matters.   All  accounting  terms  not  specifically  defined herein shall be construed in accordance with GAAP.  All terms used in Article 9 of the  UCC in the State of New York and not specifically defined herein, are used herein as defined in  such  Article  9.   Unless  otherwise  expressly  indicated,  all  references  herein  to  “Article,”                                         30   107601465\V-7                                                                    

 

    “Section,” “Schedule”, “Exhibit” or “Annex” shall mean articles and sections of, and schedules,  exhibits and annexes to, this Agreement.  For purposes of this Agreement, the other Transaction  Documents and all such certificates and other documents, unless the context otherwise requires:  (a)  references  to  any  amount  as  on  deposit  or  outstanding  on  any  particular  date  means  such  amount at the close of business on such day; (b) the words “hereof,” “herein” and “hereunder”  and  words  of  similar  import  refer  to  such  agreement  (or  the  certificate  or  other  document  in  which they are used) as a whole and not to any particular provision of such agreement (or such  certificate  or  document);  (c)  references  to  any  Section,  Schedule  or  Exhibit  are  references  to  Sections, Schedules and Exhibits in or to such agreement (or the certificate or other document in  which  the  reference  is  made),  and  references  to  any  paragraph, subsection,  clause  or  other  subdivision within any Section or definition refer to such paragraph, subsection, clause or other  subdivision  of  such  Section  or  definition;  (d)  the  term  “including”  means  “including  without  limitation”; (e) references to any Applicable Law refer to that Applicable Law as amended from  time to time and include any successor Applicable Law; (f) references to any agreement refer to  that agreement as from time to time amended, restated or supplemented or as the terms of such  agreement  are  waived  or  modified  in  accordance  with  its  terms; (g)  references  to  any  Person  include  that  Person’s  permitted  successors  and  assigns;  (h)  headings  are  for  purposes  of  reference  only  and  shall  not  otherwise  affect  the  meaning  or  interpretation  of  any  provision  hereof; (i) unless otherwise provided, in the calculation of time from a specified date to a later  specified date, the term “from” means “from and including”, and the terms “to” and “until” each  means “to but excluding”; (j) terms in one gender include the parallel terms in the neuter and  opposite gender; (k) references to any amount as on deposit or outstanding on any particular date  means such amount at the close of business on such day and (l) the term “or” is not exclusive.                                    ARTICLE II                                                                      TERMS OF THE LOANS         SECTION 2.01.   Loan Facility.  Upon a request by the Borrower pursuant to Section  2.02, and on the terms and subject to the conditions hereinafter set forth, the Conduit Lenders,  ratably, in accordance with the aggregate of the Commitments of the Related Committed Lenders  with respect to each such Conduit Lender, severally and not jointly, may, in their sole discretion,  make Loans to the Borrower on a revolving basis, and if and to the extent any Conduit Lender  does not make any such requested Loan or if any Group does not include a Conduit Lender, the  Related Committed Lender(s) for such Conduit Lender or the Committed Lender for such Group,  as  the case may be, shall,  ratably in  accordance  with  their respective Commitments,  severally  and not jointly, make such Loans to the Borrower, in either case, from time to time during the  period from the Closing Date to the Termination Date.  Under no circumstances shall any Lender  be obligated to make any such Loan if, after giving effect to such Loan:               (a)     the Aggregate Capital would exceed the Facility Limit at such time;                (b)     the  sum  of  (A)  the  Capital  of  such  Lender,  plus  (B)  the  aggregate  outstanding Capital of each other Lender in its Group, would exceed the Group Commitment of  such Lender’s Group;                                          31   107601465\V-7                                                                    

 

                (c)     if  such  Lender  is  a  Committed  Lender,  the  aggregate  outstanding  Capital of such Committed Lender would exceed its Commitment; or               (d)     the Aggregate Capital would exceed the Borrowing Base at such time.         SECTION 2.02.   Making Loans; Repayment of Loans.                (a)     Each Loan hereunder shall be made on at least one (1) Business Day’s  prior written request from the Borrower to the Administrative Agent and each Group Agent in  the form of a Loan Request attached hereto as Exhibit A.  Each such request for a Loan shall be  made no later than 1:00 p.m. (New York City time) on a Business Day (it being understood that  any  such  request  made  after  such  time  shall  be  deemed  to  have  been  made  on  the  following  Business Day) and shall specify (i) the amount of the Loan(s) requested (which shall not be less  than one million dollars ($1,000,000) and shall be an integral multiple of one hundred thousand  dollars ($100,000)), (ii) the allocation of such amount among the Groups (which shall be ratable  based on the Group Commitments), (iii) the account to which the proceeds of such Loan shall be  distributed and (iv) the date such requested Loan is to be made (which shall be a Business Day).               (b)     On the date of each Loan specified in the applicable Loan Request, the  Lenders shall, upon satisfaction of the applicable conditions set forth in Article V and pursuant to  the other conditions set forth in this Article II, make available to the Borrower in same day funds  an aggregate amount equal to the amount of such Loans requested, at the account set forth in the  related Loan Request.               (c)     Each  Committed  Lender’s  obligation  shall  be  several,  such  that the  failure of any Committed Lender to make available to the Borrower any funds in connection with  any  Loan shall not  relieve any other Committed Lender of its  obligation, if any, hereunder to  make  funds  available  on  the  date  such  Loans  are  requested  (it  being  understood,  that  no  Committed Lender shall be responsible for the failure of any other Committed Lender (other than  a Committed Lender in its Group) to make funds available to the Borrower in connection with  any Loan hereunder).               (d)     The Borrower shall repay in full the outstanding Capital of each Lender  on the Final Maturity Date.  Prior thereto, the Borrower shall, on each Settlement Date, make a  prepayment of the outstanding Capital of the Lenders to the extent required under Section 3.01  and  otherwise  in  accordance  therewith.   Notwithstanding  the  foregoing,  the  Borrower,  in  its  discretion,  shall  have  the  right  to  make  a  prepayment,  in  whole  or  in  part,  of  the  outstanding  Capital of the Lenders on any Business Day upon one (1) Business Day’s prior written notice  thereof to the Administrative Agent and each Group Agent in the form of a Reduction Notice  attached  hereto  as  Exhibit  B;  provided,  however,  that  (i)  each such  prepayment  shall  be  in  a  minimum aggregate amount of one hundred thousand dollars ($100,000) and shall be an integral  multiple of one hundred thousand dollars ($100,000); provided, however, that notwithstanding  the  foregoing,  a  prepayment  may  be  in  an  amount  necessary  to  reduce  any  Borrowing  Base  Deficit existing at such time or the outstanding Capital of the Lenders to zero ($0), and (ii) any  accrued  Interest  and  Fees  in  respect  of such  prepaid  Capital  shall be paid  on the immediately  following Settlement Date; provided, further, that the Borrower shall not provide any Reduction                                          32   107601465\V-7                                                                    

 

    Notice,  and  no  such  Reduction  Notice  shall  be  effective,  if  after  giving  effect  thereto,  the  Aggregate Capital at such time would be less than the Minimum Funding Threshold.               (e)     The Borrower may, at any time upon at least thirty (30) calendar days’  prior written notice to the Administrative Agent and each Group Agent, terminate the Facility  Limit in whole or ratably reduce the Facility Limit in part.  Each partial reduction in the Facility  Limit shall be in a minimum aggregate amount of five million dollars ($5,000,000) or integral  multiples  of  one  million  dollars  ($1,000,000)  in  excess  thereof,  and  no  such  partial  reduction  shall  reduce  the  Facility  Limit  to  an  amount  less  than  one  hundred  million  dollars  ($100,000,000).  In connection with any partial reduction in the Facility Limit, the Commitment  of each Committed Lender shall be ratably reduced.               (f)     In  connection  with  any  reduction  of  the  Commitments,  the  Borrower  shall  remit  to  the  Administrative  Agent  (i)  instructions  regarding  such  reduction  and  (ii)  for  payment  to  the  Lenders,  cash  in  an  amount  sufficient  to  pay  (A)  Capital  of  Lenders  in  each  Group  in  excess  of  the  Group  Commitment  of  such  Group  and  (B)  all  other  outstanding  Borrower  Obligations  with  respect  to  such  reduction  (determined  based  on  the  ratio  of  the  reduction of the Commitments being effected to the amount of the Commitments prior to such  reduction  or,  if  the  Administrative  Agent  reasonably  determines  that  any  portion  of  the  outstanding Borrower Obligations is allocable solely to that portion of the Commitments being  reduced or has arisen solely as a result of such reduction, all of such portion) including, without  duplication,  any  associated  Breakage  Fees.   Upon  receipt  of  any  such  amounts,  the  Administrative Agent shall apply such amounts first to the reduction of the outstanding Capital,  and second to the payment of the remaining outstanding Borrower Obligations with respect to  such reduction, including any Breakage Fees, by paying such amounts to the Lenders.               (g)     The Borrower hereby covenants and agrees from time to time to request  Loans pursuant to Section 2.02(a) in amounts and at such times such that the Aggregate Capital  at all times is no less than the Minimum Funding Threshold at such time; it being understood and  agreed  that  each  Credit  Extension  pursuant  to  this  Agreement  is  subject  to  the  applicable  conditions set forth in Article V and the other conditions set forth in this Article II.           SECTION 2.03.   Interest and Fees.               (a)     On  each  Settlement  Date,  the  Borrower  shall,  in  accordance  with  the  terms and priorities for payment set forth in Section 3.01, pay to each Group Agent, each Lender,  the Administrative Agent and the Structuring Agent certain fees (collectively, the “Fees”) in the  amounts  set  forth  in  the  fee  letter  agreements  from  time  to  time  entered  into,  among  the  Borrower, the members of the applicable Group (or their Group Agent on their behalf) and/or the  Administrative  Agent  (each  such  fee  letter  agreement,  as  amended,  restated,  supplemented  or  otherwise modified from time to time, collectively being referred to herein as the “Fee Letter”).   Undrawn Fees (as defined in the Fee Letter) shall cease to accrue on the unfunded portion of the  Commitment of such Defaulting Lender as provided in Section 2.06.               (b)     Each Loan of each Lender and the Capital thereof shall accrue interest  on each day when such Capital remains outstanding at the then applicable Interest Rate for such  Loan.   The  Borrower  shall  pay  all  Interest  (including,  for  the avoidance  of  doubt,  all  Interest                                         33   107601465\V-7                                                                    

 

    accrued on LIBOR Loans during an Interest Period regardless of whether the applicable Tranche  Period  has  ended),  Fees  and  Breakage  Fees  accrued  during  each  Interest  Period  on  each  Settlement Date in accordance with the terms and priorities for payment set forth in Section 3.01.         SECTION 2.04.   Records of Loans.  Each Group Agent shall record in its records, the  date and amount of each Loan made by the Lenders in its Group hereunder, the interest rate with  respect thereto, the Interest accrued thereon and each repayment and payment thereof.  Subject to  Section 13.03(c), such records shall be conclusive and binding absent manifest error.  The failure  to so record any such information or any error in so recording any such information shall not,  however, limit or otherwise affect the obligations of the Borrower hereunder or under the other  Transaction Documents to repay the Capital of each Lender, together with all Interest accruing  thereon and all other Borrower Obligations.         SECTION 2.05.   Selection of Interest Rates and Tranche Periods.               (a)     Subject to the following sentence, each Loan shall bear interest initially  at  LMIR.   Thereafter,  so  long  as  no  Event  of  Default  has  occurred  and  is  continuing,  the  Borrower  may  from  time  to  time  elect  to  change  or  continue  the type  of  Interest  Rate  and/or  Tranche  Period borne  by  each  Loan or, subject  to  the minimum  amount requirement for each  outstanding  Loan  set  forth  in  Section  2.02,  a  portion  thereof  by  notice  to  the  Administrative  Agent  not  later  than  11:00 a.m.  (New  York  City  time),  one  (1)  Business  Day  prior  to  the  expiration of any Tranche Period or Interest Period, as applicable; provided, that there shall not  be more than three (3) LIBOR Loans outstanding hereunder at any one time; provided, further  that for the avoidance of doubt, any change from LMIR to Adjusted LIBOR and/or any change  to a Tranche Period applicable to a Loan shall not be effective until the Monthly Settlement Date  occurring  after  the  date  of  such  request.   Any  such  notices  requesting  the  continuation  or  conversion of a Loan to the Administrative Agent may be given by telephone, telecopy, or other  telecommunication  device  acceptable  to  the  Administrative  Agent  (which  notice  shall  be  irrevocable once given and, if by telephone, shall be promptly confirmed in writing in a manner  acceptable to the Administrative Agent).               (b)     If, by the time required in Section 2.05(a), the Borrower fails to select a  Tranche Period or Interest Rate for any Loan, such Loan shall automatically accrue Interest at  LMIR for the next occurring Interest Period.         SECTION 2.06.   Defaulting  Lenders.   Notwithstanding  any  provision  of  this  Agreement  to  the  contrary,  if  any  Lender  becomes  a  Defaulting  Lender,  then  the  following  provisions shall apply for so long as such Lender is a Defaulting Lender:               (a)     Undrawn Fees (as defined in the Fee Letter) shall cease to accrue on the  unfunded portion of the Commitment of such Defaulting Lender.               (b)     The Commitment and Capital  of such Defaulting  Lender shall not be  included  in  determining  whether  the  Majority  Lenders  have  taken  or  may  take  any  action  hereunder (including any consent to any amendment, waiver or other modification pursuant to  Section  13.01);  provided,  that,  except  as  otherwise  provided  in  Section  13.01,  this  clause  (b)  shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other                                         34   107601465\V-7                                                                    

 

    modification requiring the consent of such Lender or each Lender directly affected thereby (if  such Lender is directly affected thereby).               (c)     In  the  event  that  the  Administrative  Agent,  the  Borrower  and  the  Servicer each agrees in writing that a Defaulting Lender has adequately remedied all matters that  caused such Lender to be a Defaulting Lender, then on such date such Lender shall purchase at  par such of the Loans of the other Lenders as the Administrative Agent shall determine may be  necessary  in  order  for  such  Lender  to  hold  such  Loans  in  accordance  with  its  Pro  Rata  Percentage;  provided,  that  no  adjustments  shall  be  made  retroactively  with  respect  to  fees  accrued or payments made by or on behalf of the Borrower while such Lender was a Defaulting  Lender, and provided, further, that except to the extent otherwise agreed by the affected parties,  no  change  hereunder  from  Defaulting  Lender  to  Lender  that  is  not  a  Defaulting  Lender  will  constitute  a  waiver  or  release  of  any  claim  of  any  party  hereunder  arising  from  that  Lender  having been a Defaulting Lender.         SECTION 2.07.   Successor LMIR or Adjusted LIBOR Index.                 (a)     If the Administrative Agent determines (which determination shall be  final  and  conclusive,  absent  manifest  error)  that  either  (i)  (A)  the  circumstances  set  forth  in  Section 4.04 have arisen and are unlikely to be temporary, or (B) the circumstances set forth in  Section 4.04 have not arisen but the applicable supervisor or administrator (if any) of LMIR or  Adjusted LIBOR or a Governmental Authority having jurisdiction over the Administrative Agent  has made a public statement identifying the specific date after which LMIR or Adjusted LIBOR  shall  no  longer  be  used  for  determining  interest  rates  for  loans  (either  such  date,  a  “LIBOR  Termination  Date”),  or  (ii)  a  rate  other  than  LMIR  or  Adjusted  LIBOR  has  become a widely  recognized  benchmark  rate  for  newly  originated  loans  in  Dollars  in  the U.S.  market,  then  the  Administrative Agent may (in consultation with the Borrower) choose a replacement index for  LMIR or Adjusted LIBOR and make adjustments to applicable margins and related amendments  to this Agreement as referred to below such that, to the extent practicable, the all-in interest rate  based on the replacement index will be substantially equivalent to the all-in LMIR- or Adjusted  LIBOR-based interest rate in effect prior to its replacement.               (b)     The  Administrative  Agent  and  the  Borrower  shall  enter  into  an  amendment to this Agreement to reflect the replacement index, the adjusted margins and such  other related amendments as may be appropriate, in the discretion of the Administrative Agent,  for the implementation and administration of the replacement index-based rate.  Notwithstanding  anything  to  the  contrary  in  this  Agreement  or  the  other  Transaction  Documents  (including,  without limitation, Section 13.01), such amendment shall become effective without any further  action or consent of any other party to this Agreement at 5:00 p.m. New York City time on the  tenth (10th) Business  Day  after the date  a draft  of the  amendment  is  provided to  the  Lenders,  unless the Administrative Agent receives, on or before such tenth (10th) Business Day, a written  notice from the Majority Group Agents stating that the Majority Group Agents object to such  amendment).               (c)     Selection  of  the  replacement  index,  adjustments  to  the  applicable  margins, and amendments to this Agreement (i) will be determined with due consideration to the  then-current  market  practices  for  determining  and  implementing a  rate  of  interest  for  newly                                         35   107601465\V-7                                                                    

 

    originated loans in the United States and loans converted from a LMIR- or Adjusted LIBOR- based rate to a replacement index-based rate, and (ii) may also reflect adjustments to account for  (A) the effects of the transition from LMIR or Adjusted LIBOR to the replacement index and (B)  yield- or risk-based differences between LMIR or Adjusted LIBOR and the replacement index.               (d)     Until an amendment reflecting a new replacement index in accordance  with this Section 2.07 is effective, each advance, conversion and renewal of a Loan under LMIR  or Adjusted LIBOR will continue to bear interest with reference to LMIR or Adjusted LIBOR;  provided,  however, that  if the Administrative Agent  determines (which determination shall be  final and conclusive, absent manifest error) that a LIBOR Termination Date has occurred, then  following the LIBOR Termination Date, all Loans as to which LMIR or Adjusted LIBOR would  otherwise  apply  shall  automatically  be  converted  to  the  Base  Rate  until  such  time  as  an  amendment  reflecting  a  replacement  index  and  related  matters  as described above is  implemented.               (e)     Notwithstanding  anything  to  the  contrary  contained  herein,  if  at  any  time the replacement index is less than zero, at such times, such index shall be deemed to be zero  for purposes of this Agreement.                                    ARTICLE III                                                     SETTLEMENT PROCEDURES AND PAYMENT PROVISIONS         SECTION 3.01.   Settlement Procedures.               (a)     The  Servicer  shall  set  aside  and  hold  in  trust  for  the  benefit of  the  Secured Parties (or, if so requested by the Administrative Agent, segregate in a separate account  approved by the Administrative Agent, which shall be an account maintained and controlled by  the  Administrative  Agent  unless  the  Administrative  Agent  otherwise  instructs  in  its  sole  discretion),  for  application  in accordance  with  the  priority  of  payments  set  forth  below,  all  Collections on Pool Receivables that are received by the Servicer or the Borrower or received in  any Lock-Box or Collection Account; provided, however, that so long as each of the conditions  precedent  set  forth  in  Section  5.03  are  satisfied  on  such  date,  the  Servicer  may  release  to  the  Borrower from such Collections the amount (if any) necessary to pay (i) the purchase price for  Receivables  purchased  by  the  Borrower  on  such  date  in  accordance  with  the  terms  of  the  Purchase and Sale Agreement or (ii) amounts owing by the Borrower to the Originators under  the Subordinated Notes (each such release, a “Release”).  On each Settlement Date, the Servicer  (or, following its assumption of control of the Collection Accounts, the Administrative Agent)  shall, distribute such Collections in the following order of priority:                     (i)   first, to the Servicer for the payment of the accrued Servicing Fees        payable for the immediately preceding Interest Period (plus, if applicable, the amount of        Servicing Fees payable for any prior Interest Period to the extent such amount has not        been distributed to the Servicer);                     (ii)  second,  to  each  Lender  and  other  Credit  Party  (ratably,  based  on        the amount then due and owing), all accrued and unpaid Interest, Fees and Breakage Fees                                         36   107601465\V-7                                                                    

 

          due to such Lender and other Credit Party for the immediately preceding Interest Period        (including any additional amounts or indemnified amounts payable under Sections 4.03        and  12.01  in  respect  of  such  payments),  plus,  if  applicable,  the  amount  of  any  such        Interest,  Fees  and  Breakage  Fees  (including  any  additional  amounts  or  indemnified        amounts payable under Sections 4.03 and 12.01 in respect of such payments) payable for        any  prior  Interest  Period  to  the  extent  such  amount  has  not  been  distributed  to  such        Lender or Credit Party;                     (iii) third, as set forth in clause (A), (B) or (C) below, as applicable:                           (A)   prior  to  the  occurrence  of  the  Termination  Date,  to  the                    extent that a Borrowing Base Deficit exists on such date or the Aggregate                    Capital on such date exceeds the Facility Limit, to the Lenders (ratably,                    based on the aggregate outstanding Capital of each Lender at such time)                    for the payment of a portion of the outstanding Aggregate Capital at such                    time, in an aggregate amount equal to the amount necessary to reduce the                    Borrowing Base Deficit to zero ($0) or the amount necessary to reduce the                    Aggregate Capital to an amount equal to or less than the Facility Limit, as                    applicable;                           (B)   on  and  after  the  occurrence  of  the  Termination  Date,  to                    each Lender (ratably, based on the aggregate outstanding Capital of each                    Lender at such time) for the payment in full of the aggregate outstanding                    Capital of such Lender at such time; or                           (C)   prior  to  the  occurrence  of  the  Termination  Date,  at  the                    election of the Borrower from time to time and in accordance with Section                    2.02(d), to the payment of all or any portion of the outstanding Capital of                    the  Lenders  at  such  time  (ratably,  based  on  the  aggregate  outstanding                    Capital of each Lender at such time);                      (iv)  fourth, to the Credit Parties, the Affected Persons and the Borrower        Indemnified Parties (ratably, based on the amount due and owing at such time), for the        payment of all other Borrower Obligations then due and owing by the Borrower to the        Credit Parties, the Affected Persons and the Borrower Indemnified Parties; and                     (v)   fifth,  the  balance,  if  any,  to  be  paid  to  the  Borrower  for  its own        account.               (b)     All payments or distributions to be made by the Servicer, the Borrower  and  any  other  Person  to  the  Lenders  (or  their  respective  related  Affected  Persons  and  the  Borrower  Indemnified  Parties)  shall  be  paid  or  distributed  to  the  related  Group  Agent  at  its  Group Agent’s Account.  Each Group Agent, upon its receipt in the applicable Group Agent’s  Account of any such payments or distributions, shall distribute such amounts to the applicable  Lenders,  Affected  Persons  and  the  Borrower  Indemnified  Parties within  its  Group  ratably;  provided that if such Group Agent shall have received insufficient funds to pay all of the above  amounts in full on any such date, such Group Agent shall pay such amounts to the applicable                                         37   107601465\V-7                                                                    

 

    Lenders, Affected Persons and the Borrower Indemnified Parties within its Group in accordance  with the priority of payments set forth above, and with respect to any such category above for  which there are insufficient funds to pay all amounts owing on such date, ratably (based on the  amounts in such categories owing to each such Person in such Group) among all such Persons in  such Group entitled to payment thereof.               (c)     If  and  to  the  extent  the  Administrative  Agent,  any  Credit  Party,  any  Affected Person or any Borrower Indemnified Party shall be required for any reason to pay over  to any Person any amount received on its behalf hereunder, such amount shall be deemed not to  have been so  received but  rather to  have been retained by the Borrower and, accordingly, the  Administrative Agent,  such Credit Party, such  Affected Person or such Borrower  Indemnified  Party, as the case may be, shall have a claim against the Borrower for such amount.               (d)     For the purposes of this Section 3.01:                     (i)   If, on any day, the Outstanding Balance of any Pool Receivable is        reduced  or  adjusted  as  a  result  of  any  defective,  rejected,  returned,  repossessed  or        foreclosed  goods  or  services,  or  any  revision,  cancellation,  allowance,  rebate,  credit        memo, discount or other adjustment made by the Borrower, any Originator, the Servicer        or  any  Affiliate  of  the  Servicer,  or  any  setoff,  counterclaim  or  dispute  between  the        Borrower  or  any  Affiliate  of  the  Borrower,  an  Originator  or  any  Affiliate  of  an        Originator, or the Servicer or any Affiliate of the Servicer, and an Obligor, the Borrower        shall be deemed to have received on such day a Collection of such Pool Receivable in the        amount  of  such  reduction  or  adjustment  and  shall  immediately  pay  any  and  all  such        amounts  in  respect  thereof  to  a  Collection  Account  (or  as  otherwise  directed  by  the        Administrative Agent at such time) for the benefit of the Credit Parties for application        pursuant to Section 3.01(a);                     (ii)  if on any day any of the representations  or warranties  in  Section        6.01 is not true with respect to  any Pool Receivable, the Borrower shall be deemed to        have  received  on  such  day  a  Collection  of  such  Pool  Receivable in  full  and  shall        immediately pay the amount of such deemed Collection to a Collection Account (or as        otherwise directed by the Administrative Agent at such time) for the benefit of the Credit        Parties  for  application  pursuant  to  Section  3.01(a)  (Collections  deemed  to  have  been        received pursuant to Section 3.01(d) are hereinafter sometimes referred to as “Deemed        Collections”);                     (iii) except as provided in clauses (i) or (ii) above or otherwise required        by Applicable Law or the relevant Contract, all Collections received from an Obligor of        any Receivable shall be applied to the Receivables of such Obligor in the order of the age        of  such  Receivables,  starting  with  the  oldest  such  Receivable, unless  such  Obligor        designates in writing its payment for application to specific Receivables; and                     (iv)  if and to the extent the Administrative Agent, any Credit Party, any        Affected Person or any Borrower Indemnified Party shall be required for any reason to        pay  over  to  an  Obligor  (or  any  trustee,  receiver,  custodian  or similar  official  in  any        Insolvency  Proceeding)  any  amount  received  by  it  hereunder,  such  amount  shall  be                                         38   107601465\V-7                                                                    

 

          deemed not to have been so received by such Person but rather to have been retained by        the Borrower and, accordingly, such Person shall have a claim against the Borrower for        such amount, payable when and to the extent that any distribution from or on behalf of        such Obligor is made in respect thereof.         SECTION 3.02.   Payments and Computations, Etc.                 (a)     All  amounts  to  be  paid  by  the  Borrower  or  the  Servicer  to  the  Administrative Agent, any Credit Party, any Affected Person or any Borrower Indemnified Party  hereunder shall be paid no later than noon (12:00 p.m.) (New York City time) on the day when  due in same day funds to the applicable Group Agent’s Account.               (b)     Each of the Borrower and the Servicer shall, to the extent permitted by  Applicable Law, pay interest on any amount not paid or deposited by it when due hereunder, at  an interest rate per annum equal to 2.50% per annum above the Base Rate, payable on demand.                (c)     All  computations  of  interest  under  subsection  (b)  above  and  all  computations of Interest, Fees and other amounts hereunder shall be made on the basis of a year  of 360 days (or, in the case of amounts determined by reference to  the Base Rate, 365 or 366  days, as applicable) for the actual number of days (including the first but excluding the last day)  elapsed.  Whenever any payment or deposit to be made hereunder shall be due on a day other  than a Business Day, such payment or deposit shall be made on the next succeeding Business  Day and such extension of time shall be included in the computation of such payment or deposit.                                    ARTICLE IV                                            INCREASED COSTS; FUNDING LOSSES; TAXES; ILLEGALITY AND SECURITY                                   INTEREST         SECTION 4.01.   Increased Costs.               (a)     Increased Costs Generally.  If any Change in Law shall:                     (i)   impose,  modify  or  deem  applicable  any  reserve,  special  deposit,        liquidity,  compulsory  loan,  insurance  charge  or  similar  requirement  against  assets  of,        deposits with or for the account of, or credit extended or participated in by, any Affected        Person;                     (ii)  subject  any  Affected  Person  to  any  Taxes  (except  to  the  extent        such  Taxes  are  Indemnified  Taxes  for  which  relief  is  sought  under  Section  4.03  or        Excluded  Taxes)  on  its  loans,  loan  principal,  commitments  or  other  obligations,  or  its        deposits, reserves, other liabilities or capital attributable thereto; or                     (iii) impose  on  any  Affected  Person  any  other  condition,  cost  or        expense  (other  than  Taxes)  (A)  affecting  the  Collateral,  this  Agreement,  any  other        Transaction Document, any Program Support Agreement, any Loan or (B) affecting its        obligations or rights to make Loans;                                          39   107601465\V-7                                                                    

 

    and the result of any of the foregoing shall be to increase the cost to such Affected Person (A)  acting  as  the  Administrative  Agent,  a  Group  Agent  or  a  Lender  hereunder  or  as  a  Program  Support  Provider  with  respect  to  the  transactions  contemplated hereby,  (B)  of  funding  or  maintaining any Loan or (C) of maintaining its obligation to fund or maintain any Loan, or to  reduce the amount of any sum received or receivable by such Affected Person hereunder, then,  upon  request  of  such  Affected  Person  (or  its  Group  Agent),  the Borrower  shall  pay  to  such  Affected Person such additional amount or amounts as will compensate such Affected Person for  such additional costs incurred or reduction suffered.               (b)     Capital and Liquidity Requirements.  If any Affected Person determines  that any Change in Law affecting such Affected Person or any lending office of such Affected  Person  or  such  Affected  Person’s  holding  company,  if  any,  regarding  capital  or  liquidity  requirements, has or would have the effect of (x) increasing the amount of capital required to be  maintained by such Affected Person or Affected Person’s holding company, if any, (y) reducing  the rate of return on such Affected Person’s capital or on the capital of such Affected Person’s  holding company, if any, or (z) causing an internal capital or liquidity charge or other imputed  cost to be assessed upon such Affected Person or Affected Person’s holding company, if any, in  each case, as a consequence of (A) this Agreement or any other Transaction Document, (B) the  commitments of such Affected Person hereunder or under any other Transaction Document or  related Program Support Agreement, (C) the Loans made by such Affected Person or (D)  any  Capital (or portion thereof), to a level below that which such Affected Person or such Affected  Person’s  holding  company  could  have  achieved  but  for  such  Change  in  Law  (taking  into  consideration such Affected Person’s policies and the policies of such Affected Person’s holding  company with respect to capital adequacy and liquidity), then from time to time, upon request of  such Affected Person (or its Group Agent), the Borrower will pay to such Affected Person such  additional  amount  or  amounts  as  will  compensate  such  Affected  Person  or  such  Affected  Person’s holding company for any such increase, reduction or charge.               (c)     Adoption  of  Changes  in  Law.   The  Borrower  acknowledges  that  any  Affected Person may institute measures in anticipation of a Change in Law (including, without  limitation, the imposition of internal charges on such Affected Person’s interests or obligations  under  any  Transaction  Document  or  Program  Support  Agreement),  and  may  commence  allocating  charges  to  or  seeking  compensation  from  the  Borrower  under  this  Section  4.01  in  connection with such measures, in advance of the effective date of such Change in Law, and the  Borrower  agrees  to  pay  such  charges  or  compensation  to  such  Affected  Person,  following  demand therefor  in  accordance  with  the terms  of this  Section 4.01, without  regard to  whether  such effective date has occurred.               (d)     Certificates for Reimbursement.  A certificate of an Affected Person (or  its Group Agent on its behalf) setting forth the amount or amounts necessary to compensate such  Affected Person or its holding company, as the case may be, as specified in clause (a), (b) or (c)  of  this  Section  4.01  and  delivered  to  the  Borrower,  shall  be  conclusive  absent  manifest  error.   The  Borrower  shall,  subject  to  the  priorities  of  payment  set  forth  in  Section  3.01,  pay  such  Affected Person the amount shown as due on any such certificate on the first Settlement Date  occurring after the Borrower’s receipt of such certificate.                                          40   107601465\V-7                                                                    

 

                (e)     Delay in Requests.  Failure or delay on the part of any Affected Person  to  demand  compensation  pursuant  to  this  Section  4.01  shall  not constitute  a  waiver  of  such  Affected Person’s right to demand such compensation.         SECTION 4.02.   Funding Losses.               (a)     The Borrower will pay each Lender all Breakage Fees.               (b)     A certificate of a Lender (or its Group Agent on its behalf) setting forth  the amount or amounts necessary to compensate such Lender, as specified in  clause (a) above  and delivered to the Borrower, shall be conclusive absent manifest error.  The Borrower shall,  subject to the priorities of payment set forth in Section 3.01, pay such Lender the amount shown  as due on any such certificate on the first Settlement Date occurring after the Borrower’s receipt  of such certificate.         SECTION 4.03.   Taxes.               (a)     Payments Free of Taxes.  Any and all payments by or on account of any  obligation of the Borrower under any Transaction Document shall be made without deduction or  withholding for any Taxes, except as required by Applicable Law.  If any Applicable Law (as  determined  in  the  good  faith  discretion  of  the  applicable  Credit  Party,  Affected  Person  or  Borrower Indemnified Party) requires the deduction or withholding of any Tax from any such  payment by a Credit Party, Affected Person or Borrower Indemnified Party, then the applicable  Credit  Party,  Affected  Person  or  Borrower  Indemnified  Party  shall  be  entitled  to  make  such  deduction  or  withholding  and  shall  timely  pay  the  full  amount  deducted  or  withheld  to  the  relevant  Governmental  Authority  in  accordance  with  Applicable  Law,  and,  if  such  Tax  is  an  Indemnified Tax, then the sum payable by the Borrower shall be increased as necessary so that  after such deduction or withholding has been made (including such deductions and withholdings  applicable to additional sums payable under this Section), the applicable Credit Party, Affected  Person  or  Borrower  Indemnified  Party  receives  an  amount  equal  to  the  sum  it  would  have  received had no such deduction or withholding been made.               (b)     Payment of Other Taxes by the Borrower.  The Borrower shall timely  pay to the relevant Governmental Authority in accordance with Applicable Law, or, at the option  of the Administrative Agent, timely reimburse it for the payment of, any Other Taxes.               (c)     Indemnification by the Borrower.  The Borrower shall indemnify each  Affected Person, within ten (10) calendar days after demand therefor, for the full amount of any  (I)  Indemnified  Taxes  (including  Indemnified  Taxes  imposed  or  asserted  on  or  attributable  to  amounts payable under this Section) payable or paid by such Affected Person or required to be  withheld or deducted  from  a payment  to  such  Affected Person and  any  penalties, interest  and  reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified  Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority and  (II) Taxes that arise because a Loan is not treated for U.S. federal, state, local or franchise Tax  purposes as intended under Section 13.14 (such indemnification will include any U.S. federal,  state or local income and franchise Taxes necessary to make such Affected Person whole on an  after-tax basis taking into account the taxability of receipt of payments under this clause (II) and                                         41   107601465\V-7                                                                    

 

    any  reasonable  expenses  (other  than  Taxes)  arising  out  of,  relating  to,  or  resulting  from  the  foregoing).   Promptly  upon  having  knowledge  that  any  such  Indemnified  Taxes  have  been  levied,  imposed  or  assessed,  and  promptly  upon  notice  by  the  Administrative  Agent  or  any  Affected Person (or its related Group Agent), the Borrower shall pay such Indemnified Taxes  directly  to  the  relevant  taxing  authority  or  Governmental  Authority;  provided  that  neither  the  Administrative Agent nor any Affected Person shall be under any obligation to provide any such  notice to the Borrower.  A certificate as to the amount of such payment or liability delivered to  the  Borrower  by  an  Affected  Person  (with  a  copy  to  the  Administrative  Agent),  or  by  the  Administrative Agent on its own behalf or on behalf of an Affected Person, shall be conclusive  absent manifest error.               (d)     Indemnification by the Lenders.  Each Lender (other than the Conduit  Lenders) shall severally indemnify the Administrative Agent, within ten (10) calendar days after  demand therefor, for (i) any Indemnified Taxes attributable to such Lender, its Related Conduit  Lender or any of their respective Affiliates that are Affected Persons (but only to the extent that  the Borrower and its Affiliates have not already indemnified the Administrative Agent for such  Indemnified  Taxes  and  without  limiting  any  obligation  of  the  Borrower,  the  Servicer  or  their  Affiliates to do so), (ii) any Taxes attributable to the failure of such Lender, its Related Conduit  Lender  or  any  of  their  respective  Affiliates  that  are  Affected Persons  to  comply  with  Section  13.03(f)  relating  to  the  maintenance  of  a  Participant  Register and  (iii)  any  Excluded  Taxes  attributable to such Lender, its Related Conduit Lender or any of their respective Affiliates that  are  Affected  Persons,  in  each  case,  that  are  payable  or  paid  by  the  Administrative  Agent  in  connection with any Transaction Document, and any reasonable expenses arising therefrom or  with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by  the relevant Governmental Authority.  A certificate as to the amount of such payment or liability  delivered to any Lender (or its Group Agent) by the Administrative Agent shall be conclusive  absent  manifest  error.   Each  Lender  (other  than  the  Conduit  Lenders)  hereby  authorizes  the  Administrative Agent to set off and apply any and all amounts at any time owing to such Lender,  its Related Conduit Lender or any of their respective Affiliates that are Affected Persons under  any Transaction Document or otherwise payable by the Administrative Agent to such Lender, its  Related Conduit Lender or any of their respective Affiliates that are Affected Persons from any  other source against any amount due to the Administrative Agent under this clause (d).               (e)     Evidence  of  Payments.   As  soon  as  practicable  after  any  payment of  Taxes by the Borrower to a Governmental Authority pursuant to this Section 4.03, the Borrower  shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by  such  Governmental  Authority  evidencing  such  payment,  a  copy  of the  return  reporting  such  payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.               (f)     Status of Affected Persons.                       (i)   Any  Affected  Person  that  is  entitled  to  an  exemption  from  or        reduction  of  withholding  Tax  with  respect  to  payments  made  under  any  Transaction        Document  shall  deliver  to  the  Borrower  and  the  Administrative  Agent,  at  the  time  or        times reasonably requested by the Borrower or the Administrative Agent, such properly        completed  and  executed  documentation  reasonably  requested  by  the  Borrower  or  the        Administrative Agent as will permit such payments to be made without withholding or at                                         42   107601465\V-7                                                                    

 

                                   a reduced rate of withholding.  In addition, any Affected Person, if reasonably requested       by  the  Borrower  or  the  Administrative  Agent,  shall  deliver  such  other  documentation       prescribed  by  Applicable  Law  or  reasonably  requested  by  the  Borrower  or  the       Administrative  Agent  as  will  enable  the  Borrower  or  the  Administrative  Agent  to       determine  whether  or  not  such  Affected  Person  is  subject  to  backup  withholding  or       information  reporting  requirements.   Notwithstanding  anything  to  the  contrary  in  the       preceding  two  sentences,  the  completion,  execution  and  submission  of  such       documentation  (other  than  such  documentation  set  forth  in  Sections  4.03(f)(ii)(A),       4.03(f)(ii)(B) and 4.03(g)) shall not be required if, in the Affected Person’s reasonable       judgment, such completion, execution or submission would subject such Affected Person       to any material unreimbursed cost or expense or would materially prejudice the legal or       commercial position of such Affected Person                    (ii)  Without limiting the generality of the foregoing:                          (A)   an Affected Person that is a U.S. Person shall deliver to the                   Borrower  and  the  Administrative  Agent  from  time  to  time  upon  the                   reasonable request of the Borrower or the Administrative Agent, executed                   originals  of  Internal  Revenue  Service  Form  W-9  certifying  that such                   Affected Person is exempt from U.S. federal backup withholding tax;                          (B)   any Affected Person that is not a U.S. Person shall, to the                   extent  it  is  legally  entitled  to  do  so,  deliver  to  the  Borrower  and  the                   Administrative Agent (in such number of copies as shall be requested of                   the Affected Person) from time to time upon the reasonable request of the                   Borrower  or  the  Administrative  Agent,  whichever  of  the  following  is                   applicable:                                (1)   in the case of such an Affected Person claiming the                         benefits  of  an  income  tax  treaty  to  which  the  United  States  is a                         party,  (x)  with  respect  to  payments  of  interest  under  any                         Transaction  Document,  executed  originals  of  Internal  Revenue                         Service  Form  W-8BEN  establishing  an  exemption  from,  or                         reduction  of,  U.S.  federal  withholding  Tax  pursuant  to  the                         “interest” article of such tax treaty and (y) with respect to any other                         applicable  payments  under  any  Transaction  Document,  Internal                         Revenue Service Form W-8BEN establishing an exemption from,                         or  reduction  of,  U.S.  federal  withholding  Tax  pursuant  to  the                         “business profits” or “other income” article of such tax treaty;                                (2)   executed  originals  of  Internal  Revenue  Service                         Form W-8ECI;                                (3)   in the case of such an Affected Person claiming the                         benefits  of  the  exemption  for  portfolio  interest  under  Section                         881(c) of the Code, (x) a certificate to the effect that such Affected                         Person is not a “bank” within the meaning of Section 881(c)(3)(A)                                        43  107601465\V-7                                                                                 

 

                            of the Code, a “10 percent shareholder” of the Borrower within the                          meaning  of  Section  881(c)(3)(B)  of  the  Code,  or  a  “controlled                          foreign corporation” described in Section 881(c)(3)(C) of the Code                          (a “U.S. Tax Compliance Certificate”) and (y) executed originals                          of Internal Revenue Service Form W-8BEN; or                                 (4)   to  the  extent  such  Affected  Person  is  not  the                          beneficial  owner,  executed  originals  of  Internal  Revenue  Service                          Form  W-8IMY,  accompanied  by  Internal  Revenue  Service  Form                          W-8ECI,  Internal  Revenue  Service  Form  W-8BEN,  a  U.S.  Tax                          Compliance  Certificate,  Internal  Revenue  Service  Form  W-9,                          and/or  other  certification  documents  from  each  beneficial  owner,                          as  applicable;  provided  that,  if  such  Affected  Person  is  a                          partnership  and  one  or  more  direct  or  indirect  partners  of  such                          Affected Person are claiming the portfolio interest exemption, such                          Affected  Person  may  provide  a  U.S.  Tax  Compliance  Certificate                          on behalf of each such direct and indirect partner; and                           (C)   any Affected Person that is not a U.S. Person shall, to the                    extent  it  is  legally  entitled  to  do  so,  deliver  to  the  Borrower  and  the                    Administrative Agent (in such number of copies as shall be requested by                    the  recipient),  from  time  to  time  upon  the  reasonable  request  of  the                    Borrower  or  the  Administrative  Agent,  executed  originals  of  any other                    form  prescribed  by  Applicable  Law  as  a  basis  for  claiming  exemption                    from  or  a  reduction  in  U.S.  federal  withholding  Tax,  duly  completed,                    together with such supplementary documentation as may be prescribed by                    Applicable  Law  to  permit  the  Borrower  or  the  Administrative  Agent  to                    determine the withholding or deduction required to be made.               (g)     Documentation  Required  by  FATCA.   If  a  payment  made  to  an  Affected Person under any Transaction Document would be subject to U.S. federal withholding  Tax  imposed  by  FATCA  if  such  Affected  Person  were  to  fail  to  comply  with  the  applicable  reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of  the  Code,  as  applicable),  such  Affected  Person  shall  deliver  to  the  Borrower  and  the  Administrative  Agent  at  the  time  or  times  prescribed  by  Applicable  Law  and  at  such  time  or  times  reasonably  requested  by  the  Borrower  or  the  Administrative  Agent  such  documentation  prescribed by Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code)  and such additional documentation reasonably requested by the Borrower or the Administrative  Agent as may be necessary for the Borrower and the Administrative Agent to comply with their  obligations under FATCA and to determine that such Affected Person has complied with such  Affected Person’s obligations under FATCA or to determine the amount to deduct and withhold  from  such  payment.   Solely  for  purposes  of  this  clause  (g),  “FATCA”  shall  include  any  amendments  made  to  FATCA  after  the  date  of  this  Agreement  and  any  fiscal  or  regulatory  legislation, rules or practices adopted pursuant to any intergovernmental agreement entered into  in connection with FATCA.                                          44   107601465\V-7                                                                    

 

                (h)     Survival.  Each party’s obligations under this Section 4.03 shall survive  the resignation or replacement of the Administrative Agent or any assignment of rights by, or the  replacement of, a Credit Party or any other Affected person, the termination of the Commitments  and the repayment, satisfaction or discharge of all the Borrower Obligations and the Servicer’s  obligations hereunder.               (i)     Updates.  Each Affected Person agrees that if any form or certification  it previously delivered pursuant to this Section 4.03 expires or becomes obsolete or inaccurate in  any respect, it shall update such form or certification or promptly notify the Borrower and the  Administrative Agent in writing of its legal inability to do so.         SECTION 4.04.   Inability  to  Determine  Adjusted  LIBOR  or  LMIR;  Change  in  Legality.               (a)    If any Group Agent shall have determined (which determination shall be  conclusive and binding upon the parties hereto absent manifest error) on any day, by reason of  circumstances  affecting  the  interbank  Eurodollar market,  either  that:  (i)  dollar  deposits  in  the  relevant amounts and for the relevant Interest Period or day, as applicable, are not available, (ii)  adequate and reasonable means do not exist for ascertaining Adjusted LIBOR or LMIR for such  Interest  Period  or  day,  as  applicable,  or  (iii)  Adjusted  LIBOR or  LMIR  determined  pursuant  hereto  does  not  accurately  reflect  the  cost  to  the  applicable  Affected  Person  (as  conclusively  determined  by  such  Group  Agent)  of  maintaining  any  Portion  of  Capital  during  such  Interest  Period or day,  as  applicable, such Group Agent shall promptly  give telephonic notice of such  determination, confirmed in writing, to the Borrower on such day.  Upon delivery of such notice:  (i) no Portion of Capital shall be funded thereafter at Adjusted LIBOR or LMIR unless and until  such Group Agent shall have given notice to the Administrative Agent and the Borrower that the  circumstances  giving  rise  to  such  determination  no  longer  exist  and  (ii)  with  respect  to  any  outstanding Portion of Capital then funded at Adjusted LIBOR or LMIR, such Interest Rate shall  automatically be converted to the Base Rate.               (b)    If on any day any Group Agent shall have been notified by any Affected  Person  that  such  Affected  Person  has  determined  (which  determination  shall  be  final  and  conclusive  absent  manifest  error)  that  any  Change  in  Law,  or  compliance by such Affected  Person with any Change in Law, shall make it unlawful or impossible for such Affected Person  to fund or maintain any Portion of Capital at or by reference to Adjusted LIBOR or LMIR, such  Group Agent shall notify the Borrower and the Administrative Agent thereof.  Upon receipt of  such  notice,  until  the  applicable  Group  Agent  notifies  the  Borrower  and  the  Administrative  Agent that the circumstances giving rise to such determination no longer apply, (i) no Portion of  Capital shall be funded at or by reference to Adjusted LIBOR or LMIR and (ii) the Interest for  any outstanding portions of Capital then funded at Adjusted LIBOR or LMIR shall automatically  and immediately be converted to the Base Rate.         SECTION 4.05.   Security Interest.               (a)    As  security  for  the  performance  by  the  Borrower  of  all  the  terms,  covenants and agreements on the part of the Borrower to be performed under this Agreement or  any  other  Transaction  Document,  including  the  punctual  payment when  due  of  the  Aggregate                                         45   107601465\V-7                                                                    

 

    Capital and all Interest in respect of the Loans and all other Borrower Obligations, the Borrower  hereby grants to the Administrative Agent for its benefit and the ratable benefit of the Secured  Parties, a valid, continuing and perfected first priority security interest in, all of the Borrower’s  right, title and interest in, to and under all of the following, whether now or hereafter owned,  existing  or  arising  (collectively,  the  “Collateral”):  (i)  all  Pool  Receivables,  (ii)  all  Related  Security  with  respect  to  such  Pool  Receivables,  (iii)  all  Collections  with  respect  to  such  Pool  Receivables, (iv) the Lock-Boxes and Collection Accounts and all amounts on deposit therein,  and all certificates and instruments, if any, from time to time evidencing such Lock-Boxes and  Collection Accounts and amounts on deposit therein, (v) all rights (but none of the obligations)  of  the  Borrower  under  the  Purchase  and  Sale  Agreement,  (vi)  all  other  personal  and  fixture  property  or  assets  of  the  Borrower  of  every  kind  and  nature  including,  without  limitation,  all  goods  (including  inventory,  equipment  and  any  accessions  thereto),  instruments  (including  promissory notes), documents, accounts, chattel paper (whether tangible or electronic), deposit  accounts,  securities  accounts,  securities  entitlements,  letter of  credit  rights,  commercial  tort  claims,  securities  and  all  other  investment  property,  supporting  obligations,  money,  any  other  contract rights or rights to the payment of money, insurance claims and proceeds, and all general  intangibles  (including  all  payment  intangibles)  (each  as  defined  in  the  UCC)  and  (vii)  all  proceeds of, and all amounts received or receivable under any or all of, the foregoing.               (b)    The Administrative Agent (for the benefit of the Secured Parties) shall  have,  with  respect  to  all  the  Collateral,  and  in  addition  to  all  the  other  rights  and  remedies  available to the Administrative Agent (for the benefit of the Secured Parties), all the rights and  remedies  of  a  secured  party  under  any  applicable  UCC.   The  Borrower  hereby  authorizes  the  Administrative Agent to file financing statements describing as the collateral covered thereby as  “all of the debtor’s personal property or assets” or words to that effect, notwithstanding that such  wording may be broader in scope than the collateral described in this Agreement.               (c)    Immediately  upon  the  occurrence  of  the  Final  Payout  Date,  the  Collateral shall be automatically released from the lien created hereby, and this Agreement and  all  obligations  (other  than  those  expressly  stated  to  survive  such  termination)  of  the  Administrative  Agent,  the  Lenders  and  the  other  Credit  Parties hereunder  shall  terminate,  all  without delivery of any instrument or performance of any act by any party, and all rights to the  Collateral  shall  revert  to  the  Borrower;  provided,  however,  that  promptly  following  any  such  termination,  and  at  the  expense  of  the  Borrower,  the  Administrative  Agent  shall  execute  (if  applicable) and deliver to the Borrower UCC-3 termination statements and such other documents  as the Borrower shall reasonably request to evidence such termination.                                    ARTICLE V                                                    CONDITIONS TO EFFECTIVENESS AND CREDIT EXTENSIONS               SECTION 5.01.     Conditions Precedent to Effectiveness and the Initial Credit  Extension.   This  Agreement  shall  become  effective  as  of  the  Closing  Date  when  (a)  the  Administrative Agent shall have received each of the documents, agreements (in fully executed  form), opinions of counsel, lien search results, UCC filings, certificates and other  deliverables  listed  on  the  closing  memorandum  attached  as  Exhibit  H  hereto, in  each  case,  in  form  and  substance acceptable to the Administrative Agent and (b) all fees and expenses payable by the                                         46   107601465\V-7                                                                    

 

    Borrower on the Closing Date to the Credit Parties have been paid in full in accordance with the  terms of the Transaction Documents.               SECTION 5.02.     Conditions  Precedent  to  All  Credit  Extensions.   Each  Credit  Extension  hereunder  on  or  after  the  Closing  Date  shall  be  subject  to  the  conditions  precedent that:                (a)    in  the  case  of  a  Loan,  the  Borrower  shall  have  delivered  to  the  Administrative Agent and each Group Agent a Loan Request for such Loan, in accordance with  Section 2.02(a);               (b)    the Servicer shall have delivered to the Administrative Agent and each  Group Agent all Information Packages required to be delivered hereunder;               (c)    the  conditions  precedent  to  such  Credit  Extension  specified  in Section  2.01(a) through (d) shall be satisfied;               (d)    on the date of such Credit Extension the following statements shall be  true  and  correct  (and  upon  the  occurrence  of  such  Credit  Extension,  the  Borrower  and  the  Servicer shall be deemed to have represented and warranted that such statements are then true  and correct):                     (i)   the  representations  and  warranties  of  the  Borrower  and  the        Servicer contained in Sections 6.01 and 6.02 are true and correct in all material respects        (unless such representations and warranties contain a materiality qualifier, in which case        such representations and warranties shall be true and correct as made) on and as of the        date  of  such  Credit  Extension  as  though  made  on  and  as  of  such date  unless  such        representations and warranties by their terms refer to an earlier date, in which case they        shall  be  true  and  correct  in  all  material  respects  (unless  such  representations  and        warranties  contain  a  materiality  qualifier,  in  which  case  such representations  and        warranties shall be true and correct as made) on and as of such earlier date;                     (ii)  no Event of Default or Unmatured Event of Default has occurred        and is continuing, and no Event of Default or Unmatured Event of Default would result        from such Credit Extension;                     (iii) no Borrowing Base Deficit exists or would exist after giving effect        to such Credit Extension;                     (iv)  the  Aggregate  Capital  would  not  equal  an  amount  less  than  the        Minimum Funding Threshold after giving effect to such Credit Extension; and                     (v)   the Termination Date has not occurred.         SECTION 5.03.   Conditions Precedent to All Releases.  Each Release hereunder on or  after the Closing Date shall be subject to the conditions precedent that:                                          47   107601465\V-7                                                                    

 

                (a)    after giving effect to such Release, the Servicer shall be holding in trust  for the benefit of the Secured Parties an amount of Collections sufficient to pay the sum of (x) all  accrued and unpaid Servicing Fees, Interest, Fees and Breakage Fees, in each case, through the  date of such Release, (y) the amount of any Borrowing Base Deficit and (z) the amount of all  other accrued and unpaid Borrower Obligations through the date of such Release;               (b)    the Borrower shall use the proceeds of such Release solely to pay (x) the  purchase price for Receivables purchased by the Borrower in accordance with the terms of the  Purchase and Sale Agreement and (y) any amounts owing by the Borrower to the Originators  under the Subordinated Notes; and               (c)    on the date of such Release the following statements shall be true and  correct (and upon the occurrence of such Release, the Borrower and the Servicer shall be deemed  to have represented and warranted that such statements are then true and correct):                     (i)   the  representations  and  warranties  of  the  Borrower  and  the        Servicer contained in Sections 6.01 and 6.02 are true and correct in all material respects        (unless such representations and warranties contain a materiality qualifier, in which case        such representations and warranties shall be true and correct as made) on and as of the        date of such Release as though made on and as of such date unless such representations        and warranties by their terms refer to an earlier date, in which case they shall be true and        correct  in  all  material  respects  (unless  such  representations  and  warranties  contain  a        materiality qualifier, in which case such representations and warranties shall be true and        correct as made) on and as of such earlier date;                     (ii)  no Event of Default has occurred and is continuing, and no Event        of Default would result from such Release;                     (iii) no Borrowing Base Deficit exists or would exist after giving effect        to such Release; and                     (iv)  the Termination Date has not occurred.                                    ARTICLE VI                                                              REPRESENTATIONS AND WARRANTIES         SECTION 6.01.   Representations  and  Warranties  of  the  Borrower.   The  Borrower  represents and warrants to each Credit Party as of the Closing Date, on each Settlement Date and  on each day on which a Credit Extension shall have occurred:               (a)    Organization and Good Standing.  The Borrower is a duly organized and  validly  existing  limited  liability  company  in  good  standing  under  the  laws  of  the  State  of  Delaware  and  has  full  power  and  authority  under  its  organizational  documents  and  under  the  laws of the State of Delaware to own its properties and to conduct its business as such properties  are currently owned and such business is presently conducted.                                          48   107601465\V-7                                                                    

 

                (b)    Due Qualification.  The Borrower is duly qualified to do business, is in  good  standing  as  a  foreign  entity  and  has  obtained  all  necessary  licenses  and  approvals  in  all  jurisdictions  in  which  the  conduct  of  its  business  requires  such  qualification,  licenses  or  approvals, except where the failure to do so could not reasonably be expected to have a Material  Adverse Effect.               (c)    Power  and  Authority;  Due  Authorization.   The  Borrower  (i)  has  all  necessary  power  and  authority  to  (A)  execute  and  deliver  this  Agreement  and  the  other  Transaction Documents to which it is a party, (B) perform its obligations under this Agreement  and the other Transaction Documents to which it is a party and (C) grant a security interest in the  Collateral to the Administrative Agent on the terms and subject to the conditions herein provided  and (ii) has duly authorized by all necessary action such grant and the execution, delivery and  performance of, and the consummation of the transactions provided for in, this Agreement and  the other Transaction Documents to which it is a party.               (d)    Binding Obligations.  This Agreement and each of the other Transaction  Documents to which the Borrower is a party constitutes legal, valid and binding obligations of  the Borrower, enforceable against the Borrower in accordance with their respective terms, except  (i) as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization,  moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii)  as such enforceability may be limited by general principles of equity, regardless of whether such  enforceability is considered in a proceeding in equity or at law.               (e)    No Conflict or Violation.  The execution, delivery and performance of,  and  the  consummation  of  the  transactions  contemplated  by,  this Agreement  and  the  other  Transaction Documents to which the Borrower is a party, and the fulfillment of the terms hereof  and thereof, will not (i) conflict with, result in any breach of any of the terms or provisions of, or  constitute  (with  or  without  notice  or  lapse  of  time  or  both)  a default  under  its  organizational  documents  or  any  indenture,  sale  agreement,  credit  agreement,  loan  agreement,  security  agreement, mortgage, deed of trust or other agreement or instrument to which the Borrower is a  party or by which it or any of its properties is bound, (ii) result in the creation or imposition of  any Adverse Claim upon any of the Collateral or any of its properties pursuant to the terms of  any  such  indenture,  credit  agreement,  loan  agreement,  security agreement,  mortgage,  deed  of  trust  or  other  agreement  or  instrument,  other  than  this  Agreement  and  the  other  Transaction  Documents or (iii) conflict with or violate any Applicable Law.               (f)    Litigation  and  Other  Proceedings.   (i)   There  is  no  action,  suit,  proceeding  or  investigation  pending  or,  to  the  best  knowledge  of  the  Borrower,  threatened,  against the Borrower before any Governmental Authority and (ii) the Borrower is not subject to  any  order,  judgment,  decree,  injunction,  stipulation  or  consent  order  of  or  with  any  Governmental Authority that, in the case of either of the foregoing clauses (i) and (ii), (A) asserts  the invalidity of this  Agreement  or any other Transaction Document, (B) seeks  to  prevent  the  grant of a security interest in any Collateral by the  Borrower to the Administrative Agent, the  ownership  or  acquisition  by  the  Borrower  of  any  Pool  Receivables  or  other  Collateral  or  the  consummation  of  any  of  the  transactions  contemplated  by  this  Agreement  or  any  other  Transaction Document, (C) seeks any determination or ruling that could materially and adversely  affect the performance by the Borrower of its obligations under, or the validity or enforceability                                         49   107601465\V-7                                                                    

 

    of, this Agreement or any other Transaction Document or (D) individually or in the aggregate for  all  such  actions,  suits,  proceedings  and  investigations  could  reasonably  be  expected  to  have  a  Material Adverse Effect.               (g)    No Consents.  The Borrower is not required to obtain the consent of any  other  party  or  any  consent,  order,  license,  approval,  registration,  authorization,  action  or  declaration  of  or  with  any  Governmental  Authority  in  connection  with  the  grant  of  a  security  interest  in  the  Collateral  by  the  Borrower  to  the  Administrative  Agent  hereunder  or  the  due  execution, delivery, or performance by the Borrower of this Agreement or any other Transaction  Document  to  which  it  is  a  party  or  the  consummation  by  the  Borrower  of  the  transactions  contemplated by this Agreement or any other Transaction Documents to which it is a party that  has not already been obtained and are in full force and effect or the failure of which to obtain  could not reasonably be expected to have a Material Adverse Effect.                (h)    Offices; Legal Name.  The Borrower’s sole jurisdiction of organization  is the State of Delaware and such jurisdiction has not changed within four (4) months prior to the  date  of  this  Agreement.   The  office  of  the  Borrower  is  located at  One  Applied  Plaza,  MS-4,  Cleveland, Ohio 44115.  The legal name of the Borrower is AIT Receivables LLC.               (i)    Investment Company Act; Volcker Rule.  The Borrower (i) is not, and is  not  controlled  by,  an  “investment  company”  registered  or  required  to  be  registered  under  the  Investment  Company  Act  and  (ii)  is  not  a  “covered  fund”  under  the  Volcker  Rule.   In  determining  that  the  Borrower  is  not  a  “covered  fund”  under  the  Volcker  Rule,  the  Borrower  relies on, and is entitled to rely on, the exemption from the definition of “investment company”  set forth in Section 3(c)(5) of the Investment Company Act.               (j)    No  Material  Adverse  Effect.   Since  the  date  of  formation  of  the  Borrower there has been no Material Adverse Effect with respect to the Borrower.               (k)    Accuracy  of  Information.   All  Information  Packages,  Interim  Reports,  Loan  Requests,  certificates,  reports,  statements,  documents  and  other  information,  other  than  financial projections, furnished to the Administrative Agent or any other Credit Party by or on  behalf  of  the  Borrower  pursuant  to  any  provision  of  this  Agreement  or  any  other  Transaction  Document, or in connection with or pursuant to any amendment or modification of, or waiver  under,  this  Agreement  or  any  other  Transaction  Document,  are,  at  the  time  the  same  are  so  furnished, complete and correct in all material respects on the date the same are furnished to the  Administrative Agent or such other Credit Party, and do not contain any material misstatement  of fact or omit to state a material fact or any fact necessary to make the statements contained  therein not misleading.               (l)    Anti-Money  Laundering/International  Trade  Law  Compliance.   No  Covered Entity is a Sanctioned Person.  No Covered Entity, either in its own right or through any  third  party,  (i)  has  any  of  its  assets  in  a  Sanctioned  Country or  in  the  possession,  custody  or  control of a Sanctioned Person in violation of any Anti-Terrorism Law; (ii) does business in or  with,  or  derives  any  of  its  income  from  investments  in  or  transactions  with,  any  Sanctioned  Country or Sanctioned Person in violation of any Anti-Terrorism  Law; or (iii) engages in any  dealings or transactions prohibited by any Anti-Terrorism Law.                                         50   107601465\V-7                                                                    

 

                (m)    Transaction  Information.   None  of  the  Borrower,  any  Affiliate  of  the  Borrower or any third party with which the Borrower or any Affiliate thereof has contracted, has  delivered,  in  writing  or  orally,  to  any  Rating  Agency,  any  Transaction  Information  without  providing such Transaction Information to the applicable Group Agent prior to delivery to such  Rating Agency and has not participated in any oral communications with respect to Transaction  Information with any Rating Agency without the participation of such Group Agent.               (n)    Compliance with Law.  The Borrower has complied in all respects with  all Applicable Laws to which it may be subject, except where the failure to so comply would not  reasonably be expected to have a Material Adverse Effect.               (o)    Eligible  Receivables.   Each  Receivable  included  as  an  Eligible  Receivable in the calculation of the Net Receivables Pool Balance as of any date is an Eligible  Receivable as of such date.               (p)    Bulk Sales Act.  No transaction contemplated by this Agreement requires  compliance by it with any bulk sales act or similar law.               (q)    Taxes.  The Borrower has (i) timely filed all tax returns (federal, state  and local) required to be filed by it and (ii) paid, or caused to be paid, all taxes, assessments and  other  governmental  charges,  if  any,  other  than  taxes,  assessments  and  other  governmental  charges  being  contested  in  good  faith  by  appropriate  proceedings  and  as  to  which  adequate  reserves have been provided in accordance with GAAP.               (r)    Opinions.   The  facts  regarding  the  Borrower,  the  Servicer,  each  Originator,  the  Performance  Guarantor,  the  Receivables,  the  Related  Security  and  the  related  matters set forth or assumed in each of the opinions of counsel delivered in connection with this  Agreement and the Transaction Documents are true and correct in all material respects.               (s)    Other Transaction Documents.  Each representation and warranty made  by the Borrower under each other Transaction Document to which it is a party is true and correct  in all material respects (unless such representation and warranty contains a materiality qualifier,  in which case such representation and warranty shall be true and correct as made) as of the date  when made, except for any such representation and warranty that applies as to an earlier date (in  which case, such representation and warranty shall be true and correct in all material  respects  (unless  such  representation  and  warranty  contains  a  materiality  qualifier,  in  which  case  such  representation and warranty shall be true and correct as made) as of such earlier date).               (t)    No Linked Accounts.  Except for account no. 1017305622 maintained at  the Administrative Agent, there are no Linked Accounts with respect to any Collection Account.               (u)    Margin Regulations.  The Borrower is not engaged, principally or as one  of its important activities, in the business of extending credit for the purpose of purchasing or  carrying  margin  stock  (within  the  meanings  of  Regulations  T,  U and  X  of  the  Board  of  Governors of the Federal Reserve System).               (v)    Solvency.  After giving effect to the transactions contemplated by this  Agreement and the other Transaction Documents, the Borrower is Solvent.                                         51   107601465\V-7                                                                    

 

                                         (w)    Perfection Representations.                    (i)   This Agreement creates a valid and continuing security interest (as       defined in the applicable UCC) in the Borrower’s right, title and interest in, to and under       the Collateral which (A) security interest has been perfected and is enforceable against       creditors of and purchasers from the Borrower and (B) will be free of all Adverse Claims       in such Collateral.                    (ii)  The  Receivables  constitute  “accounts”  or  “general  intangibles”       within the meaning of Section 9-102 of the UCC.                    (iii) The  Borrower  owns  and  has  good  and  marketable  title  to  the       Collateral free and clear of any Adverse Claim of any Person.                    (iv)  All  appropriate  financing  statements,  financing  statement       amendments and continuation statements have been filed in the proper filing office in the       appropriate  jurisdictions  under  Applicable  Law  in  order  to  perfect  (and  continue  the       perfection of) the sale or contribution of the Receivables and Related Security from each       Originator to the Borrower pursuant to the Purchase and Sale Agreement and the grant by       the Borrower of a security interest in the Collateral to the Administrative Agent pursuant       to this Agreement.                    (v)   Other  than  the  security  interest  granted  to  the  Administrative       Agent pursuant to this Agreement, the Borrower has not pledged, assigned, sold, granted       a security interest in, or otherwise conveyed any of the Collateral except as permitted by       this Agreement and the other Transaction Documents.  The Borrower has not authorized       the filing of and is not aware of any financing statements filed against the Borrower that       include  a  description  of  collateral  covering  the  Collateral  other  than  any  financing       statement  (i)  in  favor  of  the  Administrative  Agent  or  (ii)  that  has  been  terminated  or       amended to reflect the release of any security interest in the Collateral.  The Borrower is       not aware of any judgment lien, ERISA lien or tax lien filings against the Borrower.                    (vi)  Notwithstanding  any  other  provision  of  this  Agreement  or  any       other Transaction Document, the representations contained in this Section 6.01(w) shall       be continuing and remain in full force and effect until the Final Payout Date.              (x)    The Lock-Boxes and Collection Accounts.                    (i)   Nature  of  Collection  Accounts.   Each  Collection  Account       constitutes a “deposit account” within the meaning of the applicable UCC.                    (ii)  Ownership.   Each  Lock-Box  and  Collection  Account  is  in  the       name of the Borrower, and the Borrower owns and has good and marketable title to the       Collection Accounts free and clear of any Adverse Claim.                    (iii) Perfection.   The  Borrower  has  delivered  to  the  Administrative       Agent  a  fully  executed  Account  Control  Agreement  relating  to  each  Lock-Box  and       Collection  Account,  pursuant  to  which  each  applicable  Collection  Account  Bank  has                                        52  107601465\V-7                                                                                 

 

          agreed to comply with the instructions originated by the Administrative Agent directing        the  disposition  of  funds  in  such  Lock-Box  and  Collection  Account  without  further        consent by the Borrower, the Servicer or any other Person.  The Administrative Agent        has “control” (as defined in Section 9-104 of the UCC) over each Collection Account.                     (iv)  Instructions.  Neither the Lock-Boxes nor the Collection Accounts        are in the name of any Person other than the Borrower.  Neither the Borrower nor the        Servicer  has  consented  to  the  applicable  Collection  Account  Bank  complying  with        instructions of any Person other than the Administrative Agent.               (y)    Ordinary Course of Business.  Each remittance of Collections by or on  behalf of the Borrower to the Credit Parties under this Agreement will have been (i) in payment  of a debt incurred by the Borrower in the ordinary course of business or financial affairs of the  Borrower and (ii) made in the ordinary course of business or financial affairs of the Borrower.               (z)    Tax Status.  The Borrower (i) is, and shall at all relevant times continue  to be, a “disregarded entity” within the meaning of U.S. Treasury Regulation § 301.7701-3 for  U.S.  federal  income  tax  purposes  and  (ii)  is  not  and  will  not  at  any  relevant  time  become  an  association (or publicly traded partnership) taxable as an association for U.S. federal income tax  purposes.               (aa)   Liquidity Coverage Ratio.  The Borrower has not, does not and will not  during  this  Agreement  (x)  issue  any  obligations  that  (A)  constitute  asset-backed  commercial  paper,  or  (B)  are  securities  required  to  be  registered  under  the  Securities  Act  or  that  may  be  offered for sale under Rule 144A or a similar exemption from registration under the Securities  Act or the rules promulgated thereunder, or (y) issue any other debt obligations or equity interest  other  than  debt  obligations  substantially  similar  to  the  obligations  of  the  Borrower  under  this  Agreement  that  are  (A)  issued  to  other  banks  or  asset-backed  commercial  paper  conduits  in  privately negotiated transactions, and (B) subject to transfer restrictions substantially similar to  the  transfer  restrictions  set  forth  in  this  Agreement.   The  Borrower  further  represents  and  warrants that its assets and liabilities are consolidated with the assets and liabilities of Parent for  purposes of generally accepted accounting principles.               (bb)   Reaffirmation of Representations and Warranties.  On the date of each  Credit  Extension,  on  the  date  of  each  Release,  on  each  Settlement  Date  and  on  the  date  each  Information Package, Interim Report or other report is delivered to the Administrative Agent or  any  Group  Agent  hereunder,  the  Borrower  shall  be  deemed  to  have  certified  that  (i)  all  representations  and  warranties  of  the  Borrower  hereunder  are  true  and  correct  in  all  material  respects (unless such representations and warranties contain a materiality qualifier, in which case  such representations and warranties shall be true and correct as made) on and as of such day as  though made on and as of such day, except for representations and warranties which apply as to  an earlier date (in which case such representations and warranties shall be true and correct in all  material respects (unless such representations and warranties contain a materiality qualifier, in  which  case  such  representations  and  warranties  shall  be  true  and  correct  as  made)  as  of  such  date)  and  (ii)  no  Event  of  Default  or  an  Unmatured  Event  of  Default  has  occurred  and  is  continuing or will result from such Credit Extension or Release.                                          53   107601465\V-7                                                                    

 

          Notwithstanding  any  other  provision  of  this  Agreement  or  any  other  Transaction  Document, the representations and warranties contained in this Section 6.01 shall be continuing,  and remain in full force and effect until the Final Payout Date.         SECTION 6.02.   Representations  and  Warranties of  the  Servicer.   The  Servicer  represents and warrants to each Credit Party as of the Closing Date, on each Settlement Date and  on each day on which a Credit Extension shall have occurred:               (a)    Organization and Good Standing.  The Servicer is a duly organized and  validly existing corporation in good standing under the laws of the State of Ohio and has full  power and authority under its organizational documents and under the laws of the State of Ohio  to own its properties and to conduct its business as such properties are currently owned and such  business is presently conducted.               (b)    Due Qualification.  The Servicer is duly qualified to do business, is in  good  standing  as  a  foreign  entity  and  has  obtained  all  necessary  licenses  and  approvals  in  all  jurisdictions  in  which  the  conduct  of  its  business  or  the  servicing  of  the  Pool  Receivables  as  required by this Agreement requires such qualification, licenses or approvals, except where the  failure to do so could not reasonably be expected to have a Material Adverse Effect.               (c)    Power  and  Authority;  Due  Authorization.   The  Servicer  (i)  has  all  necessary  power  and  authority  to  (A)  execute  and  deliver  this  Agreement  and  the  other  Transaction  Documents  to  which  it  is  a  party  and  (B)  perform  its  obligations  under  this  Agreement  and  the  other  Transaction  Documents  to  which  it  is  a party  and  (ii)  has  duly  authorized  by  all  necessary  action  the  execution,  delivery  and performance  of,  and  the  consummation  of  the  transactions  provided  for  in,  this  Agreement  and  the  other  Transaction  Documents to which it is a party.               (d)    Binding Obligations.  This Agreement and each of the other Transaction  Documents to which the Servicer is a party constitutes legal, valid and binding obligations of the  Servicer, enforceable against the Servicer in accordance with their respective terms, except (i) as  such  enforceability  may  be  limited  by  applicable  bankruptcy,  insolvency,  reorganization,  moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii)  as such enforceability may be limited by general principles of equity, regardless of whether such  enforceability is considered in a proceeding in equity or at law.               (e)    No Conflict or Violation.  The execution, delivery and performance of,  and  the  consummation  of  the  transactions  contemplated  by,  this Agreement  and  the  other  Transaction Documents to which the Servicer is a party, and the fulfillment of the terms hereof  and thereof, will not (i) conflict with, result in any breach of any of the terms or provisions of, or  constitute  (with  or  without  notice  or  lapse  of  time  or  both)  a default  under  its  organizational  documents or any material indenture, sale agreement, credit agreement, loan agreement, security  agreement, mortgage, deed of trust or other agreement or instrument to which the Servicer is a  party or by which it or any of its properties is bound, (ii) result in the creation or imposition of  any Adverse Claim upon any of its properties pursuant to the terms of any such indenture, credit  agreement, loan agreement, security agreement, mortgage, deed of trust  or other agreement or  instrument, other than this Agreement and the other Transaction Documents or (iii) conflict with                                         54   107601465\V-7                                                                    

 

    or  violate  any  Applicable  Law,  except  to  the  extent  that  any  such  conflict,  breach,  default,  Adverse Claim or violation could not reasonably be expected to have a Material Adverse Effect.               (f)    Litigation  and  Other  Proceedings.   (i)   There  is  no  action,  suit,  proceeding or investigation pending or, to the best knowledge of the Servicer, threatened, against  the Borrower before any Governmental Authority and (ii) the Servicer is not subject to any order,  judgment, decree, injunction, stipulation or consent order of or with any Governmental Authority  that, in the case of either of the foregoing clauses (i) and (ii), (A) asserts the invalidity of this  Agreement or any other Transaction Document, (B) seeks to prevent the consummation of any of  the transactions contemplated by this Agreement or any other Transaction Document, (C) seeks  any  determination or ruling  that could  materially and adversely affect  the performance by the  Servicer of its obligations under, or the validity or enforceability of, this Agreement or any other  Transaction  Document  or  (D)  individually  or  in  the  aggregate  for  all  such  actions,  suits,  proceedings and investigations could reasonably be expected to have a Material Adverse Effect.               (g)    No Consents.  The Servicer is not required to obtain the consent of any  other  party  or  any  consent,  order,  license,  approval,  registration,  authorization,  action  or  declaration  of  or  with  any  Governmental  Authority  in  connection  with  the  due  execution,  delivery, or performance by the Servicer of this Agreement or any other Transaction Documents  to which it is a party or the consummation by the Servicer of the transactions contemplated by  this Agreement or any other Transaction Document to which it is a party that has not already  been  obtained  and  are  in  full  force  and  effect  or  the  failure  of  which  to  obtain  could  not  reasonably be expected to have a Material Adverse Effect.               (h)    Location of Records.  The offices where the initial Servicer keeps all of  its records relating to the servicing of the Pool  Receivables are located at One Applied Plaza,  MS-56, Cleveland, Ohio 44115.               (i)    Investment Company Act.  The Servicer is not, and is not controlled by,  an “investment company” registered or required to be registered under the Investment Company  Act.                 (j)    No  Material  Adverse  Effect.   Since  June  30,  2018,  there  has  been  no  Material Adverse Effect with respect to the Servicer.                (k)    Accuracy  of  Information.   All  Information  Packages,  Interim  Reports,  Loan  Requests,  certificates,  reports,  statements,  documents  and  other  information,  other  than  financial projections, furnished to the Administrative Agent or any other Credit Party by or on  behalf  of  the  Servicer  pursuant  to  any  provision  of  this  Agreement  or  any  other  Transaction  Document, or in connection with or pursuant to any amendment or modification of, or waiver  under,  this  Agreement  or  any  other  Transaction  Document,  are,  at  the  time  the  same  are  so  furnished, complete and correct in all material respects on the date the same are furnished to the  Administrative Agent or such other Credit Party, and do not contain any material misstatement  of fact or omit to state a material fact or any fact necessary to make the statements contained  therein not misleading.                                          55   107601465\V-7                                                                    

 

                (l)    Anti-Money  Laundering/International  Trade  Law  Compliance.   No  Covered Entity is a Sanctioned Person.  No Covered Entity, either in its own right or through any  third  party,  (i)  has  any  of  its  assets  in  a  Sanctioned  Country or  in  the  possession,  custody  or  control of a Sanctioned Person in violation of any Anti-Terrorism Law; (ii) does business in or  with,  or  derives  any  of  its  income  from  investments  in  or  transactions  with,  any  Sanctioned  Country or Sanctioned Person in violation of any Anti-Terrorism  Law; or (iii) engages in any  dealings or transactions prohibited by any Anti-Terrorism Law.               (m)    Transaction  Information.   None  of  the  Servicer,  any  Affiliate  of  the  Servicer or any third party with which the Servicer or any Affiliate thereof has contracted, has  delivered, in writing or orally, to any Rating Agency, or monitoring a rating of, any Notes, any  Transaction Information without providing such Transaction Information to the applicable Group  Agent  prior  to  delivery  to  such  Rating  Agency  and  has  not  participated  in  any  oral  communications  with  respect  to  Transaction  Information with  any Rating  Agency  without the  participation of such Group Agent.               (n)    Compliance with Law.  The Servicer (i) shall duly satisfy all obligations  on  its  part  to  be  fulfilled  under  or  in  connection  with  the  Pool  Receivables  and  the  related  Contracts, (ii) has maintained in effect all qualifications required under Applicable Law in order  to properly service the Pool Receivables and (iii) has complied in all respects with all Applicable  Laws  in  connection  with  servicing  the  Pool  Receivables,  except,  with  respect  to  clause  (iii)  above,  where  the  failure  to  so  comply  would  not  reasonably  be  expected  to  have  a  Material  Adverse Effect.               (o)    Eligible  Receivables.   Each  Receivable  included  as  an  Eligible  Receivable in the calculation of the Net Receivables Pool Balance as of any date is an Eligible  Receivable as of such date.               (p)    Bulk Sales Act.  No transaction contemplated by this Agreement requires  compliance by it with any bulk sales act or similar law.               (q)    Taxes.  The Servicer has (i) timely filed all tax returns (federal, state and  local) required to be filed by it and (ii) paid, or caused to be paid, all taxes, assessments and other  governmental  charges,  if  any,  other  than  taxes,  assessments  and  other  governmental  charges  being contested in good faith by appropriate proceedings and as to which adequate reserves have  been provided in accordance with GAAP.               (r)    Opinions.   The  facts  regarding  the  Borrower,  the  Servicer,  each  Originator,  the  Performance  Guarantor,  the  Receivables,  the  Related  Security  and  the  related  matters set forth or assumed in each of the opinions of counsel delivered in connection with this  Agreement and the Transaction Documents are true and correct in all material respects.               (s)    Other Transaction Documents.  Each representation and warranty made  by the Servicer under each other Transaction Document to which it is a party (including, without  limitation, the Purchase and Sale Agreement) is true and correct in all material respects (unless  such  representation  and  warranty  contains  a  materiality  qualifier,  in  which  case  such  representation and warranty shall be true and correct as made) as of the date when made, except                                         56   107601465\V-7                                                                    

 

    for any such representation and warranty that applies as to an earlier date (in which case, such  representation  and  warranty  shall  be  true  and  correct  in  all  material  respects  (unless  such  representation  and warranty contains  a materiality  qualifier, in  which  case  such  representation  and warranty shall be true and correct as made) as of such earlier date).               (t)    No Linked Accounts.  Except for account no. 1017305622 maintained at  the Administrative Agent, there are no Linked Accounts with respect to any Collection Account.               (u)    Credit  and  Collection  Procedures.   The  Servicer  has  complied  in all  material respects with the Credit and Collection Procedures (or, prior to the existence thereof in  documented  form,  the  substance  thereof)  with  regard  to  each  Pool  Receivable  and  the  related  Contracts.               (v)    Servicing  Programs.   No  license  or  approval  is  required  for  the  Administrative Agent’s use of any software or other computer program used by the Servicer, any  Originator or any Sub-Servicer in the servicing of the Pool Receivables, other than those which  have been obtained and are in full force and effect.               (w)    Servicing of Pool Receivables.  Since the Closing Date, there has been  no  material  adverse  change  in  the  ability  of  the  Servicer  or  any  Sub-Servicer  to  service  and  collect the Pool Receivables and the Related Security.               (x)    Financial  Condition.   The  consolidated  balance  sheets  of  the  Servicer  and its consolidated Subsidiaries as of June 30, 2018 and the related statements of income and  shareholders’ equity of the Servicer and its consolidated Subsidiaries for the fiscal quarter then  ended, copies of which have been furnished to the Administrative Agent and the Group Agents,  present fairly in all material respects the consolidated financial position of the Servicer and its  consolidated Subsidiaries for the period ended on such date, all in accordance with GAAP.               (y)    Reaffirmation of Representations and Warranties.  On the date of each  Credit  Extension,  on  the  date  of  each  Release,  on  each  Settlement  Date  and  on  the  date  each  Information Package, Interim Report or other report is delivered to the Administrative Agent or  any  Group  Agent  hereunder,  the  Servicer  shall  be  deemed  to  have  certified  that  (i)  all  representations  and  warranties  of  the  Servicer  hereunder  are  true  and  correct  in  all  material  respects (unless such representations and warranties contain a materiality qualifier, in which case  such representations and warranties shall be true and correct as made) on and as of such day as  though made on and as of such day, except for representations and warranties which apply as to  an earlier date (in which case such representations and warranties shall be true and correct in all  material respects (unless such representations and warranties contain a materiality qualifier, in  which  case  such  representations  and  warranties  shall  be  true  and  correct  as  made)  as  of  such  date)  and  (ii)  no  Event  of  Default  or  an  Unmatured  Event  of  Default  has  occurred  and  is  continuing or will result from such Credit Extension or Release.         Notwithstanding  any  other  provision  of  this  Agreement  or  any  other  Transaction  Document, the representations and warranties contained in this Section 6.02 shall be continuing,  and remain in full force and effect until the Final Payout Date.                                          57   107601465\V-7                                                                    

 

                                    ARTICLE VII                                                                           COVENANTS         SECTION 7.01.   Covenants of the Borrower.  At all times from the Closing Date until  the Final Payout Date:               (a)    Payment  of  Principal  and  Interest.   The  Borrower  shall  duly  and  punctually pay Capital, Interest, Fees and all other amounts payable by the Borrower hereunder  in accordance with the terms of this Agreement.               (b)    Existence.  The Borrower shall keep in full force and effect its existence  and rights as a limited liability company under the laws of the State of Delaware, and shall obtain  and preserve its qualification to do business in each jurisdiction in which such qualification is or  shall  be  necessary  to  protect  the  validity  and  enforceability  of  this  Agreement,  the  other  Transaction Documents and the Collateral.               (c)    Financial  Reporting.   The  Borrower  will  maintain  a  system  of  accounting  established  and  administered  in  accordance  with  GAAP,  and  the  Borrower  (or  the  Servicer on its behalf) shall furnish to the Administrative Agent and each Group Agent:                     (i)   Annual  Financial  Statements  of  the  Borrower.  Promptly  upon        completion and in no event later than ninety (90) calendar days after the close of each        fiscal year of the Borrower (or, if applicable, the date on which the financial statements        describe in Section 7.01(c)(v) are delivered), annual unaudited financial statements of the        Borrower certified by a Financial Officer of the Borrower that they fairly present in all        material respects, in accordance with GAAP, the financial condition of the Borrower as        of the date indicated and the results of its operations for the periods indicated.                     (ii)  Information Packages and Interim Reports.  As soon as available        and in any event not later than two (2) Business Days prior to each Settlement Date, an        Information  Package  as  of  the  most  recently  completed  Fiscal  Month;  provided,  that,        upon thirty (30) Business Days’ prior written notice from the Administrative Agent, the        Borrower  shall  furnish  or  cause  to  be  furnished  to  the  Administrative  Agent  and  each        Group Agent a weekly Interim Report with respect to the Pool Receivables with data as        of the close of business on the Business Day preceding the date on which such Interim        Report is delivered; provided, further, that, at any time after the occurrence and during        the continuance of an Event of Default, the Administrative Agent may  specify in such        notice that such Interim Report be furnished to the Administrative Agent and each Group        Agent on a more frequent basis until the Administrative Agent gives notices otherwise.                     (iii) Other  Information.  Such  other  information  (including  non-       financial information) as the Administrative Agent or any Group Agent may from time to        time reasonably request.                     (iv)  Quarterly Financial Statements of Parent.  As soon as available and        in no event later than forty five (45) calendar days following the end of each of the first        three fiscal quarters in each of Parent’s fiscal years (or, if applicable, the date on which                                         58   107601465\V-7                                                                    

 

          such  financial  statements  are  required  to  be  filed  with  the  SEC),  (i)  the  unaudited        consolidated  balance  sheet  and  statements  of  income  of  Parent  and  its  consolidated        Subsidiaries as at the end of such fiscal quarter and the related unaudited consolidated        statements of earnings and cash flows for such fiscal quarter and for the elapsed portion        of the fiscal year ended with the last day of such fiscal quarter, in each case setting forth        comparative  figures  for  the  corresponding  fiscal  quarter  in  the  prior  fiscal  year,  all  of        which  shall  be  certified  by  a  Financial  Officer  of  Parent  that they  fairly  present  in  all        material  respects,  in  accordance  with  GAAP,  the  financial  condition  of  Parent  and  its        consolidated Subsidiaries as of the dates indicated and the results of their operations for        the periods indicated, subject  to  normal  year-end audit adjustments  and  the  absence  of        footnotes and (ii) management’s discussion and analysis of the important operational and        financial developments during such fiscal quarter.                     (v)   Annual  Financial  Statements  of  Parent.   Within  ninety  (90)        calendar days after the close of each of Parent’s fiscal years (or, if applicable, the date on        which such financial statements are required to be filed with the SEC), the consolidated        balance sheet of Parent and its consolidated Subsidiaries as at the end of such fiscal year        and the related consolidated statements of earnings and cash flows for such fiscal  year        setting  forth  comparative  figures  for  the  preceding  fiscal  year,  all  reported  on  by        independent  certified  public  accountants  of  recognized  national  standing  (without  a        “going  concern” or like  qualification or exception) to  the effect  that such consolidated        financial statements present fairly in all material respects, in accordance with GAAP, the        financial condition of Parent and its consolidated Subsidiaries as of the dates indicated        and the results of their operations for the periods indicated.                     (vi)  Other Reports and Filings.  Promptly (but in any event within ten        (10) calendar days) after the filing or delivery thereof, copies of all financial information,        proxy  materials  and  reports  not  otherwise  delivered  pursuant  to  Sections  7.01(c)(i)        through  (v)  above,  if  any,  which  Parent  or  any  of  its  consolidated  Subsidiaries  shall        publicly  file  with  the  SEC  or  deliver  to  holders  (or  any  trustee,  agent  or  other        representative  therefor)  of  any  of  its  material  Debt  pursuant  to  the  terms  of  the        documentation governing the same.                      (vii) Notwithstanding  anything  herein  to  the  contrary,  any  financial        information, proxy statements or other material required to be delivered pursuant to this        Section  7.01(c)  shall  be  deemed  to  have  been  furnished  to  each of  the  Administrative        Agent  and  each  Group  Agent  on  the  date  that  such  report,  proxy statement  or  other        material is posted on the SEC’s website at www.sec.gov.               (d)    Notices.   The  Borrower  (or  the  Servicer  on  its  behalf)  will  notify  the  Administrative Agent and each Group Agent in writing of any of the following events promptly  upon (but in no event later than three (3) Business Days after) a Financial Officer or other officer  learning of the occurrence thereof, with such notice describing the same, and if applicable, the  steps being taken by the Person(s) affected with respect thereto:                     (i)   Notice of Events of Default or Unmatured Events of Default.  A        statement  of  a  Financial  Officer  of  the  Borrower  setting  forth details  of  any  Event  of                                         59   107601465\V-7                                                                    

 

          Default or Unmatured Event of Default that has occurred and is continuing and the action        which the Borrower proposes to take with respect thereto.                     (ii)  Representations and Warranties.  The failure of any representation        or warranty made or deemed to be made by the Borrower under this Agreement or any        other Transaction Document to be true and correct in any material respect when made.                     (iii) Litigation.  The institution of any litigation, arbitration proceeding        or governmental proceeding on the Borrower, the Servicer, the Performance Guarantor or        any  Originator,  which  with  respect  to  any  Person  other  than  the  Borrower,  could        reasonably be expected to have a Material Adverse Effect.                     (iv)  Adverse  Claim.  (A)  Any  Person  shall  obtain  an  Adverse  Claim        upon the Collateral or any portion thereof, (B) any Person other than the Borrower, the        Servicer  or  the  Administrative  Agent  shall  obtain  any  rights  or  direct  any  action  with        respect to any Collection Account (or related Lock-Box) or (C) any Obligor shall receive        any  change  in  payment  instructions  with  respect  to  Pool  Receivable(s)  from  a  Person        other than the Servicer or the Administrative Agent.                     (v)   Name  Changes.   At  least  thirty  (30)  calendar  days  before  any        change in any Originator’s or the Borrower’s name, jurisdiction of organization or any        other  change  requiring  the  amendment  of  UCC  financing  statements,  a  notice  setting        forth such changes and the effective date thereof.                     (vi)  Change in Accountants or Accounting Policy.  Any change in (i)        the external accountants of the Borrower, the Servicer, any Originator or the Parent, (ii)        any  accounting  policy  of  the  Borrower  or  (iii)  any  material  accounting  policy  of  any        Originator  that  is  relevant  to  the  transactions  contemplated  by  this  Agreement  or  any        other Transaction Document (it being understood that any change to the manner in which        any  Originator  accounts  for  the  Pool  Receivables  shall  be  deemed  “material”  for such        purpose).                     (vii) Notice  of  Purchase  and  Sale  Termination  Event  or  Unmatured        Purchase  and  Sale  Termination  Event.   The  occurrence  of  a  Purchase  and  Sale        Termination  Event  or  an  Unmatured  Purchase  and  Sale  Termination  Event  under  the        Purchase and Sale Agreement.                     (viii) Material Adverse Change.  Promptly after the occurrence thereof,        notice of any material adverse change in the business, operations, property or financial or        other  condition  of  the  Borrower,  the  Servicer,  the  Performance Guarantor  or  any        Originator (including, without limitation, a material change to the Credit and Collection        Procedures).               (e)    Conduct  of  Business.   The  Borrower  will  carry  on  and  conduct  its  business in substantially the same manner and in substantially the same fields of enterprise as it  is presently conducted, and will do all things necessary to remain duly organized, validly existing  and in good standing as a domestic organization in its jurisdiction of organization and maintain                                         60   107601465\V-7                                                                    

 

    all  requisite  authority  to  conduct  its  business  in  each  jurisdiction  in  which  its  business  is  conducted.               (f)    Compliance with Laws.  The Borrower will comply with all Applicable  Laws to which it may be subject if the failure to comply could reasonably be expected to have a  Material Adverse Effect.               (g)    Furnishing of Information and Inspection of Receivables.  The Borrower  will furnish or cause to be furnished to the Administrative Agent and each Group Agent from  time to time such information with respect to the Pool Receivables and the other Collateral as the  Administrative Agent or any Group Agent may reasonably request.  The Borrower will, (i) at the  Borrower’s  expense,  during  regular  business  hours  with  prior  written  notice,  permit  the  Administrative Agent and each Group Agent or their respective agents or representatives to (A)  examine  and  make  copies  of  and  abstracts  from  all  books  and  records  relating  to  the  Pool  Receivables  or  other  Collateral,  (B)  visit  the  offices  and  properties  of  the  Borrower  for  the  purpose  of  examining  such  books  and  records  and  (C)  discuss  matters  relating  to  the  Pool  Receivables,  the  other  Collateral  or  the  Borrower’s  performance  hereunder  or  under  the  other  Transaction Documents to which it is a party with any of the officers, directors, employees or  independent  public  accountants  of  the  Borrower  having  knowledge  of  such  matters  and  (ii)  without  limiting  the  provisions  of  clause  (i)  above,  during  regular  business  hours,  at  the  Borrower’s expense, upon prior written notice from the Administrative Agent, permit certified  public accountants or other auditors acceptable to the Administrative Agent to conduct a review  of its books and records with respect to the Pool Receivables and other Collateral; provided, that  the  Borrower  shall  be  required  to  reimburse  the  Administrative Agent  for  only  one  (1)  such  review pursuant to clause (ii) above in any twelve-month period, unless an Event of Default has  occurred and is continuing.               (h)    Payments on Receivables, Collection Accounts.  The Borrower (or the  Servicer on its behalf) will, and will cause each Originator to, at all times, instruct all Obligors to  deliver payments on the Pool Receivables to a Collection Account or a Lock-Box.  The Borrower  (or the Servicer on its behalf) will, and will cause each Originator to, at all times, maintain such  books and records as are necessary to identify Collections received from time to time on Pool  Receivables  and  to  segregate  such  Collections  from  other  property  of  the  Servicer  and  the  Originators.  If any payments on the Pool Receivables or other Collections are received by the  Borrower, the Servicer or an Originator, it shall hold such payments in trust for the benefit of the  Administrative Agent, the Group Agents and the other Secured Parties and promptly (but in any  event within one (1) Business Day after receipt) remit such funds into a Collection Account.  The  Borrower (or the Servicer on its behalf) will cause each Collection Account Bank to comply with  the terms of each applicable Account Control Agreement.  The Borrower shall not permit funds  other  than  Collections  on  Pool  Receivables  and  other  Collateral  and  remittances  of  funds  for  Subject Receivables (subject to the proviso below) to be deposited into any Collection Account.   If  such  funds  are  nevertheless  deposited  into  any  Collection  Account,  the  Borrower  (or  the  Servicer on its behalf) shall, within two (2) Business Days, (x) identify and transfer such funds to  the appropriate Person entitled to such funds and (y) instruct such Person to no longer deposit  any such funds into any such Collection Account.  The Borrower will not, and will not permit the  Servicer, any Originator or any other Person to commingle Collections or other funds to which  the Administrative Agent, any Group Agent or any other Secured Party is entitled, with any other                                         61   107601465\V-7                                                                    

 

    funds; provided, that, up to twenty (20%) of monthly cash receipts will be permitted to be related  to the Subject Receivables; provided, further that, upon notice by the Majority Group Agents to  the Borrower that such commingling shall no longer be permitted, the Borrower shall promptly  (but in  no event  later than the thirtieth  (30th) calendar day following the date of such notice)  instruct  the  Servicer,  the  related  Subject  Originator  or  such  other  Person  to  (x)  transfer  such  funds related to the Subject Receivables into an account other than a Collection Account, (y) no  longer deposit such funds into any Collection Account and (z) instruct the related obligors to no  longer deposit any such funds into any such Collection Account.  The Borrower shall only add a  Collection  Account  (or  a  related  Lock-Box)  or  a  Collection  Account  Bank  to  those  listed  on  Schedule II to this Agreement, if the Administrative Agent has received notice of such addition  and an executed and acknowledged copy of an Account Control Agreement (or an amendment  thereto)  in  form  and  substance  acceptable  to  the  Administrative  Agent  from  the  applicable  Collection  Account  Bank.   The  Borrower  shall  only  terminate  a  Collection  Account  Bank  or  close  a  Collection  Account  (or  a  related  Lock-Box)  with  the  prior  written  consent  of  the  Administrative Agent.               (i)    Sales,  Liens,  etc.   Except  as  otherwise  provided  herein,  the  Borrower  will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer  to  exist  any  Adverse  Claim  upon  (including,  without  limitation,  the  filing  of  any  financing  statement)  or  with  respect  to,  any  Pool  Receivable  or  other  Collateral,  or  assign  any  right  to  receive income in respect thereof.               (j)    Extension  or  Amendment  of  Pool  Receivables.  Except  as  otherwise  permitted in Section 8.02, the Borrower will not, and will not permit the Servicer to, alter the  delinquency status or adjust the Outstanding Balance or otherwise modify the terms of any Pool  Receivable in any material respect, or amend, modify or waive, in any material respect, any term  or condition of any related Contract.  The Borrower shall at its expense, timely and fully perform  and comply in all material respects with all provisions, covenants and other promises required to  be  observed  by  it  under  the  Contracts  related  to  the  Pool  Receivables,  and  timely  and  fully  comply with the Credit and Collection Procedures with regard to each Pool Receivable and the  related Contract.               (k)    Change  in  Credit  and  Collection  Procedures.   The  Borrower  will not  make  any  material  change  in  the  Credit  and  Collection  Procedures  without  the  prior  written  consent of the Administrative Agent and the Majority Group Agents.  Promptly following any  change in the Credit and Collection Procedures, the Borrower will deliver a copy of the updated  Credit and Collection Procedures to the Administrative Agent and each Lender.               (l)    Books  and  Records.   The  Borrower  shall  maintain  and  implement  (or  cause  the  Servicer  to  maintain  and  implement)  administrative  and  operating  procedures  (including an ability to recreate records evidencing Pool Receivables and related Contracts in the  event of the destruction of the originals thereof), and keep and maintain (or cause the Servicer to  keep  and  maintain)  all  documents,  books,  records,  computer  tapes  and  disks  and  other  information  reasonably  necessary  or  advisable  for  the  collection  of  all  Pool  Receivables  (including  records  adequate  to  permit  the  daily  identification of  each  Pool  Receivable  and  all  Collections of and adjustments to each existing Pool Receivable).                                          62   107601465\V-7                                                                    

 

                (m)    Identifying of Records.   The  Borrower shall:  (i) identify (or cause the  Servicer to identify) its master data processing records relating to Pool Receivables and related  Contracts with a legend that indicates that the Pool Receivables have been pledged in accordance  with  this  Agreement  and  (ii)  cause  each  Originator  so  to  identify  its  master  data  processing  records with such a legend.               (n)    Change  in  Payment  Instructions  to  Obligors.   The  Borrower  shall  not  (and  shall  not  permit  the  Servicer  or  any  Sub-Servicer  to)  add,  replace  or  terminate  any  Collection Account (or any related Lock-Box) or make any change in its (or their) instructions to  the Obligors regarding payments to be made to the Collection Accounts (or any related Lock- Box),  other  than  any  instruction  to  remit  payments  to  a  different  Collection  Account  (or  any  related Lock-Box), unless the Administrative Agent shall have received (i) prior written notice of  such  addition,  termination  or  change  and  (ii)  a  signed  and  acknowledged  Account  Control  Agreement  (or  an  amendment  thereto)  with  respect  to  such  new  Collection  Accounts  (or  any  related Lock-Box), and the Administrative Agent shall have consented to such change in writing.               (o)    Security Interest, Etc.  The Borrower shall (and shall cause the Servicer  to), at its expense, take all action necessary or reasonably desirable to establish and maintain a  valid and enforceable first priority perfected security interest in the Collateral, in each case free  and clear of any Adverse Claim, in favor of the Administrative Agent (on behalf of the Secured  Parties),  including  taking  such  action  to  perfect,  protect  or  more  fully  evidence  the  security  interest  of  the  Administrative  Agent  (on  behalf  of  the  Secured Parties)  as  the  Administrative  Agent or any Secured Party may reasonably request.  In order to evidence the security interests  of the Administrative Agent under this Agreement, the Borrower shall, from time to time take  such  action,  or  execute  and  deliver  such  instruments  as  may  be necessary  (including,  without  limitation, such actions as are reasonably requested by the Administrative Agent) to maintain and  perfect,  as  a  first-priority  interest,  the  Administrative  Agent’s  security  interest in the  Receivables,  Related  Security  and  Collections.   The  Borrower  shall,  from  time  to  time  and  within the time limits established by law, prepare and present to the Administrative Agent for the  Administrative  Agent’s  authorization  and  approval,  all  financing  statements,  amendments,  continuations or initial financing statements in lieu of a continuation statement, or other filings  necessary  to  continue,  maintain  and  perfect  the  Administrative Agent’s  security  interest  as  a  first-priority interest.  The Administrative Agent’s approval  of such filings shall authorize the  Borrower to file such financing statements under the UCC without the signature of the Borrower,  any Originator or the Administrative Agent where allowed by Applicable Law.  Notwithstanding  anything  else  in  the  Transaction  Documents  to  the  contrary,  the  Borrower  shall  not  have  any  authority to file a termination, partial termination, release, partial release, or any amendment that  deletes  the  name  of  a  debtor  or  excludes  collateral  of  any  such  financing  statements  filed  in  connection  with  the  Transaction  Documents,  without  the  prior  written  consent  of  the  Administrative Agent.               (p)    Further Assurances; Change in Name or Jurisdiction of Origination, etc.                      (i)   The  Borrower  hereby  authorizes  and  hereby  agrees  from  time  to        time,  at  its  own  expense,  promptly  to  execute  (if  necessary)  and  deliver  all  further        instruments  and  documents,  and  to  take  all  further  actions,  that  may  be  necessary  or        desirable, or that the Administrative Agent may reasonably request, to perfect, protect or                                         63   107601465\V-7                                                                    

 

          more fully evidence the security interest granted pursuant to this Agreement or any other        Transaction Document, or to enable the Administrative Agent (on behalf of the Secured        Parties)  to  exercise  and  enforce  the  Secured  Parties’  rights  and  remedies  under  this        Agreement  or  any  other  Transaction  Document.   Without  limiting the  foregoing,  the        Borrower hereby authorizes, and will, upon the request of the Administrative Agent, at        the Borrower’s own expense, execute (if necessary) and file such financing statements or        continuation  statements,  or  amendments  thereto,  and  such  other instruments  and        documents,  that  may  be  necessary  or  reasonably  desirable,  or  that  the  Administrative        Agent may reasonably request, to perfect, protect or evidence any of the foregoing.                     (ii)  The  Borrower  authorizes  the  Administrative  Agent  to  file        financing statements, continuation statements and amendments thereto and assignments        thereof,  relating  to  the  Receivables,  the  Related  Security,  the  related  Contracts,        Collections  with  respect  thereto  and  the  other  Collateral  without  the  signature  of  the        Borrower.  A photocopy or other reproduction of this Agreement shall be sufficient as a        financing statement where permitted by law.                     (iii) The Borrower shall at all times be organized under the laws of the        State of Delaware and shall not take any action to change its jurisdiction of organization.                     (iv)  The  Borrower  will  not  change  its  name,  location,  identity  or        corporate structure unless (x) the Borrower, at its own expense, shall have taken all action        necessary  or  appropriate  to  perfect  or  maintain  the  perfection of  the  security  interest        under this Agreement (including, without limitation, the filing of all financing statements        and  the  taking  of  such  other  action  as  the  Administrative  Agent  may  request  in        connection  with  such  change  or  relocation)  and  (y)  if  requested  by  the  Administrative        Agent, the Borrower shall cause to be delivered to the Administrative Agent, an opinion,        in form and substance satisfactory to the Administrative Agent as to such UCC perfection        and priority matters as the Administrative Agent may request at such time.               (q)    Transaction  Information.   None  of  the  Borrower,  any  Affiliate  of  the  Borrower  or  any  third  party  with  which  the  Borrower  or  any  Affiliate  thereof  has  contracted,  shall deliver, in writing or orally, to any Rating Agency, any Transaction Information without  providing such Transaction Information to the applicable Group Agent prior to delivery to such  Rating Agency and will not participate in any oral communications with respect to Transaction  Information with any Rating Agency without the participation of such Group Agent.               (r)    Anti-Money  Laundering/International  Trade  Law  Compliance.   The  Borrower will not become a Sanctioned Person.  No Covered Entity, either in its own right or  through  any  third  party,  will  (a)  have  any  of  its  assets  in  a  Sanctioned  Country  or  in  the  possession, custody or control of a Sanctioned Person in violation of any Anti-Terrorism Law;  (b) do business in or with, or derive any of its income from investments in or transactions with,  any  Sanctioned  Country  or  Sanctioned  Person  in  violation  of  any  Anti-Terrorism  Law;  (c)  engage  in  any  dealings  or  transactions  prohibited  by  any  Anti-Terrorism  Law  or  (d)  use  the  proceeds of any Credit Extension to fund any operations in, finance any investments or activities  in,  or, make any payments  to,  a Sanctioned Country or Sanctioned Person  in  violation of any  Anti-Terrorism Law.  The funds used to repay each Credit Extension will not be derived from                                         64   107601465\V-7                                                                    

 

    any unlawful activity.  The Borrower shall comply with all Anti-Terrorism Laws.  The Borrower  shall promptly notify the Administrative Agent and each Lender in writing upon the occurrence  of a Reportable Compliance Event.  The Borrower has not used and will not use the proceeds of  any Credit Extension to fund any operations in, finance any investments or activities in or make  any payments to, a Sanctioned Person or a Sanctioned Country.               (s)    Borrower’s  Tax  Status.   The  Borrower  will  remain  a  wholly-owned  subsidiary of a United States person (within the meaning of Section 7701(a)(30) of the Code)  and not be subject to withholding under Section 1446 of the Code.  The Borrower shall not take  or cause any action to be taken that could result in the Borrower (i) being treated other than as a  “disregarded  entity”  within  the  meaning  of  U.S.  Treasury  Regulation  §  301.7701-3  for  U.S.  federal income tax purposes or (ii) becoming an association taxable as a corporation or a publicly  traded partnership taxable as a corporation for U.S. federal income tax purposes.               (t)    Credit Risk Retention.  The Borrower shall cooperate with each Credit  Party (including by providing such information and entering into or delivering such additional  agreements  or documents  reasonably  requested by  such Credit Party) to  the extent reasonably  necessary to  assure such Credit Party that the Originators retain credit risk  in the amount and  manner required by the Credit Risk Retention Rules and to permit such Credit Party to perform  its due diligence and monitoring obligations (if any) under the Credit Risk Retention Rules.               (u)    Fundamental  Changes.   The  Borrower  shall  not,  without  the  prior  written consent of the Administrative Agent and the Majority Group Agents, permit (i) itself to  merge or consolidate with or into, or convey, transfer, lease or otherwise dispose of (whether in  one transaction or in a series of transactions) all or substantially all of its assets (whether now  owned or hereafter acquired) to, any Person or (ii) itself to be directly owned by any Person other  than  an  Originator  or  (iii)  any  of  its  issued  and  outstanding  Capital  Stock  or  any  of  its  other  equity  interests  to  become  subject  to  any  Adverse  Claims.   The Borrower  shall  provide  the  Administrative Agent with at least thirty (30) calendar days’ prior written notice before making  any change in the Borrower’s name or location or making any other change in the Borrower’s  identity  or  corporate  structure  that  could  impair  or  otherwise render  any  UCC  financing  statement filed in connection with this Agreement or any other Transaction Document “seriously  misleading”  as  such  term  (or  similar  term)  is  used  in  the  applicable  UCC;  each  notice  to  the  Administrative  Agent  and  the  Group  Agents  pursuant  to  this  sentence  shall  set  forth  the  applicable change and the proposed effective date thereof.               (v)    Certain  Agreements.   Without  the  prior  written  consent  of  the  Administrative Agent and the Majority Group Agents, the Borrower will not (and will not permit  any Originator or the Servicer to) amend, modify, waive, revoke or terminate any Transaction  Document to which it is a party or any provision of the Borrower’s organizational documents  which requires the consent of the “Independent Director” (as such term is used in the Borrower’s  Certificate of Formation and Limited Liability Company Agreement).               (w)    Restricted Payments.                       (i)   Except  pursuant  to  clause  (ii)  below,  the  Borrower  will  not:  (A)        purchase or redeem any of its membership interests, (B) declare or pay any dividend or                                         65   107601465\V-7                                                                    

 

          set aside any funds for any such purpose, (C) prepay, purchase or redeem any Debt, (D)        lend or advance any funds or (E) repay any loans or advances to, for or from any of its        Affiliates  (the  amounts  described  in  clauses  (A)  through  (E)  being  referred  to  as        “Restricted Payments”).                     (ii)  Subject  to  the  limitations  set  forth  in  clause  (iii)  below,  the        Borrower may make Restricted Payments so long as such Restricted Payments are made        only in one or more of the following ways: (A) the Borrower may make cash payments        (including prepayments) on the Subordinated Notes in accordance with their respective        terms  and  (B)  the  Borrower  may  declare  and  pay  dividends  if,  in  both  cases,  both        immediately  before  and  immediately  after  giving  effect  thereto,  the  Borrower’s  Net        Worth is not less than the Required Capital Amount.                     (iii) The  Borrower  may  make  Restricted  Payments  only  out  of  the        funds, if any, it receives pursuant to Sections 3.01 of this Agreement; provided that the        Borrower shall not pay, make or declare any Restricted Payment (including any dividend)        if, after giving effect thereto, any Event of Default or Unmatured Event of Default shall        have occurred and be continuing.               (x)    Other Business.  The Borrower will not: (i) engage in any business other  than the transactions contemplated by the Transaction Documents, (ii) create, incur or permit to  exist any Debt of any kind (or cause or permit to be issued for its account any letters of credit) or  bankers’ acceptances other than pursuant to this Agreement or the Subordinated Notes or (iii)  form any Subsidiary or make any investments in any other Person.               (y)    Use of Collections Available to the Borrower.  The Borrower shall apply  the Collections available to the Borrower to make payments in the following order of priority: (i)  the  payment  of  its  obligations  under  this  Agreement  and  each  of the other Transaction  Documents (other than the Subordinated Notes), (ii) the payment of accrued and unpaid interest  on the Subordinated Notes and (iii) other legal and valid purposes.               (z)    Borrower’s Net Worth.  The Borrower shall not permit the Borrower’s  Net Worth to be less than the Required Capital Amount.         SECTION 7.02.   Covenants of the Servicer.  At all times from the Closing Date until  the Final Payout Date:               (a)    Existence.  The Servicer shall keep in full force and effect its existence  and rights as a corporation under the laws of the State of Ohio, and shall obtain and preserve its  qualification  to  do  business  in  each  jurisdiction  in  which  such  qualification  is  or  shall  be  necessary for the conduct of its business or the servicing of the Pool Receivables as required by  this Agreement.               (b)    Financial Reporting.  The Servicer will maintain a system of accounting  established  and  administered  in  accordance  with  GAAP,  and  the  Servicer  shall  furnish  to  the  Administrative Agent and each Group Agent:                                          66   107601465\V-7                                                                    

 

                      (i)   Compliance  Certificates.   (A)  A  compliance  certificate  promptly        upon completion of the annual report of the Parent and in no event later than ninety (90)        calendar  days  after  the  close  of  each  fiscal  year  of  the  Parent,  in  form  and  substance        substantially similar to Exhibit G signed by a Financial Officer of the Servicer stating that        no Event of Default or Unmatured Event of Default has occurred and is continuing, or if        any  Event  of  Default  or  Unmatured  Event  of  Default  has  occurred  and  is  continuing,        stating  the  nature  and  status  thereof  and  (B)  within  thirty  (30)  calendar  days  after  the        close of each fiscal quarter of the Servicer, a compliance certificate in form and substance        substantially similar to Exhibit G signed by a Financial Officer of the Servicer stating that        no Event of Default or Unmatured Event of Default has occurred and is continuing, or if        any  Event  of  Default  or  Unmatured  Event  of  Default  has  occurred  and  is  continuing,        stating the nature and status thereof.                     (ii)  Information Packages and Interim Reports.  As soon as available        and in any event not later than two (2) Business Days prior to each Settlement Date, an        Information  Package  as  of  the  most  recently  completed  Fiscal  Month;  provided,  that,        upon thirty (30) Business Days’ prior written notice from the Administrative Agent, the        Servicer  shall  furnish  or  cause  to  be  furnished  to  the  Administrative  Agent  and  each        Group Agent a weekly Interim Report with respect to the Pool Receivables with data as        of the close of business on the Business Day preceding the date on which such Interim        Report is delivered; provided, further, that, at any time after the occurrence and during        the continuance of an Event of Default, the Administrative Agent may  specify in such        notice that such Interim Report be furnished to the Administrative Agent and each Group        Agent on a more frequent basis until the Administrative Agent gives notices otherwise.                      (iii) Other  Information.   Such  other  information  (including  non-       financial information) as the Administrative Agent or any Group Agent may from time to        time reasonably request.               (c)    Notices.   The  Servicer  will  notify  the  Administrative  Agent  and each  Group Agent in writing of any of the following events promptly upon (but in no event later than  three  (3)  Business  Days  after)  a  Financial  Officer  or  other  officer  learning  of  the  occurrence  thereof,  with  such  notice  describing  the  same,  and  if  applicable,  the  steps  being  taken  by  the  Person(s) affected with respect thereto:                     (i)   Notice of Events of Default or Unmatured Events of Default.  A        statement  of  a  Financial  Officer  of  the  Servicer  setting  forth details  of  any  Event  of        Default or Unmatured Event of Default that has occurred and is continuing and the action        which the Servicer proposes to take with respect thereto.                     (ii)  Representations and Warranties.  The failure of any representation        or warranty made or deemed to be made by the Servicer under this  Agreement or any        other Transaction Document to be true and correct in any material respect when made.                     (iii) Litigation.  The institution of any litigation, arbitration proceeding        or  governmental  proceeding  which  could  reasonably  be  expected  to  have  a  Material        Adverse Effect.                                         67   107601465\V-7                                                                    

 

                      (iv)  Adverse  Claim.  (A)  Any  Person  shall  obtain  an  Adverse  Claim        upon the Collateral or any portion thereof, (B) any Person other than the Borrower, the        Servicer  or  the  Administrative  Agent  shall  obtain  any  rights  or  direct  any  action  with        respect to any Collection Account (or related Lock-Box) or (C) any Obligor shall receive        any  change  in  payment  instructions  with  respect  to  Pool  Receivable(s)  from  a  Person        other than the Servicer or the Administrative Agent.                     (v)   Name  Changes.   At  least  thirty  (30)  calendar  days  before  any        change in any Originator’s or the Borrower’s name, jurisdiction of organization or any        other  change  requiring  the  amendment  of  UCC  financing  statements,  a  notice  setting        forth such changes and the effective date thereof.                     (vi)  Change in Accountants or Accounting Policy.  Any change in (i)        the external accountants of the Borrower, the Servicer, any Originator or the Parent, (ii)        any  accounting  policy  of  the  Borrower  or  (iii)  any  material  accounting  policy  of  any        Originator  that  is  relevant  to  the  transactions  contemplated  by  this  Agreement  or  any        other Transaction Document (it being understood that any change to the manner in which        any  Originator  accounts  for  the  Pool  Receivables  shall  be  deemed  “material”  for  such        purpose).                     (vii) Notice  of  Purchase  and  Sale  Termination  Event  or  Unmatured        Purchase  and  Sale  Termination  Event.   The  occurrence  of  a  Purchase  and  Sale        Termination  Event  or  an  Unmatured  Purchase  and  Sale  Termination  Event  under  the        Purchase and Sale Agreement.                     (viii) Material Adverse Change.  Promptly after the occurrence thereof,        notice of any material adverse change in the business, operations, property or financial or        other  condition  of  the  Borrower,  the  Servicer,  the  Performance Guarantor  or  any        Originator  (including,  without  limitation,  a  change  to  the  Credit  and  Collection        Procedures).               (d)    Conduct  of  Business.   The  Servicer  will  carry  on  and  conduct  its  business in substantially the same manner and in substantially the same fields of enterprise as it  is presently conducted (except as would not change the general nature of the business of such  Servicer  and  its  Affiliates  taken  as  a  whole)  and  in  businesses  reasonably  similar  or  related  thereto, and will do all things necessary to remain duly organized, validly existing and in good  standing as a domestic corporation in its jurisdiction of organization and maintain all requisite  authority  to  conduct  its  business  in  each  jurisdiction  in  which  its  business  is  conducted  if  the  failure to have such authority could reasonably be expected to have a Material Adverse Effect.               (e)    Compliance with Laws.  The Servicer will comply with all Applicable  Laws to which it may be subject if the failure to comply could reasonably be expected to have a  Material Adverse Effect.               (f)    Furnishing of Information and Inspection of Receivables.  The Servicer  will furnish or cause to be furnished to the Administrative Agent and each Group Agent from  time to time such information with respect to the Pool Receivables and the other Collateral as the                                         68   107601465\V-7                                                                    

 

    Administrative Agent or any Group Agent may reasonably request.  The Servicer will, (i) at the  Servicer’s  expense,  during  regular  business  hours  with  prior  written  notice,  permit  the  Administrative Agent and each Group Agent or their respective agents or representatives to (A)  examine  and  make  copies  of  and  abstracts  from  all  books  and  records  relating  to  the  Pool  Receivables  or  other  Collateral,  (B)  visit  the  offices  and  properties  of  the  Servicer  for  the  purpose  of  examining  such  books  and  records  and  (C)  discuss  matters  relating  to  the  Pool  Receivables,  the  other  Collateral  or  the  Servicer’s  performance  hereunder  or  under  the  other  Transaction Documents to which it is a party with any of the officers, directors, employees or  independent public accountants of the Servicer (provided that representatives of the Servicer are  present during such discussions) having knowledge of such matters and (ii) without limiting the  provisions  of  clause  (i) above,  during  regular  business  hours,  at  the  Servicer’s  expense,  upon  prior written notice from the Administrative Agent, permit certified public accountants or other  auditors  acceptable  to  the  Administrative  Agent  to  conduct  a  review  of  its  books  and  records  with  respect  to  the Pool  Receivables  and other  Collateral;  provided, that  the Servicer shall be  required to reimburse the Administrative Agent for only one (1) such review pursuant to clause  (ii) above in any twelve-month period unless an Event of Default has occurred and is continuing.               (g)    Payments on Receivables, Collection Accounts.  The Servicer will at all  times, instruct all Obligors to deliver payments on the Pool Receivables to a Collection Account  or a Lock-Box.  The Servicer will, at all times, maintain such books and records as are necessary  to  identify  Collections  received  from  time  to  time  on  Pool  Receivables  and  to  segregate  such  Collections from other property of the Servicer and the Originators.  If any payments on the Pool  Receivables or other Collections are received by the Borrower, the Servicer or an Originator, it  shall hold such payments in trust for the benefit of the Administrative Agent, the Group Agents  and the other Secured Parties and promptly (but in any event within one (1) Business Day after  receipt) remit such funds into a Collection Account.  The Servicer shall not permit funds other  than Collections on Pool Receivables and other Collateral and remittances of funds for Subject  Receivables (subject to the proviso below) to be deposited into any Collection Account.  If such  funds are nevertheless deposited into any Collection Account, the Servicer shall, within two (2)  Business  Days,  (x)  identify  and  transfer  such  funds  to  the  appropriate  Person  entitled  to  such  funds and (y) instruct such Person to no longer deposit any such funds into any such Collection  Account.  The Servicer will not, and will not permit the Borrower, any Originator or any other  Person to commingle Collections or other funds to which the Administrative Agent, any Group  Agent or any other Secured Party is entitled, with any other funds; provided, that, up to twenty  (20%)  of  monthly  cash  receipts  will  be  permitted  to  be  related to  the  Subject  Receivables;  provided,  further  that,  upon  notice  by  the  Majority  Group  Agents  to  the  Servicer  that  such  commingling shall no longer be permitted, the Servicer shall promptly (but in no event later than  the  thirtieth  (30th)  calendar  day  following  the  date  of  such  notice)  instruct  the  Borrower,  the  related Subject Originator or such other Person to (x) transfer such funds related to the Subject  Receivables into an account other than a Collection Account, (y) no longer deposit such funds  into any Collection Account and (z) instruct the related obligors to no longer deposit any such  funds into any such Collection Account.  The Servicer shall only add a Collection Account (or a  related  Lock-Box)  or  a  Collection  Account  Bank  to  those  listed on  Schedule  II  to  this  Agreement, if the Administrative Agent has received notice of such addition and an executed and  acknowledged copy of an Account Control Agreement (or an amendment thereto) in form and  substance acceptable to the Administrative Agent from the applicable Collection Account Bank.                                          69   107601465\V-7                                                                    

 

    The Servicer shall only terminate a Collection Account Bank or close a Collection Account (or a  related Lock-Box) with the prior written consent of the Administrative Agent.               (h)    Extension  or  Amendment  of  Pool  Receivables.   Except  as  otherwise  permitted  in  Section  8.02,  the  Servicer  will  not  alter  the  delinquency  status  or  adjust  the  Outstanding  Balance  or  otherwise  modify  the  terms  of  any  Pool  Receivable  in  any  material  respect, or amend, modify or waive, in any material respect, any term or condition of any related  Contract. The Servicer shall at its expense, timely and fully perform and comply in all material  respects with all provisions, covenants and other promises required to be observed by it under the  Contracts  related  to  the  Pool  Receivables,  and  timely  and  fully  comply  with  the  Credit  and  Collection Procedures with regard to each Pool Receivable and the related Contract.               (i)    Change in Credit and Collection Procedures.  The Servicer will comply  in  all  material  respects  with  the  Credit  and  Collection  Procedures  with  regard  to  each  Pool  Receivable  and  the related  Contracts.   The  Servicer will  not  make  any  material  change  in  the  Credit and Collection Procedures without the prior written consent of the Administrative Agent  and the Majority Group Agents.  Promptly following any change in the Credit and Collection  Procedures, the Servicer will deliver a copy of the updated Credit and Collection Procedures to  the Administrative Agent and each Lender.               (j)    Books  and  Records.   The  Servicer  will  maintain  and  implement  administrative and operating procedures (including an ability to recreate records evidencing Pool  Receivables and related Contracts in the event of the destruction of the originals thereof), and  keep  and  maintain  all  documents,  books,  records,  computer  tapes  and  disks  and  other  information  reasonably  necessary  or  advisable  for  the  collection  of  all  Pool  Receivables  (including  records  adequate  to  permit  the  daily  identification of  each  Pool  Receivable  and  all  Collections of and adjustments to each existing Pool Receivable).               (k)    Identifying  of  Records.   The  Servicer  shall  identify  its  master data  processing records relating to Pool Receivables and related Contracts with a legend that indicates  that the Pool Receivables have been pledged in accordance with this Agreement.               (l)    Change in Payment Instructions to Obligors.  The Servicer shall not (and  shall not permit any Sub-Servicer to) add, replace or terminate any Collection Account (or any  related Lock-Box) or make any change in its instructions to the Obligors regarding payments to  be  made  to  the  Collection  Accounts  (or  any  related  Lock-Box),  other  than  any  instruction  to  remit  payments  to  a  different  Collection  Account  (or  any  related  Lock-Box),  unless  the  Administrative Agent shall have received (i) prior written notice of such addition, termination or  change  and  (ii)  a  signed  and  acknowledged  Account  Control  Agreement  (or  an  amendment  thereto)  with  respect  to  such  new  Collection  Accounts  (or  any  related  Lock-Box)  and  the  Administrative Agent shall have consented to such change in writing.               (m)    Security Interest, Etc.  The Servicer shall, at its expense, take all action  necessary or reasonably desirable to establish and maintain a valid and enforceable first priority  perfected security interest in the Collateral, in each case free and clear of any Adverse Claim in  favor  of  the  Administrative  Agent  (on  behalf  of  the  Secured  Parties),  including  taking  such  action to perfect, protect or more fully evidence the security interest of the Administrative Agent                                         70   107601465\V-7                                                                    

 

    (on  behalf  of  the  Secured  Parties)  as  the  Administrative  Agent or  any  Secured  Party  may  reasonably request.  In order to evidence the security interests of the Administrative Agent under  this Agreement, the Servicer shall, from time to time take such action, or execute and deliver  such  instruments  as  may  be  necessary  (including,  without  limitation,  such  actions  as  are  reasonably  requested  by  the  Administrative  Agent)  to  maintain  and  perfect,  as  a  first-priority  interest,  the  Administrative  Agent’s  security  interest  in  the  Receivables,  Related  Security  and  Collections.  The Servicer shall, from time to time and within the time limits established by law,  prepare  and  present  to  the  Administrative  Agent  for  the  Administrative  Agent’s  authorization  and approval, all financing statements, amendments, continuations or initial financing statements  in lieu of a continuation statement, or other filings necessary to continue, maintain and perfect  the  Administrative  Agent’s  security  interest  as  a  first-priority  interest.   The  Administrative  Agent’s  approval  of  such  filings  shall  authorize the  Servicer  to  file  such  financing  statements  under  the  UCC  without  the  signature  of  the  Borrower,  any  Originator  or  the  Administrative  Agent  where  allowed  by  Applicable  Law.   Notwithstanding  anything  else  in  the  Transaction  Documents to the contrary, the Servicer shall not have any authority to file a termination, partial  termination,  release,  partial  release,  or  any  amendment  that  deletes  the  name  of  a  debtor  or  excludes  collateral  of  any  such  financing  statements  filed  in  connection  with  the  Transaction  Documents, without the prior written consent of the Administrative Agent.               (n)    Further Assurances; Change in Name or Jurisdiction of Origination, etc.   The  Servicer  hereby  authorizes  and  hereby  agrees  from  time  to  time,  at  its  own  expense,  promptly to execute (if necessary) and deliver all further instruments and documents, and to take  all  further  actions,  that  may  be  necessary  or  desirable,  or  that  the  Administrative  Agent  may  reasonably  request,  to  perfect,  protect  or  more  fully  evidence the  security  interest  granted  pursuant to this Agreement or any other Transaction Document, or to enable the Administrative  Agent (on behalf of the Secured Parties) to exercise and enforce the Secured Parties’ rights and  remedies  under  this  Agreement  or  any  other  Transaction  Document.   Without  limiting  the  foregoing,  the  Servicer  hereby  authorizes,  and  will,  upon  the  request  of  the  Administrative  Agent, at the Servicer’s own expense, execute (if necessary) and file such financing statements  or continuation statements, or amendments thereto, and such other instruments and documents,  that may be necessary or reasonably desirable, or that the Administrative Agent may reasonably  request, to perfect, protect or evidence any of the foregoing.               (o)    Transaction  Information.   None  of  the  Servicer,  any  Affiliate  of  the  Servicer or any third party with which the Servicer or any Affiliate thereof has contracted, shall  deliver,  in  writing  or  orally,  to  any  Rating  Agency,  any  Transaction  Information  without  providing such Transaction Information to the applicable Group Agent prior to delivery to such  Rating Agency, and will not participate in any oral communications with respect to Transaction  Information with any Rating Agency without the participation of such Group Agent.               (p)    Anti-Money  Laundering/International  Trade  Law  Compliance.   The  Servicer  will not  become a Sanctioned  Person.   No Covered Entity,  either in  its own right  or  through  any  third  party,  will  (a)  have  any  of  its  assets  in  a  Sanctioned  Country  or  in  the  possession, custody or control of a Sanctioned Person in violation of any Anti-Terrorism Law;  (b) do business in or with, or derive any of its income from investments in or transactions with,  any  Sanctioned  Country  or  Sanctioned  Person  in  violation  of  any  Anti-Terrorism  Law;  (c)  engage  in  any  dealings  or  transactions  prohibited  by  any  Anti-Terrorism  Law  or  (d)  use  the                                         71   107601465\V-7                                                                    

 

    proceeds of any Credit Extension to fund any operations in, finance any investments or activities  in,  or, make any payments  to,  a Sanctioned Country or Sanctioned Person  in  violation of any  Anti-Terrorism Law.  The funds used to repay each Credit Extension will not be derived from  any unlawful activity.  The Servicer shall comply with all Anti-Terrorism Laws.  The Servicer  shall promptly notify the Administrative Agent and each Lender in writing upon the occurrence  of a Reportable Compliance Event.               (q)    Borrower’s Tax Status.  The Servicer shall not take or cause any action  to be taken that could result in the Borrower (i) being treated other than as a “disregarded entity”  within  the  meaning  of  U.S.  Treasury  Regulation  §  301.7701-3  for  U.S.  federal  income  tax  purposes or (ii) becoming an association taxable as a corporation or a publicly traded partnership  taxable as a corporation for U.S. federal income tax purposes.               (r)    Credit  Risk  Retention.   The  Servicer  shall,  and  shall  cause  each  Originator  to,  cooperate  with  each  Credit  Party  (including  by  providing  such  information  and  entering  into  or  delivering  such  additional  agreements  or  documents  reasonably  requested  by  such  Credit  Party)  to  the  extent  reasonably  necessary  to  assure  such  Credit  Party  that  the  Originators retain credit risk in the amount and manner required by the Credit Risk Retention  Rules and to permit such Credit Party to perform its due diligence and monitoring obligations (if  any) under the Credit Risk Retention Rules.         SECTION 7.03.   Separate Existence of the Borrower.  Each of the Borrower and the  Servicer hereby acknowledges that the Secured Parties, the Group Agents and the Administrative  Agent  are  entering  into  the  transactions  contemplated  by  this  Agreement  and  the  other  Transaction Documents in reliance upon the Borrower’s identity as a legal entity separate from  any Originator, the Servicer, the Performance Guarantor and their Affiliates.  Therefore, each of  the  Borrower  and  Servicer  shall  take  all  steps  specifically  required  by  this  Agreement  or  reasonably required by the Administrative Agent or any Group Agent to continue the Borrower’s  identity as a separate legal entity and to make it apparent to third Persons that the Borrower is an  entity  with  assets  and  liabilities  distinct  from  those  of  the  Performance  Guarantor,  the  Originators,  the  Servicer  and  any  other  Person,  and  is  not  a  division  of  the  Performance  Guarantor, the Originators, the Servicer, its Affiliates or any other Person. Without limiting the  generality of the foregoing and in addition to and consistent with the other covenants set forth  herein, each of the Borrower and the Servicer shall take such actions as shall be required in order  that:               (a)    Special  Purpose  Entity.   The  Borrower  will  be  a  special  purpose  company  whose  primary  activities  are  restricted  in  its  Certificate  of  Formation  or  Limited  Liability  Company  Agreement  to:  (i)  purchasing  or  otherwise  acquiring  from  the  Originators,  owning, holding, collecting, granting security interests or selling interests in, the Collateral, (ii)  entering  into  agreements  for  the  selling,  servicing  and  financing  of  the  Receivables  Pool  (including  the  Transaction  Documents)  and  (iii)  conducting  such  other  activities  as  it  deems  necessary or appropriate to carry out its primary activities.               (b)    No  Other  Business  or  Debt.   The  Borrower  shall  not  engage  in  any  business or activity except as set forth in this Agreement nor, incur any indebtedness or liability  other than as expressly permitted by the Transaction Documents.                                         72   107601465\V-7                                                                    

 

                (c)    Independent  Director.   Not  fewer  than  one  member  of  the  Borrower’s  board of directors (the “Independent Director”) shall be a natural person who (i) has never been,  and  shall  at  no  time  be,  an  equityholder,  director,  officer,  manager,  member,  partner,  officer,  employee or associate, or any relative of the foregoing, of any member of the Parent Group (as  hereinafter defined) (other than his or her service as an Independent Director of the Borrower or  an  independent  director  of  any  other  bankruptcy-remote  special purpose  entity  formed  for  the  sole purpose of securitizing, or facilitating the securitization of, financial assets of any member  or members of the Parent Group), (ii) is not a customer or supplier of any member of the Parent  Group  (other  than  his  or  her  service  as  an  Independent  Director  of  the  Borrower  or  an  independent director of any other bankruptcy-remote special purpose entity formed for the sole  purpose  of  securitizing,  or  facilitating  the  securitization  of,  financial  assets  of  any  member  or  members  of  the  Parent  Group),  (iii)  is  not  any  member  of  the  immediate  family  of  a  person  described in (i) or (ii) above, and (iv) has (x) prior experience as an independent director for a  corporation or limited liability company whose organizational or charter documents required the  unanimous  consent  of  all  independent  directors  thereof  before  such  corporation  or  limited  liability  company  could  consent  to  the  institution  of  bankruptcy  or  insolvency  proceedings  against it or could file a petition seeking relief under any applicable federal or state law relating  to bankruptcy and (y) at least three years of employment experience with one or more entities  that  provide,  in  the  ordinary  course  of  their  respective  businesses,  advisory,  management  or  placement services to issuers of securitization or structured finance instruments, agreements or  securities.  For purposes of this clause (c), “Parent Group” shall mean (i) the Parent, the Servicer,  the Performance Guarantor and each Originator, (ii) each person that directly or indirectly, owns  or controls, whether beneficially, or as a trustee, guardian or other fiduciary, five percent (5%) or  more of the membership interests in the Parent, (iii) each person that controls, is controlled by or  is  under  common  control  with  the  Parent  and  (iv)  each  of  such  person’s officers,  directors,  managers, joint venturers and partners.  For the purposes of this definition, “control” of a person  means the possession, directly or indirectly, of the power to direct or cause the direction of the  management  and  policies  of  a  person  or  entity,  whether  through the  ownership  of  voting  securities,  by  contract  or  otherwise.   A  person  shall  be  deemed  to  be  an  “associate”  of  (A)  a  corporation or organization of which such person is an officer, director, partner or manager or is,  directly or indirectly, the beneficial owner of ten percent (10%) or more of any class of equity  securities,  (B)  any  trust  or  other  estate  in  which  such  person serves  as  trustee  or  in  a  similar  capacity  and  (C)  any  relative  or  spouse  of  a  person  described  in  clause  (A)  or  (B)  of  this  sentence, or any relative of such spouse.         The Borrower shall (A) give written notice to the Administrative Agent of the election or  appointment,  or  proposed  election  or  appointment,  of  a  new  Independent  Director  of  the  Borrower, which notice shall be given not later than ten (10) Business Days prior to the date such  appointment  or  election  would  be  effective  (except  when  such  election  or  appointment  is  necessary  to  fill  a  vacancy  caused  by  the  death,  disability,  or  incapacity  of  the  existing  Independent  Director, or the failure of such  Independent  Director to  satisfy the  criteria for  an  Independent Director set forth in this clause (c), in which case the Borrower shall provide written  notice  of  such  election  or  appointment  within  one  (1)  Business Day)  and  (B)  with  any  such  written  notice,  certify  to  the  Administrative  Agent  that  the  Independent  Director  satisfies  the  criteria for an Independent Director set forth in this clause (c).                                          73   107601465\V-7                                                                    

 

          The  Borrower’s  Limited  Liability  Company  Agreement  shall  provide  that:  (A)  the  Borrower’s board of directors shall not approve, or take any other action to cause the filing of, a  voluntary bankruptcy petition with respect to the Borrower unless the Independent Director shall  approve  the  taking  of  such  action  in  writing  before  the  taking of  such  action  and  (B)  such  provision  and  each  other  provision  requiring  an  Independent  Director  cannot  be  amended  without the prior written consent of the Independent Director.         The Independent Director shall not at any time serve as a trustee in bankruptcy for the  Borrower, the Parent,  the Performance Guarantor, any Originator, the Servicer or any of their  respective Affiliates.               (d)    Organizational  Documents.   The  Borrower  shall  maintain  its  organizational  documents  in  conformity  with  this  Agreement,  such  that  it  does  not  amend,  restate, supplement or otherwise modify its ability to comply with the terms and provisions of  any of the Transaction Documents, including, without limitation, Section 7.01(o).               (e)    Conduct of Business.  The Borrower shall conduct its affairs strictly in  accordance  with  its  organizational  documents  and  observe  all  necessary,  appropriate  and  customary  company  formalities,  including,  but  not  limited  to,  holding  all  regular  and  special  members’ and board of directors’ meetings appropriate to authorize all company action, keeping  separate and accurate minutes of its meetings, passing all resolutions or consents necessary to  authorize actions taken or to be taken, and maintaining accurate and separate books, records and  accounts, including, but not limited to, payroll and intercompany transaction accounts.               (f)    Compensation.  Any employee, consultant or agent of the Borrower will  be  compensated  from  the  Borrower’s  funds  for  services  provided to  the  Borrower,  and  to  the  extent that Borrower shares the same officers or other employees as the Servicer (or any other  Affiliate thereof), the salaries and expenses  relating to  providing benefits  to  such officers and  other employees shall be fairly allocated among such entities, and each such entity shall bear its  fair share of the salary and benefit costs associated with such common officers and employees.   The  Borrower  will  not  engage  any  agents  other  than  its  attorneys,  auditors  and  other  professionals, and a servicer and any other agent contemplated by the Transaction Documents for  the Receivables Pool, which servicer will be fully compensated for its services by payment of the  Servicing Fee.               (g)    Servicing  and Costs.  The  Borrower will contract  with  the Servicer to  perform for the Borrower all operations required on a daily basis to service the Receivables Pool.   The Borrower will not incur any indirect or overhead expenses for items shared with the Servicer  (or any other Affiliate thereof) that are not reflected in the Servicing Fee.  To the extent, if any,  that  the  Borrower  (or  any  Affiliate  thereof)  shares  items  of  expenses  not  reflected  in  the  Servicing  Fee,  such  as  legal,  auditing  and  other  professional  services,  such  expenses  will  be  allocated to the extent practical on the basis of actual use or the value of services rendered, and  otherwise on a basis reasonably related to the actual use or the value of services rendered.               (h)    Operating  Expenses.   The  Borrower’s  operating  expenses  will  not  be  paid  by  the  Servicer,  the  Parent,  the  Performance  Guarantor,  any  Originator  or  any  Affiliate  thereof.                                         74   107601465\V-7                                                                    

 

                (i)    Stationery.  The Borrower will have its own separate stationery.               (j)    Books  and  Records.   The  Borrower’s  books  and  records  will  be  maintained  separately  from  those  of  the  Servicer,  the  Parent,  the  Performance  Guarantor,  the  Originators and any of their Affiliates and in a manner such that it will not be difficult or costly  to segregate, ascertain or otherwise identify the assets and liabilities of the Borrower.               (k)    Disclosure of Transactions.  All financial statements of the Servicer, the  Parent, the Performance Guarantor, the Originators or any Affiliate thereof that are consolidated  to  include  the  Borrower  will  disclose  that  (i)  the  Borrower’s  sole  business  consists  of  the  purchase or acceptance through capital contributions of the Receivables and Related Rights from  the  Originators  and  the  subsequent  retransfer  of  or  granting  of  a  security  interest  in  such  Receivables and Related Rights to the Administrative Agent pursuant to this Agreement, (ii) the  Borrower is a separate legal entity with its own separate creditors who will be entitled, upon its  liquidation,  to  be  satisfied  out  of  the  Borrower’s  assets  prior  to  any  assets  or  value  in  the  Borrower  becoming  available  to  the  Borrower’s  equity  holders  and  (iii)  the  assets  of  the  Borrower  are  not  available  to  pay  creditors  of  the  Servicer,  the  Parent,  the  Performance  Guarantor, the Originators or any Affiliate thereof.               (l)    Segregation of Assets.   The Borrower’s  assets  will be maintained in  a  manner that facilitates their identification and segregation from those of the Servicer, the Parent,  the Performance Guarantor, the Originators or any Affiliates thereof.               (m)    Corporate  Formalities.   The  Borrower  will  strictly  observe  limited  liability  company  formalities  in  its  dealings  with  the  Servicer,  the  Parent,  the  Performance  Guarantor, the Originators or any Affiliates thereof, and funds or other assets of the Borrower  will not be commingled with those of the Servicer, the Parent, the Performance Guarantor, the  Originators or any Affiliates thereof except as permitted by this Agreement in connection with  servicing the Pool Receivables.  The Borrower shall not maintain joint bank accounts or other  depository  accounts  to  which  the  Servicer,  the  Parent,  the  Performance  Guarantor,  the  Originators or any Affiliate thereof (other than the Servicer solely in its capacity as such) has  independent access.  The Borrower is not named, and has not entered into any agreement to be  named, directly or indirectly, as a direct or contingent beneficiary or loss payee on any insurance  policy  with  respect  to  any  loss  relating  to  the  property  of  the  Servicer,  the  Parent,  the  Performance  Guarantor,  the  Originators  or  any  Subsidiaries  or  other  Affiliates  thereof.   The  Borrower will pay to the appropriate Affiliate the marginal increase or, in the absence of such  increase, the market amount of its portion of the premium payable with respect to any insurance  policy that covers the Borrower and such Affiliate.               (n)    Arm’s-Length Relationships.  The Borrower will maintain arm’s-length  relationships with the Servicer, the Parent, the Performance Guarantor, the Originators and any  Affiliates thereof.  Any Person that renders or otherwise furnishes services to the Borrower will  be  compensated  by  the  Borrower  at  market  rates  for  such  services  it  renders  or  otherwise  furnishes to the Borrower.  Neither the Borrower on the one hand, nor the Servicer, the Parent,  the Performance Guarantor, any Originator or any Affiliate thereof, on the other hand, will be or  will  hold  itself  out  to  be  responsible  for  the  debts  of  the  other  or  the  decisions  or  actions  respecting the daily business and affairs of the other.  The Borrower, the Servicer, the Parent, the                                         75   107601465\V-7                                                                    

 

    Performance Guarantor, the Originators and their respective Affiliates will immediately correct  any known misrepresentation with respect to the foregoing, and they will not operate or purport  to  operate as  an integrated single economic unit with  respect  to  each other or in  their dealing  with any other entity.               (o)    Allocation of Overhead.  To the extent that Borrower, on the one hand,  and the Servicer, the Parent, the Performance Guarantor, any Originator or any Affiliate thereof,  on  the  other  hand,  have  offices  in  the  same  location,  there  shall  be  a  fair  and  appropriate  allocation of overhead  costs between them, and  the Borrower shall bear  its  fair share of such  expenses, which may be paid through the Servicing Fee or otherwise.                                   ARTICLE VIII                                                               ADMINISTRATION AND COLLECTION                                OF RECEIVABLES         SECTION 8.01.   Appointment of the Servicer.               (a)    The servicing, administering and collection of the Pool Receivables shall  be conducted by the Person so designated from time to time as the Servicer in accordance with  this  Section  8.01.   Until  the  Administrative  Agent  gives  notice  to  Applied  Industrial  (in  accordance with  this  Section 8.01)  of the designation of a new Servicer, Applied  Industrial  is  hereby designated as, and hereby agrees to perform the duties and obligations of, the  Servicer  pursuant to the terms hereof.  Upon the occurrence of an Event of Default, the Administrative  Agent may (with the consent of the Majority Group Agents) and shall (at the direction of the  Majority Group Agents) designate as Servicer any Person (including itself) to succeed Applied  Industrial  or  any  successor  Servicer,  on  the  condition  in  each case  that  any  such  Person  so  designated shall agree to perform the duties and obligations of the Servicer pursuant to the terms  hereof.               (b)    Upon the designation of a successor  Servicer as set forth in  clause (a)  above,  Applied  Industrial  agrees  that  it  will  terminate  its  activities  as  Servicer  hereunder  in  a  manner that the Administrative Agent reasonably determines will facilitate the transition of the  performance of such activities to the new Servicer, and Applied Industrial shall cooperate with  and assist such new Servicer.  Such cooperation shall include access to and transfer of records  (including all Contracts) related to Pool Receivables and use by the new Servicer of all licenses  (or  the  obtaining  of  new  licenses),  hardware  or  software  necessary  or  reasonably  desirable  to  collect the Pool Receivables and the Related Security.               (c)    Applied Industrial acknowledges that, in making its decision to execute  and  deliver  this  Agreement,  the  Administrative  Agent  and  each  member  in  each  Group  have  relied  on  Applied  Industrial’s  agreement  to  act  as  Servicer  hereunder.   Accordingly,  Applied  Industrial agrees that it will not voluntarily resign as Servicer without the prior written consent of  the Administrative Agent and the Majority Group Agents.               (d)    The  Servicer  may  delegate  its  duties  and  obligations  hereunder to  any  subservicer  (each  a  “Sub-Servicer”); provided,  that,  in  each  such  delegation:  (i)  such  Sub-                                        76   107601465\V-7                                                                    

 

    Servicer shall agree in  writing to perform the delegated duties and obligations of the  Servicer  pursuant  to  the  terms  hereof,  (ii)  the  Servicer  shall  remain  liable  for  the  performance  of  the  duties and obligations so delegated, (iii) the Borrower, the  Administrative Agent, each Lender  and each Group Agent shall have the right to look solely to the Servicer for performance, (iv) the  terms of any agreement with any Sub-Servicer shall provide that the Administrative Agent may  terminate such agreement upon the termination of the Servicer hereunder by giving notice of its  desire  to  terminate such  agreement  to  the Servicer  (and the Servicer shall  provide appropriate  notice to each such Sub-Servicer) and (v) if such Sub-Servicer is not an Affiliate of the Parent,  the  Administrative  Agent  and  the  Majority  Group  Agents  shall  have  consented  in  writing  in  advance to such delegation.         SECTION 8.02.   Duties of the Servicer.               (a)    The Servicer shall take or cause to be taken all such action as may be  necessary or reasonably advisable to service, administer and collect each Pool Receivable from  time to time, all in accordance with this  Agreement and all Applicable Laws, with reasonable  care and diligence, and in accordance with the Credit and Collection Procedures and consistent  with the past practices of the Originators.  The Servicer shall set aside, for the accounts of each  Group,  the  amount  of  Collections  to  which  each  such  Group  is  entitled  in  accordance  with  Article III hereof.  The Servicer may, in accordance with the Credit and Collection Procedures  and consistent with past practices of the Originators, take such action, including modifications,  waivers  or  restructurings  of  Pool  Receivables  and  related  Contracts,  as  the  Servicer  may  reasonably determine to  be appropriate to maximize  Collections thereof or reflect adjustments  expressly permitted under the Credit and Collection Procedures or as expressly required under  Applicable Laws or the applicable Contract; provided, that for purposes of this Agreement: (i)  such  action  shall  not,  and  shall  not  be  deemed  to,  change  the  number  of  days  such  Pool  Receivable  has  remained  unpaid  from  the  date  of  the  original  due  date  related  to  such  Pool  Receivable,  (ii) such action shall not  alter the status  of such  Pool  Receivable  as  a  Delinquent  Receivable  or  a  Defaulted  Receivable  or  limit  the  rights  of  any  Secured  Party  under  this  Agreement or any other Transaction Document and (iii) if an Event of Default has occurred and  is  continuing,  the  Servicer  may  take  such  action  only  upon  the prior  written  consent  of  the  Administrative Agent.  The Borrower shall deliver to the Servicer and the Servicer shall hold for  the  benefit  of  the  Administrative  Agent  (individually  and  for  the  benefit  of  each  Group),  in  accordance with their respective interests, all records and documents (including computer tapes  or  disks)  with  respect  to  each  Pool  Receivable.  Notwithstanding  anything  to  the  contrary  contained herein, if an Event of Default has occurred and is continuing, the Administrative Agent  may direct the Servicer to commence or settle any legal action to enforce collection of any Pool  Receivable that is a Defaulted Receivable or to foreclose upon or repossess any Related Security  with respect to any such Defaulted Receivable.               (b)    The  Servicer  shall,  as  soon  as  practicable  following  actual  receipt  of  collected funds, turn over to the Borrower the collections of any indebtedness that is not a Pool  Receivable, less, if Applied Industrial or an Affiliate thereof is not the Servicer, all reasonable  and appropriate out-of-pocket costs and expenses of such Servicer of servicing, collecting and  administering  such  collections.   The  Servicer,  if  other  than  Applied  Industrial  or  an  Affiliate  thereof,  shall,  as  soon  as  practicable  upon  demand,  deliver  to the  Borrower  all  records  in  its                                          77   107601465\V-7                                                                    

 

    possession that evidence or relate to any indebtedness that is not a Pool Receivable, and copies  of records in its possession that evidence or relate to any indebtedness that is a Pool Receivable.               (c)    The Servicer’s obligations hereunder shall terminate on the Final Payout  Date.  Promptly following the Final Payout Date, the Servicer shall deliver to the Borrower all  books, records and related materials that the  Borrower previously provided to the Servicer, or  that have been obtained by the Servicer, in connection with this Agreement.         SECTION 8.03.   Collection Account Arrangements.  On or prior to the Closing Date,  the  Borrower  shall  have  entered  into  Account  Control  Agreements  with  all  of  the  Collection  Account Banks and delivered executed counterparts of each to the Administrative Agent.  Upon  the occurrence and during the continuance of an Event of Default, the Administrative Agent may  (with the consent of the Majority Group Agents) and shall (upon the direction of the Majority  Group  Agents)  at  any  time  thereafter  give  notice  to  each  Collection  Account  Bank  that  the  Administrative Agent is exercising its rights under the Account Control Agreements to do any or  all of the following: (a) to have the exclusive ownership and control of the Collection Accounts  transferred to the Administrative Agent (for the benefit of the Secured Parties) and to exercise  exclusive dominion and control over the funds deposited therein, (b) to have the proceeds that  are sent to the respective Collection Accounts redirected pursuant to the Administrative Agent’s  instructions rather than deposited in the applicable Collection Account and (c) to take any or all  other actions permitted under the applicable Account Control Agreement.  The Borrower hereby  agrees that if the Administrative Agent at any time takes any action set forth in the preceding  sentence, the Administrative Agent shall have exclusive control (for the benefit of the Secured  Parties) of the proceeds (including Collections) of all Pool Receivables and the Borrower hereby  further agrees to take any other action that the Administrative Agent may reasonably request to  transfer  such  control.   Any  proceeds  of  Pool  Receivables  received  by  the  Borrower  or  the  Servicer thereafter shall be sent immediately to, or as otherwise instructed by, the Administrative  Agent.         SECTION 8.04.   Enforcement Rights.               (a)    At any time following the occurrence and during the continuation of an  Event of Default:                     (i)   the Administrative Agent (at the Borrower’s expense) may direct        the  Obligors  that  payment  of  all  amounts  payable  under  any  Pool  Receivable  is  to  be        made directly to the Administrative Agent or its designee;                     (ii)  the  Administrative  Agent  may  instruct  the  Borrower  or  the        Servicer to  give  notice  of  the  Secured  Parties’  interest  in Pool  Receivables  to  each        Obligor, which notice shall direct that payments be made directly to the Administrative        Agent  or  its  designee  (on  behalf  of  the  Secured  Parties),  and  the  Borrower  or  the        Servicer, as the case may be, shall give such notice at the expense of the Borrower or the        Servicer, as the case may be; provided, that if the Borrower or the Servicer, as the case        may  be,  fails  to  so  notify  each  Obligor  within  two  (2)  Business  Days  following        instruction by the Administrative Agent, the Administrative Agent (at the Borrower’s or        the Servicer’s, as the case may be, expense) may so notify the Obligors;                                         78   107601465\V-7                                                                    

 

                      (iii) the  Administrative  Agent  may  request  the  Servicer  to,  and  upon        such request the Servicer shall: (A) assemble all of the records necessary or desirable to        collect  the  Pool  Receivables  and  the  Related  Security,  and  transfer  or  license  to  a        successor  Servicer  the  use  of  all  software  necessary  or  desirable  to  collect  the  Pool        Receivables and the Related Security, and make the same available to the Administrative        Agent or its designee (for the benefit of the Secured Parties) at a place selected by the        Administrative Agent and (B) segregate all cash, checks and other instruments received        by it from time to time constituting Collections in a manner reasonably acceptable to the        Administrative  Agent  and,  promptly  upon  receipt,  remit  all  such  cash,  checks  and        instruments,  duly  endorsed  or  with  duly  executed  instruments  of  transfer,  to  the        Administrative Agent or its designee;                     (iv)  the  Administrative  Agent  may  notify  the  Collection  Account        Banks that the Borrower and the Servicer will no longer have any access to the Collection        Accounts;                     (v)   the Administrative Agent may (or, at the direction of the Majority        Group Agents shall) replace the Person then acting as Servicer; and                     (vi)  the  Administrative  Agent  may  collect  any  amounts  due  from  an        Originator under the Purchase and Sale Agreement or the Performance Guarantor under        the Performance Guaranty.               (b)    The Borrower hereby authorizes the Administrative Agent (on behalf of  the Secured Parties),  and irrevocably appoints  the  Administrative Agent  as  its  attorney-in-fact  with full power of substitution and with full authority in the place and stead of the  Borrower,  which  appointment  is  coupled  with  an  interest,  to  take  any  and all  steps  in  the  name  of  the  Borrower and on behalf of the Borrower necessary or desirable, in the reasonable determination  of  the  Administrative  Agent,  after  the  occurrence  and  during  the  continuation  of  an  Event  of  Default,  to  collect  any  and  all  amounts  or  portions  thereof  due  under  any  and  all  Collateral,  including  endorsing  the  name  of  the  Borrower  on  checks  and  other  instruments  representing  Collections and enforcing such Collateral.  Notwithstanding anything to the contrary contained  in  this  subsection,  none  of  the  powers  conferred  upon  such  attorney-in-fact  pursuant  to  the  preceding sentence shall subject  such attorney-in-fact  to  any liability if any action taken by it  shall prove to be inadequate or invalid, nor shall they confer any obligations upon such attorney- in-fact in any manner whatsoever.               (c)    The Servicer hereby authorizes the Administrative Agent (on behalf of  the Secured Parties),  and irrevocably appoints  the Administrative Agent as  its  attorney-in-fact  with  full  power  of  substitution  and  with  full  authority  in  the place  and  stead  of  the  Servicer,  which  appointment  is  coupled  with  an  interest,  to  take  any  and all  steps  in  the  name  of  the  Servicer and on behalf of the Servicer necessary or desirable, in the reasonable determination of  the  Administrative  Agent,  after  the  occurrence  and  during  the  continuation  of  an  Event  of  Default,  to  collect  any  and  all  amounts  or  portions  thereof  due  under  any  and  all  Collateral,  including  endorsing  the  name  of  the  Servicer  on  checks  and  other  instruments  representing  Collections and enforcing such Collateral.  Notwithstanding anything to the contrary contained  in  this  subsection,  none  of  the  powers  conferred  upon  such  attorney-in-fact  pursuant  to  the                                         79   107601465\V-7                                                                    

 

    preceding sentence shall subject  such attorney-in-fact  to  any liability if any action taken by it  shall prove to be inadequate or invalid, nor shall they confer any obligations upon such attorney- in-fact in any manner whatsoever.         SECTION 8.05.   Responsibilities of the Borrower.               (a)    Anything herein to the contrary notwithstanding, the Borrower shall: (i)  perform all of its obligations, if any, under the Contracts related to the Pool Receivables to the  same extent as if interests in such Pool Receivables had not been transferred hereunder, and the  exercise  by  the  Administrative  Agent,  or  any  other  Credit  Party  of  their  respective  rights  hereunder shall not relieve the Borrower from such obligations and (ii) pay when due any taxes,  including any sales taxes payable in connection with the Pool Receivables and their creation and  satisfaction. None of the Credit Parties shall have any obligation or liability with respect to any  Collateral, nor shall any of them be obligated to perform any of the obligations of the Borrower,  the Servicer or any Originator thereunder.               (b)    Applied Industrial hereby irrevocably agrees that if at any time it shall  cease to be the Servicer hereunder, it shall act (if the then-current Servicer so requests) as the  data-processing agent of the Servicer and, in such capacity, Applied Industrial shall conduct the  data-processing functions of the administration of the Receivables and the Collections thereon in  substantially  the  same  way  that  Applied  Industrial  conducted  such  data-processing  functions  while it acted as the Servicer.  In connection with any such processing functions, the Borrower  shall  pay  to  Applied  Industrial  its  reasonable  out-of-pocket  costs  and  expenses  from  the  Borrower’s own funds (subject to the priority of payments set forth in Section 3.01).         SECTION 8.06.   Servicing Fee.               (a)    Subject  to  clause (b)  below, the Borrower shall pay the Servicer a  fee  (the “Servicing Fee”) equal to 1.00% per annum (the “Servicing Fee Rate”) of the daily average  aggregate  Outstanding  Balance  of  the  Pool  Receivables.   Accrued  Servicing  Fees  shall  be  payable from Collections to the extent of available funds in accordance with Section 3.01.               (b)    If the Servicer ceases to be Applied Industrial or an Affiliate thereof, the  Servicing Fee shall be the greater of: (i) the amount calculated pursuant to clause (a) above and  (ii)  an  alternative  amount  specified  by  the  successor  Servicer not  to  exceed  110%  of  the  aggregate reasonable costs and expenses incurred by such successor Servicer in connection with  the performance of its obligations as Servicer hereunder.                                    ARTICLE IX                                                                       EVENTS OF DEFAULT         SECTION 9.01.   Events of Default.  If any of the following events (each an “Event of  Default”) shall occur:                (a)    (i)  the  Borrower,  any  Originator,  the  Performance  Guarantor  or the  Servicer shall fail to perform or observe any term, covenant or agreement under this Agreement  or any other Transaction Document (other than any such failure which would constitute an Event                                         80   107601465\V-7                                                                    

 

    of  Default  under  clause  (ii)  or  (iii)  of  this  Section  9.01(a)),  and  such  failure  shall  continue  unremedied for thirty (30) calendar days solely to the extent (A) such failure is capable of being  cured (as determined by the Administrative Agent) and (B) the Borrower, such Originator, the  Performance  Guarantor  or  the  Servicer  provides  written  notice  to  the  Administrative  Agent  detailing  the  action  which  it  is  taking  in  order  to  cure  such  failure,  (ii)  the  Borrower,  any  Originator, the Performance Guarantor or the Servicer shall fail to make when due any payment  or deposit to be made by it under this Agreement or any other Transaction Document and such  failure shall continue unremedied for two (2) Business Days (unless such failure is related to an  Event of Default set forth in Section 9.01(h)) or (iii) Applied Industrial shall resign as Servicer,  and no successor Servicer reasonably satisfactory to the Administrative Agent shall have been  appointed;               (b)    any representation or warranty made or deemed made by the Borrower,  any Originator, the Performance Guarantor or the Servicer (or any of their respective officers)  under  or  in  connection  with  this  Agreement  or  any  other  Transaction  Document  or  any  information or report delivered by the Borrower, any Originator, the Performance Guarantor or  the Servicer pursuant to this Agreement or any other Transaction Document, shall prove to have  been incorrect or untrue in any material respect when made or deemed made or delivered;               (c)    the Borrower or the Servicer shall fail to deliver an Information Package  or Interim Report pursuant to this Agreement, and such failure shall remain unremedied for two  (2) Business Days with respect to an Information Package or two (2) Business Days with respect  to an Interim Report;                (d)    this  Agreement  or  any  security  interest  granted  pursuant  to  this  Agreement or any other Transaction Document shall for any reason cease to create, or for any  reason cease to be, a valid and enforceable first priority perfected security interest in favor of the  Administrative Agent with respect to the Collateral, free and clear of any Adverse Claim;               (e)    the Borrower, any Originator, the Performance Guarantor or the Servicer  shall generally not pay its debts as such debts become due, or shall admit in writing its inability  to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any  Insolvency  Proceeding  shall  be  instituted  by  or  against  the  Borrower,  any  Originator,  the  Performance Guarantor or the Servicer and, in the case of any such proceeding instituted against  such Person (but not instituted by such Person), either such proceeding shall remain undismissed  or unstayed for a period of sixty (60) consecutive calendar days, or any of the actions sought in  such  proceeding  (including  the  entry  of  an  order  for  relief  against,  or  the  appointment  of  a  receiver,  trustee,  custodian  or  other  similar  official  for,  it or  for  any  substantial  part  of  its  property)  shall  occur;  or  the  Borrower,  any  Originator,  the  Performance  Guarantor  or  the  Servicer shall take any corporate or organizational action to authorize any of the actions set forth  above in this Section 9.01(e);               (f)    (i)  the  average  for  three  (3)  consecutive  Fiscal  Months  of:   (A)  the  Default Ratio shall exceed three and one-half percent (3.50%), (B) the Delinquency Ratio shall  exceed seven percent (7.00%) or (C) the Dilution Ratio shall exceed six percent (6.00%) or (ii)  the Days’ Sales Outstanding shall exceed sixty five (65) calendar days;                                          81   107601465\V-7                                                                    

 

                (g)    a Change in Control shall occur;               (h)    a  Borrowing  Base  Deficit  shall  occur,  and  shall  not  have  been  cured  within two (2) Business Days;               (i)    (i) the Borrower shall fail to pay any principal of or premium or interest  on any of its  Debt  when the same becomes due  and payable  (whether by  scheduled maturity,  required prepayment, acceleration, demand or otherwise), and such failure shall continue after  the  applicable  grace  period  (not  to  exceed  thirty  (30)  calendar  days),  if  any,  specified  in  the  agreement, mortgage, indenture or instrument relating to such Debt (whether or not such failure  shall  have  been  waived  under  the  related  agreement);  (ii)  any  Originator,  the  Performance  Guarantor  or  the  Servicer,  or  any  of  their  respective  Subsidiaries,  individually  or  in  the  aggregate,  shall  fail  to  pay  any  principal  of  or  premium  or  interest  on  any  of  its  Debt  that  is  outstanding in a principal amount of at least thirty million dollars ($30,000,000) in the aggregate  when the same becomes due and payable (whether by scheduled maturity, required prepayment,  acceleration,  demand  or  otherwise),  and  such  failure  shall  continue  after  the  applicable  grace  period (not to  exceed  thirty  (30)  calendar days),  if any,  specified in  the agreement,  mortgage,  indenture or instrument relating to such Debt (whether or not such failure shall have been waived  under the related agreement); (iii) any other event shall occur or condition shall exist under any  agreement, mortgage, indenture or instrument relating to any such Debt (as referred to in clause  (i)  or  (ii)  of  this  Section  9.01(i))  and  shall  continue  after  the  applicable  grace  period  (not  to  exceed  thirty  (30)  calendar  days),  if  any,  specified  in  such  agreement,  mortgage,  indenture  or  instrument (whether or not such failure shall have been waived under the related agreement), if  the effect of such event or condition is to give the applicable debtholders the right (whether acted  upon or not) to accelerate or permit the acceleration of the maturity of such Debt (as referred to  in  clause  (i)  or  (ii)  of  this  Section  9.01(i))  or  to  terminate the  commitment  of  any  lender  thereunder, or (iv) any such Debt (as referred to in clause (i) or (ii) of this Section 9.01(i)) shall  be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled  required prepayment), redeemed, purchased or defeased, or an offer to repay, redeem, purchase  or defease such Debt shall be required to be made or the commitment of any lender thereunder  terminated, in each case before the stated maturity thereof;                (j)    (i) the Performance Guarantor shall fail to perform any of its obligations  under the Performance Guaranty (other than any such failure which would constitute an Event of  Default under clause (ii) of this Section 9.01(j)), and such failure shall continue unremedied for  thirty  (30)  calendar  days,  solely  to  the  extent  (A)  such  failure  is  capable  of  being  cured  (as  determined by the Administrative Agent) and (B) the Performance Guarantor provides written  notice to the Administrative Agent detailing the action which it is taking in order to cure such  failure, or (ii) the Performance Guarantor shall fail to make when due any payment or deposit to  be made by it under the Performance Guaranty and such failure shall continue unremedied for  two (2) Business Days (unless such failure is related to an Event of Default set forth in Section  9.01(h));               (k)    the Borrower shall fail (x) at any time (other than for ten (10) Business  Days  following  notice  of  the  death  or  resignation  of  any  Independent  Director)  to  have  an  Independent  Director  who  satisfies  each  requirement  and  qualification  specified  in  Section  7.03(c) of this Agreement for Independent Directors, on the Borrower’s board of directors or (y)                                         82   107601465\V-7                                                                    

 

    to timely notify the Administrative Agent of any replacement or appointment of any director that  is to serve as an Independent Director on the Borrower’s board of directors as required pursuant  to Section 7.03(c) of this Agreement;               (l)    there shall have occurred any event which materially adversely impairs,  in the reasonable discretion of Administrative Agent, the collectibility of the Pool Receivables  generally or any material portion thereof;               (m)    either (i) the Internal Revenue Service shall file notice of a lien pursuant  to Section 6323 of the Code with regard to any assets of the Borrower, any  Originator or the  Parent or (ii) the PBGC shall, or shall indicate its intention to, file notice of a lien pursuant to  Section  4068  of  ERISA  with  regard  to  any  of  the  assets  of  the  Borrower,  the  Servicer,  any  Originator or the Parent;               (n)    (i)  the  occurrence  of  a  Reportable  Event;  (ii)  the  adoption  of an  amendment to a Pension Plan that would require the provision of security pursuant to Section  401(a)(29)  of  the  Code;  (iii)  the  existence  with  respect  to  any  Multiemployer  Plan  of  an  “accumulated  funding  deficiency”  (as  defined  in  Section  431  of the  Code  or  Section  304  of  ERISA), whether or not waived; (iv) the failure to satisfy the minimum funding standard under  Section 412 of the Code with respect to any Pension Plan (v) the incurrence of any liability under  Title  IV  of  ERISA  with  respect  to  the  termination  of  any  Pension  Plan  or  the  withdrawal  or  partial withdrawal of any of the Borrower, any Originator, the Servicer, the Parent or any of their  respective  ERISA  Affiliates  from  any  Multiemployer  Plan;  (vi)  the  receipt  by  any  of  the  Borrower, any Originator, the Servicer, the  Parent or any of their respective ERISA Affiliates  from the PBGC or any plan administrator of any notice relating to the intention to terminate any  Pension Plan or Multiemployer Plan or to appoint a trustee to administer any Pension Plan or  Multiemployer Plan; (vii) the receipt by the Borrower, any Originator, the Servicer, the Parent or  any of their respective ERISA Affiliates of any notice concerning the imposition of Withdrawal  Liability or a determination that a Multiemployer Plan is, or is expected to  be, insolvent or in  reorganization, within the meaning of Title IV of ERISA; (viii) the occurrence of a prohibited  transaction with respect to any of the Borrower, any Originator, the Servicer, the Parent or any of  their respective ERISA Affiliates (pursuant to Section 4975 of the Code); or (ix) the occurrence  or  existence  of  any  other  similar  event  or  condition  with  respect  to  a  Pension  Plan  or  a  Multiemployer Plan, with respect to each of clause (i) through (ix), either individually or in the  aggregate, could reasonably be expected to result in a Material Adverse Effect;               (o)    a Purchase and Sale Termination Event shall occur under the Purchase  and Sale Agreement;               (p)    the Borrower shall be required to register as an “investment company”  within the meaning of the Investment Company Act;               (q)    any  material  provision  of  this  Agreement  or  any  other  Transaction  Document shall cease to be in full force and effect or any of the Borrower, any Originator, the  Performance  Guarantor  or  the  Servicer  (or  any  of  their  respective  Affiliates)  shall  so  state  in  writing;                                           83   107601465\V-7                                                                    

 

                (r)    one or more judgments or decrees shall be entered against the Borrower,  any  Originator,  the  Performance  Guarantor  or  the  Servicer,  or  any  Affiliate  of  any  of  the  foregoing  involving  in  the  aggregate  a  liability  (not  paid  or  to  the  extent  not  covered  by  a  reputable and solvent insurance company) and such judgments and decrees either shall be final  and non-appealable or shall not be vacated, discharged or stayed or bonded pending appeal for  any  period  of  thirty  (30)  consecutive  calendar  days,  and  the  aggregate  amount  of  all  such  judgments equals or exceeds thirty million dollars ($30,000,000) (or solely with respect to the  Borrower, fifteen thousand dollars ($15,000)); or                (s)    the Leverage Ratio as of the last day of any test period (as calculated in  the related Credit Agreement) exceeds 4.25 to 1.00 (or any step-down or step-up thereof);   then, and in any such event, the Administrative Agent may (or, at the direction of the Majority  Group Agents shall) by notice to the Borrower (x) declare the Termination Date to have occurred  (in which case the Termination  Date shall be deemed to  have occurred), (y) declare the Final  Maturity Date to have occurred (in which case the Final Maturity Date shall be deemed to have  occurred)  and  (z)  declare  the  Aggregate  Capital  and  all  other  Borrower  Obligations  to  be  immediately  due  and  payable  (in  which  case  the  Aggregate  Capital  and  all  other  Borrower  Obligations  shall  be  immediately  due  and  payable);  provided  that,  automatically  upon  the  occurrence  of  any  event  (without  any  requirement  for  the  giving  of  notice)  described  in  subsection (e) of this Section 9.01, the Termination Date shall occur and the Aggregate Capital  and  all  other  Borrower  Obligations  shall  be  immediately  due  and  payable.   Upon  any  such  declaration or designation or upon such automatic termination, the Administrative Agent and the  other  Secured  Parties  shall  have,  in  addition  to  the  rights  and  remedies  which  they  may  have  under  this  Agreement  and  the  other  Transaction  Documents,  all  other  rights  and  remedies  provided  after  default  under  the  UCC  and  under  other  Applicable  Law,  which  rights  and  remedies shall be cumulative.  Any proceeds from liquidation of the Collateral shall be applied in  the order of priority set forth in Section 3.01.                                    ARTICLE X                                                                  THE ADMINISTRATIVE AGENT         SECTION 10.01.  Authorization  and  Action.   Each  Credit  Party  hereby  appoints  and  authorizes the Administrative Agent to take such action as agent on its behalf and to exercise  such powers under this  Agreement  as  are delegated to  the Administrative Agent  by the terms  hereof,  together  with  such  powers  as  are  reasonably  incidental thereto.   The  Administrative  Agent  shall  not  have  any  duties  other  than  those  expressly  set forth  in  the  Transaction  Documents,  and  no  implied  obligations  or  liabilities  shall  be  read  into  any  Transaction  Document, or otherwise exist, against the Administrative Agent.  The Administrative Agent does  not assume, nor shall it be deemed to have assumed, any obligation to, or relationship of trust or  agency with, the Borrower or any Affiliate thereof or any Credit Party except for any obligations  expressly  set  forth  herein.   Notwithstanding  any  provision  of  this  Agreement  or  any  other  Transaction Document, in no event shall the Administrative Agent ever be required to take any  action which exposes the Administrative Agent to personal liability or which is contrary to any  provision of any Transaction Document or Applicable Law.                                          84   107601465\V-7                                                                    

 

          SECTION 10.02.  Administrative  Agent’s  Reliance,  Etc.   Neither  the  Administrative  Agent nor any of its directors, officers, agents or employees shall be liable for any action taken  or omitted to be taken by it or them as Administrative Agent under or in connection with this  Agreement (including, without limitation, the Administrative Agent’s servicing, administering or  collecting  Pool  Receivables  in  the  event  it  replaces  the  Servicer  in  such  capacity  pursuant  to  Section 8.01), in the absence of its or their own gross negligence or willful misconduct.  Without  limiting  the  generality  of  the  foregoing,  the  Administrative  Agent:  (a)  may  consult  with  legal  counsel  (including  counsel  for  any  Credit  Party  or  the  Servicer),  independent  certified  public  accountants  and  other  experts  selected  by  it  and  shall  not  be  liable  for  any  action  taken  or  omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants  or experts; (b) makes no warranty or representation to any Credit Party (whether written or oral)  and shall not be responsible to any Credit Party for any statements, warranties or representations  (whether written or oral) made by any other party in or in connection with this Agreement; (c)  shall not have any duty to ascertain or to inquire as to the performance or observance of any of  the terms, covenants or conditions of this Agreement on the part of any Credit Party or to inspect  the property (including the books and records) of any Credit Party; (d) shall not be responsible to  any Credit Party for the due execution, legality, validity, enforceability, genuineness, sufficiency  or value of this Agreement or any other instrument or document furnished pursuant hereto; and  (e) shall be entitled to rely, and shall be fully protected in so relying, upon any notice (including  notice  by  telephone),  consent,  certificate  or  other  instrument or  writing  (which  may  be  by  facsimile) believed by it to be genuine and signed or sent by the proper party or parties.         SECTION 10.03.  Administrative  Agent  and  Affiliates.   With  respect  to  any  Credit  Extension or interests therein owned by any Credit Party that is also the Administrative Agent,  such  Credit  Party  shall  have  the  same  rights  and  powers  under  this  Agreement  as  any  other  Credit Party and may exercise the same as though it were not the Administrative Agent.  The  Administrative Agent and any of its Affiliates may generally engage in any kind of business with  the  Borrower  or  any  Affiliate  thereof  and  any  Person  who  may  do  business  with  or  own  securities of the Borrower or any Affiliate thereof, all as if the Administrative Agent were not the  Administrative Agent hereunder and without any duty to account therefor to any other Secured  Party.         SECTION 10.04.  Indemnification of Administrative Agent.  Each  Committed Lender  agrees to indemnify the Administrative Agent (to the extent not reimbursed by the Borrower or  any Affiliate thereof), ratably according to the respective Percentage of such Committed Lender,  from  and  against  any  and  all  liabilities,  obligations,  losses, damages,  penalties,  actions,  judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may  be imposed on, incurred by, or asserted against the Administrative Agent in any way relating to  or  arising  out  of  this  Agreement  or  any  other  Transaction  Document  or  any  action  taken  or  omitted by the Administrative Agent under this Agreement or any other Transaction Document;  provided that no Committed Lender shall be liable for any portion of such liabilities, obligations,  losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting  from the Administrative Agent’s gross negligence or willful misconduct.         SECTION 10.05.  Delegation of Duties.  The Administrative Agent may execute any of  its duties through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning                                          85   107601465\V-7                                                                    

 

    all matters pertaining to such duties.  The Administrative Agent shall not be responsible for the  negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.         SECTION 10.06.  Action  or  Inaction  by  Administrative  Agent.   The  Administrative  Agent  shall  in  all  cases  be  fully  justified  in  failing  or  refusing  to  take  action  under  any  Transaction  Document  unless  it  shall  first  receive  such  advice or  concurrence  of  the  Group  Agents or the Majority Group Agents, as the case may be, and assurance of its indemnification  by the Committed Lenders, as it deems appropriate.  The Administrative Agent shall in all cases  be  fully  protected  in  acting,  or  in  refraining  from  acting,  under  this  Agreement  or  any  other  Transaction Document in accordance with a request or at the direction of the Group Agents or  the Majority Group Agents,  as  the case may be, and such request  or direction and any action  taken  or  failure  to  act  pursuant  thereto  shall  be  binding  upon all  Credit  Parties.   The  Credit  Parties  and  the  Administrative  Agent  agree  that  unless  any  action  to  be  taken  by  the  Administrative  Agent  under  a  Transaction  Document  (i)  specifically  requires  the  advice  or  concurrence  of  all  Group  Agents  or  (ii)  may  be  taken  by  the  Administrative  Agent  alone  or  without any advice or concurrence of any Group Agent, then the Administrative Agent may take  action based upon the advice or concurrence of the Majority Group Agents.         SECTION 10.07.  Notice of Events of Default; Action by Administrative Agent.  The  Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any  Unmatured Event of Default or Event of Default unless the Administrative Agent has received  notice  from  any  Credit  Party  or  the  Borrower  stating  that  an  Unmatured  Event  of  Default  or  Event  of  Default  has  occurred  hereunder  and  describing  such  Unmatured  Event  of  Default  or  Event  of  Default.   If  the  Administrative  Agent  receives  such  a notice,  it  shall  promptly  give  notice thereof to each Group Agent, whereupon each Group Agent shall promptly give notice  thereof  to  its  respective  Conduit  Lender(s)  and  Related  Committed  Lender(s).   The  Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking  such action, concerning an Unmatured Event of Default or Event of Default or any other matter  hereunder as the Administrative Agent deems advisable and in the best interests of the Secured  Parties.         SECTION 10.08.  Non-Reliance  on  Administrative  Agent  and  Other  Parties.   Each  Credit  Party  expressly  acknowledges  that  neither  the  Administrative  Agent  nor  any  of  its  directors, officers, agents or employees has made any representations or warranties to it and that  no act by the Administrative Agent hereafter taken, including any review of the affairs of the  Borrower or any Affiliate thereof, shall be deemed to constitute any representation or warranty  by the Administrative Agent.  Each Credit Party represents and warrants to the Administrative  Agent  that,  independently  and  without  reliance  upon  the  Administrative  Agent  or  any  other  Credit Party and based on such documents and information as it has deemed appropriate, it has  made  and  will  continue  to  make  its  own  appraisal  of,  and  investigation  into,  the  business,  operations,  property,  prospects,  financial  and  other  conditions  and  creditworthiness  of  the  Borrower, each Originator, the Performance Guarantor or the Servicer and the Pool Receivables  and  its  own  decision  to  enter  into  this  Agreement  and  to  take, or  omit,  action  under  any  Transaction  Document.   Except  for  items  expressly  required  to  be  delivered  under  any  Transaction  Document  by  the  Administrative  Agent  to  any  Credit Party,  the  Administrative  Agent shall not have any duty or responsibility to provide any Credit Party with any information  concerning the Borrower, any Originator, the Performance Guarantor or the Servicer that comes                                         86   107601465\V-7                                                                    

 

    into  the  possession  of  the  Administrative  Agent  or  any  of  its  directors,  officers,  agents,  employees, attorneys-in-fact or Affiliates.         SECTION 10.09.  Successor Administrative Agent.               (a)    The Administrative Agent may, upon at least thirty (30) calendar days’  notice  to  the  Borrower,  the  Servicer  and  each  Group  Agent,  resign  as  Administrative  Agent.   Except  as  provided  below,  such  resignation  shall  not  become  effective  until  a  successor  Administrative Agent is appointed by the Majority Group Agents as a successor Administrative  Agent and has accepted such appointment.  If no successor Administrative Agent shall have been  so appointed by the Majority Group Agents, within thirty (30) calendar days after the departing  Administrative Agent’s giving of notice of resignation, the departing Administrative Agent may,  on  behalf  of  the  Secured  Parties,  appoint  a  successor  Administrative  Agent  as  successor  Administrative Agent.  If no successor Administrative Agent shall have been so appointed by the  Majority  Group  Agents  within  sixty  (60)  calendar  days  after  the  departing  Administrative  Agent’s giving of notice of resignation, the departing Administrative Agent may, on behalf of the  Secured Parties, petition a court of competent jurisdiction to appoint a successor Administrative  Agent.               (b)    Upon  such  acceptance  of  its  appointment  as  Administrative  Agent  hereunder  by  a  successor  Administrative  Agent,  such  successor  Administrative  Agent  shall  succeed  to  and  become  vested  with  all  the  rights  and  duties  of the  resigning  Administrative  Agent,  and  the  resigning  Administrative  Agent  shall  be  discharged  from  its  duties  and  obligations  under  the  Transaction  Documents.   After  any  resigning  Administrative  Agent’s  resignation hereunder, the provisions of this Article X and Article XII shall inure to its benefit as  to any actions taken or omitted to be taken by it while it was the Administrative Agent.         SECTION 10.10.  Structuring Agent.  Each of the parties hereto hereby acknowledges  and  agrees  that  the  Structuring  Agent  shall  not  have  any  right,  power,  obligation,  liability,  responsibility or duty under this Agreement, other than the Structuring Agent’s right to receive  fees pursuant to Section 2.03 and expenses (if any) pursuant to Section 13.04.  Each Credit Party  acknowledges that it has not relied, and will not rely, on the Structuring Agent in deciding to  enter  into  this  Agreement  and  to  take,  or  omit  to  take,  any  action  under  any  Transaction  Document.                                    ARTICLE XI                                                                       THE GROUP AGENTS         SECTION 11.01.  Authorization and Action.  Each Credit Party that belongs to a Group  hereby appoints and authorizes the Group Agent for such Group to take such action as agent on  its  behalf  and  to  exercise  such  powers  under  this  Agreement  as are  delegated  to  such  Group  Agent by the terms hereof, together with such powers as are reasonably incidental thereto.  No  Group  Agent  shall  have  any  duties  other  than  those  expressly  set  forth  in  the  Transaction  Documents,  and  no  implied  obligations  or  liabilities  shall  be  read  into  any  Transaction  Document, or otherwise exist, against any Group Agent.  No Group Agent assumes, nor shall it  be  deemed  to  have  assumed,  any  obligation  to,  or  relationship  of  trust  or  agency  with  the                                         87   107601465\V-7                                                                    

 

    Borrower  or  any  Affiliate  thereof,  any  Lender  except  for  any  obligations  expressly  set  forth  herein.  Notwithstanding any provision of this Agreement or any other Transaction Document, in  no event shall any Group Agent ever be required to take any action which exposes such Group  Agent to personal liability or which is contrary to any provision of any Transaction Document or  Applicable Law.         SECTION 11.02.  Group  Agent’s  Reliance,  Etc.   No  Group  Agent  nor  any  of  its  directors, officers, agents or employees shall be liable for any action taken or omitted to be taken  by  it  or  them  as  a  Group  Agent  under  or  in  connection  with  this  Agreement  or  any  other  Transaction Documents in the absence of its or their own gross negligence or willful misconduct.   Without  limiting  the  generality  of  the  foregoing,  a  Group  Agent:  (a)  may  consult  with  legal  counsel  (including  counsel  for  the  Administrative  Agent,  the  Borrower  or  the  Servicer),  independent certified public accountants and other experts selected by it and shall not be liable  for any action taken or omitted to be taken in good faith by it in accordance with the advice of  such counsel, accountants or experts; (b) makes no warranty or representation to any Credit Party  (whether  written  or  oral)  and  shall  not  be  responsible  to  any  Credit  Party  for  any  statements,  warranties  or  representations  (whether  written  or  oral)  made  by  any  other  party  in  or  in  connection with this Agreement or any other Transaction Document; (c) shall not have any duty  to ascertain or to inquire as to the performance or observance of any of the terms, covenants or  conditions of this Agreement or any other Transaction Document on the part of the Borrower or  any  Affiliate  thereof  or  any  other  Person  or  to  inspect  the  property  (including  the  books  and  records) of the Borrower or any Affiliate thereof; (d) shall not be responsible to any Credit Party  for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this  Agreement,  any  other  Transaction  Documents  or  any  other  instrument  or  document  furnished  pursuant hereto; and (e) shall be entitled to rely, and shall be fully protected in so relying, upon  any  notice  (including  notice  by  telephone),  consent,  certificate  or  other  instrument  or  writing  (which may be by facsimile) believed by it to be genuine and signed or sent by the proper party  or parties.         SECTION 11.03.  Group Agent and Affiliates.  With respect to any Credit Extension or  interests therein owned by any Credit Party that is also a Group Agent, such Credit Party shall  have the same rights and powers under this Agreement as any other Lender and may exercise the  same  as  though  it  were  not  a  Group  Agent.   A  Group  Agent  and  any  of  its  Affiliates  may  generally  engage  in  any  kind  of  business  with  the  Borrower  or  any  Affiliate  thereof  and  any  Person who may do business with or own securities of the Borrower or any Affiliate thereof or  any of their respective Affiliates, all as if such Group Agent were not a Group Agent hereunder  and without any duty to account therefor to any other Secured Party.         SECTION 11.04.  Indemnification  of  Group  Agents.   Each  Committed  Lender  in  any  Group agrees to indemnify the Group Agent for such Group (to the extent not reimbursed by the  Borrower or any Affiliate thereof), ratably according to the proportion of the Percentage of such  Committed Lender to the aggregate Percentages of all Committed Lenders in such Group, from  and  against  any  and  all  liabilities,  obligations,  losses,  damages,  penalties,  actions,  judgments,  suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed  on, incurred by, or asserted against such Group Agent in any way relating to or arising out of this  Agreement or any other Transaction Document  or any action taken or omitted by such Group  Agent under this Agreement or any other Transaction Document;  provided that no Committed                                         88   107601465\V-7                                                                    

 

    Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties,  actions, judgments, suits, costs, expenses or disbursements resulting from such Group Agent’s  gross negligence or willful misconduct.         SECTION 11.05.  Delegation  of  Duties.   Each  Group  Agent  may  execute  any  of  its  duties through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all  matters pertaining to such duties.  No Group Agent shall be responsible for the negligence or  misconduct of any agents or attorneys-in-fact selected by it with reasonable care.         SECTION 11.06.  Notice  of  Events  of  Default.   No  Group  Agent  shall  be  deemed  to  have  knowledge  or  notice  of  the  occurrence  of  any  Unmatured  Event  of  Default  or  Event  of  Default unless such Group Agent has received notice from the Administrative Agent, any other  Group Agent,  any other Credit Party, the Servicer or the Borrower stating that  an Unmatured  Event  of  Default  or  Event  of  Default  has  occurred  hereunder  and  describing  such  Unmatured  Event of Default or Event of Default.  If a Group Agent receives such a notice, it shall promptly  give notice thereof to the Credit Parties in its Group and to the Administrative Agent (but only if  such notice received by such Group Agent was not sent by the Administrative Agent).  A Group  Agent may take such action concerning an Unmatured Event of Default or Event of Default as  may be directed by Committed Lenders in its Group representing a majority of the Commitments  in such Group (subject to the other provisions of this  Article XI), but until such Group Agent  receives such directions, such Group Agent may (but shall not be obligated to) take such action,  or refrain from taking such action, as such Group Agent deems advisable and in the best interests  of the Conduit Lenders and Committed Lenders in its Group.         SECTION 11.07.  Non-Reliance on Group Agent and Other Parties.  Each Credit Party  expressly  acknowledges  that  neither  the  Group  Agent  for  its  Group  nor  any  of  such  Group  Agent’s directors, officers, agents or employees has made any representations or warranties to it  and that no act by such Group Agent hereafter taken, including any review of the affairs of the  Borrower or any Affiliate thereof, shall be deemed to constitute any representation or warranty  by  such  Group  Agent.   Each  Credit  Party  represents  and  warrants  to  the  Group  Agent  for  its  Group that, independently and without reliance upon such Group Agent, any other Group Agent,  the  Administrative  Agent  or  any  other  Credit  Party  and  based  on  such  documents  and  information  as  it  has  deemed  appropriate,  it  has  made  and  will continue  to  make  its  own  appraisal of, and investigation into, the business, operations, property, prospects, financial and  other  conditions  and  creditworthiness  of  the  Borrower  or  any  Affiliate  thereof  and  the  Receivables and its own decision to enter into this Agreement and to take, or omit, action under  any  Transaction  Document.   Except  for  items  expressly  required to  be  delivered  under  any  Transaction Document by a Group Agent to any Credit Party in its Group, no Group Agent shall  have any duty or responsibility to provide any Credit Party in its Group with any information  concerning the Borrower or any Affiliate thereof that comes into the possession of such Group  Agent or any of its directors, officers, agents, employees, attorneys-in-fact or Affiliates.         SECTION 11.08.  Successor Group Agent.  Any Group Agent may, upon at least thirty  (30) days’ notice to the Administrative Agent, the Borrower, the Servicer and the Credit Parties  in its Group, resign as Group Agent for its Group.  Such resignation shall not become effective  until  a  successor  Group  Agent  is  appointed  by  the  Lender(s)  in such  Group.   Upon  such  acceptance of its appointment as Group Agent for such Group hereunder by a successor Group                                         89   107601465\V-7                                                                    

 

    Agent, such successor Group Agent shall succeed to and become vested with all the rights and  duties of the resigning Group Agent, and the resigning Group Agent shall be discharged from its  duties  and  obligations  under  the  Transaction  Documents.   After any  resigning  Group  Agent’s  resignation hereunder, the provisions of this Article XI and Article XII shall inure to its benefit  as to any actions taken or omitted to be taken by it while it was a Group Agent.         SECTION 11.09.  Reliance on Group Agent.  Unless otherwise advised in writing by a  Group Agent or by any Credit Party in such Group Agent’s Group, each party to this Agreement  may  assume  that  (i)  such  Group  Agent  is  acting  for  the  benefit and  on  behalf  of  each  of  the  Credit Parties in its Group, as well as for the benefit of each assignee or other transferee from  any such Person and (ii) each action taken by such Group Agent has been duly authorized and  approved by all necessary action on the part of the Credit Parties in its Group.                                   ARTICLE XII                                                                        INDEMNIFICATION         SECTION 12.01.  Indemnities by the Borrower.               (a)    Without  limiting  any  other  rights  that  the  Administrative  Agent,  the  Credit Parties, the Affected Persons and their respective assigns, officers, directors, agents and  employees  (each,  a  “Borrower  Indemnified  Party”)  may  have  hereunder  or  under  Applicable  Law,  the  Borrower  hereby  agrees  to  indemnify  each  Borrower  Indemnified  Party  from  and  against  any  and  all  claims,  expenses,  damages,  losses  and  liabilities  suffered  or  sustained  (including  Attorney  Costs)  (all  of  the  foregoing  being  collectively  referred  to  as  “Borrower  Indemnified Amounts”) arising out of, relating to or in connection this Agreement or any other  Transaction Document or the use of proceeds of the Credit Extensions or the security interest in  respect  of  any  Pool  Receivable  or  any  other  Collateral;  excluding,  however,  (x)  Borrower  Indemnified  Amounts  to  the  extent  a  final  non-appealable  judgment  of  a  court  of  competent  jurisdiction  holds  that  such  Borrower  Indemnified  Amounts  resulted  solely  from  the  gross  negligence,  bad  faith,  willful  misconduct  by  the  Borrower  Indemnified  Party  seeking  indemnification,  (y)  Borrower  Indemnified  Amounts  to  the  extent  a  final  non-appealable  judgment of a court of competent jurisdiction holds that such Borrower Indemnified Amounts  resulted solely from a material breach of a Transaction Document by the Borrower Indemnified  Party seeking indemnification and (z) Taxes that are covered by Section 4.03.  Without limiting  or being limited by the foregoing, the Borrower shall pay on demand (it being understood that if  any portion of such payment obligation is made from Collections, such payment will be made at  the time and in  the order of priority set  forth  in  Section 3.01), to  each  Borrower  Indemnified  Party any  and all amounts necessary to indemnify  such  Borrower Indemnified Party from and  against  any  and  all  Borrower  Indemnified  Amounts  relating  to  or  resulting  from  any  of  the  following (but excluding Borrower Indemnified Amounts and Taxes described in clauses (x), (y)  and (z) above):                     (i)   any Pool Receivable which the Borrower or the Servicer includes        as an Eligible Receivable as part of the Net Receivables Pool Balance but which is not an        Eligible Receivable at such time;                                          90   107601465\V-7                                                                    

 

                                               (ii)  any  representation,  warranty  or  statement  made  or  deemed  made       by  the  Borrower  (or  any  of  its  respective  officers)  under  or  in  connection  with  this       Agreement, any of the other Transaction Documents, any Information Package, Interim       Report  or  any  other  information  or  report  delivered  by  or  on  behalf  of  the  Borrower       pursuant hereto which shall have been untrue or incorrect when made or deemed made;                    (iii) the  failure  by  the  Borrower  to  comply  with  any  Applicable  Law       with respect to  any Pool Receivable or the related Contract; or the failure of any Pool       Receivable or the related Contract to conform to any such Applicable Law;                    (iv)  the  failure  to  vest  in  the  Administrative  Agent  a  first  priority       perfected security interest  in  all or any portion  of the Collateral,  in  each  case  free  and       clear of any Adverse Claim;                    (v)   the  failure  to  have  filed,  or  any  delay  in  filing,  financing       statements,  financing  statement  amendments,  continuation  statements  or  other  similar       instruments  or  documents  under  the  UCC  of  any  applicable  jurisdiction  or  other       Applicable  Laws  with  respect  to  any  Pool  Receivable  and  the  other  Collateral  and       Collections  in  respect  thereof,  whether  at  the  time  of  any  Credit  Extension  or  at  any       subsequent time;                    (vi)  any dispute, claim or defense (other than discharge in bankruptcy),       of  an  Obligor  to  the  payment  of  any  Pool  Receivable  (including,  without  limitation,  a       defense based on such Pool Receivable or the related Contract not being a legal, valid and       binding obligation of such Obligor enforceable against it in accordance with its terms), or       any other claim resulting from or relating to collection activities with respect to such Pool       Receivable;                    (vii) any  failure  of  the  Borrower  to  perform  any  of  its  duties  or       obligations  in  accordance  with  the  provisions  hereof  and  of  each  other  Transaction       Document related to Pool Receivables or to timely and fully comply with the Credit and       Collection Procedures in regard to each Pool Receivable;                    (viii) any products liability, environmental or other claim arising out of       or in connection with any Pool Receivable or other merchandise, goods or services which       are the subject of or related to any Pool Receivable;                    (ix)  the  commingling  of  Collections  of  Pool  Receivables  at  any  time       with other funds;                    (x)   any  investigation,  litigation  or  proceeding  (actual  or  threatened)       related to this Agreement or any other Transaction Document or the use of proceeds of       any  Credit  Extensions  or  in  respect  of  any  Pool  Receivable  or  other  Collateral  or  any       related Contract;                    (xi)  any  failure  of  the  Borrower  to  comply  with  its  covenants,       obligations  and  agreements  contained  in  this  Agreement  or  any  other  Transaction       Document;                                        91  107601465\V-7                                                                                 

 

                      (xii) any offset, setoff, adjustment, or other non-cash  reduction of any        Pool  Receivable  (including  Deemed  Collections)  not  arising  from  the  bankruptcy  or        insolvency, lack of creditworthiness or other financial default or inability to pay of the        related Obligor any undisputed indebtedness;                     (xiii) any  claim  brought  by  any  Person  other  than  a  Borrower        Indemnified  Party  arising  from  any  activity  by  the  Borrower  or any  Affiliate  of  the        Borrower in servicing, administering or collecting any Pool Receivable;                     (xiv) the failure by the Borrower to pay when due any taxes, including,        without limitation, sales, excise or personal property taxes;                     (xv)  any failure of a Collection Account Bank to comply with the terms        of the applicable Account Control Agreement, the termination by a Collection Account        Bank  prior  to  the  appointment  of  a  successor  collection  account  bank  or  any  amounts        payable by the Administrative Agent to a Collection Account Bank under any Account        Control Agreement;                     (xvi) any  dispute,  claim,  offset  or  defense  (other  than  discharge  in        bankruptcy  of  the  Obligor)  of  the  Obligor  to  the  payment  of  any  Pool  Receivable        (including,  without  limitation,  a  defense  based  on  such  Pool  Receivable  or  the  related        Contract  not  being  a  legal,  valid  and  binding  obligation  of  such  Obligor  enforceable        against  it  in  accordance  with  its  terms),  or  any  other  claim  resulting  from  the  sale  of        goods or the rendering of services related to such Pool Receivable or the furnishing or        failure to furnish any such goods or services or other similar claim or defense not arising        from the financial inability of any Obligor to pay undisputed indebtedness;                     (xvii) any  action  taken  by  the  Administrative  Agent  as  attorney-in-fact        for the Borrower, any Originator or the Servicer pursuant to this Agreement or any other        Transaction Document;                     (xviii) the use of proceeds of any Credit Extension;                      (xix) any  reduction  in  Capital  as  a result  of  the  distribution  of        Collections  if  all  or  a  portion  of  such  distributions  shall  thereafter  be  rescinded  or        otherwise must be returned for any reason; or                     (xx)  any failure by any Originator to provide an Obligor with an invoice        evidencing indebtedness related to a Pool Receivable.               (b)    Notwithstanding anything to the contrary in this Agreement, solely for  purposes of the Borrower’s indemnification obligations in clauses (ii), (iii), (vii) and (xi) of this  Article  XII,  any  representation,  warranty  or  covenant  qualified  by  the  occurrence  or  non- occurrence of a material adverse effect or similar concepts of materiality shall be deemed to be  not so qualified.               (c)    If  for  any  reason  the  foregoing  indemnification  is  unavailable to  any  Borrower  Indemnified  Party  or  insufficient  to  hold  it  harmless,  then  the  Borrower  shall                                         92   107601465\V-7                                                                    

 

    contribute to  such  Borrower  Indemnified Party the amount paid  or payable by such  Borrower  Indemnified  Party  as  a  result  of  such  loss,  claim,  damage  or  liability  in  such  proportion  as  is  appropriate to reflect the relative economic interests of the Borrower and its Affiliates on the one  hand and such Borrower Indemnified Party on the other hand in the matters contemplated by this  Agreement  as  well  as  the  relative  fault  of  the  Borrower  and  its  Affiliates  and  such  Borrower  Indemnified Party  with  respect  to  such loss, claim,  damage or liability  and any other  relevant  equitable  considerations.   The  reimbursement,  indemnity  and  contribution  obligations  of  the  Borrower under this Section 12.01 shall be in addition to any liability which the Borrower may  otherwise have, shall extend upon the same terms and conditions to each Borrower Indemnified  Party, and shall be binding upon and inure to the benefit of any successors, assigns, heirs and  personal representatives of the Borrower and the Borrower Indemnified Parties.               (d)    Any  indemnification  or  contribution  under  this  Section  12.01  shall  survive the termination of this Agreement.         SECTION 12.02.  Indemnification by the Servicer.               (a)    The  Servicer  hereby  agrees  to  indemnify  and  hold  harmless  the  Borrower, the Administrative Agent, the Credit Parties, the Affected Persons and their respective  assigns, officers, directors, agents and employees (each, a “Servicer Indemnified Party”), from  and against any and all claims, expenses, damages, losses and liabilities suffered or sustained by  reason of any acts, omissions or alleged acts or omissions arising out of activities of the Servicer  pursuant to this Agreement or any other Transaction Document, including any judgment, award,  settlement, Attorney Costs and other costs or expenses incurred in connection with the defense of  any  actual  or  threatened  action,  proceeding  or  claim  (all  of  the  foregoing  being  collectively  referred to as, “Servicer Indemnified Amounts”); excluding (w) Servicer Indemnified Amounts  to the extent a final non-appealable judgment of a court of competent jurisdiction holds that such  Servicer  Indemnified  Amounts  resulted  solely  from  the  gross  negligence,  bad  faith  or  willful  misconduct by the Servicer Indemnified Party seeking indemnification, (x) Servicer Indemnified  Amounts to the extent a final non-appealable judgment of a court of competent jurisdiction holds  that such Servicer Indemnified Amounts resulted solely from a material breach of a Transaction  Document by the Servicer Indemnified Party seeking indemnification, (y) Taxes that are covered  by Section 4.03 and (z) Servicer Indemnified Amounts to the extent the same includes losses in  respect  of  Pool  Receivables  that  are  uncollectible  solely  on  account  of  the  insolvency,  bankruptcy,  lack  of  creditworthiness  or  other  financial  inability  to  pay  of  the  related  Obligor.   Without limiting or being limited by the foregoing, the Servicer shall pay on demand, to each  Servicer  Indemnified  Party  any  and  all  amounts  necessary  to  indemnify  such  Servicer  Indemnified  Party  from  and  against  any  and  all  Servicer  Indemnified  Amounts  relating  to  or  resulting from any of the following (but excluding Servicer Indemnified Amounts described in  clauses (z), (y) and (z) above):                     (i)   any  representation,  warranty  or  statement  made  or  deemed  made        by  the  Servicer  (or  any  of  its respective  officers)  under  or  in  connection  with  this        Agreement, any of the other Transaction Documents, any Information Package, Interim        Report  or  any  other  information  or  report  delivered  by  or  on  behalf  of  the  Servicer        pursuant hereto which shall have been untrue or incorrect when made or deemed made;                                          93   107601465\V-7                                                                    

 

                      (ii)  the  failure  by  the  Servicer  to  comply  with  any  Applicable  Law        with respect to  any Pool Receivable or the related Contract; or the failure of any Pool        Receivable or the related Contract to conform to any such Applicable Law;                     (iii) the  commingling  of  Collections  of  Pool  Receivables  at  any  time        with other funds; or                     (iv)  any  failure  of  the  Servicer  to  comply  with  its  covenants,        obligations  and  agreements  contained  in  this  Agreement  or  any  other  Transaction        Document (including, without limitation, the failure or delay by the Servicer to provide,        or  cause  the  applicable  Originator  to  provide,  any  Obligor  with  an  invoice  or  other        evidence of Indebtedness related to a Pool Receivable).                (b)    If  for  any  reason  the  foregoing  indemnification  is  unavailable to  any  Servicer Indemnified Party or insufficient to hold it harmless, then the Servicer shall contribute  to the amount paid or payable by such Servicer Indemnified Party as a result of such loss, claim,  damage or liability in such proportion as is appropriate to reflect the relative economic interests  of the Servicer and its Affiliates  on the one hand and such Servicer  Indemnified Party on the  other  hand  in  the  matters  contemplated  by  this  Agreement  as  well  as  the  relative  fault  of  the  Servicer and its Affiliates and such Servicer Indemnified Party with respect to such loss, claim,  damage  or  liability  and  any  other  relevant  equitable  considerations.   The  reimbursement,  indemnity  and  contribution  obligations  of  the  Servicer  under  this  Section  12.02  shall  be  in  addition  to  any  liability  which  the  Servicer  may  otherwise  have,  shall  extend  upon  the  same  terms and conditions to Servicer Indemnified Party, and shall be binding upon and inure to the  benefit  of  any  successors,  assigns,  heirs  and  personal  representatives  of  the  Servicer  and  the  Servicer Indemnified Parties.               (c)    Any  indemnification  or  contribution  under  this  Section  12.02  shall  survive the termination of this Agreement.                                   ARTICLE XIII                                                                         MISCELLANEOUS         SECTION 13.01.  Amendments, Etc.         No failure on the part of any Credit Party to  exercise, and no delay in  exercising, any  right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any  right hereunder preclude any other or further exercise thereof or the exercise of any other right.   No amendment or waiver of any provision of this Agreement or consent to any departure by any  of  the  Borrower  or  any  Affiliate  thereof  shall  be  effective  unless  in  a  writing  signed  by  the  Administrative Agent and the Majority Group Agents (and, in the case of any amendment, also  signed by the Borrower), and then such amendment, waiver or consent shall be effective only in  the specific instance and for the specific purpose for which given; provided, however, that (A) no  amendment,  waiver  or  consent  shall,  unless  in  writing  and  signed  by  the  Servicer,  affect  the  rights  or  duties  of  the  Servicer  under  this  Agreement;  (B)  no  amendment,  waiver  or  consent  shall, unless in writing and signed by the Administrative Agent and each Group Agent:                                         94   107601465\V-7                                                                    

 

                (a)    change  (directly  or  indirectly)  the  definitions  of,  Borrowing  Base  Deficit, Defaulted Receivable, Delinquent Receivable, Eligible Receivable, Facility Limit, Final  Maturity Date, Net Receivables Pool Balance or Total Reserves contained in this Agreement, or  increase the then existing Concentration Percentage for any Obligor or change the calculation of  the Borrowing Base;               (b)    reduce the amount of Capital or Interest or any Fee that is payable on  account of any Loan or with respect to any other Credit Extension or delay any scheduled date  for payment thereof;               (c)    change any Event of Default;               (d)    release all or a material portion of the Collateral from the Administrative  Agent’s security interest created hereunder;               (e)    release the Performance Guarantor from any of its obligations under the  Performance Guaranty or terminate the Performance Guaranty;               (f)    change any of the provisions of this  Section 13.01 or the definition of  “Majority Group Agents”; or               (g)    change the order of priority in which Collections are applied pursuant to  Section 3.01.         Notwithstanding the foregoing, (i) no amendment, waiver or consent shall increase any  Committed Lender’s Commitment hereunder without the consent of such Committed Lender and  (ii)  no  amendment,  waiver  or  consent  shall  reduce  any  Fees  payable  by  the  Borrower  to  any  member of any  Group  or delay  the dates  on  which  any  such  Fees  are payable, in  either case,  without the consent of the Group Agent for such Group and (iii) no consent with respect to any  amendment, waiver or other modification of this Agreement shall be required of any Defaulting  Lender,  except  with  respect  to  any  amendment,  waiver  or  other  modification  referred  to  in  clauses (i) through (vii) above and then only in the event such Defaulting Lender shall be directly  affected by such amendment, waiver or other modification.        SECTION 13.02.   Notices, Etc.  All notices and other communications hereunder shall,  unless otherwise stated herein, be in writing (which shall include facsimile communication) and  faxed or delivered, to each party hereto, at its address set forth under its name on Schedule III  hereto or at such other address  as shall be designated by such party in  a written notice to the  other parties hereto.  Notices and communications by facsimile shall be effective when sent (and  shall be followed by hard copy sent by regular mail), and notices and communications sent by  other means shall be effective when received.        SECTION 13.03.   Assignability; Addition of Lenders.               (a)    Assignment by Conduit Lenders.  This Agreement and the rights of each  Conduit Lender hereunder (including  each  Loan made by it hereunder)  shall be assignable by  such  Conduit  Lender  and  its  successors  and  permitted  assigns  (i)  to  any  Program  Support  Provider of such Conduit Lender without prior notice to or consent from the Borrower or any                                         95   107601465\V-7                                                                    

 

    other party, or any other condition or restriction of any kind, (ii)  to any other Lender with prior  notice  to  the  Borrower  but  without  consent  from  the  Borrower  or  (iii)  with  the  prior  written  consent of the Borrower (such consent not to be unreasonably withheld, conditioned or delayed;  provided, however, that such consent shall not be required if an Event of Default or Unmatured  Event of Default has occurred and is continuing), to any other Eligible Assignee.  Each assignor  of  a  Loan  or  any  interest  therein  may,  in  connection  with  the  assignment  or  participation,  disclose to the assignee or Participant any information relating to the Borrower and its Affiliates,  including the Receivables, furnished to such assignor by or on behalf of the Borrower and its  Affiliates  or  by  the  Administrative  Agent;  provided  that,  prior  to  any  such  disclosure,  the  assignee  or  Participant  agrees  to  preserve  the  confidentiality of  any  confidential  information  relating to the Borrower and its Affiliates received by it from any of the foregoing entities in a  manner consistent with Section 13.06(b).               (b)    Assignment  by  Committed  Lenders.   Each  Committed  Lender  may  assign to any Eligible Assignee or to any other Committed Lender all or a portion of its rights  and  obligations  under  this  Agreement  (including,  without  limitation,  all  or  a  portion  of  its  Commitment and any Loan or interests therein owned by it); provided, however that                     (i)   except  for  an  assignment  by  a  Committed  Lender  to  either  an        Affiliate  of  such  Committed  Lender  or  any  other  Committed  Lender,  each  such        assignment shall require the prior written consent of the Borrower (such consent not to be        unreasonably  withheld,  conditioned  or  delayed;  provided,  however,  that  such  consent        shall  not  be  required  if  an  Event  of  Default  or  an  Unmatured  Event  of  Default  has        occurred and is continuing);                     (ii)  each  such  assignment  shall  be  of  a  constant,  and  not  a  varying,        percentage of all rights and obligations under this Agreement;                     (iii) the  amount  being  assigned  pursuant  to  each  such  assignment        (determined as of the date of the Assignment and Acceptance Agreement with respect to        such  assignment)  shall  in  no  event  be  less  than  the  lesser  of  (x)  five  million  dollars        ($5,000,000) and (y) all of the assigning Committed Lender’s Commitment; and                     (iv)  the parties to each such assignment shall execute and deliver to the        Administrative  Agent,  for its  acceptance and recording in  the Register,  an Assignment        and Acceptance Agreement.         Upon such execution, delivery, acceptance and recording from and after the effective date  specified in such Assignment and Acceptance Agreement, (x) the assignee thereunder shall be a  party to this Agreement, and to the extent that rights and obligations under this Agreement have  been assigned to it pursuant to such Assignment and Acceptance Agreement, have the rights and  obligations of a Committed Lender hereunder and (y) the assigning Committed Lender shall, to  the extent that rights and obligations have been assigned by it pursuant to such Assignment and  Acceptance Agreement, relinquish such rights and be released from such obligations under this  Agreement (and, in the case of an Assignment and Acceptance Agreement covering all or the  remaining  portion  of  an  assigning  Committed  Lender’s  rights  and  obligations  under  this  Agreement, such Committed Lender shall cease to be a party hereto).                                         96   107601465\V-7                                                                    

 

                (c)    Register.  The Administrative Agent shall, acting solely for this purpose  as an agent of the Borrower, maintain at its address referred to on Schedule III of this Agreement  (or such other address of the Administrative Agent notified by the Administrative Agent to the  other  parties  hereto)  a  copy  of  each  Assignment  and  Acceptance Agreement  delivered  to  and  accepted by it and a register for the recordation of the names and addresses of the Committed  Lenders and the Conduit Lenders, the Commitment of each Committed Lender and the aggregate  outstanding Capital  (and stated interest) of the  Loans  of each Conduit  Lender and Committed  Lender from time to time (the “Register”).  The entries in the Register shall be conclusive and  binding  for  all  purposes,  absent  manifest  error,  and  the  Borrower,  the  Servicer,  the  Administrative  Agent,  the  Group  Agents,  and  the  other  Credit  Parties  may  treat  each  Person  whose name is recorded in the Register as a Committed Lender or Conduit Lender, as the case  may  be,  under  this  Agreement  for  all  purposes  of  this  Agreement.   The  Register  shall  be  available for inspection by the Borrower, the Servicer, any Group Agent, any Conduit Lender or  any  Committed  Lender  at  any  reasonable  time  and  from  time  to  time  upon  reasonable  prior  notice.               (d)    Procedure.   Upon  its  receipt  of  an  Assignment  and  Acceptance  Agreement executed and delivered by an assigning Committed Lender and an Eligible Assignee  or  assignee  Committed  Lender,  the  Administrative  Agent  shall,  if  such  Assignment  and  Acceptance  Agreement  has  been  duly  completed,  (i)  accept  such  Assignment  and  Acceptance  Agreement,  (ii)  record  the  information  contained  therein  in  the  Register  and  (iii)  give  prompt  notice thereof to the Borrower and the Servicer.               (e)    Participations.  Each Committed Lender may sell participations to one or  more  Eligible  Assignees  (each,  a  “Participant”)  in  or  to  all  or  a  portion  of  its  rights  and/or  obligations  under  this  Agreement  (including,  without  limitation,  all  or  a  portion  of  its  Commitment and the interests in the Loans owned by it); provided, however, that                     (i)   such  Committed  Lender’s  obligations  under  this  Agreement        (including, without limitation, its Commitment to the Borrower hereunder) shall remain        unchanged, and                     (ii)  such  Committed  Lender  shall  remain  solely  responsible  to  the        other parties to this Agreement for the performance of such obligations.         The Administrative Agent, the Group Agents, the Conduit Lenders, the other Committed  Lenders, the Borrower and the Servicer shall have the right to continue to deal solely and directly  with such Committed Lender in connection with such Committed Lender’s rights and obligations  under this Agreement.               (f)    Participant Register.  Each Committed Lender that sells a participation  shall, acting solely for this purpose as an agent of the Borrower, maintain a register on which it  enters the name and address of each Participant and the principal amounts (and stated interest) of  each  Participant’s  interest  in  the  Loans  or  other  obligations  under  this  Agreement  (the  “Participant Register”); provided that no Committed Lender shall have any obligation to disclose  all  or  any  portion  of  the  Participant  Register  (including  the  identity  of  any  Participant  or  any  information  relating  to  a  Participant’s  interest  in  any  Commitments,  Loans  or  its  other                                         97   107601465\V-7                                                                    

 

    obligations under any this Agreement) to any Person except to the extent that such disclosure is  necessary  to  establish  that  such  Commitment,  Loan  or  other  obligation  is  in  registered  form  under  Section  5f.103-1(c)  of  the  United  States  Treasury  Regulations.   The  entries  in  the  Participant Register shall be conclusive absent manifest error, and such Committed Lender shall  treat  each  Person  whose  name  is  recorded  in  the  Participant  Register  as  the  owner  of  such  participation for all purposes of this Agreement notwithstanding any notice to the contrary.  For  the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall  have no responsibility for maintaining a Participant Register.               (g)    Assignments by Agents.  This Agreement and the rights and obligations  of  the  Administrative  Agent  and  each  Group  Agent  herein  shall  be  assignable  by  the  Administrative Agent or such Group Agent, as the case may be, and its successors and assigns;  provided  that  in  the  case  of  an  assignment  to  a  Person  that  is not  an  Affiliate  of  the  Administrative Agent or such Group Agent, so long as no Event of Default or Unmatured Event  of Default has occurred and is continuing, such assignment shall require the Borrower’s consent  (not to be unreasonably withheld, conditioned or delayed).               (h)    Assignments by the Borrower or the Servicer.  Neither the Borrower nor,  except  as  provided  in  Section  8.01,  the  Servicer  may  assign  any  of  its  respective  rights  or  obligations  hereunder  or  any  interest  herein  without  the  prior written  consent  of  the  Administrative Agent and each Group Agent (such consent to be provided or withheld in the sole  discretion of such Person).               (i)    Addition  of  Lenders  or  Groups.   The  Borrower  may,  with  written  consent of the Administrative Agent and the Majority Group Agents, add additional Persons as  Lenders  (by  creating  a  new  Group)  or  cause  an  existing  Lender  to  increase  its  Commitment;  provided, however, that the Commitment of any existing Lender may only be increased with the  prior written consent of such Lender.  Each new Lender (or Group) shall become a party hereto,  by  executing  and  delivering  to  the  Administrative  Agent  and  the  Borrower,  an  assumption  agreement  (each,  an  “Assumption  Agreement”)  in  the  form  of Exhibit  D  hereto  (which  Assumption Agreement shall, in the case of any new Lender, be executed by each Person in such  new Lender’s Group).               (j)    Pledge  to  a  Federal  Reserve  Bank.  Notwithstanding  anything  to  the  contrary set  forth  herein, (i) any  Lender, Program  Support  Provider or any of their respective  Affiliates may at any time pledge or grant a security interest in all or any portion of its interest in,  to  and  under  this  Agreement  (including,  without  limitation,  rights  to  payment  of  Capital  and  Interest)  and  any  other  Transaction  Document  to  secure  its  obligations  to  a  Federal  Reserve  Bank, without notice to or the consent of the Borrower, the Servicer, any Affiliate thereof or any  Credit  Party;  provided,  however,  that  that  no  such  pledge  shall  relieve  such  assignor  of  its  obligations under this Agreement.               (k)    Pledge to a Security Trustee.  Notwithstanding anything to the contrary  set forth herein, (i) any Lender, Program Support Provider or any of their respective Affiliates  may at any time pledge or grant a security interest in all or any portion of its interest in, to and  under this Agreement (including, without limitation, rights to payment of Capital and Interest)  and any other Transaction Document to a security trustee in connection with the funding by such                                         98   107601465\V-7                                                                    

 

    Person of Loans, without notice to or the consent of the Borrower, the Servicer,  any Affiliate  thereof  or  any  Credit  Party;  provided,  however,  that  that  no  such  pledge  shall  relieve  such  assignor of its obligations under this Agreement.         SECTION 13.04.  Costs  and  Expenses.   In  addition  to  the  rights  of  indemnification  granted under Section 12.01 hereof, the Borrower agrees to pay on demand all reasonable and  documented  out-of-pocket  costs  and  expenses  in  connection  with the  preparation,  negotiation,  execution, delivery and administration of this Agreement, any Program Support Agreement (or  any  supplement  or  amendment  thereof)  related  to  this  Agreement and  the  other  Transaction  Documents (together with all amendments, restatements, supplements, consents and waivers, if  any,  from  time  to  time  hereto  and  thereto),  including,  without limitation,  (i)  the  reasonable  Attorney Costs for the Administrative Agent, the Structuring Agent and the other Credit Parties  and  any  of  their  respective  Affiliates  with  respect  thereto  and  with  respect  to  advising  the  Administrative  Agent,  the  Structuring  Agent  and  the  other  Credit  Parties  and  their  respective  Affiliates  as  to  their  rights  and  remedies  under  this  Agreement  and  the  other  Transaction  Documents and (ii) reasonable accountants’, auditors’ and consultants’ fees and expenses for the  Administrative  Agent,  the  Structuring  Agent  and  the  other  Credit  Parties  and  any  of  their  respective  Affiliates  and  the  fees  and  charges  of  any  nationally  recognized  statistical  rating  agency  incurred  in  connection  with  the  administration  and  maintenance  of  this  Agreement  or  advising the Administrative Agent or any other Credit Party as to their rights and remedies under  this Agreement or as to any actual or reasonably claimed breach of this Agreement or any other  Transaction Document.  In addition, the Borrower agrees to pay on demand all reasonable out- of-pocket  costs  and  expenses  (including  reasonable  Attorney  Costs),  of  the  Administrative  Agent, the Structuring Agent and the other Credit Parties and their respective Affiliates, incurred  in  connection  with  the  enforcement  of  any  of  their  respective  rights  or  remedies  under  the  provisions of this Agreement and the other Transaction Documents.         SECTION 13.05.  No Proceedings; Limitation on Payments.               (a)    Each  of  the  Borrower,  the  Administrative  Agent,  the  Servicer,  each  Group  Agent,  each  Lender and  each  assignee  of a  Loan  or any  interest  agrees  that it will not  institute  against,  or  join  any  other  Person  in  instituting  against,  any  Conduit  Lender  any  Insolvency Proceeding so long as any Notes or other senior indebtedness issued by such Conduit  Lender shall be outstanding or there shall not have elapsed one year plus one day since the last  day on which any such Notes or other senior indebtedness shall have been outstanding.               (b)    Each of the Servicer, each Group Agent, each Lender and each assignee  of a Loan or any interest therein, hereby covenants and agrees that it will not institute against, or  join any other Person in instituting against, the Borrower any Insolvency Proceeding until one  year and one day after the Final Payout Date; provided, that the Administrative Agent may take  any such action in its sole discretion following the occurrence of an Event of Default.               (c)    Notwithstanding  any  provisions  contained  in  this  Agreement  to  the  contrary, a Conduit Lender shall not, and shall be under no obligation to, pay any amount, if any,  payable  by  it  pursuant  to  this  Agreement  or  any  other  Transaction  Document  unless  (i)  such  Conduit Lender has received funds which may be used to make such payment and which funds  are not required to repay such Conduit Lender’s Notes when due and (ii) after giving effect to                                         99   107601465\V-7                                                                    

 

    such  payment,  either  (x)  such  Conduit  Lender  could  issue  Notes to  refinance  all  of  its  outstanding Notes (assuming such outstanding Notes matured at such time) in accordance with  the  program  documents  governing  such  Conduit  Lender’s  securitization  program  or  (y)  all  of  such Conduit Lender’s Notes are paid in full.  Any amount which any Conduit Lender does not  pay pursuant to the operation of the preceding sentence shall not constitute a claim (as defined in  Section 101 of the Bankruptcy Code) against or company obligation of such Conduit Lender for  any such insufficiency unless and until such Conduit Lender satisfies the provisions of clauses (i)  and  (ii)  above.   The  provisions  of  this  Section  13.05  shall  survive  any  termination  of  this  Agreement.        SECTION 13.06.   Confidentiality.               (a)    Each of the Borrower and the Servicer covenants and agrees to hold in  confidence,  and  not  disclose  to  any  Person,  the  terms  of  this  Agreement  or  any  Fee  Letter  (including  any  fees  payable  in  connection  with  this  Agreement, such Fee Letter or any other  Transaction  Document or the identity of the Administrative Agent  or  any  other Credit Party),  except  as  the  Administrative  Agent  and  each  Group  Agent  may  have  consented  to  in  writing  prior to any proposed disclosure; provided, however, that it may disclose such information (i) to  its Advisors and Representatives, (ii) to the extent such information has become available to the  public other than as  a result of a disclosure by or through the  Borrower, the Servicer or their  Advisors and Representatives or (iii) to the extent it should be (A) required by Applicable Law,  or in connection with any legal or regulatory proceeding or (B) requested by any Governmental  Authority  to  disclose  such  information;  provided,  that,  in  the case  of  clause  (iii)  above,  the  Borrower and the Servicer will use reasonable efforts to maintain confidentiality and will (unless  otherwise prohibited by Applicable Law) notify the Administrative Agent and the affected Credit  Party of its intention to make any such disclosure prior to making such disclosure.  Each of the  Borrower and the Servicer agrees to be responsible for any breach of this Section 13.06 by its  Representatives and Advisors and agrees that its Representatives and Advisors will be advised  by it of the confidential nature of such information and shall agree to comply with this Section.   Notwithstanding the foregoing, it is expressly agreed that each of the Borrower, the Servicer and  their  respective  Affiliates  may  publish  a  press  release  or  otherwise  publicly  announce  the  existence and principal amount of the Commitments under this Agreement and the transactions  contemplated  hereby;  provided  that  the  Administrative  Agent  shall  be  provided  a  reasonable  opportunity to review such press release or other public announcement prior to its release and  provide  comment  thereon;  and  provided,  further,  that  no  such  press  release  shall  name  or  otherwise identify the Administrative Agent,  any other Credit Party or any of their respective  Affiliates  without  such Person’s  prior  written  consent (such  consent  not  to  be  unreasonably  withheld, conditioned or delayed).  Notwithstanding the foregoing, the Borrower consents to the  publication  by  the  Administrative  Agent  or  any  other  Credit  Party  of  a  tombstone  or  similar  advertising material relating to the financing transactions contemplated by this Agreement.               (b)    Each of the Administrative Agent and each other Credit Party, severally  and with respect to itself only, agrees to hold in confidence, and not disclose to any Person, any  confidential  and  proprietary  information  concerning  the  Borrower,  the  Servicer  and  their  respective  Affiliates  and  their  businesses  or  the  terms  of  this  Agreement  (including  any  fees  payable in connection with this Agreement or the other Transaction Documents), except as the  Borrower  or  the  Servicer  may  have  consented  to  in  writing  prior  to  any  proposed  disclosure;                                        100   107601465\V-7                                                                    

 

    provided, however, that it may disclose such information (i) to its Advisors and Representatives  and to any related Program Support Provider, (ii) to its assignees and Participants and potential  assignees  and  Participants  and their  respective  counsel  if  they  agree  in  writing  to  hold  it  confidential, (iii) to the extent such information has become available to the public other than as  a result of a disclosure by or through it or its Representatives or Advisors or any related Program  Support Provider, (iv) to any nationally recognized statistical rating organization in connection  with obtaining or maintaining the rating of any Conduit Lender’s Notes or as contemplated by 17  CFR 240.17g-5(a)(3), (v) at the request of a bank examiner or other regulatory authority or in  connection with an examination of any of the Administrative Agent, any Group Agent or any  Lender or their respective Affiliates or Program Support Providers or (vi) to the extent it should  be (A) required by Applicable Law, or in connection with any legal or regulatory proceeding or  (B) requested by any Governmental Authority to disclose such information; provided, that, in the  case of clause (vi) above, the Administrative Agent, each Group Agent and each Lender will use  reasonable efforts to maintain confidentiality and will (unless otherwise prohibited by Applicable  Law)  notify  the  Borrower  and  the  Servicer  of  its  making  any  such  disclosure  as  promptly  as  reasonably practicable thereafter.  Each of the Administrative Agent, each Group Agent and each  Lender, severally and with respect to itself only, agrees to be responsible for any breach of this  Section 13.06 by its Representatives, Advisors and Program Support Providers and agrees that its  Representatives,  Advisors  and  Program  Support  Providers  will  be  advised  by  it  of  the  confidential nature of such information and shall agree to comply with this Section.               (c)    As  used  in  this  Section,  (i) “Advisors”  means,  with  respect  to  any  Person,  such  Person’s  accountants,  attorneys  and  other  confidential  advisors  and  (ii)  “Representatives”  means,  with  respect  to  any  Person,  such  Person’s  Affiliates,  Subsidiaries,  directors,  managers,  officers,  employees,  members,  investors,  financing  sources,  insurers,  professional advisors, representatives and agents; provided that such Persons shall not be deemed  to Representatives of a Person unless (and solely to the extent that) confidential information is  furnished to such Person.               (d)    Notwithstanding  the  foregoing,  to  the  extent  not  inconsistent  with  applicable securities laws, each party hereto (and each of its employees, representatives or other  agents) may disclose to any and all persons, without limitation of any kind, the tax treatment and  tax  structure  (as  defined  in  Section  1.6011-4  of  the  Treasury  Regulations)  of  the  transactions  contemplated by the Transaction Documents and all materials of any kind (including opinions or  other  tax  analyses)  that  are  provided  to  such  Person  relating  to  such  tax  treatment  and  tax  structure.         SECTION 13.07.  GOVERNING  LAW.   THIS  AGREEMENT,  INCLUDING  THE  RIGHTS  AND  DUTIES  OF  THE  PARTIES  HERETO,  SHALL  BE  GOVERNED  BY, AND  CONSTRUED  IN  ACCORDANCE  WITH,  THE  LAWS  OF  THE  STATE  OF  NEW  YORK  (INCLUDING  SECTIONS  5-1401  AND  5-1402  OF  THE  GENERAL  OBLIGATIONS  LAW  OF  THE  STATE  OF  NEW  YORK,  BUT  WITHOUT  REGARD  TO  ANY  OTHER  CONFLICTS OF  LAW PROVISIONS THEREOF, EXCEPT TO THE  EXTENT THAT          THE  PERFECTION,  THE  EFFECT  OF  PERFECTION  OR  PRIORITY  OF  THE  INTERESTS  OF  ADMINISTRATIVE  AGENT  OR  ANY  LENDER  IN  THE  COLLATERAL  IS  GOVERNED  BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK).                                         101   107601465\V-7                                                                    

 

          SECTION 13.08.  Execution in Counterparts.  This Agreement may be executed in any  number of counterparts, each of which when so executed shall be deemed to be an original and  all of which when taken together shall constitute one and the same agreement.  Delivery of an  executed counterpart hereof by facsimile or other electronic means shall be equally effective as  delivery of an originally executed counterpart.         SECTION 13.09.  Integration;  Binding  Effect;  Survival  of  Termination.   This  Agreement and the other Transaction Documents contain the final and complete integration of all  prior  expressions  by  the  parties  hereto  with  respect  to  the  subject  matter  hereof  and  shall  constitute the entire agreement among the parties hereto with respect to the subject matter hereof  superseding all prior oral or written understandings.  This Agreement shall be binding upon and  inure to the benefit of the parties hereto and their respective successors and permitted assigns.   This  Agreement  shall  create  and  constitute  the  continuing  obligations  of  the  parties  hereto  in  accordance with its terms and shall remain in full force and effect until the Final Payout Date;  provided, however, that the provisions of Sections 4.01, 4.02, 4.03, 10.04, 10.06, 11.04, 12.01,  12.02,  13.04,  13.05,  13.06,  13.09,  13.11  and  13.13  shall  survive  any  termination  of  this  Agreement.         SECTION 13.10.  CONSENT TO JURISDICTION.                 (a)    EACH  PARTY  HERETO  HEREBY  IRREVOCABLY  SUBMITS  TO  (I)  WITH  RESPECT  TO  THE  BORROWER  AND  THE  SERVICER,  THE  EXCLUSIVE  JURISDICTION,  AND  (II)  WITH  RESPECT  TO  EACH  OF  THE  OTHER  PARTIES  HERETO, THE NON-EXCLUSIVE JURISDICTION, IN EACH CASE, OF ANY NEW YORK  STATE  OR  FEDERAL  COURT  SITTING  IN  NEW  YORK  CITY,  NEW  YORK  IN  ANY  ACTION  OR  PROCEEDING  ARISING  OUT  OF  OR  RELATING  TO  THIS  AGREEMENT  OR ANY OTHER TRANSACTION DOCUMENT, AND EACH PARTY HERETO HEREBY  IRREVOCABLY  AGREES  THAT  ALL  CLAIMS  IN  RESPECT  OF  SUCH  ACTION  OR  PROCEEDING  (I)  IF  BROUGHT  BY  THE  BORROWER,  THE  SERVICER  OR  ANY  AFFILIATE THEREOF, SHALL BE HEARD AND DETERMINED, AND (II) IF BROUGHT  BY  ANY  OTHER  PARTY  TO  THIS  AGREEMENT  OR  ANY  OTHER  TRANSACTION  DOCUMENT,  MAY  BE  HEARD  AND  DETERMINED,  IN  EACH  CASE,  IN  SUCH  NEW  YORK STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL  COURT.   NOTHING  IN  THIS  SECTION  13.10  SHALL  AFFECT  THE  RIGHT  OF THE  ADMINISTRATIVE AGENT OR ANY OTHER CREDIT PARTY TO BRING ANY ACTION  OR PROCEEDING AGAINST THE BORROWER OR THE SERVICER OR ANY OF THEIR  RESPECTIVE PROPERTY IN THE COURTS OF OTHER JURISDICTIONS.  EACH OF THE  BORROWER  AND  THE  SERVICER  HEREBY  IRREVOCABLY  WAIVES,  TO  THE  FULLEST  EXTENT  IT  MAY  EFFECTIVELY  DO  SO,  THE  DEFENSE  OF  AN  INCONVENIENT  FORUM  TO  THE  MAINTENANCE  OF  SUCH  ACTION  OR  PROCEEDING.  THE PARTIES HERETO AGREE THAT A  FINAL JUDGMENT  IN         ANY  SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED  IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER  MANNER PROVIDED BY LAW.               (b)    EACH OF THE BORROWER AND THE SERVICER CONSENTS TO  THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING                                        102   107601465\V-7                                                                    

 

    BY THE MAILING OF COPIES OF SUCH PROCESS TO IT AT ITS ADDRESS SPECIFIED  IN SECTION 13.02.  NOTHING IN THIS SECTION 13.10 SHALL AFFECT THE RIGHT OF  THE ADMINISTRATIVE AGENT OR ANY OTHER CREDIT PARTY TO SERVE LEGAL  PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.         SECTION 13.11.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY  WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY  JURY  IN  ANY  JUDICIAL  PROCEEDING  INVOLVING,  DIRECTLY  OR  INDIRECTLY,  ANY  MATTER  (WHETHER  SOUNDING  IN  TORT,  CONTRACT  OR  OTHERWISE)  IN  ANY  WAY  ARISING  OUT  OF,  RELATED  TO,  OR  CONNECTED  WITH  THIS  AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.         SECTION 13.12.  Ratable Payments.  If any Credit Party, whether by setoff or  otherwise,  has  payment  made  to  it  with  respect  to  any  Borrower Obligations  in  a  greater  proportion than that received by any other Credit Party entitled to receive a ratable share of such  Borrower  Obligations,  such  Credit  Party  agrees,  promptly  upon  demand,  to  purchase  for  cash  without recourse or warranty a portion of such Borrower Obligations held by the other Credit  Parties  so  that  after  such  purchase  each  Credit  Party  will  hold  its  ratable  proportion  of  such  Borrower  Obligations;  provided  that  if  all  or  any  portion  of  such  excess  amount  is  thereafter  recovered  from  such  Credit  Party,  such  purchase  shall  be  rescinded  and  the  purchase  price  restored to the extent of such recovery, but without interest.         SECTION 13.13.  Limitation of Liability.               (a)    No claim may be made by the Borrower or any Affiliate thereof or any  other Person against any Credit Party or their respective Affiliates, members, directors, officers,  employees, incorporators, attorneys or agents for any special, indirect, consequential or punitive  damages in respect of any claim for breach of contract or any other theory of liability arising out  of  or  related  to  the  transactions  contemplated  by  this  Agreement  or  any  other  Transaction  Document, or any act, omission or event occurring in connection herewith or therewith; and each  of the Borrower and the Servicer hereby waives, releases, and agrees not to sue upon any claim  for any such damages, whether or not accrued and whether or not known or suspected to exist in  its favor.  None of the Credit Parties and their respective Affiliates shall have any liability to the  Borrower or any Affiliate thereof or any other Person asserting claims on behalf of or in right of  the Borrower or any Affiliate thereof in connection with or as a result of this Agreement or any  other Transaction Document or the transactions contemplated hereby or thereby, except to the  extent that any losses, claims, damages, liabilities or expenses incurred by the Borrower or any  Affiliate  thereof  result  from  the  breach  of  contract,  gross  negligence  or  willful  misconduct  of  such  Credit  Party  in  performing  its  duties  and  obligations  hereunder  and  under  the  other  Transaction Documents to which it is a party.               (b)    The obligations of the Administrative Agent and each of the other Credit  Parties  under this  Agreement and each of the Transaction Documents  are solely the corporate  obligations of such Person.  No recourse shall be had for any obligation or claim arising out of or  based upon this Agreement or any other Transaction Document against any member, director,  officer, employee or incorporator of any such Person.                                         103   107601465\V-7                                                                    

 

          SECTION 13.14.  Intent  of  the  Parties.   The  Borrower  has  structured  this  Agreement  with the intention that the Loans and the obligations of the Borrower hereunder will be treated  under United States federal, and applicable state, local and foreign tax law as debt (the “Intended  Tax  Treatment”).  The  Borrower, the Servicer,  the Administrative Agent  and the other Credit  Parties  agree  to  file  no  tax  return,  or  take  any  action,  inconsistent  with  the  Intended  Tax  Treatment unless required by law.  Each assignee and each Participant acquiring an interest in a  Credit Extension, by its acceptance of such assignment or participation, agrees to comply with  the immediately preceding sentence.         SECTION 13.15.  USA Patriot Act.  Each of the Administrative Agent and each of the  other  Credit  Parties  hereby  notifies  the  Borrower  and  the  Servicer  that  pursuant  to  the  requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26,  2001)  (the  “PATRIOT  Act”),  the  Administrative  Agent  and  the  other  Credit  Parties  may  be  required to obtain, verify and record information that identifies the Borrower, the Originators, the  Servicer  and  the  Performance  Guarantor,  which  information  includes  the  name,  address,  tax  identification  number  and  other  information  regarding  the  Borrower,  the  Originators,  the  Servicer and the Performance Guarantor that will allow the Administrative Agent and the other  Credit  Parties  to  identify  the  Borrower,  the  Originators,  the  Servicer  and  the  Performance  Guarantor in accordance with the PATRIOT Act.  This notice is given in accordance with the  requirements of the PATRIOT Act.  Each of the Borrower and the Servicer agrees to provide the  Administrative Agent and each other Credit Parties such information and documentation as may  reasonably be requested by the Administrative Agent or any Credit Party, from time to time, for  purposes of compliance by the Administrative Agent or such Credit Party with Applicable Laws  (including  without  limitation  the  PATRIOT  Act  and  other  “know  your  customer”  and  anti- money  laundering  rules  and  regulations)  and  any  policy  or  procedure  implemented  by  the  Administrative Agent or such Credit Party to comply therewith.         SECTION 13.16.  Right of Setoff.  Each Credit Party is hereby authorized (in addition  to any other rights it may have), at any time during the continuance of an Event of Default, to  setoff, appropriate and  apply (without presentment,  demand, protest  or other  notice  which  are  hereby expressly waived) any deposits and any other indebtedness held or owing by such Credit  Party (including by any branches or agencies of such Credit Party) to, or for the account of, the  Borrower  or  the  Servicer  against  amounts  owing  by  the  Borrower or  the  Servicer  hereunder  (even if contingent or unmatured); provided that such Credit Party shall notify the Borrower or  the Servicer, as applicable, promptly following such setoff.         SECTION 13.17.  Severability.  Any provisions of this Agreement which are prohibited  or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of  such prohibition  or unenforceability without invalidating the remaining  provisions hereof,  and  any  such  prohibition  or  unenforceability  in  any  jurisdiction  shall  not  invalidate  or  render  unenforceable such provision in any other jurisdiction.         SECTION 13.18.  Mutual  Negotiations.   This  Agreement  and  the  other  Transaction  Documents are the product of mutual negotiations by the parties thereto and their counsel, and no  party shall be deemed the draftsperson of this Agreement or any other Transaction Document or  any provision hereof or thereof or to have provided the same.  Accordingly, in the event of any  inconsistency  or  ambiguity  of  any  provision  of  this  Agreement  or  any  other  Transaction                                        104   107601465\V-7                                                                    

 

    Document, such inconsistency or ambiguity shall not be interpreted against any party because of  such party’s involvement in the drafting thereof.         SECTION 13.19.  Captions and Cross References.  The various captions (including the  table of contents) in this Agreement are provided solely for convenience of reference and shall  not affect the meaning or interpretation of any provision of this Agreement.  Unless otherwise  indicated, references in this Agreement to any Section, Schedule or Exhibit are to such Section  Schedule  or  Exhibit  to  this  Agreement,  as  the  case  may  be,  and references  in  any  Section,  subsection,  or  clause  to  any  subsection,  clause  or  subclause  are  to  such  subsection,  clause  or  subclause of such Section, subsection or clause.                               [Signature Pages Follow]                                                                                   105   107601465\V-7                                                                    

 

 

 

 

 

 

 

 

 

                                     EXHIBIT A                               Form of Loan Request                               [Letterhead of Borrower]   [Date]    [Administrative Agent]   [Group Agents]         Re:  Loan Request   Ladies and Gentlemen:         Reference is hereby made to that certain Receivables Financing Agreement, dated as of  August  31,  2018  among  AIT  Receivables  LLC  (the  “Borrower”),  Applied  Industrial  Technologies,  Inc.,  as  Servicer  (the  “Servicer”),  the  Lenders  party  thereto,  the  Group  Agents  party thereto, PNC Bank, National Association, as Administrative Agent (in such capacity, the  “Administrative Agent”) and PNC Capital Markets LLC, as Structuring Agent (the “Structuring  Agent”) (as amended, supplemented or otherwise modified from time to time, the “Agreement”).   Capitalized  terms  used  in  this  Loan  Request  and  not  otherwise  defined  herein  shall  have  the  meanings assigned thereto in the Agreement.         This letter constitutes a Loan Request pursuant to Section 2.02(a) of the Agreement.  The  Borrower hereby request a Loan in the amount of [$_______] to be made on [_____, 20__] (of  which $[___] will be funded by the PNC Group [and $[___] will be funded by the [___] Group].   The proceeds of such  Loan should be deposited to [Account number], at [Name, Address and  ABA  Number  of  Bank].   After  giving  effect  to  such  Loan,  the  Aggregate  Capital  will  be  [$_______].         The  Borrower  hereby  represents  and  warrants  as  of  the  date  hereof,  and  after  giving  effect to such Credit Extension, as follows:                   (i)     the  representations  and  warranties  of  the  Borrower  and  the        Servicer contained in Sections 6.01 and 6.02 of the Agreement are true and correct in all        material  respects  (unless  such  representations  and  warranties  contain  a  materiality        qualifier, in which case such representations and warranties shall be true and correct as        made) on and as of the date of such Credit Extension as though made on and as of such        date unless such representations and warranties by their terms refer to an earlier date, in        which  case  they  shall  be  true  and  correct  in  all  material  respects  (unless  such        representations  and  warranties  contain  a  materiality  qualifier,  in  which  case  such        representations and warranties shall be true and correct as made) on and as of such earlier        date;                                      Exhibit A-1                                     

 

                                            (ii)     no Event of Default or Unmatured Event of Default has occurred       and is continuing, and no Event of Default or Unmatured Event of Default would result       from such Credit Extension;                 (iii)    no Borrowing Base Deficit exists or would exist after giving effect       to such Credit Extension;                 (iv)     the Aggregate Capital will not exceed the Facility Limit;                 (v)      the sum of (A) the Capital of the applicable Lender, plus (B) the       aggregate outstanding Capital of each other Lender in its Group, would not exceed the       Group Commitment of such Lender’s Group;                 (vi)     if  the  applicable  Lender  is  a  Committed  Lender,  the  aggregate       outstanding Capital of such Committed Lender would not exceed its Commitment;                 (vii)     the  Aggregate  Capital  would  not  exceed  the  Borrowing  Base  at       such time; and                (viii)    the Termination Date has not occurred.                                             Exhibit A-2                                   107601465\V-7                                                                                 

 

          IN WITNESS WHEREOF, the undersigned has executed this letter by its duly authorized  officer as of the date first above written.                                       Very truly yours,                                       AIT RECEIVABLES LLC                                       By:   ____________________________________                                       Name:   _________________________________                                       Title:   __________________________________                                                                                   Exhibit A-3                                    107601465\V-7                                                                    

 

                                     EXHIBIT B                             Form of Reduction Notice                             [LETTERHEAD OF BORROWER]   [Date]   [Administrative Agent]   [Group Agents]         Re:   Reduction Notice   Ladies and Gentlemen:         Reference is hereby made to that certain Receivables Financing Agreement, dated as of  August  31,  2018 among  AIT  Receivables  LLC  (the  “Borrower”),  Applied  Industrial  Technologies,  Inc.,  as  Servicer  (the  “Servicer”),  the  Lenders  party  thereto,  the  Group  Agents  party thereto, PNC Bank, National Association, as Administrative Agent (in such capacity, the  “Administrative Agent”) and PNC Capital Markets LLC, as Structuring Agent (the “Structuring  Agent”) (as amended, supplemented or otherwise modified from time to time, the “Agreement”).   Capitalized terms used in this Reduction Notice and not otherwise defined herein shall have the  meanings assigned thereto in the Agreement.         This letter constitutes a Reduction Notice pursuant to Section 2.02(d) of the Agreement.   The Borrower hereby notifies the Administrative Agent and the Lenders that it shall prepay the  outstanding Capital of the Lenders in the amount of [$_______] to be made on [_____, 201_].   After giving effect to such prepayment, the Aggregate Capital will be [$_______].         The  Borrower  hereby  represents  and  warrants  as  of  the  date  hereof,  and  after  giving  effect to such reduction, as follows:                     (i)   the  representations  and  warranties  of  the  Borrower  and  the        Servicer contained in Sections 6.01 and 6.02 of the Agreement are true and correct in all        material  respects  (unless  such  representations  and  warranties  contain  a  materiality        qualifier, in which case such representations and warranties shall be true and correct as        made) on and as of the date of such prepayment as though made on and as of such date        unless such representations and warranties by their terms refer to an earlier date, in which        case they shall be true and correct in all material respects (unless such representations and        warranties  contain  a  materiality  qualifier,  in  which  case  such representations  and        warranties shall be true and correct as made)  on and as of such earlier date;                     (ii)  no Event of Default or Unmatured Event of Default has occurred        and is continuing, and no Event of Default or Unmatured Event of Default would result        from such prepayment;                                      Exhibit B-1  

 

                                               (iii) no Borrowing Base Deficit exists or would exist after giving effect       to such prepayment;                     (iv)  the  Aggregate  Capital  would  not  equal  an  amount  less  than  the       Minimum Funding Threshold; and                    (v)   the Termination Date has not occurred.                                     Exhibit B-2  107601465\V-7                                                                                 

 

           IN WITNESS WHEREOF,  the  undersigned  has  executed  this  letter  by  its  duly  authorized  officer as of the date first above written.                                       Very truly yours,                                       AIT RECEIVABLES LLC                                       By:   ____________________________________                                       Name:   _________________________________                                       Title:   __________________________________                                                                                                          Exhibit B-3   107601465\V-7                                                                    

 

                                 EXHIBIT C                    Form of Assignment and Acceptance Agreement                             Dated as of ___________, 20__   Section 1.         Commitment assigned:                                            $[_____]        Assignor’s remaining Commitment:                                $[_____]        Capital allocable to Commitment assigned:                       $[_____]        Assignor’s remaining Capital:                                   $[_____]        Interest (if any) allocable to Capital assigned:                $[_____]        Interest (if any) allocable to Assignor’s remaining Capital:    $[_____]    Section 2.       Effective Date of this Assignment and Acceptance Agreement:   [__________]         Upon  execution  and  delivery  of  this  Assignment  and  Acceptance  Agreement  by  the  assignee and the assignor and the satisfaction of the other conditions to assignment specified in  Section 13.03(b) of the Agreement (as defined below), from and after the effective date specified  above,  the  assignee  shall  become  a  party  to,  and,  to  the  extent  of  the  rights  and  obligations  thereunder  being  assigned  to  it  pursuant  to  this  Assignment  and  Acceptance  Agreement,  shall  have the rights and obligations of a Committed Lender under that certain Receivables Financing  Agreement,  dated  as  of  August  31,  2018  among  AIT  Receivables  LLC  (the  “Borrower”),  Applied Industrial Technologies, Inc., as Servicer (the “Servicer”), the Lenders party thereto, the  Group Agents party thereto, PNC Bank, National Association, as Administrative Agent (in such  capacity, the “Administrative Agent”) and PNC Capital Markets LLC, as Structuring Agent (the  “Structuring Agent”) (as amended, supplemented or otherwise modified from time to time, the  “Agreement”).                               (Signature Pages Follow)                                      Exhibit C-1  

 

ASSIGNOR:                                 [_________]                                             By:                                                                       Name:                                            Title    ASSIGNEE:                                 [_________]                                             By:                                                                       Name:                                            Title:                                             [Address]    Accepted as of date first above  written:   PNC BANK, NATIONAL ASSOCIATION,  as Administrative Agent   By:                                      Name:  Title:   AIT RECEIVABLES LLC,  as Borrower   By:                                      Name:  Title:                                         Exhibit C-2   107601465\V-7                                                                    

 

                                 EXHIBIT D                           Form of Assumption Agreement         THIS ASSUMPTION AGREEMENT (this “Agreement”), dated as of [______ __, ____],  is  among  ____________________  (the  “Borrower”),  [________],  as  conduit  lender  (the  “[_____] Conduit  Lender”),  [________],  as  the  Related  Committed  Lender  (the  “[______]  Committed  Lender”  and  together  with  the  Conduit  Lender,  the  “[_____] Lenders”),  and  [________], as group agent for the [_____] Lenders (the “[______] Group Agent” and together  with the [_____] Lenders, the “[_______] Group”).                                  BACKGROUND         The  Borrower  and  various  others  are  parties  to  a  certain  Receivables  Financing  Agreement, dated as of August 31, 2018 (as amended through the date hereof and as the same  may be amended, amended and restated, supplemented or otherwise modified from time to time,  the  “Receivables  Financing  Agreement”).   Capitalized  terms  used  and  not  otherwise  defined  herein  have  the  respective  meaning  assigned  to  such  terms  in  the Receivables  Financing  Agreement.         NOW, THEREFORE, the parties hereto hereby agree as follows:         SECTION 1.  This  letter  constitutes  an  Assumption  Agreement  pursuant  to  Section  13.03(i) of the Receivables Financing Agreement.  The Borrower desires [the [_____] Lenders]  [the  [______]  Committed  Lender]  to  [become  a  Group]  [increase  its  existing  Commitment]  under the Receivables Financing Agreement, and upon the terms and subject to the conditions set  forth  in  the  Receivables  Financing  Agreement,  the  [the  [_____]  Lenders]  [the  [______]  Committed  Lender]  agree[s]  to  [become  Lenders  within  a  Group  thereunder]  [increase  its  Commitment to the amount set forth as its “Commitment” under the signature of such [______]  Committed Lender hereto].         The Borrower hereby represents and warrants to the [the [_____] Lenders] [the [______]  Committed Lender] [and the [_________] Group Agent] as of the date hereof, as follows:       (i)     the representations and warranties of the Borrower contained in Section 6.01 of  the Receivables Financing Agreement are true and correct on and as of such date as though made  on and as of such date;      (ii)     no  Event  of  Default  or  Unmatured  Event  of  Default  has  occurred  and  is  continuing, or would result from the assumption contemplated hereby; and      (iii)    the Termination Date shall not have occurred.         SECTION 2.  Upon execution and delivery of this Agreement by the Borrower and [each  member  of  the  [______]  Group]  [the  [_____]  Lenders]  [the  [______]  Committed  Lender],  satisfaction of the other conditions with respect to the addition of a Group specified in Section  13.03(i) of  the  Receivables  Financing  Agreement  (including  the  written  consent  of  the  Administrative Agent and the Majority Group Agents) and receipt by the Administrative Agent                                     Exhibit D-1    

 

of counterparts of this Agreement (whether by facsimile or otherwise) executed by each of the  parties hereto, [the [_____] Lenders shall become a party to, and have the rights and obligations  of Lenders under, the Receivables Financing Agreement and the “Commitment” with respect to  the Committed Lenders in such Group as shall be as set forth under the signature of each such  Committed Lender hereto] [the [______] Committed Lender shall increase its Commitment to  the  amount  set  forth  as  the  “Commitment”  under  the  signature  of  the  [______]  Committed  Lender hereto].         SECTION 3.  Each  party  hereto  hereby  covenants  and  agrees  that  it  will  not  institute  against,  or  join  any  other  Person  in  instituting  against,  any  Conduit  Lender,  any  bankruptcy,  reorganization,  arrangement,  insolvency  or  liquidation  proceeding,  or  other  proceeding  under  any federal or state bankruptcy or similar law, for one year and one day after the latest maturing  commercial paper notes or other senior indebtedness issued by such Conduit Lender is paid in  full. The covenant contained in this paragraph shall survive any termination of the Receivables  Financing Agreement.         SECTION 4.  THIS  AGREEMENT,  INCLUDING  THE  RIGHTS  AND  DUTIES  OF  THE  PARTIES  HERETO,  SHALL  BE  GOVERNED  BY,  AND  CONSTRUED  IN  ACCORDANCE  WITH,  THE  LAWS  OF  THE  STATE  OF  NEW  YORK  (INCLUDING  SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE  OF  NEW  YORK,  BUT  WITHOUT  REGARD  TO  ANY  OTHER  CONFLICTS  OF  LAW  PROVISIONS  THEREOF).   This  Agreement  may  not  be  amended  or  supplemented  except  pursuant to a writing signed be each of the parties hereto and may not be waived except pursuant  to a writing signed by the party to be charged.  This Agreement may be executed in counterparts,  and by the different parties on different counterparts, each of which shall constitute an original,  but all together shall constitute one and the same agreement.                               (Signature Pages Follow)                                      Exhibit D-2   107601465\V-7                                                                    

 

      IN WITNESS WHEREOF, the parties hereto have executed this Agreement by their duly  authorized officers as of the date first above written.                                   [___________], as a Conduit Lender                                                                                                      By: ________________________________________                                   Name Printed: _______________________________                                   Title:                                  [Address]                                   [___________], as a Committed Lender                                                                    By: ________________________________________                                   Name Printed: _______________________________                                   Title:                                  [Address]                                  [Commitment]                                   [_____________], as Group Agent for [_________]                                                                    By: ________________________________________                                   Name Printed: _______________________________                                   Title:                                  [Address]                                      Exhibit D-3   107601465\V-7                                                                    

 

AIT RECEIVABLES LLC,  as Borrower   By: _________________________________  Name Printed: ________________________  Title: _______________________________                                      Exhibit D-4   107601465\V-7                                                                    

 

           EXHIBIT E    Credit and Collection Procedures   (On File with the Administrative Agent)                                                   Exhibit E-1  

 

                                EXHIBIT F                           Form of Information Package                        (On File with the Administrative Agent)                                     Exhibit F-1  107601465\V-7                                                                                 

 

                                     EXHIBIT G                           Form of Compliance Certificate   To: PNC Bank, National Association, as Administrative Agent         This Compliance Certificate is furnished pursuant to that certain Receivables Financing  Agreement,  dated  as  of  August  31,  2018  among  AIT  Receivables  LLC  (the  “Borrower”),  Applied Industrial Technologies, Inc., as Servicer (the “Servicer”), the Lenders party thereto, the  Group Agents party thereto, PNC Bank, National Association, as Administrative Agent (in such  capacity, the “Administrative Agent”) and PNC Capital Markets LLC, as Structuring Agent (the  “Structuring Agent”) (as amended, supplemented or otherwise modified from time to time, the  “Agreement”).  Capitalized terms used herein and not otherwise defined herein shall have the  meanings assigned to them in the Agreement.         THE UNDERSIGNED HEREBY CERTIFIES THAT:         1.    I am the duly elected ________________of the Servicer.         2.    I  have  reviewed  the  terms  of  the  Agreement  and  each  of  the  other  Transaction  Documents and I have made, or have caused to be made under my supervision, a detailed review  of the transactions and condition of the Borrower during the accounting period covered by the  attached financial statements.         3.    The examinations described in paragraph 2 above did not disclose, and I have no  knowledge of, the existence of any condition or event which constitutes an Event of Default or  an Unmatured Event of Default, as each such term is defined under the Agreement, during or at  the end of the accounting period covered by the attached financial statements or as of the date of  this Certificate[, except as set forth in paragraph 5 below].         4.    Schedule  I attached  hereto  sets  forth  financial  statements  of  the  Parent  and  its  Subsidiaries for the period referenced on such Schedule I.         [5.   Described  below  are  the  exceptions,  if  any,  to  paragraph  3  above  by  listing,  in  detail, the nature of the condition or event, the period during which it has existed and the action  which Borrower has taken, is taking, or proposes to take with respect to each such condition or  event:]                                                                 Exhibit G-1  

 

          The  foregoing  certifications  are  made  and  delivered  this  ______  day  of  ___________________, 20___.   [_________]   By:                          Name:                        Title:                                                           Exhibit G-2   107601465\V-7                                                                    

 

                      SCHEDULE I TO COMPLIANCE CERTIFICATE         A.    Schedule of Compliance as of ___________________,  20__  with Section  7.02(b)(i) of the Agreement.  Unless otherwise defined herein, the terms used in this Compliance  Certificate have the meanings ascribed thereto in the Agreement.         This schedule relates to the month ended: __________________.         B.    The following financial statements of the Parent and its Subsidiaries for the period  ending on ______________, 20__, are attached hereto:                                      Exhibit G-3   107601465\V-7                                                                    

 

                                                              EXHIBIT H                              Closing Memorandum                        (On File with the Administrative Agent)                                     Exhibit H-1  107601465\V-7                                                                                 

 

                                          EXHIBIT I        Form of Interim Report   (On File with the Administrative Agent)                                                         Exhibit I-1  

 

                                    SCHEDULE I                                  Commitments   PNC Group                                                 Party                         Capacity                  Maximum Commitment  PNC                           Committed Lender          $125,000,000  PNC                           Group Agent               N/A                                                            Regions Group                                             Party                         Capacity                  Maximum Commitment  Regions Bank                  Committed Lender          $50,000,000  Regions Bank                  Group Agent               N/A                                                                                    Schedule I-1  

 

                                                   SCHEDULE II  Lock-Boxes, Collection Accounts and Collection Account Banks              (On File with the Administrative Agent)                                          Schedule II-1  

 

                                    SCHEDULE III                                 Notice Addresses   (A)   in the case of the Borrower, at the following address:               AIT Receivables LLC              One Applied Plaza, MS-4              Cleveland, Ohio 44115              Attention:  Shaun McElhannon, CTP              Telephone:  (216) 426-4887              Facsimile:  (216) 426-4826              Email:  smcelhannon@applied.com   (B)   in the case of the Servicer, at the following address:               Applied Industrial Technologies, Inc.              One Applied Plaza, MS-56              Cleveland, Ohio 44115              Attention:  Fred D. Bauer, Esq.              Telephone:  (216) 426-4000              Facsimile:  (216) 426-4826              Email:  fbauer@applied.com   (C)   in the case of PNC or the Administrative Agent, at the following address:               PNC Bank, National Association              300 Fifth Avenue              Pittsburgh, PA 15222              Attention:  Robyn Reeher              Telephone:  (412) 768-3090              Facsimile:  (412) 762-9184              Email:  robyn.reeher@pnc.com   (D)   in the case of Regions Bank, at the following address:                Regions Bank              1180 West Peachtree Street NW, Suite 1000              Atlanta, GA 30309              Attention:  Cecil Noble              Telephone:  (404) 221-4571              Email:  cecil.noble@regions.com; regionsbusinesscapital@regions.com    (E)   in  the  case  of  any  other  Person,  at  the  address  for  such  Person  specified  in  the  other  Transaction Documents; in each case, or at such other address as shall be designated by such  Person in a written notice to the other parties to this Agreement.                                     Schedule III-1   107601465\V-7                                                                    

 

                                                             SCHEDULE IV                                Excluded Obligors                        (On File with the Administrative Agent)                                    Schedule IV-1  107601465\V-7                                                                                 

 

                                                             SCHEDULE V                               Subject Originators                        (On File with the Administrative Agent)                                    Schedule V-1  107601465\V-7pncpsa83118

                                            EXECUTION VERSION             PURCHASE AND SALE AGREEMENT                  Dated as of August 31, 2018                           among   VARIOUS ENTITIES LISTED ON SCHEDULE I HERETO,                       as Originators,       APPLIED INDUSTRIAL TECHNOLOGIES, INC.,                        as Servicer,                            and                  AIT RECEIVABLES LLC,                         as Buyer                   

 

                                 CONTENTS         Clause        Subject Matter                                       Page   ARTICLE I AGREEMENT TO PURCHASE AND SELL ........................................................... 2        SECTION 1.1   Agreement To Purchase and Sell ........................................................... 2        SECTION 1.2   Timing of Purchases ............................................................................... 3        SECTION 1.3   Consideration for Purchases ................................................................... 3        SECTION 1.4   Contributions .......................................................................................... 3        SECTION 1.5   Purchase and Sale Termination Date ...................................................... 4        SECTION 1.6   Intention of the Parties ........................................................................... 4  ARTICLE II PURCHASE REPORT; CALCULATION OF PURCHASE PRICE ....................... 4        SECTION 2.1   Purchase Report ...................................................................................... 4        SECTION 2.2   Calculation of Purchase Price ................................................................. 5  ARTICLE III PAYMENT OF PURCHASE PRICE ...................................................................... 5        SECTION 3.1   Initial Purchase Price Payment ............................................................... 5        SECTION 3.2   Subsequent Purchase Price Payments .................................................... 6        SECTION 3.3   Settlement as to Specific Receivables and Dilution ............................... 7        SECTION 3.4   Reconveyance of Receivables ................................................................ 8  ARTICLE IV CONDITIONS OF PURCHASES; ADDITIONAL ORIGINATORS;  TERMINATION OF ORIGINATORS........................................................................................... 8        SECTION 4.1   Conditions Precedent to Initial Purchase ................................................ 8        SECTION 4.2   Certification as to Representations and Warranties ............................. 10        SECTION 4.3   Additional Originators .......................................................................... 10        SECTION 4.4   Termination of Originators ................................................................... 11        SECTION 4.5   Addition or Removal of Excluded Obligors ......................................... 11  ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE ORIGINATORS ............ 12        SECTION 5.1   Organization and Good Standing ......................................................... 12        SECTION 5.2   Due Qualification ................................................................................. 13        SECTION 5.3   Power and Authority; Due Authorization ............................................ 13        SECTION 5.4   Binding Obligations ............................................................................. 13        SECTION 5.5   No Conflict or Violation ....................................................................... 13        SECTION 5.6   Litigation and Other Proceedings ......................................................... 13        SECTION 5.7   No Consents ......................................................................................... 14        SECTION 5.8   Names and Location ............................................................................. 14        SECTION 5.9   Investment Company Act; Volcker Rule ............................................. 14                                         i   107601487\V-5                                                                    

 

                                 CONTENTS         Clause        Subject Matter                                       Page         SECTION 5.10  No Material Adverse Effect ................................................................. 14        SECTION 5.11  Accuracy of Information ...................................................................... 14        SECTION 5.12  Anti-Money Laundering/International Trade Law Compliance .......... 15        SECTION 5.13  Transaction Information ....................................................................... 15        SECTION 5.14  Compliance with Law .......................................................................... 15        SECTION 5.15  Eligible Receivables ............................................................................. 15        SECTION 5.16  Bulk Sales Act ...................................................................................... 15        SECTION 5.17  Taxes .................................................................................................... 15        SECTION 5.18  Opinions ............................................................................................... 15        SECTION 5.19  Other Transaction Documents .............................................................. 15        SECTION 5.20  No Linked Accounts ............................................................................. 16        SECTION 5.21  Margin Regulations .............................................................................. 16        SECTION 5.22  Solvency ............................................................................................... 16        SECTION 5.23  Perfection Representations ................................................................... 16        SECTION 5.24  Ordinary Course of Business ................................................................ 17        SECTION 5.25  Tax Status ............................................................................................. 17        SECTION 5.26  Credit and Collection Procedures ......................................................... 17        SECTION 5.27  Servicing Programs .............................................................................. 17        SECTION 5.28  Servicing of Pool Receivables .............................................................. 17        SECTION 5.29  Financial Condition .............................................................................. 17        SECTION 5.30  Valid Sale ............................................................................................. 17        SECTION 5.31  Good Title ............................................................................................. 18        SECTION 5.32  Reliance on Separate Legal Identity ..................................................... 18        SECTION 5.33  Adverse Change in Receivables ........................................................... 18        SECTION 5.34  No Fraudulent Conveyance .................................................................. 18        SECTION 5.35  Nature of Pool Receivables .................................................................. 18        SECTION 5.36  Enforceability of Contracts .................................................................. 18        SECTION 5.37  Reaffirmation of Representations and Warranties by each Originator 19  ARTICLE VI COVENANTS OF THE ORIGINATORS ............................................................ 19        SECTION 6.1   Covenants ............................................................................................. 19        SECTION 6.2   Separateness Covenants ....................................................................... 25                                         ii   107601487\V-5                                                                    

 

                                 CONTENTS         Clause        Subject Matter                                       Page   ARTICLE VII ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF  RECEIVABLES ........................................................................................................................... 27        SECTION 7.1   Rights of the Buyer ............................................................................... 27        SECTION 7.2   Responsibilities of the Originators ....................................................... 27        SECTION 7.3   Further Action Evidencing Purchases .................................................. 27        SECTION 7.4   Application of Collections .................................................................... 28        SECTION 7.5   Performance of Obligations .................................................................. 28  ARTICLE VIII PURCHASE AND SALE TERMINATION EVENTS ...................................... 28        SECTION 8.1   Purchase and Sale Termination Events ................................................ 28        SECTION 8.2   Remedies .............................................................................................. 30  ARTICLE IX INDEMNIFICATION ........................................................................................... 30        SECTION 9.1   Indemnities by the Originators ............................................................. 30  ARTICLE X MISCELLANEOUS ............................................................................................... 33        SECTION 10.1  Amendments, etc .................................................................................. 33        SECTION 10.2  Notices, etc ........................................................................................... 33        SECTION 10.3  No Waiver; Cumulative Remedies ....................................................... 33        SECTION 10.4  Binding Effect; Assignability ............................................................... 34        SECTION 10.5  GOVERNING LAW ............................................................................ 34        SECTION 10.6  Costs, Expenses and Taxes ................................................................... 34        SECTION 10.7  CONSENT TO JURISDICTION ......................................................... 35        SECTION 10.8  WAIVER OF JURY TRIAL ................................................................ 35        SECTION 10.9  Captions and Cross References; Incorporation by Reference .............. 36        SECTION 10.10 Execution in Counterparts .................................................................... 36        SECTION 10.11 Acknowledgment and Agreement ........................................................ 36        SECTION 10.12 No Proceeding ...................................................................................... 36        SECTION 10.13 Mutual Negotiations ............................................................................. 36        SECTION 10.14 Severability ........................................................................................... 37        SECTION 10.15 Limited Recourse ................................................................................. 37                                                                            SCHEDULES         Schedule I  List and Location of Each Originator        Schedule II Location of Books and Records of Originators                                         iii   107601487\V-5                                                                    

 

                                CONTENTS        Clause        Subject Matter                                       Page        Schedule III Trade Names       Schedule IV Notice Addresses                                    EXHIBITS        Exhibit A   Form of Purchase Report       Exhibit B   Form of Subordinated Note       Exhibit C   Form of Joinder Agreement                                         iv  107601487\V-5                                                                                 

 

         This  PURCHASE AND SALE AGREEMENT (as  amended, restated, supplemented or  otherwise modified from time to time, this “Agreement”), dated as of August 31, 2018 is entered  into  among  the  VARIOUS ENTITIES  LISTED  ON SCHEDULE  I HERETO  or  that  become  parties hereto from time to time pursuant to Section 4.3 hereof (the “Originators” and each, an  “Originator”),  APPLIED  INDUSTRIAL  TECHNOLOGIES,  INC.,  an  Ohio  corporation  (“Applied Industrial”), as initial Servicer (as defined below), and AIT RECEIVABLES LLC, a  Delaware limited liability company (the “Buyer”).                                  BACKGROUND         1.    The  Buyer  is  a  special  purpose  limited  liability  company,  all  of  the  issued  and  outstanding membership interests of which are owned by Applied Industrial.         2.    The Originators generate Receivables in the ordinary course of their businesses.         3.    The  Originators,  in  order  to  finance  their  respective  businesses,  wish  to  sell  (and/or,  in  the  case  of  Applied  Industrial,  contribute  from  time  to  time)  Receivables  and  the  Related Rights to the Buyer, and the Buyer is willing to purchase and/or accept such Receivables  and the Related Rights from the Originators, on the terms and subject to the conditions set forth  herein.         4.    The Originators and the Buyer intend each such transaction to be a true sale or  absolute contribution and conveyance of Receivables and the Related Rights by each Originator  to the Buyer, providing the Buyer with the full benefits of ownership of the Receivables, and the  Originators and the Buyer do not intend the transactions hereunder to be characterized as a loan  from the Buyer to any Originator.         5.    The  Buyer  intends  to  pledge  the  Receivables  and  the  Related  Rights  to  the  Administrative Agent pursuant to the Receivables Financing Agreement.         NOW, THEREFORE, in consideration of the premises and the mutual agreements herein  contained,  the  receipt  and  sufficiency  of  which  are  hereby  acknowledged,  the  parties  hereto,  intending to be legally bound, agree as follows:                                   DEFINITIONS         Unless  otherwise indicated herein,  capitalized terms  used and not  otherwise defined in  this Agreement are defined in Article I to the Receivables Financing Agreement, dated as of the  date hereof (as the same may be amended, restated, supplemented or otherwise modified from  time to time, the “Receivables Financing Agreement”), among the Buyer, as borrower, Applied  Industrial,  as  initial  Servicer (in such capacity, the “Servicer”), the Persons  from  time to time  party  thereto  as  Lenders  and  as  Group  Agents,  and  PNC  Bank,  National  Association,  as  Administrative  Agent,  and  PNC  Capital  Markets  LLC,  as  Structuring  Agent.   All  references  hereto  to  months  are  to  Fiscal  Months  unless  otherwise  expressly  indicated.   All  accounting  terms not specifically defined herein shall be construed in accordance with GAAP.  All terms  used in Article 9 of the UCC in the State of New York, and not specifically defined herein, are  used  herein  as  defined  in  such  Article  9.   Unless  the  context  otherwise  requires,  “or”  means                                                                                     

 

   “and/or,”  and  “including”  (and  with  correlative  meaning  “include”  and  “includes”)  means  including without limiting the generality of any description preceding such term.                                     ARTICLE I                      AGREEMENT TO PURCHASE AND SELL         SECTION 1.1    Agreement  To  Purchase  and  Sell.   On  the  terms  and  subject  to  the  conditions  set  forth  in  this  Agreement,  each  Originator,  severally  and  for  itself,  agrees  to  sell  (and/or, in the case of Applied Industrial,  contribute from time to time) to the Buyer, and the  Buyer agrees to purchase (and, in the case of a contribution, accept) from such Originator, from  time to time on or after the Closing Date, but before the Purchase and Sale Termination Date (as  defined in Section 1.5), all of such Originator’s right, title and interest in and to:               (a)   each  Receivable  of  such  Originator  (other  than  the  Receivables  contributed  by  Applied  Industrial  to  the  capital  of  the  Buyer  pursuant  to Section  3.1(a))  that  existed and was owing to such Originator at the closing of such Originator’s business on the Cut- Off Date (defined below);               (b)   each Receivable generated by such Originator from and including the Cut- Off Date to but excluding the Purchase and Sale Termination Date;               (c)   all of such Originator’s interest in any goods (including returned goods),  and documentation of title evidencing the shipment or storage of any goods (including returned  goods), the sale of which gave rise to such Receivable;               (d)   all instruments and chattel paper that may evidence such Receivable;               (e)   all other security interests or liens and property subject thereto from time  to  time  purporting  to  secure  payment  of  such  Receivable,  whether  pursuant  to  the  Contract  related to such Receivable or otherwise, together with all UCC financing statements or similar  filings relating thereto;               (f)   solely to the extent applicable to such Receivable, all of such Originator’s  rights, interests and claims under the related Contracts and all guaranties, indemnities, insurance  and  other  agreements  (including  the  related  Contract)  or  arrangements  of  whatever  character  from time to time supporting or securing payment of such Receivable or otherwise relating to  such Receivable, whether pursuant to the Contract related to such Receivable or otherwise;               (g)   all books and records of such Originator to the extent related to any of the  foregoing, and all rights, remedies, powers, privileges, title and interest (but not obligations), if  any, in and to each Lock-Box and all Collection Accounts, into which any Collections or other  proceeds (as such term is defined in the applicable UCC) with respect to such Receivables may  be deposited, and any related investment property acquired with any such Collections or other  proceeds (as such term is defined in the applicable UCC); and               (h)   all  Collections  and  other  proceeds  (as  such  term  is  defined  in  the  applicable UCC) of any of the foregoing that are or were received by such Originator on or after  the  Cut-Off  Date,  including,  without  limitation,  all  funds  which  either  are  received  by  such                                         2   107601487\V-5                                                                    

 

   Originator,  the  Buyer,  any  Sub-Servicer  or  the  Servicer  from  or  on  behalf  of  the  Obligors  in  payment  of  any  amounts  owed  (including,  without  limitation,  invoice  price,  finance  charges,  interest and all other charges) in respect of any of the above Receivables or are applied to such  amounts owed by the Obligors (including, without limitation, any insurance payments that such  Originator,  the  Buyer,  any  Sub-Servicer  or  the  Servicer  applies  in  the  ordinary  course  of  its  business to amounts owed in respect of any of the above Receivables, and net proceeds of sale or  other disposition of repossessed goods or other collateral or property of the Obligors in respect of  any of the above Receivables or any other parties directly or indirectly liable for payment of such  Receivables).   All  purchases  and  contributions  hereunder  shall  be  made without  recourse,  but  shall  be  made  pursuant  to,  and  in  reliance  upon,  the  representations,  warranties  and  covenants  of  the  Originators  set  forth  in  this  Agreement.   No  obligation  or  liability  to  any  Obligor  on  any  Receivable  is  intended  to  be  assumed  by  the  Buyer  hereunder,  and  any  such  assumption  is  expressly  disclaimed.   The  property,  proceeds  and  rights  described  in clauses  (c) through (h)  above are herein referred to as the “Related Rights”, and the Buyer’s foregoing commitment to  purchase Receivables and Related Rights is herein called the “Purchase Facility.”   As used herein,  “Cut-Off Date” means (a) with  respect to each Originator party hereto on the  date  hereof,  July  31,  2018,  and  (b)  with  respect  to  any  Originator  that  first  becomes  a  party  hereto after the date hereof, the calendar day prior to the date on which such Originator becomes  a party hereto or such other date as the Buyer and such Originator agree to in writing.         SECTION 1.2    Timing of Purchases.               (a)   Closing Date Purchases.  Effective on the Closing Date, each Originator  hereby sells to the Buyer, and the Buyer hereby purchases, such Originator’s entire right, title  and  interest  in,  to  and  under  (i)  each  Receivable  (other  than  the  Receivables  contributed  by  Applied Industrial to the capital of the Buyer pursuant to Section 3.1(a)) that existed and was  owing to such Originator on the Cut-Off Date, (ii) each Receivable generated by such Originator  from  and  including  the  Cut-Off  Date,  to  and  including  the  Closing  Date,  and  (iii)  all  Related  Rights with respect thereto.               (b)   Subsequent  Purchases.   After  the  Closing  Date,  until  the  Purchase  and  Sale  Termination  Date,  each  Receivable  and  the  Related  Rights  generated  by  each  Originator  shall be, and shall be deemed to have been, sold by such Originator to the Buyer immediately  (and without further action) upon the creation of such Receivable (other  than the Receivables  contributed by Applied Industrial to the capital of the Buyer pursuant to Section 1.4).         SECTION 1.3    Consideration  for  Purchases.   On  the  terms  and  subject  to  the  conditions set forth in this Agreement, the Buyer agrees to make Purchase Price payments to the  Originators and to reflect all capital contributions in accordance with Article III.         SECTION 1.4    Contributions.  Applied Industrial may from time to time at its option,  by notice to the Buyer on or prior to the date of the proposed contribution, identify Receivables  that it proposes  to  contribute to  the Buyer as  a  capital  contribution.  On the date of and after                                         3   107601487\V-5                                                                    

 

   giving  effect  to  each  contribution,  the  Buyer  shall  own  the  Receivables  so  identified  and  contributed and all Related Rights.         SECTION 1.5    Purchase  and  Sale  Termination  Date.   The  “Purchase  and  Sale  Termination Date” shall be the earlier to occur of (a) the date the Purchase Facility is terminated  pursuant to Section 8.2(a) and (b) the Payment Date immediately following the day on which the  Originators  shall  have  given  written  notice  to  the  Buyer,  the  Administrative  Agent  and  each  Group  Agent  at  or  prior  to  10:00  a.m.  (New  York  City  time)  that  the  Originators  desire  to  terminate this Agreement.         SECTION 1.6    Intention of the Parties.  It is the express intent of each Originator and  the Buyer that each conveyance by such Originator to the Buyer pursuant to this Agreement of  the  Receivables,  including  without  limitation,  all  Receivables,  if  any,  constituting  accounts  or  general intangibles each as defined in the UCC, and all Related Rights be construed as a valid  and perfected sale or contribution and absolute assignment (without recourse except as provided  herein) of such Receivables and Related Rights by such Originator to the Buyer (rather than the  grant of a security interest to secure a debt or other obligation of such Originator) and that the  right, title and interest in and to such Receivables and Related Rights conveyed to the Buyer be  prior to the rights of and enforceable against all other Persons at  any time, including, without  limitation,  lien  creditors,  secured  lenders,  purchasers  and  any  Person  claiming  through  such  Originator.   However,  if,  contrary  to  the  mutual  intent  of  the  parties,  any  conveyance  of  Receivables,  including  without  limitation  any  Receivables  constituting  accounts  or  general  intangibles each as defined in the UCC, and all Related Rights is not construed to be both a valid  and  perfected  sale  or  contribution  and  absolute  assignment  of  such  Receivables  and  Related  Rights, and a conveyance of such Receivables and Related Rights that is prior to the rights of and  enforceable  against  all  other  Persons  at  any  time,  including  without  limitation  lien  creditors,  secured  lenders,  purchasers  and  any  Person  claiming  through  such  Originator,  then,  it  is  the  intent of such Originator and the Buyer that (i) this Agreement also shall be deemed to be, and  hereby is, a security agreement within the meaning of the UCC and (ii) such Originator shall be  deemed  to  have  granted  to  the  Buyer  as  of  the  date  of  this  Agreement,  and  such  Originator  hereby grants to the Buyer a security interest in, to and under all of such Originator’s right, title  and interest in and to:  (A) the Receivables and the Related Rights now existing and hereafter  created by such Originator transferred or purported to be transferred hereunder, (B) all monies  due  or  to  become  due  and  all  amounts  received  with  respect  thereto  and  (C)  all  books  and  records of such Originator to the extent related to any of the foregoing.                                    ARTICLE II             PURCHASE REPORT; CALCULATION OF PURCHASE PRICE         SECTION 2.1    Purchase  Report.   On  the  Closing  Date  and  on  each  date  when  an  Information Package is due to be delivered under the Receivables  Financing Agreement (each  such date, a “Monthly Purchase Report Date”), the Servicer shall deliver to the Buyer and each  Originator a report in substantially the form of Exhibit A (each such report being herein called a  “Purchase Report”) setting forth, among other things:               (a)   Receivables purchased by the Buyer from each Originator on the Closing  Date (in the case of the Purchase Report to be delivered on the Closing Date);                                         4   107601487\V-5                                                                    

 

               (b)   Receivables  purchased  or  accepted  as  a  contribution  by  the  Buyer  from  each Originator during the Fiscal Month immediately preceding such Monthly Purchase Report  Date (in the case of each subsequent Purchase Report); and               (c)   the calculations of reductions of the Purchase Price for any Receivables as  provided in Section 3.3 (a) and (b).         SECTION 2.2    Calculation  of  Purchase  Price.   The  “Purchase  Price”  to  be  paid  to  each Originator in accordance with the terms of Article III for the Receivables and the Related  Rights that are purchased hereunder from such Originator shall be determined in accordance with  the following formula:               PP          =     OB x FMVD               where:                           PP          =     Purchase  Price  for  each  Receivable  as  calculated  on  the                                relevant Payment Date.               OB          =     The  Outstanding  Balance  of  such  Receivable  on  the                                relevant Payment Date.               FMVD        =     Fair Market Value Discount, as measured on such Payment                                Date,  which  is  equal  to  the  quotient  (expressed  as                                percentage) of (a) one, divided by (b) the sum  of (i) one,                                plus (ii) the product of (A) the Prime Rate on such Payment                                Date, times (B)  a  fraction,  the  numerator  of  which  is  the                                Days’  Sales  Outstanding  (calculated  as  of  the last  day  of                                the  Fiscal  Month  immediately  preceding  such  Payment                                Date)  and  the  denominator  of  which  is  365  or  366,  as                                applicable.         “Payment Date” means (i) the Closing Date and (ii) each Business Day thereafter that the  Originators are open for business.         “Prime Rate” means a per annum rate equal to the “U.S. Prime Rate” as published in the  “Money Rates” section of The Wall Street Journal or if such information ceases to be published  in The Wall Street Journal, such other publication as determined by the Administrative Agent in  its sole discretion.                                    ARTICLE III                          PAYMENT OF PURCHASE PRICE         SECTION 3.1    Initial Purchase Price Payment.                 (a)   On the Closing Date, Applied Industrial shall and hereby does contribute,  to the capital of the Buyer, the Receivables having an aggregate Outstanding Balance of fifteen  million dollars ($15,000,000).                                         5   107601487\V-5                                                                    

 

               (b)   On the terms and subject to the conditions set forth in this Agreement, the  Buyer agrees to pay to each Originator the Purchase Price for the purchase to be made from such  Originator on the Closing Date (i) to the extent the Buyer has unrestricted cash available therefor  (and such payment is not prohibited by the Receivables Financing Agreement), partially, in cash  (in an amount to be agreed between the Buyer and such Originator and set forth in the initial  Purchase Report) and (ii) the remainder by issuing a promissory note in the form of Exhibit B to  such Originator (each such promissory note, as it may be amended, supplemented, endorsed or  otherwise modified from time to  time, together  with  all promissory notes  issued from  time to  time in substitution therefor or renewal thereof in accordance with the Transaction Documents,  each being herein  called a “Subordinated Note”) with  an initial  principal amount equal  to  the  remaining Purchase Price payable to such Originator not paid in cash.         SECTION 3.2    Subsequent  Purchase  Price  Payments.   On  each  Payment  Date  subsequent  to  the  Closing  Date,  on  the  terms  and  subject  to  the  conditions  set  forth  in  this  Agreement, the Buyer shall pay to each Originator the Purchase Price for the Receivables and the  Related Rights generated by such Originator since the immediately preceding Payment Date in  accordance with Section 1.2(b):               (a)   First,  in  cash  to  the  extent  the  Buyer  has  unrestricted  cash  available  therefor (and such payment is not prohibited under the Receivables Financing Agreement); and               (b)   Second, to the extent any portion of the Purchase Price remains unpaid, the  principal  amount  outstanding  under  the  applicable  Subordinated  Note  shall  be  automatically  increased by an amount equal to the lesser of (x) such remaining unpaid portion of such Purchase  Price and (y) the maximum increase in the principal balance of the applicable Subordinated Note  that  could  be  made  without  rendering  the  Buyer’s  Net  Worth  less  than  the  Required  Capital  Amount;   provided, however, that if more than one Originator is selling Receivables to the Buyer on the  date of such purchase, the Buyer shall make cash payments among the Originators in such a way  as  to  minimize  to  the  greatest  extent  practicable  the  aggregate  principal  amounts  outstanding  under the Subordinated Notes.         “Net Worth” has the meaning set forth under “Borrower’s Net Worth” in the Receivables  Financing Agreement.         All amounts paid by the Buyer to any Originator in respect of the Subordinated Note of  such  Originator  shall  be  allocated first to  the  payment  of  accrued  and  unpaid  interest  on  the  Subordinated Note of such Originator and second to the repayment of the principal outstanding  on the Subordinated Note of such Originator to the extent of such outstanding principal thereof  as of the date of such payment before such amounts may be allocated for any other purpose.  The  Servicer  shall  make  all  appropriate  record  keeping  entries  with  respect  to  each  of  the  Subordinated  Notes  to  reflect  the  foregoing  payments and  payments  and  reductions  made  pursuant  to Section  3.3,  and  the  Servicer’s  books  and  records  shall  constitute  rebuttable  presumptive  evidence  of  the  principal  amount  of,  and  accrued  interest  on,  each  of  the  Subordinated Notes at any time.  Each Originator hereby irrevocably authorizes the Servicer to                                         6   107601487\V-5                                                                    

 

   mark the Subordinated Notes “CANCELED” and to return such Subordinated Notes to the Buyer  upon the final payment thereof after the occurrence of the Purchase and Sale Termination Date.         SECTION 3.3    Settlement as to Specific Receivables and Dilution.               (a)   If,  (i)  on  the  day  of  purchase  of  any  Receivable  from  an  Originator  hereunder, any of the representations or warranties set forth in Sections 5.15, 5.30, 5.31, 5.34,  5.35 or 5.36 are  not  true  with  respect  to  such  Receivable  or (ii)  as  a  result  of  any  action  or  inaction (other than solely as a result of the failure to collect such Receivable due to a discharge  in bankruptcy or similar insolvency proceeding or other credit related reasons with respect to the  relevant  Obligor)  of such  Originator,  on  any  subsequent  day,  any  of  such  representations  or  warranties set forth in Sections 5.15, 5.30, 5.31, 5.34, 5.35 or 5.36 is no longer true with respect  to such Receivable, then the Purchase Price for such Receivable shall be reduced by an amount  equal  to  the  Outstanding  Balance  of  such  Receivable  and  shall  be  accounted  to  the  Buyer  as  provided in clause (c) below; provided, that if the Buyer thereafter receives payment on account  of the Outstanding Balance of such Receivable, the Buyer promptly shall deliver such funds to  such Originator.               (b)   If,  on  any  day,  the  Outstanding  Balance  of  any  Receivable  purchased  hereunder is either (i) reduced, adjusted or canceled as a result of (A) any defective, rejected or  returned goods or services, any cash or other discount, or any failure by an Originator to deliver  any  goods  or  perform  any  services  or  otherwise  perform  under  the  underlying  Contract  or  invoice, (B) any change in or cancellation of any of the terms of such Contract or invoice or any  other adjustment by an Originator, any Sub-Servicer, the Servicer or the Buyer which reduces the  amount  payable  by  the  Obligor  on  the  related  Receivable,  (C)  any  rebates,  warranties,  allowances or charge-backs or (D) any setoff or credit in respect of any claim by the Obligor  thereof  (whether  such  claim  arises  out  of  the  same  or  a  related  transaction  or  an  unrelated  transaction), or (ii) subject to  any specific dispute, offset, counterclaim  or defense whatsoever  (except the discharge in bankruptcy of the Obligor thereof), then the Purchase Price with respect  to  such  Receivable  shall  be  reduced  by  the  amount  of  such  net  reduction,  adjustment,  cancellation or dispute and shall be accounted to the Buyer as provided in clause (c) below.               (c)   Any  reduction  in  the  Purchase  Price  of  any  Receivable  pursuant  to  clause (a) or (b) above  shall  be  applied  as  a  credit  for  the  account  of  the  Buyer  against  the  Purchase  Price  of  Receivables  subsequently  purchased  by  the  Buyer  from  such  Originator  hereunder; provided, however if  there  have  been  no  purchases  of  Receivables  from  such  Originator (or insufficiently large purchases of Receivables) to create a Purchase Price sufficient  to so apply such credit against, the amount of such credit:                     (i)   to  the  extent  of  any  accrued  and  unpaid  interest under  the        Subordinated Note payable to such Originator, shall be deemed to be a payment under,        and  shall  be  deducted  from  the  accrued  and  unpaid  interest  outstanding  under,  the        Subordinated Note payable to such Originator;                     (ii)  to  the  extent  of  any  outstanding principal  balance  under  the        Subordinated Note payable to such Originator, shall be deemed to be a payment under,                                         7   107601487\V-5                                                                    

 

         and  shall  be  deducted  from  the  principal  amount  outstanding  under,  the  Subordinated        Note payable to such Originator; and                     (iii) after making any deduction pursuant to clauses (i) and (ii) above,        shall be paid in cash to the Buyer by such Originator in the manner and for application as        described in the following proviso;   provided, further,  that  at  any  time  (x)  when  an  Event  of  Default  or  an  Unmatured Event  of  Default  exists  under  the  Receivables  Financing  Agreement,  (y)  when  a  Purchase  and  Sale  Termination  Event  or  an  Unmatured  Purchase  and  Sale  Termination  Event  exists  under  this  Agreement or (z) on or after the Purchase and Sale Termination Date, the amount of any such  credit shall be paid by such Originator to the Buyer in cash by deposit of immediately available  funds into a Collection Account no later than one (1) Business Day after the events described in  clauses (x), (y) and (z) above for application by the Servicer to the same extent as if Collections  of the applicable Receivable in such amount had actually been received on such date.         SECTION 3.4    Reconveyance of Receivables.  In the event that the Purchase Price of  a  Receivable  has  been  reduced  to  zero,  and the  credit  for  such  reduction  has  been  applied  pursuant to Section 3.3, the Buyer shall reconvey such Receivable to such Originator, without  representation, warranty or recourse, but free and clear of all liens, security interests, charges,  and encumbrances created by the Buyer.                                    ARTICLE IV    CONDITIONS OF PURCHASES; ADDITIONAL ORIGINATORS; TERMINATION OF                                  ORIGINATORS         SECTION 4.1    Conditions  Precedent  to  Initial  Purchase.   The  initial  purchase  hereunder is subject to the condition precedent that the Buyer, the Administrative Agent (as the  Buyer’s assignee) and each Group Agent shall have received, on or before the Closing Date, the  following,  each  (unless  otherwise  indicated)  dated  the  Closing  Date,  and  each  in  form  and  substance satisfactory to the Buyer and the Administrative Agent (as the Buyer’s assignee) and  each Group Agent:               (a)   a  copy  of  the  resolutions  or  unanimous  written  consent  of  the  board  of  directors  or  other  governing  body  of  each  Originator  approving  this  Agreement  and  the  other  Transaction  Documents  to  be  executed  and  delivered  by  it  and  the  transactions  contemplated  hereby and thereby, certified by the Secretary or Assistant Secretary of such Originator;               (b)   good  standing  certificates  for  each  Originator  issued  as  of  a  recent  date  acceptable to the Buyer and the Administrative Agent (as the Buyer’s assignee) by the Secretary  of State (or similar official) of the jurisdiction of such Originator’s organization or formation and  each  other  jurisdiction  where  such  Originator  is  required  to  be  qualified  to  transact  business,  except where the failure to be so qualified would not reasonably be expected to have a Material  Adverse Effect;               (c)   a  certificate  of  the  Secretary  or  Assistant  Secretary  of  each  Originator  certifying  the  names  and  true  signatures  of  the  officers  authorized  on  such  Person’s  behalf  to  sign this Agreement and the other Transaction Documents to be executed and delivered by it (on                                        8   107601487\V-5                                                                    

 

   which certificate the Servicer, the Buyer, the Administrative Agent (as the Buyer’s assignee) and  each  Group  Agent  may  conclusively  rely  until such  time  as  the  Servicer,  the  Buyer,  the  Administrative Agent (as the Buyer’s assignee) and each Group Agent shall receive from such  Person a revised certificate meeting the requirements of this clause (c));               (d)   the certificate or articles of incorporation, certificate of formation or other  organizational  document  of  each  Originator  (including  all  amendments  and  modifications  thereto)  duly  certified  by  the  Secretary  of  State  of  the  jurisdiction  of  such  Originator’s  organization as of a recent date, together with a copy of the by-laws, limited liability company  agreement  or  other  governing  documents  of  such  Originator  (including  all  amendments  and  modifications  thereto),  as  applicable,  each  duly  certified  by  the  Secretary  or  an  Assistant  Secretary of such Originator;               (e)   proper financing statements (Form UCC-1) that have been duly authorized  and  name  each  Originator  as  the  debtor/seller  and  the  Buyer  as  the  buyer/assignor  (and  the  Administrative  Agent,  for  the  benefit  of  the  Lenders,  as  secured  party/assignee)  of  the  Receivables  generated  by  such  Originator  as  may  be  necessary  or,  in  the  Buyer’s  or  the  Administrative  Agent’s  opinion,  desirable  under  the  UCC  of  all  appropriate  jurisdictions  to  perfect the Buyer’s ownership or security interest in such Receivables and the Related Rights in  which an ownership or security interest has been assigned to it hereunder;               (f)   a  written  search  report  from  a  Person  satisfactory  to  the  Buyer  and  the  Administrative  Agent  (as  the  Buyer’s  assignee)  listing  all  effective  financing  statements  that  name the Originators as debtors or sellers and that are filed in all jurisdictions in which filings  may be made against such Person pursuant to the applicable UCC, together with copies of such  financing  statements  (none  of  which,  except  for  those  described  in  the  foregoing clause (e)  (and/or  released  or  terminated,  as  the  case  may  be,  prior  to  the  date  hereof),  shall  cover  any  Receivable or any Related Rights which are to be sold or contributed to the Buyer hereunder),  and tax and judgment lien search reports (including, without limitation, liens of the PBGC) from  a  Person  satisfactory  to  the  Buyer  and  the  Administrative  Agent  (as  the  Buyer’s  assignee)  showing no evidence of such liens filed against any Originator;               (g)   favorable  opinions  of  counsel  to  the Originators,  in  form  and  substance  satisfactory to the Buyer, the Administrative Agent and each Group Agent;               (h)   a  Subordinated  Note  in  favor  of  each  Originator,  duly  executed  by  the  Buyer;               (i)   a  certificate  from  an  officer  of  each  Originator  to  the  effect  that  the  Servicer or such Originator have placed on the most recent, and have taken all steps reasonably  necessary to ensure that there shall be placed on each subsequent, data processing report that it  generates which are of the type that a proposed purchaser or lender would use to evaluate the  Receivables, the following legend (or the substantive equivalent thereof):  “A/R SOLD TO AIT  RECEIVABLES LLC & PLEDGED TO PNC”; and               (j)   evidence (i) of the execution and delivery by each of the parties thereto of  each  of  the other  Transaction  Documents  to  be  executed  and  delivered  by  it  in  connection                                         9   107601487\V-5                                                                    

 

   herewith  and  (ii)  that  each  of  the  conditions  precedent  to  the  execution,  delivery  and  effectiveness  of  such  other  Transaction  Documents  has  been  satisfied  to  the  Buyer’s  and  the  Administrative Agent’s (as the Buyer’s assignee) satisfaction.         SECTION 4.2    Certification as to Representations and Warranties.  Each Originator,  by  accepting  the  Purchase  Price  related  to  each  purchase  of  Receivables  generated  by  such  Originator, shall be deemed to have certified that (a) the representations and warranties of such  Originator contained in Article V, as from time to time amended in accordance with the terms  hereof,  are  true  and  correct  in  all  material  respects  (unless  such  representation  or  warranty  contains a materiality qualification and, in such case, such representation and warranty shall be  true and correct as made) on and as of such day, with the same effect as though made on and as  of such day (except for representations and warranties which apply to an earlier date, in which  case such representations and warranties shall be true and correct in all material respects (unless  such  representation  or  warranty  contains  a  materiality  qualification  and,  in  such  case,  such  representation and warranty shall be true and correct as made) as of such earlier date) and (b) no  Purchase and Sale Termination Event, Unmatured Purchase and Sale Termination Event, Event  of Default or an Unmatured Event of Default has occurred and is continuing or will result from  the creation and sale of such Receivable.         SECTION 4.3    Additional  Originators.  Additional  Persons  may  be  added  as  Originators hereunder, with the prior written consent of the Buyer, the Administrative Agent and  each Group Agent (which consents may be granted or withheld in their sole discretion); provided  that the following conditions are satisfied or waived in writing by the Administrative Agent and  each Group Agent on or before the date of such addition:               (a)   the  Servicer  shall  have  given  the  Buyer,  the  Administrative  Agent  and  each Group Agent at least thirty (30) days’ prior written notice of such proposed addition and the  identity  of  the  proposed  additional  Originator  and  shall  have  provided  such  other  information  with respect to such proposed additional Originator as the Buyer, the Administrative Agent or  any Group Agent may reasonably request;               (b)   such proposed additional Originator shall have executed and delivered to  the Buyer, the Administrative Agent  and  each  Group Agent an  agreement  substantially in the  form attached hereto as Exhibit C (a “Joinder Agreement”);               (c)   such proposed additional Originator shall have delivered to the Buyer, the  Administrative Agent (as the Buyer’s  assignee) and each Group Agent each of the documents  with  respect  to  such  Originator  described  in Section  4.1,  in  each  case  in  form  and  substance  satisfactory to  the Buyer, the Administrative Agent  (as  the Buyer’s  assignee) and  each  Group  Agent;               (d)   no Purchase and Sale Termination Event or Unmatured Purchase and Sale  Termination Event shall have occurred and be continuing; and               (e)   no Event of Default or Unmatured Event of Default shall have occurred  and be continuing.                                         10   107601487\V-5                                                                    

 

         SECTION 4.4    Termination  of  Originators.  An  Originator  may  be  removed  as  an  Originator hereunder, with the prior written consent of the Buyer, the Administrative Agent and  each Group Agent (which consents may be granted or withheld in their sole discretion); provided  that the following conditions are satisfied or waived in writing by the Administrative Agent and  each Group Agent on or before the date of such addition:               (a)   such  Originator  shall  have  submitted  a  written  notice  (an  “Originator  Termination Notice”) to the Buyer, the Administrative Agent and each Group Agent notifying  them of its request to terminate its status as an Originator and specifying the date on which such  termination is to take effect (an “Originator Termination Effective Date”);               (b)   the  related  Originator  Termination  Effective  Date is  at  least  thirty  (30)  calendar  days  after  the  date  of  such  Originator  Termination  Notice  (or  such  earlier  date  as  consented to by the Buyer, the Administrative Agent and each Group Agent);               (c)   the Servicer shall have delivered a pro forma Interim Report showing that  no  Borrowing  Base  Deficit  shall  exist  after  giving  effect  to  the  requested  termination  and  excluding all Receivables originated by such Originator to be terminated;                (d)   the  Servicer  shall  have  provided  such  other  information  with  respect  to  such Originator to  be terminated as  the  Buyer, the Administrative Agent or any Group Agent  may reasonably request;               (e)   no Purchase and Sale Termination Event or Unmatured Purchase and Sale  Termination Event shall have occurred and be continuing; and               (f)   no Event of Default or Unmatured Event of Default shall have occurred  and be continuing.               (g)   Schedules I, II, III and IV shall be amended to reflect the termination of  such Originator; and               (h)   if  such  Originator  to  be  removed  is  the  Servicer,  the  Buyer,  the  Administrative Agent and each Group Agent shall have approved the successor Servicer.         SECTION 4.5    Addition or Removal of Excluded Obligors. An Obligor may be added  as  an  Excluded  Obligor  or  an  existing  Excluded  Obligor  may  be  removed  as  an  Excluded  Obligor, in each case, with the prior written consent of the Buyer, the Administrative Agent and  the Majority Group Agents (which consents may be granted or withheld in their sole discretion);  provided that the following conditions are satisfied or waived in writing by the Administrative  Agent and the Majority Group Agents on or before the date of such addition:               (a)   the related Originator shall have submitted a written notice (an “Addition  or  Removal  of  Excluded  Obligor  Notice”)  to  the  Buyer,  the  Administrative  Agent  and  the  Majority Group Agents notifying them of its request to add or remove an Obligor as an Excluded  Obligor and specifying the date on which such addition or removal is to take effect (an “Addition  or Removal of Excluded Obligor Effective Date”);                                         11   107601487\V-5                                                                    

 

               (b)   the related Addition or Removal of Excluded Obligor Effective Date is at  least thirty (30) calendar days after the date of such Addition or Removal of Excluded Obligor  Notice  (or  such  earlier  date  as  consented  to  by  the  Buyer,  the  Administrative  Agent  and  the  Majority Group Agents) ;               (c)   the Servicer shall have delivered a pro forma Interim Report showing that  no  Borrowing  Base  Deficit  shall  exist  after  giving  effect  to  such  addition  or  removal  and  the  related  excluding  or  adding,  as  the  case  may  be,  of  all  Receivables  from  such  Obligor  to  be  added or removed as an Excluded Obligor;                (d)   the  Servicer  shall  have  provided  such  other  information  with  respect  to  such Obligor to be added or removed as an Excluded Obligor as the Buyer, the Administrative  Agent or any Group Agent may reasonably request;               (e)   no Purchase and Sale Termination Event or Unmatured Purchase and Sale  Termination Event shall have occurred and be continuing; and               (f)   no Event of Default or Unmatured Event of Default shall have occurred  and be continuing.               (g)   Schedule IV to the Receivables Financing Agreement shall be amended to  reflect  the  addition  or  removal  of  such  Obligor  pursuant  to  the  Receivables  Financing  Agreement; and               (h)   with  respect  to  any  proposed  removal  of  such  Obligor  as  an  Excluded  Obligor, the Administrative Agent and each Group Agent have been satisfied that all other action  to perfect and protect the security interests of the Buyer and the Administrative Agent, on behalf  of  the  Lenders,  in  and  to  the  Receivables  of  such  Obligor  to  be  removed  and  to  be  sold  or  contributed  by  the  related  Originator  hereunder  and  other  Related  Rights,  as  requested  by  the  Administrative Agent or any Group Agent shall have been taken by Applied Industrial, including  the filing of any UCC financing statements, the preparation and delivery of certificates and other  requested  documents  from  any  public  official  and  all  such  other  actions  required  pursuant  to  Section  7.3 and,  if  requested  by  the  Administrative  Agent,  the  delivery  of  executed  copies  of  bring-down  or  reaffirmation  opinions  relating  to  UCC  matters  (in  form  and  substance  satisfactory to the Administrative Agent), in each case, at the expense of Applied Industrial.                                    ARTICLE V           REPRESENTATIONS AND WARRANTIES OF THE ORIGINATORS         In  order  to  induce  the  Buyer  to  enter  into  this  Agreement  and  to  make  purchases  hereunder,  each  Originator  hereby  represents  and  warrants  with  respect  to  itself  that  each  representation and warranty concerning it or the Receivables sold or contributed by it hereunder  that is contained in the Receivables Financing Agreement is true and correct, and hereby makes  the representations and warranties set forth in this Article V:         SECTION 5.1    Organization and Good Standing.  Such Originator is duly organized  and  validly  existing,  in  good  standing  under  the  laws  of  its  state  of  organization  and  has  full  power  and  authority  under  its  organizational  documents  and  under  the  laws  of  its  state  of                                        12   107601487\V-5                                                                    

 

   organization to  own its  properties  and to  conduct  its  business  as  such properties  are  currently  owned and such business is presently conducted.         SECTION 5.2    Due Qualification.  Such Originator is duly qualified to do business, is  in good standing as a foreign entity and has obtained all necessary licenses and approvals in all  jurisdictions  in  which  the  conduct  of  its  business  requires  such  qualification,  licenses  or  approvals, except where the failure to do so could not reasonably be expected to have a Material  Adverse Effect.         SECTION 5.3    Power and Authority; Due Authorization.  Such Originator (i) has all  necessary  power  and  authority  to  (A)  execute  and  deliver  this  Agreement  and  the  other  Transaction Documents to which it is a party, (B) perform its obligations under this Agreement  and the other Transaction Documents to which it is a party and (C) grant a security interest in the  Receivables and the Related Rights to the Buyer on the terms and subject to the conditions herein  provided  and  (ii)  has  duly  authorized  by  all  necessary  action  such  grant  and  the  execution,  delivery  and  performance  of,  and  the  consummation  of  the  transactions  provided  for  in,  this  Agreement and the other Transaction Documents to which it is a party.         SECTION 5.4    Binding  Obligations.   This  Agreement  and  each  of  the  other  Transaction Documents to which such Originator is a party constitutes legal, valid and binding  obligations  of  such  Originator,  enforceable  against  such  Originator  in  accordance  with  their  respective  terms,  except  (i)  as  such  enforceability  may  be  limited  by  applicable  bankruptcy,  insolvency,  reorganization,  moratorium  or  other  similar  laws  affecting  the  enforcement  of  creditors’ rights generally and (ii) as such enforceability may be limited by general principles of  equity, regardless  of whether such enforceability is  considered in  a proceeding in  equity or at  law.         SECTION 5.5    No Conflict or Violation.  The execution, delivery and performance of,  and  the  consummation  of  the  transactions contemplated  by,  this  Agreement  and  the  other  Transaction  Documents  to  which  such  Originator  is  a  party,  and  the  fulfillment  of  the  terms  hereof  and  thereof,  will  not  (i)  conflict  with,  result  in  any  breach  of  any  of  the  terms  or  provisions of, or constitute (with or without notice or lapse of time or both) a default under its  organizational  documents  or  any  material  indenture,  sale  agreement,  credit  agreement,  loan  agreement,  security  agreement,  mortgage,  deed  of  trust  or  other  agreement  or  instrument  to  which such Originator is a party or by which it or any of its properties is bound, (ii) result in the  creation or imposition of any Adverse Claim upon any of the Receivables or the Related Rights  pursuant  to  the  terms  of  any  such  indenture,  credit  agreement,  loan  agreement,  security  agreement, mortgage, deed of trust or other agreement or instrument, other than this Agreement  and the other Transaction Documents or (iii) conflict with or violate any Applicable Law.         SECTION 5.6    Litigation  and  Other  Proceedings.   (i)  There  is  no  action,  suit,  proceeding  or  investigation  pending  or,  to  the  best  knowledge  of  such  Originator,  threatened,  against  such  Originator  before  any  Governmental  Authority  and  (ii)  such  Originator  is  not  subject  to  any order, judgment, decree, injunction, stipulation  or consent order of or with  any  Governmental Authority that, in the case of either of the foregoing clauses (i) and (ii), (A) asserts  the invalidity of this  Agreement or any other Transaction Document, (B) seeks  to  prevent  the  sale or contribution of any Receivable or Related Right by such Originator to the Buyer (or the                                         13   107601487\V-5                                                                    

 

   grant of the related security interest thereof), the ownership or acquisition by the Buyer of any  Pool Receivables or Related Right or the consummation of any of the transactions contemplated  by this  Agreement or any  other Transaction Document, (C) seeks  any determination or ruling  that could materially and adversely affect the performance by such Originator of its obligations  under, or the validity or enforceability of, this Agreement or any other Transaction Document or  (D)  individually  or  in  the  aggregate  for  all  such  actions,  suits,  proceedings  and  investigations  could reasonably be expected to have a Material Adverse Effect.         SECTION 5.7    No Consents.  Such Originator is not required to obtain the consent of  any  other  party  or  any  consent,  order,  license,  approval,  registration,  authorization,  action  or  declaration of or with any Governmental Authority in connection with the sale or contribution of  the  Receivables  and  Related  Rights  to  the  Buyer  (or  the  grant  of  the  related  security  interest  thereof)  hereunder  or  the  due  execution,  delivery,  or  performance  by  such  Originator  of  this  Agreement or any other Transaction Document to which it is a party or the consummation by  such  Originator  of  the  transactions  contemplated  by  this  Agreement  or  any  other  Transaction  Document to which it is a party that has not already been obtained and are in full force and effect  or the failure of which to obtain could not reasonably be expected to have a Material Adverse  Effect.         SECTION 5.8    Names  and  Location.   Except  as  described  in Schedule  III,  such  Originator  has  not  used  any  corporate  names,  trade  names  or  assumed  names  since  the  date  occurring five (5) calendar years prior to the Closing Date other than its name set forth on the  signature pages hereto.  Such Originator is “located” (as such term is defined in the applicable  UCC) in the jurisdiction specified in Schedule I and since the date occurring five (5) calendar  years prior to the Closing Date, has not been “located” (as such term is defined in the applicable  UCC)  in  any  other  jurisdiction  (except  as  specified  in Schedule  I).   The  office(s)  where  such  Originator  keeps  its  records  concerning  the  Receivables  is  at  the  address(es)  set  forth  on  Schedule II as such address(es) may be updated with thirty (30) days’ prior written notice to the  Buyer and the Administrative Agent.         SECTION 5.9    Investment  Company Act; Volcker Rule.  Such Originator  (i) is  not,  and is not controlled by, an “investment company” registered or required to be registered under  the Investment Company Act and (ii) is not a “covered fund” under the Volcker Rule.           SECTION 5.10   No Material Adverse Effect.  Since June 30, 2018, there has been no  Material Adverse Effect with respect to such Originator.         SECTION 5.11   Accuracy of Information.  All certificates, reports, Purchase Reports,  statements, documents and other information, other than financial projections, furnished to the  Buyer,  Administrative  Agent  or  any  other  Credit  Party  by  or  on  behalf  of  such  Originator  pursuant  to  any  provision  of  this  Agreement  or  any  other  Transaction  Document,  or  in  connection  with  or  pursuant  to  any  amendment  or  modification  of,  or  waiver  under,  this  Agreement  or  any  other  Transaction  Document,  are,  at  the  time  the  same  are  so  furnished,  complete and correct in  all material  respects on the date the same are furnished to the Buyer,  Administrative Agent or such other Credit Party, and, do not contain any material misstatement  of fact or omit to state a material fact or any fact necessary to make the statements contained  therein not misleading.                                         14   107601487\V-5                                                                    

 

         SECTION 5.12   Anti-Money  Laundering/International  Trade  Law  Compliance.   No  Obligor is  or was a Sanctioned Person at the time of the origination  of any Pool  Receivables  owing by such Obligor.  Such Originator is not a Sanctioned Person.  Such Originator, either in  its  own  right  or  through  any  third  party,  (i)  does  not  have  any  of  its  assets  in  a  Sanctioned  Country or in the possession, custody or control of a Sanctioned Person in violation of any Anti- Terrorism  Law;  (ii)  does  no  business  in  or  with,  and  does  not  derive  any  of  its  income  from  investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of  any Anti-Terrorism Law; or (iii) does not engage in any dealings or transactions prohibited by  any Anti-Terrorism Law.         SECTION 5.13   Transaction  Information.   None  of  such  Originator,  any  Affiliate  of  such  Originator  nor  any  third  party  with  which  such  Originator  or  any  Affiliate  thereof  has  contracted, has delivered, in writing or orally, to any Rating Agency, or monitoring a rating of,  any Notes, any Transaction Information without providing such Transaction Information to the  applicable Group Agent prior to delivery to such Rating Agency and has not participated in any  oral communications with respect to Transaction Information with any Rating Agency without  the participation of such Group Agent.         SECTION 5.14   Compliance  with  Law.   Such  Originator  has  complied  with  all  Applicable Laws to which it may be subject, except where the failure to so comply would not  reasonably be expected to have a Material Adverse Effect.         SECTION 5.15   Eligible  Receivables.   Each  Receivable  sold,  contributed,  transferred  or assigned hereunder, other than any Receivable designated as not being an Eligible Receivable  by  the  applicable  Originator  (or  by  the  Servicer  on  behalf  of  such  Originator),  is  an  Eligible  Receivable on the date of such sale, contribution, transfer or assignment.         SECTION 5.16   Bulk  Sales  Act.   No  transaction  contemplated  by  this  Agreement  requires compliance by such Originator with any bulk sales act or similar law.         SECTION 5.17   Taxes.   Such  Originator  has  (i)  timely  filed  all  tax  returns  (federal,  state and local) required to be filed by it and (ii) paid, or caused to be paid, all taxes, assessments  and other governmental charges, if any, other than taxes, assessments and other governmental  charges  being  contested  in  good  faith  by  appropriate  proceedings  and  as  to  which  adequate  reserves have been provided in accordance with GAAP.         SECTION 5.18   Opinions.  The facts regarding such Originator, the Receivables sold or  contributed by it hereunder, the Related Security and the related matters set forth or assumed in  each of the opinions of counsel delivered in connection with this Agreement and the Transaction  Documents are true and correct in all material respects.         SECTION 5.19   Other  Transaction  Documents.   Each  representation  and  warranty  made by such Originator under each other Transaction Document to which it is a party is true  and  correct  in  all  material  respects  (unless  such  representation  and  warranty  contains  a  materiality qualifier, in which case such representation and warranty shall be true and correct as  made) as of the date when made, except for any such representation and warranty that applies as  to an earlier date (in which case, such representation and warranty shall be true and correct in all                                         15   107601487\V-5                                                                    

 

   material  respects  (unless  such  representation  and  warranty  contains  a  materiality  qualifier,  in  which case such representation and warranty shall be true and correct as made) as of such earlier  date).         SECTION 5.20   No Linked Accounts.  Except for account no. 1017305622 maintained  at  the  Administrative  Agent,  there  are  no  Linked  Accounts  with  respect  to  any  Collection  Account.         SECTION 5.21   Margin Regulations.  Such Originator is not engaged, principally or as  one of its important activities, in the business of extending credit for the purpose of purchasing  or  carrying  margin  stock  (within  the  meanings  of  Regulations  T,  U  and  X  of  the  Board  of  Governors of the Federal Reserve System).         SECTION 5.22   Solvency.  After giving effect to the transactions contemplated by this  Agreement and the other Transaction Documents, such Originator is Solvent.         SECTION 5.23   Perfection Representations .               (a)   This  Agreement  creates  a  valid  and  continuing  ownership  interest  or  security  interest  (as  defined  in  the  applicable  UCC  which,  for  avoidance  of  doubt,  includes  (among  other  things)  both  (1)  an  interest  in  personal  property  which  secures  payment  or  performance of an obligation and (2) an ownership interest of a buyer of an account or payment  intangible)  in  such  Originator’s  right,  title  and  interest  in,  to  and  under  the  Receivables  and  Related Rights originated by such Originator, which (A) ownership interest or security interest  has been perfected and is enforceable against creditors of and purchasers from such Originator  and (B) will be free of all Adverse Claims.               (b)   The  Receivables  originated  by  such  Originator  constitute  “accounts”  or  “general intangibles” within the meaning of Section 9-102 of the UCC.               (c)   Such  Originator  owns  and  has  good  and  marketable  title  to  the  Receivables and Related Rights being sold or contributed or purportedly sold or contributed by it  hereunder free and clear of any Adverse Claim of any Person.               (d)   All appropriate financing statements, financing statement amendments and  continuation statements have been filed in the proper filing office in the appropriate jurisdictions  under Applicable Law in order to perfect (and continue the perfection of) the sale or contribution  of  such  Receivables  and  Related  Rights  from  each  Originator  to  the  Buyer  pursuant  to  this  Agreement.               (e)   Other than the ownership interest or security interest granted to the Buyer  pursuant to this Agreement, such Originator has not pledged, assigned, sold, contributed, granted  a  security  interest  in,  or  otherwise  conveyed  any  of  the  Receivables  originated  by  such  Originator or Related Rights except as permitted by this Agreement and the other Transaction  Documents.  Such Originator has not authorized the filing of and is not aware of any financing  statements  filed  against  such  Originator  that  include  a  description  of  collateral  covering  the  Receivables originated by such Originator and Related Rights other than any financing statement  (i) in favor of the Administrative Agent or (ii) that has been terminated or amended to reflect the                                        16   107601487\V-5                                                                    

 

   release of any security interest in the Receivables and Related Rights.  Such Originator is not  aware of any judgment lien, ERISA lien or tax lien filings against such Originator.               (f)   Notwithstanding  any  other  provision  of  this  Agreement  or  any  other  Transaction Document, the representations contained in this Section 5.23 shall be continuing and  remain in full force and effect until the Final Payout Date.         SECTION 5.24   Ordinary Course of Business.  If (but only to the extent that ) the sale  or  contribution  of  any  property  described  herein  is  not  characterized  by  a  court  or  other  Governmental Authority as a sale or contribution, then each remittance of Collections by such  Originator to the Buyer under this Agreement will have been (i) in payment of a debt incurred by  such Originator in the ordinary course of business or financial affairs of such Originator and the  Buyer and (ii) made in the ordinary course of business or financial affairs of such Originator and  the Buyer.         SECTION 5.25   Tax  Status.   Such  Originator  (i)  is,  and  shall  at  all  relevant  times  continue  to  be,  a  “disregarded  entity”  within  the  meaning  of  U.S.  Treasury  Regulation  §  301.7701-3 for U.S. federal income tax purposes and (ii) is not and will not at any relevant time  become an association (or publicly traded partnership) taxable as an association for U.S. federal  income tax purposes.         SECTION 5.26   Credit and Collection Procedures.  Such Originator has complied in all  material respects with the Credit and Collection Procedures (or, prior to the existence thereof in  documented  form,  the  substance  thereof)  with  regard  to  each  Receivable  and  related  Contract  sold, contributed, transferred or assigned by it hereunder.         SECTION 5.27   Servicing  Programs.   No  license  or  approval  is  required  for  the  Buyer’s or Administrative Agent’s use of any software or other computer program used by such  Originator,  Servicer  or  any  Sub-Servicer  in  the  servicing  of  the  Receivables,  other  than  those  which have been obtained and are in full force and effect.         SECTION 5.28   Servicing of Pool Receivables.  To the extent such Originator is acting  as Sub-Servicer for the Servicer in accordance with the Receivables Financing Agreement, since  the Closing Date, there  has  been no material  adverse  change in  the ability of such  Originator  acting as Sub-Servicer to service and collect the Pool Receivables and the Related Security.         SECTION 5.29   Financial  Condition.   The  consolidated  balance  sheets  of  the  Parent  and its consolidated Subsidiaries as of June 30, 2018 and the related statements of income and  shareholders’  equity  of  the  Parent  and  its  consolidated  Subsidiaries  for  the  fiscal  quarter  then  ended, copies of which have been furnished to the Buyer, Administrative Agent and the Lenders,  present fairly in all material respects the consolidated financial position of such Originator and  its consolidated Subsidiaries for the period ended on such date, all in accordance with GAAP,  subject to (x) adjustments of the type which would occur as a result of a year-end audit and (y)  the absence of notes.         SECTION 5.30   Valid Sale.  Each sale of Receivables and the Related Rights made by  such Originator pursuant to this Agreement shall constitute a valid sale, transfer and assignment  of Receivables and Related Rights to the Buyer, enforceable against creditors of, and purchasers                                        17   107601487\V-5                                                                    

 

   from, such Originator, except (i) as such enforceability may be limited by applicable bankruptcy,  insolvency,  reorganization,  moratorium  or  other  similar  laws  affecting  the  enforcement  of  creditors’ rights generally and (ii) as such enforceability may be limited by general principles of  equity, regardless  of whether such enforceability is  considered in  a proceeding in  equity or at  law.         SECTION 5.31   Good Title.  Immediately preceding its sale, transfer or assignment of  each Receivable hereunder, such Originator was the owner of such Receivable sold or purported  to  be  sold  free  and  clear  of  any  Adverse  Claims,  and  each  such  sale, transfer  or  assignment  hereunder constitutes a valid sale, transfer and assignment of all of such Originator’s right, title  and interest in, to and under the Receivables sold by it, free and clear of any Adverse Claims.   On or before the date hereof and before the generation by such Originator of any new Receivable  to  be  sold  or  otherwise  conveyed  hereunder,  all  financing  statements  and  other  documents,  if  any,  required  to  be  recorded  or  filed  in  order  to  perfect  and  protect  the  Buyer’s  ownership  interest in such Receivable against all creditors of and purchasers from such Originator will have  been duly filed in each filing office necessary for such purpose, and all filing fees and taxes, if  any, payable in connection with such filings shall have been paid in full.  Upon the creation of  each new Receivable sold or otherwise conveyed or purported to be conveyed hereunder and on  the Closing Date for then existing Receivables, the Buyer shall have a valid and perfected first  priority ownership interest or security interest in each Receivable sold to it hereunder, free and  clear of any Adverse Claim.         SECTION 5.32   Reliance  on  Separate  Legal  Identity.   Such  Originator  acknowledges  that  each  of  the  Lenders  and  the  Administrative  Agent  are  entering  into  the  Transaction  Documents to  which  they  are  parties  in  reliance  upon  the  Buyer’s  identity  as  a  legal  entity  separate from such Originator.         SECTION 5.33   Adverse Change in Receivables.  Since June 30, 2018, there has been  no material adverse change in either the collectibility or the payment history of the Receivables  originated by such Originator.         SECTION 5.34   No  Fraudulent  Conveyance.   No  sale,  contribution,  transfer  or  assignment  hereunder  constitutes  a  fraudulent  transfer  or  conveyance  under  any  United  States  federal or applicable state bankruptcy or insolvency laws or is otherwise void or voidable under  such or similar laws or principles or for any other reason.         SECTION 5.35   Nature of Pool Receivables.  All Pool Receivables sold or purportedly  sold by such Originator hereunder: (i) were originated by such Originator in the ordinary course  of its business, (ii) were sold to Buyer for fair consideration and reasonably equivalent value and  (iii) represent all, or a portion of the purchase price of merchandise, insurance or services within  the meaning of Section 3(c)(5)(A) of the Investment Company Act.         SECTION 5.36   Enforceability of Contracts.  Each Contract related to any Receivable  sold  by  such  Originator  hereunder  is  effective  to  create,  and  has  created,  a  legal,  valid  and  binding  obligation  of  the  related  Obligor  to  pay  the  outstanding  balance  of  such  Receivable,  enforceable  against  the  Obligor  in  accordance  with  its  terms,  without  being  subject  to  any                                         18   107601487\V-5                                                                    

 

   defense,  deduction,  offset  or  counterclaim  and  such  Originator  has  fully  performed  its  obligations under such Contract.         SECTION 5.37   Reaffirmation of Representations and Warranties by each Originator.   On  each  day  that  a  new  Receivable  is  created,  and  when  sold  to  the  Buyer  hereunder,  such  Originator shall be deemed to have certified that (i) all representations and warranties set forth in  this Article  V are  true  and  correct  in  all  material  respects  (unless  such  representations  and  warranties contain a materiality qualifier, in which case such representations and warranties shall  be true and correct as made) on and as of such day as though made on and as of such day, except  for  representations  and  warranties  which  apply  as  to  an  earlier  date  (in  which  case  such  representations  and  warranties  shall  be  true  and  correct  in  all  material  respects  (unless  such  representations and warranties contain a materiality qualifier, in which case such representations  and warranties shall be true and correct as made) as of such date) and (ii) no Event of Default or  an Unmatured Event of Default has occurred and is continuing or will result from the creation  and sale of such Receivable.                                    ARTICLE VI                        COVENANTS OF THE ORIGINATORS         SECTION 6.1    Covenants.   From  the  date  hereof  until  the  Final  Payout  Date,  each  Originator  will,  unless  the  Administrative  Agent  and  the  Buyer  shall  otherwise  consent  in  writing, perform the following covenants:               (a)   Existence.  Such Originator shall keep in full force and effect its existence  and  rights  as  a  limited  liability  company,  corporation  or  other  entity,  as  applicable,  under  the  laws of its state of organization, and shall obtain and preserve its qualification to do business in  each jurisdiction in which such qualification is or shall be necessary to protect the validity and  enforceability  of  this  Agreement,  the  other  Transaction  Documents  and  the  Receivables  and  Related Rights.               (b)   Financial  Reporting.   Such  Originator  will  maintain  a  system  of  accounting established and administered in  accordance with  GAAP,  and such Originator shall  furnish  to  the  Servicer  such  information  as  the  Servicer  may  from  time  to  time  reasonably  request relating to such system.               (c)   Notices.  Such Originator will notify the Servicer in writing of any of the  following events promptly upon (but, unless otherwise noted below, in no event later than three  (3) Business Days after) a Financial Officer or other officer of such Originator learning of the  occurrence thereof, with such notice describing the same, and if applicable, the steps being taken  by the Person(s) affected with respect thereto:                     (i)   Notice  of  Purchase  and  Sale  Termination  Event  or  Unmatured        Purchase  and  Sale  Termination  Event.   A  statement  of  a  Financial  Officer  of  such        Originator  setting  forth  details  of  any  Purchase  and  Sale  Termination  Event  or        Unmatured Purchase and Sale Termination Event that has occurred and is continuing and        the action which such Originator proposes to take with respect thereto.                                         19   107601487\V-5                                                                    

 

                     (ii)  Representations and Warranties.  The failure of any representation        or warranty made or deemed to be made by such Originator under this Agreement or any        other Transaction Document to be true and correct in any material respect when made.                     (iii) Litigation.  The institution of any litigation, arbitration proceeding        or governmental proceeding on such Originator, which could reasonably be expected to        have a Material Adverse Effect.                     (iv)  Adverse  Claim.   (A)  Any  Person  shall  obtain  an  Adverse  Claim        upon Receivables originated by the Originator or Related Rights or any portion thereof,        (B)  any  Person  other  than  the  Buyer,  the  Servicer  or  the  Administrative  Agent  shall        obtain any rights or direct any action with respect to any Collection Account (or related        Lock-Box)  or  (C)  any  Obligor  shall  receive  any  change  in  payment  instructions  with        respect to Pool Receivable(s) from a Person other than the Servicer or the Administrative        Agent.                     (v)   Name  Changes.   At  least  thirty  (30)  calendar  days’  prior  notice        before any change described in Section 6.1(r).                     (vi)  Change in Accountants or Accounting Policy.  Any change in (i)        the external accountants of such Originator or (ii) any material accounting policy of such        Originator  that  is  relevant  to  the  transactions  contemplated  by  this  Agreement  or  any        other Transaction Document (it being understood that any change to the manner in which        such Originator accounts for the Pool Receivables shall be deemed “material” for such        purpose).                     (vii) Material Adverse Change.  Promptly after the occurrence thereof,        notice of any material adverse change in the business, operations, property or financial or        other condition of such Originator.               (d)   Conduct  of  Business.   Such  Originator  will  carry  on  and  conduct  its  business in substantially the same manner and in substantially the same fields of enterprise as it  is presently conducted (except as would not change the general nature of the business of such  Originator and its  Affiliates  taken  as  a  whole)  and in  businesses reasonably similar or  related  thereto, and will do all things necessary to remain duly organized, validly existing and in good  standing as a domestic organization in its jurisdiction of organization and maintain all requisite  authority to  conduct  its  business  in  each  jurisdiction  in  which  its  business  is  conducted  if  the  failure to have such authority could reasonably be expected to have a Material Adverse Effect.               (e)   Compliance with Laws.  Such Originator will comply with all Applicable  Laws to which it may be subject if the failure to comply could reasonably be expected to have a  Material Adverse Effect.               (f)   Furnishing of Information and Inspection of Receivables.  Such Originator  will furnish or cause to be furnished to the Buyer, Administrative Agent and each Group Agent  from time to time such information with respect to the Pool Receivables and the Related Rights  as the Administrative Agent or any Group Agent may reasonably request.  Such Originator will,  (i) at such Originator’s expense, during regular business hours with prior written notice permit                                        20   107601487\V-5                                                                    

 

   the Administrative Agent and each Group Agent or their respective agents or representatives to  (A) examine and make copies of and abstracts from all books and records relating to the Pool  Receivables and the Related Rights, (B) visit the offices and properties of such Originator for the  purpose  of  examining  such  books  and  records  and  (C)  discuss  matters  relating  to  the  Pool  Receivables  and  the  Related  Rights  or  such  Originator’s  performance  hereunder  or  under  the  other Transaction Documents to which it is a party with any of the officers, directors, employees  or independent public accountants of such Originator having knowledge of such matters and (ii)  without  limiting  the  provisions  of clause  (i) above,  during  regular  business  hours,  at  such  Originator’s expense, upon prior written notice from the Administrative Agent, permit certified  public  accountants  or  other  auditors  acceptable  to  the  Buyer  and  the  Administrative  Agent  to  conduct a review of its books and records with respect to such Pool Receivables and the Related  Rights; provided,  that  such  Originator  shall  be  required  to  reimburse  the  Buyer  and  Administrative Agent for only one (1) such review pursuant to clause (ii) above in any twelve- month period, unless a Purchase and Sale Termination Event or an Event of Default has occurred  and is continuing.               (g)   Payments on Receivables, Collection Accounts.  Such Originator (or the  Servicer  or  a  Sub-Servicer  on  its  behalf)  will,  at  all  times,  instruct  all Obligors  to  deliver  payments on the Pool Receivables (originated by such Originator) to a Collection Account or a  Lock-Box.  Such Originator (or the Servicer or a Sub-Servicer on its behalf) will, at all times,  maintain such books and records as are necessary to identify Collections received from time to  time on Pool Receivables originated by such Originator and to segregate such Collections from  other property of the Servicer, the Sub-Servicers and the other Originators.  If any payments on  such Pool Receivables or other Collections are received by such Originator, it shall hold such  payments in trust for the benefit of the Buyer, the Administrative Agent, the Group Agents and  the  other  Secured  Parties  and  promptly  (but  in  any  event  within  one  (1)  Business Day  after  receipt) remit such funds into a Collection Account.  Such Originator shall not permit funds other  than Collections on Pool Receivables and other Collateral and remittances of funds for Subject  Receivables (subject to the proviso below) to be deposited into any Collection Account.  If such  funds are nevertheless deposited into any Collection Account, such Originator (or the Servicer or  Sub-Servicer  on  its  behalf)  shall  within  two  (2) Business  Days,  (x)  identify  and  transfer  such  funds to the appropriate Person entitled to such funds and (y) instruct such Person to no longer  deposit any such funds into any such Collection Account.  Such Originator will not, and will not  permit the Servicer, any Sub-Servicer, any other Originator or any other Person to commingle  Collections  or  other  funds  to  which  the  Administrative  Agent,  any  Group  Agent  or  any  other  Secured Party is entitled with any other funds; provided, that, up to twenty (20%) of monthly  cash receipts will be permitted to be related to the Subject Receivables; provided, further that,  upon notice by the Buyer or the Servicer to the related Subject Originator that such commingling  shall no longer be permitted, such Subject Originator shall promptly (but in no event later than  the thirtieth (30th) calendar day following the date of such notice) instruct such other Person to  (x) transfer such funds related to the Subject Receivables into an account other than a Collection  Account,  (y)  no  longer  deposit  such  funds  into  any  Collection  Account  and  (z)  instruct  the  related obligors to no longer deposit any such funds into any such Collection Account.               (h)   Sales,  Liens,  etc.   Except  as  otherwise  provided  herein,  such  Originator  will not sell, assign (by operation of law or otherwise) or otherwise dispose of, or create or suffer  to  exist  any  Adverse  Claim  upon  (including,  without  limitation,  the  filing  of  any  financing                                         21   107601487\V-5                                                                    

 

   statement) or with respect to, any Pool Receivable originated by such Originator or other Related  Rights, or assign any right to receive income in respect thereof.               (i)   Extension  or  Amendment  of  Pool  Receivables.   Except  as  otherwise  permitted by the Receivables Financing Agreement, such Originator will not, and will not permit  the  Servicer  or  any  Sub-Servicer  to,  alter  the  delinquency  status  or  adjust  the  Outstanding  Balance or otherwise modify the terms of any Pool Receivable originated by such Originator in  any material respect, or amend, modify or waive, in any material respect, any term or condition  of  any  related  Contract.   Such  Originator  shall  at its  expense,  timely  and  fully  perform  and  comply in all material respects with all provisions, covenants and other promises required to be  observed by it under the Contracts related to the Pool Receivables originated by such Originator,  and timely and fully comply with the Credit and Collection Procedures with regard to each Pool  Receivable and the related Contract.               (j)   Change  in  Credit  and  Collection  Procedures.   Such  Originator  will  not  make  any  material  change  in  the  Credit  and  Collection  Procedures  without the  prior  written  consent of the Administrative Agent and the Majority Group Agents.  Promptly following any  change  in  the  Credit  and  Collection  Procedures,  such  Originator  will  deliver  a  copy  of  the  updated Credit and Collection Procedures to the Buyer, Administrative Agent and each Lender.               (k)   Books  and  Records.   Such  Originator  shall  maintain  and  implement  (or  cause  the  Servicer  to  maintain  and  implement)  administrative  and  operating  procedures  (including  an  ability  to  recreate  records  evidencing  Pool  Receivables  originated  by  such  Originator and related Contracts in the event of the destruction of the originals thereof), and keep  and  maintain  (or  cause  the  Servicer  to  keep  and  maintain)  all  documents,  books,  records,  computer  tapes  and  disks  and  other  information  reasonably  necessary  or  advisable  for  the  collection of all Pool Receivables originated by such Originator (including records adequate to  permit  the  daily  identification  of  each  Pool  Receivable  originated  by  such  Originator  and  all  Collections of and adjustments to each existing Pool Receivable originated by such Originator).               (l)   Identifying  of  Records.   Such  Originator  shall  identify  (or  cause  the  Servicer to identify) its master data processing records relating to Pool Receivables and related  Contracts originated by such Originator with a legend that indicates that the Pool Receivables  have been sold or contributed in accordance with this Agreement and pledged in accordance with  the Receivables Financing Agreement.               (m)   Change  in  Payment  Instructions  to  Obligors.   Such  Originator  shall  not  make any change in its (or their) instructions to the Obligors regarding payments to be made to  the Collection Accounts (or any related Lock-Box), other than any instruction to remit payments  to a different Collection Account (or any related Lock-Box).               (n)   Security Interest, Etc.  Such Originator shall (and shall cause the Servicer  to), at its expense, take all action necessary or reasonably desirable to establish and maintain a  valid and enforceable first priority perfected security interest in the Receivables and the Related  Rights, in each case free and clear of any Adverse Claim, in favor of the Administrative Agent  (on behalf of the Secured Parties), including taking such action to perfect, protect or more fully  evidence  the ownership  or  security  interest  of  the  Buyer  and  the  security  interest  of  the                                         22   107601487\V-5                                                                    

 

   Administrative  Agent  (on  behalf  of  the  Secured  Parties)  as  the  Administrative  Agent  or  any  Secured Party may reasonably request.  In order to evidence the security interests of the Buyer  and the security interest of the Administrative Agent under this Agreement or the Receivables  Financing Agreement, as applicable, such Originator shall, from time to time take such action, or  execute and deliver such instruments as may be necessary (including, without limitation, such  actions as are reasonably requested by the Buyer or by the Administrative Agent) to maintain  and  perfect,  as  a  first-priority  interest,  the  Buyer’s  and  the  Administrative  Agent’s  security  interest in the Receivables, Related Security and Collections.  Such Originator shall, from time to  time  and  within  the  time  limits  established  by  law,  prepare  and  present  to  the  Buyer  and  the  Administrative Agent  for the Administrative Agent’s authorization and approval,  all financing  statements, amendments, continuations or initial financing statements in lieu of a continuation  statement,  or  other  filings  necessary  to  continue,  maintain  and  perfect  the  Buyer’s  and  the  Administrative  Agent’s  security  interest  as  a  first-priority  interest.   Notwithstanding  anything  else in the Transaction Documents to the contrary, such Originator shall not have any authority  to file a termination, partial termination, release, partial release, or any amendment that deletes  the name of a debtor or excludes collateral of any such financing statements filed in connection  with the Transaction Documents, without the prior written consent of the Administrative Agent.               (o)   Further Assurances.                       (i)   Such Originator hereby authorizes and hereby agrees from time to        time,  at  its  own  expense,  promptly  to  execute  (if  necessary)  and  deliver  all  further        instruments  and  documents,  and  to  take  all  further  actions,  that  may  be  necessary  or        desirable,  or  that  the  Buyer  or  the  Administrative  Agent  may  reasonably  request,  to        perfect, protect or more fully evidence purchases or contributions made hereunder and/or        the  security  interest  granted  pursuant  to  the  Receivables  Financing  Agreement  or  any        other  Transaction  Document,  or  to  enable  the  Buyer  or  the  Administrative  Agent  (on        behalf of the Secured Parties) to exercise and enforce their respective rights and remedies        under  this  Agreement  or  any  other  Transaction  Document.   Without  limiting  the        foregoing, such Originator hereby authorizes, and will, upon the request of the Buyer or        the Administrative Agent, at such Originator’s own expense, execute (if necessary) and        file  such  financing  statements  or  continuation  statements,  or  amendments  thereto,  and        such other instruments and documents, that may be necessary or reasonably desirable, or        that  the  Buyer  or  Administrative  Agent  may  reasonably  request,  to  perfect,  protect  or        evidence any of the foregoing.                     (ii)  Such  Originator  authorizes  the  Buyer  and  the  Administrative        Agent to file financing statements, continuation statements and amendments thereto and        assignments  thereof  relating  to  the  Receivables,  the  Related  Security  and  the  related        Contracts, Collections with respect thereto.               (p)   Transaction  Information.   None  of  the  Originators,  any  Affiliate  of  an  Originator or any third party with which an Originator or any Affiliate thereof has contracted,  shall deliver, in writing or orally, to any Rating Agency, any Transaction Information without  providing such Transaction Information to the applicable Group Agent prior to delivery to such  Rating Agency and will not participate in any oral communications with respect to Transaction  Information with any Rating Agency without the participation of such Group Agent.                                         23   107601487\V-5                                                                    

 

               (q)   Anti-Money  Laundering/International  Trade  Law  Compliance.   Neither  such Originator nor any of its Subsidiaries will become a Sanctioned Person.  Such Originator  will  not,  either  in  its  own  right  or  through  any  third  party,  (a)  have  any  of  its  assets  in  a  Sanctioned Country or in the possession, custody or control of a Sanctioned Person in violation  of  any  Anti- Terrorism  Law;  (b)  do  business  in  or  with,  or  derive  any  of  its  income  from  investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of  any  Anti-Terrorism  Law;  (c)  engage  in  any  dealings  or  transactions  prohibited  by  any  Anti-  Terrorism  Law  or  (d)  use  the  proceeds  from  any  sale  of  Receivables  hereunder  to  fund  any  operations in, finance any investments or activities in, or, make any payments to, a Sanctioned  Country or Sanctioned  Person in  violation of any Anti-Terrorism  Law.  Such Originator shall  comply with all Anti-Terrorism Laws.  Such Originator shall promptly notify the Administrative  Agent  and  each  Lender  in  writing  upon  the  occurrence  of  a  Reportable  Compliance  Event  relating to such Originator or any of its Subsidiaries.               (r)   Fundamental Changes.  Such Originator shall not make any change in its  name or location of organization or any other change in its identity or corporate structure that  could  impair  or  otherwise  render  any  UCC  financing  statement  filed in  connection  with  this  Agreement  or  the  Receivables  Financing  Agreement  “seriously  misleading”  as  such  term  (or  similar term) is used in the applicable UCC, in each case, unless the Buyer, the Administrative  Agent and each Group Agent have each (A) received thirty (30) days’ prior notice thereof, (B)  consented  in  writing  thereto  (such  consent  not  to  be  unreasonably  withheld),  (C)  received  executed  copies  of  all  documents,  certificates  and  opinions  (including,  without  limitation,  opinions relating to bankruptcy and UCC matters) as the Buyer or the Administrative Agent shall  reasonably request and (D) been reasonably satisfied that all other action to perfect and protect  the interests of the Buyer and the Administrative Agent, on behalf of the Lenders, in and to the  Receivables to be sold by it hereunder and other Related Rights, as reasonably requested by the  Buyer  or  the  Administrative  Agent  shall  have  been  taken  by,  and  at  the  expense  of,  such  Originator (including the filing of any UCC financing statements, the receipt of certificates and  other requested documents from public officials and all such other actions required pursuant to  Section 7.3).               (s)   Certain  Agreements.   Without  the  prior  written  consent  of  the  Administrative Agent and the Majority Group Agents, such Originator shall not amend, modify,  waive, revoke or terminate any Transaction Document to which it is a party.               (t)   Mergers, Acquisitions, Sales, etc.  No Originator shall (i) be a party to any  merger, consolidation or other restructuring, except where such a merger, consolidation or other  restructuring (x) complies with terms of Section 6(c) of the Performance Guaranty or (y) where  the Buyer, the Administrative Agent and each Group Agent have each (A) received thirty (30)  days’ prior notice thereof, (B) consented in writing thereto (such consent not to be unreasonably  withheld), (C) received executed copies of all documents, certificates and opinions (including,  without  limitation,  opinions  relating  to  bankruptcy  and  UCC  matters)  as  the  Buyer  or  the  Administrative Agent  shall reasonably  request  and (D) been reasonably  satisfied that all other  action to perfect and protect the interests of the Buyer and the Administrative Agent, on behalf of  the Lenders, in and to the Receivables to be sold by it hereunder and other Related Rights, as  reasonably requested by the Buyer or the Administrative Agent shall have been taken by, and at  the  expense  of,  such  Originator  (including  the  filing  of  any  UCC  financing  statements,  the                                         24   107601487\V-5                                                                    

 

   receipt  of  certificates  and  other  requested  documents  from  public  officials  and  all  such  other  actions required pursuant to Section 7.3) or (ii) directly or indirectly sell, transfer, assign, convey  or lease (A) whether in one or a series of transactions, all or substantially all of its assets or (B)  any Receivables or any interest therein (other than pursuant to this Agreement).               (u)   Frequency of Billing.  Such Originator shall prepare and deliver (or cause  to  be  prepared  and  delivered)  invoices  with  respect  to  all  Receivables  in  accordance  with  the  Credit and Collection Procedures, but in any event no less frequently than as required under the  Contract related to such Receivable.               (v)   Receivables Not to Be Evidenced by Promissory Notes or Chattel Paper.   No  Originator  shall  take  any  action  to  cause  or  permit  any  Receivable  created,  acquired  or  originated by it to become evidenced by any “instrument” or “chattel paper” (as defined in the  applicable UCC) without the prior written consent of the Buyer and the Administrative Agent.               (w)   Insurance.   Such  Originator will  maintain  in  effect,  at  such  Originator’s  expense, such casualty and liability insurance as such Originator deems appropriate in its good  faith business judgment.               (x)   Subordinated  Notes,  Etc.   Such  Originator  will  not  sell,  assign  (by  operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, or  create or suffer to exist any Adverse Claim upon (including, without limitation, the filing of any  financing statement) or with respect to, the Subordinated Note issued to such Originator.         SECTION 6.2    Separateness  Covenants.   Each  Originator  hereby  acknowledges  that  this Agreement and the other Transaction Documents are being entered into in reliance upon the  Buyer’s  identity  as  a  legal  entity  separate  from  such  Originator  and  its  Affiliates.  Therefore,  from and after the date hereof, each Originator shall take all reasonable steps necessary to make  it apparent  to  third Persons that the Buyer is  an entity with  assets  and liabilities distinct  from  those  of  such  Originator  and  any  other  Person, and  is  not  a  division  of  such  Originator,  its  Affiliates or any other Person.  Without limiting the generality of the foregoing and in addition to  and consistent with the other covenants set forth herein, such Originator shall take such actions  as shall be required in order that:               (a)   such Originator shall not be involved in the day to day management of the  Buyer;               (b)   such  Originator  shall  maintain  separate  corporate  records  and  books  of  account  from  the  Buyer  and  otherwise  will  observe  corporate  formalities  and  have  a  separate  area from the Buyer for its business (which may be located at the same address as the Buyer,  and, to the extent that it and the Buyer have offices in the same location, there shall be a fair and  appropriate allocation of overhead costs between them, and each shall bear its fair share of such  expenses);               (c)   the financial statements and books and records of such Originator shall be  prepared after the date of creation of the Buyer to reflect and shall reflect the separate existence  of the Buyer;                                         25   107601487\V-5                                                                    

 

               (d)   except  as  permitted  by  the  Receivables  Financing  Agreement,  (i)  such  Originator shall maintain its  assets  (including,  without limitation,  deposit  accounts) separately  from the assets (including, without limitation, deposit accounts) of the Buyer and (ii) the Buyer’s  assets, and records relating thereto, have not been, are not, and shall not be, commingled with  those of the Buyer;               (e)   such  Originator  shall  not  act  as  an  agent  for  the  Buyer  (except  in  the  capacity of Servicer or a Sub-Servicer in accordance with the Transaction Documents);               (f)   such Originator shall not conduct any of the business of the Buyer in its  own  name  (except  in  the  capacity  of  Servicer  or  a  Sub-Servicer  in  accordance  with  the  Transaction Documents);               (g)   such Originator shall not  pay  any liabilities of the Buyer out  of its  own  funds or assets;               (h)   such  Originator  shall  maintain  an  arm’s-length  relationship  with  the  Buyer;               (i)   such Originator shall not assume or guarantee or become obligated for the  debts of the Buyer or hold out its credit as being available to satisfy the obligations of the Buyer;               (j)   such Originator shall not acquire obligations of the Buyer (other than the  Subordinated Notes);               (k)   such  Originator  shall  allocate  fairly  and  reasonably  overhead  or  other  expenses  that  are  properly  shared  with  the  Buyer,  including,  without  limitation,  shared  office  space;               (l)   such Originator shall identify and hold itself out as a separate and distinct  entity from the Buyer;               (m)   such Originator shall correct  any known misunderstanding respecting its  separate identity from the Buyer;               (n)   such Originator shall not enter into, or be a party to, any transaction with  the Buyer, except in the ordinary course of its business and on terms which are intrinsically fair  and not less favorable to it than would be obtained in a comparable arm’s-length transaction with  an unrelated third party;               (o)   such Originator shall not pay the salaries of the Buyer’s employees, if any;  and               (p)   to the extent not already covered in paragraphs (a) through (o) above, such  Originator shall comply and/or act in accordance with all of the other separateness covenants set  forth in Section 7.03 of the Receivables Financing Agreement.                                            26   107601487\V-5                                                                    

 

                                    ARTICLE VII                     ADDITIONAL RIGHTS AND OBLIGATIONS                          IN RESPECT OF RECEIVABLES         SECTION 7.1    Rights of the Buyer.  Each Originator hereby authorizes the Buyer, the  Servicer  or  their  respective  designees  or  assignees  under  this  Agreement  or  the  Receivables  Financing Agreement (including, without limitation, the Administrative Agent) to take any and  all steps in such Originator’s name necessary or desirable, in their respective determination, to  collect all amounts due under any and all Receivables sold, contributed or otherwise conveyed or  purported  to  be  sold,  contributed  or  otherwise  conveyed  by  it  hereunder,  including,  without  limitation, endorsing the name of such Originator on checks and other instruments representing  Collections  and  enforcing  such  Receivables  and  the  provisions  of  the  related  Contracts  that  concern  payment  and/or  enforcement  of  rights  to  payment; provided, however,  the  Administrative  Agent  shall  not  take  any  of the  foregoing  actions  unless  a  Purchase  and  Sale  Termination Event or an Event of Default has occurred and is continuing.         SECTION 7.2    Responsibilities  of  the  Originators.   Anything  herein  to  the  contrary  notwithstanding:               (a)   Each Originator shall perform its obligations hereunder, and the exercise  by the Buyer or its designee of its rights hereunder shall not relieve such Originator from such  obligations.               (b)   None  of  the  Buyer,  the  Servicer,  the  Lenders,  the  Group  Agents  or  the  Administrative  Agent  shall  have  any  obligation  or  liability  to  any  Obligor  or  any  other  third  Person  with  respect  to  any  Receivables,  Contracts  related  thereto  or  any  other  related  agreements,  nor  shall  the  Buyer,  the  Servicer,  the  Lenders,  the  Group  Agents  or  the  Administrative  Agent  be  obligated  to  perform  any  of  the  obligations  of  such  Originator  thereunder.               (c)   Each Originator hereby grants to the Administrative Agent an irrevocable  power-of-attorney,  with  full  power  of  substitution,  coupled  with  an  interest,  during  the  occurrence and continuation of an Event of Default to take in the name of such Originator all  steps necessary or advisable to endorse, negotiate or otherwise realize on any writing or other  right of any kind held or transmitted by such Originator or transmitted or received by the Buyer  (whether or not  from  such Originator) in  connection with  any Receivable sold,  contributed or  otherwise conveyed or purported to be sold, contributed or otherwise conveyed by it hereunder  or Related Right.         SECTION 7.3    Further Action Evidencing Purchases.  On or prior to the Closing Date,  each Originator shall mark its master data processing records evidencing Pool Receivables and  Contracts with a legend, acceptable to the Buyer and the Administrative Agent, evidencing that  the Pool Receivables have been transferred in accordance with this Agreement and none of the  Originators or Servicer shall change or remove such notation without the consent of the Buyer  and the Administrative Agent.  Each Originator agrees that from time to time, at its expense, it  will  promptly  execute and  deliver  all  further  instruments  and  documents,  and  take  all  further  action that the Buyer, the Servicer,  any Sub-Servicer, the Administrative Agent  or any Group                                         27   107601487\V-5                                                                    

 

   Agent may reasonably request in order to perfect, protect or more fully evidence the Receivables  and Related Rights purchased by or contributed to the Buyer hereunder, or to enable the Buyer to  exercise  or  enforce  any  of  its  rights  hereunder  or  under  any  other  Transaction  Document.   Without  limiting  the  generality  of  the  foregoing,  upon  the  request  of  the  Buyer,  the  Administrative Agent or any Group Agent, such Originator will execute (if applicable), authorize  and  file  such  financing  or  continuation  statements,  or  amendments  thereto  or  assignments  thereof, and such other instruments or notices, as may be necessary or appropriate.   Each  Originator  hereby  authorizes  the  Buyer  or  its  designee  or  assignee  (including,  without  limitation, the Administrative Agent) to file one or more financing or continuation statements,  and amendments thereto and assignments thereof, relative to all or any of the Receivables and  Related Rights sold, contributed or otherwise conveyed or purported to be sold, contributed or  otherwise conveyed by it hereunder and now existing or hereafter generated by such Originator.   If any Originator fails to perform any of its agreements or obligations under this Agreement, the  Buyer or its designee or assignee (including, without limitation, the Administrative Agent) may  (but  shall  not  be  required  to)  itself  perform,  or  cause  the performance  of,  such  agreement  or  obligation,  and  the  expenses  of  the  Buyer  or  its  designee  or  assignee  (including,  without  limitation, the Administrative Agent) incurred in connection therewith shall be payable by such  Originator.         SECTION 7.4    Application of Collections.  Any payment by an Obligor in respect of  any  indebtedness  owed  by  it  to  any  Originator  shall,  except  as  otherwise  specified  by  such  Obligor or required by Applicable Law and unless otherwise instructed by the Servicer (with the  prior written consent of the Administrative Agent) or the Administrative Agent, be applied as a  Collection of any Receivable or Receivables of such Obligor to the extent of any amounts then  due  and  payable  thereunder  (such  application  to  be  made  starting  with  the  oldest  outstanding  Receivable or Receivables) before being applied to any other indebtedness of such Obligor.         SECTION 7.5    Performance of Obligations.  Each Originator shall (i) perform all of  its obligations under the Contracts related to the Receivables generated by such Originator to the  same  extent  as  if  interests  in  such  Receivables  had  not  been  transferred  hereunder,  and  the  exercise by the Buyer or the Administrative Agent of its rights hereunder shall not relieve any  Originator  from  any  such  obligations  and  (ii)  pay  when  due any  taxes,  including,  without  limitation,  any  sales  taxes  payable  in  connection  with  the  Receivables  generated  by  such  Originator and their creation and satisfaction.                                   ARTICLE VIII                   PURCHASE AND SALE TERMINATION EVENTS         SECTION 8.1    Purchase and Sale Termination Events.  Each of the following events  or occurrences described in this Section 8.1 shall constitute a “Purchase and Sale Termination  Event” (each event which with notice or the passage of time or both would become a Purchase  and  Sale  Termination  Event  being  referred  to  herein as  an  “Unmatured  Purchase  and  Sale  Termination Event”):               (a)   the Termination Date shall have occurred; or                                         28   107601487\V-5                                                                    

 

               (b)   any Originator shall fail to make when due any payment or deposit to be  made by it under this Agreement or any other Transaction Document to which it is a party and  such failure shall remain unremedied for two (2) Business Days; or               (c)   any  representation  or  warranty  made  or  deemed  to  be  made  by  any  Originator  (or  any  of  its  officers)  under  or  in  connection  with  this  Agreement,  any  other  Transaction  Documents  to which  it  is  a  party,  or  any  other  information  or  report  delivered  pursuant hereto or thereto shall prove to have been incorrect or untrue in any material respect  when made or deemed made or delivered; or               (d)   any  Originator shall fail to  perform or observe the covenant  set  forth  in  Section 6.1(p);               (e)   any Originator shall fail to perform or observe any other term, covenant or  agreement contained in this Agreement or any other Transaction Document to which it is a party  (other than such failure which would constitute a Purchase and Sale Termination Event under  Section 8.1(b)), and such failure shall continue unremedied for thirty (30) calendar days solely to  the extent (i) such failure is capable of being cured (as determined by the Administrative Agent)  and (ii) such Originator provides written notice to the Administrative Agent detailing the action  which it is taking in order to cure such failure; or               (f)   any  Insolvency  Proceeding  shall  be  instituted  against  the  Buyer  or  any  Originator and, in the case of any such proceeding instituted against the Buyer or such Originator  (but not instituted by the Buyer or such Originator, as applicable), such proceeding shall remain  undismissed or unstayed for a period of sixty (60) consecutive days; or               (g)   any Originator or any of its Subsidiaries, individually or in the aggregate,  shall fail to pay any principal of or premium or interest on any of its Debt that is outstanding in a  principal amount of at least thirty million dollars ($30,000,000) in the aggregate when the same  becomes  due  and  payable  (whether  by  scheduled  maturity,  required  prepayment,  acceleration,  demand or otherwise), and such failure shall continue after the applicable grace period (not to  exceed  thirty  (30)  calendar  days),  if  any,  specified  in  the  agreement,  mortgage,  indenture  or  instrument relating to such Debt (whether or not such failure shall have been waived under the  related agreement); or               (h)   either (i) the Internal Revenue Service shall file notice of a lien pursuant to  Section 6323 of the Code with regard to any assets of any Originator or (ii) the PBGC shall, or  shall indicate its intention to, file notice of a lien pursuant to Section 4068 of ERISA with regard  to any of the assets of any Originator; or               (i)   (i) the incurrence of any liability under Title IV of ERISA with respect to  the termination of any Pension Plan or the withdrawal or partial withdrawal of any Originator or  any  of  its  respective  ERISA  Affiliates  from  any  Multiemployer  Plan;  (ii)  the  receipt  by  any  Originator or any of its respective ERISA Affiliates from the PBGC or any plan administrator of  any notice relating to the intention to terminate any Pension Plan or Multiemployer Plan or to  appoint a trustee to administer any Pension Plan or Multiemployer Plan; (iii) the receipt by any  Originator or any of their respective ERISA Affiliates of any notice concerning the imposition of                                         29   107601487\V-5                                                                    

 

   Withdrawal  Liability  or  a  determination  that  a  Multiemployer  Plan  is,  or  is  expected  to  be,  insolvent or in reorganization, within the meaning of Title IV of ERISA; (iv) the occurrence of a  prohibited transaction with respect to any Originator or any of its respective ERISA Affiliates  (pursuant to Section 4975 of the Code); or               (j)   any  material  provision  of  this  Agreement  or  any  other  Transaction  Document  shall  cease  to  be  in  full  force and  effect  or  any  Originator  or  any  of  its  respective  Affiliates shall so state in writing; or               (k)   one or more judgments or decrees shall be entered against any Originator  or any of its Affiliates of any of the foregoing involving in the aggregate a liability (not paid or  to the extent not covered by a reputable and solvent insurance company) and such judgments and  decrees either shall be final and non-appealable or shall not be vacated, discharged or stayed or  bonded pending appeal for any period of thirty (30) consecutive days, and the aggregate amount  of all such judgments equals or exceeds thirty million dollars ($30,000,000).         SECTION 8.2    Remedies.               (a)   Optional Termination.  Upon the occurrence and during the continuation  of  a  Purchase  and  Sale  Termination  Event,  the  Buyer  (and  not  the  Servicer),  with  the  prior  written consent of the Administrative Agent shall have the option, by notice to the Originators  (with a copy to the Administrative Agent and the Group Agents), to declare the Purchase Facility  terminated.               (b)   Remedies  Cumulative.   Upon  any  termination  of  the  Purchase  Facility  pursuant to Section 8.2(a), the Buyer (and the Administrative Agent as Buyer’s assignee) shall  have,  in  addition  to  all  other  rights  and  remedies  under  this  Agreement,  all  other  rights  and  remedies provided  under  the  UCC  of  each  applicable  jurisdiction  and  other  Applicable  Laws,  which rights shall be cumulative.                                    ARTICLE IX                                INDEMNIFICATION         SECTION 9.1    Indemnities by the Originators.  Without limiting any other rights that  the Buyer may have hereunder or under Applicable Law, each Originator and Applied Industrial,  jointly  and  severally,  hereby  agrees  to  indemnify  the  Buyer,  each  of  its  officers,  directors,  employees,  agents,  employees  and  respective  assigns,  the  Administrative  Agent,  each  Lender  and each Group Agent (each of the foregoing Persons being individually called a “Purchase and  Sale Indemnified Party”), from  and against any and all claims, expenses, damages, losses and  liabilities suffered or sustained (including Attorney Costs) (all of the foregoing being collectively  called  “Purchase  and  Sale  Indemnified  Amounts”)  arising  out  of,  relating  to  or  in  connection  with  this  Agreement  or  any  other  Transaction  Document  or  the  use  of  the  proceeds  from  the  Receivables generated by any Originator and Related Security or the security interest in respect  thereof and without limiting or being limited by the foregoing, any of the following:               (a)   the breach of any representation, warranty or statement made or deemed  made  by  such  Originator  (or  any  employee,  officer  or  agent  of  such  Originator)  under  or  in  connection with this Agreement or any of the other Transaction Documents, or any information                                        30   107601487\V-5                                                                    

 

   or report delivered by or on behalf of such Originator pursuant hereto or thereto which shall have  been untrue or incorrect when made or deemed made or delivered;               (b)   the failure by such Originator to  comply  with  any  Applicable  Law with  respect to any Pool Receivable or the related Contract; or the failure of any Pool Receivable or  the related Contract to conform to any such Applicable Law;               (c)   the lack of an enforceable ownership interest, or a first priority perfected  lien, in the Pool Receivables (and all Related Security) originated by such Originator against all  Persons (including any bankruptcy trustee or similar Person), in either case, free and clear of any  Adverse Claim;               (d)   the  failure  to  have  filed,  or  any  delay  in  filing,  financing  statements,  financing  statement  amendments,  continuation  statements  or  other  similar  instruments  or  documents under the UCC of any applicable jurisdiction or other Applicable Laws with respect  to any Pool Receivable or the Related Rights at any time;               (e)   the transfer by such Originator of any interest in any Pool Receivable or  Related Right other than the transfer of any Pool Receivable and Related Security to the Buyer  pursuant  to  this  Agreement  and  the  grant  of  a  security  interest  to  the  Buyer  pursuant  to  this  Agreement;               (f)   any dispute, claim, offset or defense (other than discharge in bankruptcy)  of an Obligor to the payment of any Pool Receivable (including, without limitation, a defense  based  on  such  Pool  Receivable  or  the  related  Contract  not  being  a  legal,  valid  and  binding  obligation of such Obligor enforceable against it in accordance with its terms), or any other claim  resulting from or relating to collection activities with respect to such Pool Receivable;               (g)   any failure of such Originator to perform any of its duties or obligations in  accordance with the provisions hereof and of each other Transaction Document related to Pool  Receivables or to timely and fully comply with the Credit and Collection Procedures in regard to  each Pool Receivable;               (h)   the commingling of Collections of Pool Receivables at any time with other  funds;               (i)   any investigation, litigation or proceeding (actual or threatened) related to  this Agreement or any other Transaction Document or in respect of any Pool Receivable or any  Related Rights;                (j)   any failure of any Originator to comply with its covenants, obligations and  agreements contained in this Agreement or any other Transaction Document;               (k)   any  offset,  setoff,  adjustment  or  other  non-cash  reduction  of  any  Pool  Receivable (including Deemed Collections) not arising from the bankruptcy or insolvency, lack  of  creditworthiness  or  other  financial  default  or  inability  to  pay  of  the  related  Obligor  any  undisputed indebtedness;                                         31   107601487\V-5                                                                    

 

               (l)   any  suit  or  claim  related  to  the  Pool  Receivables  originated  by  such  Originator (including any products liability or environmental liability claim) arising out of or in  connection with any Pool Receivable or other merchandise, goods or services that are the subject  of or related to any Pool Receivable;                (m)   any  claim  brought  by  any  Person  other  than  a  Purchase  and  Sale  Indemnified  Party  arising  from  any  activity  by  such  Originator  or  any  Affiliate  of  such  Originator in servicing, administering or collecting any Pool Receivable;               (n)   the  failure  by  such  Originator  to  pay  when  due  any  taxes,  including,  without limitation, sales, excise or personal property taxes;                (o)   any dispute, claim, offset or defense (other than discharge in bankruptcy)  of an Obligor to the payment of any Pool Receivable (including, without limitation, a defense  based  on  such  Pool  Receivable  or  the  related  Contract  not  being  a  legal,  valid  and  binding  obligation of such Obligor enforceable against it in accordance with its terms), or any other claim  resulting from the sale of goods or the rendering of services related to such Pool Receivable or  the furnishing or failure to furnish any such goods or services or other similar claim or defense  not arising from the bankruptcy or insolvency, lack of creditworthiness or other financial default  or inability to pay of the related Obligor any undisputed indebtedness;               (p)   any action taken by the Administrative Agent as attorney-in-fact for such  Originator pursuant to this Agreement or any other Transaction Document;                (q)   the  failure  or  delay  to  provide  any  Obligor  with  an  invoice  or  other  evidence of indebtedness related to a Pool Receivable; or               (r)   any tax or governmental fee or charge, all interest and penalties thereon or  with  respect  thereto,  and  all  out-of-pocket  costs  and  expenses,  including  without  limitation  Attorney Costs in defending against the same, which are required to be paid by reason of the  purchase or ownership of the Receivables generated by such Originator or any Related Rights  connected with any such Receivables;   provided that such indemnity shall not be available to any Purchase and Sale Indemnified Party  to the extent that such losses, claims, damages, liabilities or related expenses (i) are determined  by  a  court  of  competent  jurisdiction  in  a final  and  nonappealable  judgment  to  have  resulted  solely from the gross negligence or willful misconduct of a Purchase and Sale Indemnified Party  or  (ii)  constitute  recourse  with  respect  to  a  Pool  Receivable  by  reason  of  the  bankruptcy  or  insolvency, lack of creditworthiness or other financial default or inability to pay of the related  Obligor.    If for any reason (other than the gross negligence or willful misconduct of any Purchase and Sale  Indemnified  Party)  the  indemnification  provided  above  in  this Section  9.1 is  unavailable  to  a  Purchase  and  Sale  Indemnified  Party  or  is  insufficient  to  hold  such  Purchase  and  Sale  Indemnified  Party  harmless,  then  each  of  the  Originators  and  Applied  Industrial,  jointly  and  severally, shall contribute to the amount paid or payable by such Purchase and Sale Indemnified  Party to the maximum extent permitted under Applicable Law.  The reimbursement, indemnity  and contribution obligations of such Originator under this Section 9.1 shall be in addition to any                                        32   107601487\V-5                                                                    

 

   liability  which  such Originator  may  otherwise  have,  shall  extend  upon  the  same  terms  and  conditions to Purchase and Sale Indemnified Party, and shall be binding upon and inure to the  benefit of any successors, assigns, heirs and personal representatives of such Originator and the  Purchase and Sale Indemnified Parties.                                    ARTICLE X                                MISCELLANEOUS         SECTION 10.1   Amendments, etc.               (a)   The  provisions  of  this  Agreement  may  from  time  to  time  be  amended,  modified or waived, if such amendment, modification or waiver is in writing and executed by the  Buyer,  the  Servicer  and  each  Originator,  with  the  prior  written  consent  of  the  Administrative  Agent and the Majority Group Agents.               (b)   No  failure  or  delay  on  the  part  of  the  Buyer,  the  Servicer,  any  Sub- Servicer, any Originator, the Administrative Agent or any third-party beneficiary in exercising  any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of  any such right preclude any other or further exercise thereof or the exercise of any other power  or right.  No waiver or approval by the Buyer or the Servicer under this Agreement shall, except  as may otherwise be stated in such waiver or approval, be applicable to subsequent transactions.   No waiver or approval  under this  Agreement shall require any similar or dissimilar waiver or  approval thereafter to be granted hereunder.               (c)   The Transaction Documents contain a final and complete integration of all  prior  expressions  by  the  parties  hereto  with  respect  to  the  subject  matter  thereof  and  shall  constitute  the  entire  agreement  among  the  parties hereto  with  respect  to  the  subject  matter  thereof, superseding all prior oral or written understandings.         SECTION 10.2   Notices,  etc.  All  notices  and other communications  hereunder shall,  unless otherwise stated herein, be in writing (which shall include facsimile communication) and  shall be faxed or delivered to each party hereto, at its address or facsimile number set forth under  its  name  on Schedule  IV hereof  or  at  such  other  address  or  facsimile  number  as  shall  be  designated  by  such  party  in  a  written  notice  to  the other  parties  hereto  or  in  the  case  of  the  Administrative Agent,  any  Lender or any Group Agent,  at  their respective address  for notices  pursuant  to  the  Receivables  Financing  Agreement.   Notices  and  communications  shall  be  effective when sent (and shall be followed by hard copy sent by regular mail), and notices and  communications sent by other means shall be effective when received.         SECTION 10.3   No Waiver; Cumulative Remedies.  The remedies herein provided are  cumulative and not exclusive of any remedies provided by law.  Without limiting the foregoing,  Applied Industrial and each Originator hereby authorizes the Buyer, the Administrative Agent,  each  Lender and  each Group Agent  (collectively, the “Set-off Parties”), at  any time and from  time to time, to the fullest extent permitted by law, to set off, against any obligations of Applied  Industrial  or  such  Originator  to  such  Set-off  Party  arising  in  connection  with  the  Transaction  Documents (including, without limitation, amounts payable pursuant to Section 9.1) that are then  due  and  payable  or  that  are  not  then  due  and  payable  but  have  accrued,  any  and  all  deposits                                         33   107601487\V-5                                                                    

 

   (general or special, time or demand, provisional or final) at any time held by, and any and all  indebtedness  at  any  time  owing  by,  any  Set-off  Party  to  or  for the  credit  or  the  account  of  Applied Industrial or such Originator.         SECTION 10.4   Binding Effect; Assignability.  This Agreement shall be binding upon  and  inure  to  the  benefit  of  the  Buyer  and  each  Originator  and  their  respective  successors  and  permitted assigns.  No Originator may assign any of its rights hereunder or any interest herein  without the prior written consent of the Buyer, the Administrative Agent and each Group Agent,  except as otherwise herein specifically provided.  This Agreement shall create and constitute the  continuing obligations of the parties hereto in accordance with its terms, and shall remain in full  force and effect until such time as the parties hereto shall agree.  The rights and remedies with  respect  to  any breach of any representation and  warranty made by  any  Originator pursuant  to  Article V and the indemnification and payment provisions of Article IX and Section 10.6 shall be  continuing and shall survive any termination of this Agreement.         SECTION 10.5   GOVERNING  LAW.   THIS  AGREEMENT,  INCLUDING  THE  RIGHTS  AND  DUTIES  OF  THE  PARTIES  HERETO,  SHALL  BE  GOVERNED  BY,  AND  CONSTRUED  IN  ACCORDANCE  WITH,  THE  LAWS  OF  THE  STATE  OF  NEW  YORK  (INCLUDING  SECTIONS  5-1401  AND  5-1402  OF  THE  GENERAL  OBLIGATIONS  LAW  OF  THE  STATE  OF  NEW  YORK,  BUT  WITHOUT  REGARD  TO  ANY  OTHER  CONFLICTS OF  LAW PROVISIONS THEREOF, EXCEPT TO THE  EXTENT THAT  THE  PERFECTION,  THE  EFFECT  OF  PERFECTION  OR  PRIORITY  OF  THE  INTERESTS  OF  THE  BUYER,  THE  ADMINISTRATIVE  AGENT  OR  ANY  LENDER  IN  THE  RECEIVABLES  AND  THE  RELATED  RIGHTS  IS  GOVERNED  BY  THE  LAWS  OF  A  JURISDICTION OTHER THAN THE STATE OF NEW YORK).         SECTION 10.6   Costs,  Expenses  and  Taxes.   In  addition  to  the  obligations  of  the  Originators  under Article  IX,  each  Originator,  severally  and  for  itself  alone,  and  Applied  Industrial, jointly and severally with each Originator, agrees to pay on demand:               (a)   to  the  Buyer  (and  any  successor  and  permitted  assigns  thereof)  and  any  third-party  beneficiary  of  the  Buyer’s  rights  hereunder  all  reasonable  out-of-pocket  costs  and  expenses in connection with the preparation, negotiation, execution, delivery and administration  of  this  Agreement  and  the  other  Transaction  Documents  (together  with  all  amendments,  restatements,  supplements,  consents  and waivers, if any, from  time to  time hereto), including,  without  limitation,  (i)  the  reasonable  Attorney  Costs  for  the  Buyer  (and  any  successor  and  permitted assigns thereof) and any third-party beneficiary of the Buyer’s rights hereunder with  respect thereto and with respect to advising any such Person as to their rights and remedies under  this Agreement and the other Transaction Documents and (ii) reasonable accountants’, auditors’  and  consultants’  fees  and  expenses  for  the  Buyer  (and  any  successor  and  permitted  assigns  thereof) and any third-party beneficiary of the Buyer’s rights hereunder and the fees and charges  of  any  nationally  recognized  statistical  rating  agency  incurred  in  connection  with  the  administration and maintenance of this Agreement or advising any such Person as to their rights  and  remedies  under  this  Agreement  or  as  to  any  actual  or  reasonably  claimed  breach  of  this  Agreement or any other Transaction Document;                                          34   107601487\V-5                                                                    

 

               (b)   to  the  Buyer  (and any  successor  and  permitted  assigns  thereof)  and  any  third-party  beneficiary  of  the  Buyer’s  rights  hereunder  all  reasonable  out-of-pocket  costs  and  expenses (including reasonable Attorney Costs), of any such Person incurred in connection with  the  enforcement  of  any  of  their  respective  rights  or  remedies  under  the  provisions  of  this  Agreement and the other Transaction Documents; and               (c)   all stamp, franchise and other taxes and fees payable in connection with  the  execution,  delivery,  filing  and  recording  of  this Agreement  or  the  other  Transaction  Documents  to  be  delivered  hereunder,  and  agrees  to  indemnify  each  Purchase  and  Sale  Indemnified Party against any liabilities with respect to or resulting from any delay in paying or  omitting to pay such taxes and fees.         SECTION 10.7   CONSENT  TO  JURISDICTION.  (a)    EACH  PARTY  HERETO  HEREBY IRREVOCABLY SUBMITS TO (I) WITH RESPECT TO THE BUYER AND THE  SERVICER,  THE  EXCLUSIVE  JURISDICTION  AND  (II)  WITH  RESPECT  TO  ANY  ORIGINATOR, THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR  FEDERAL  COURT  SITTING  IN  NEW  YORK  CITY,  NEW  YORK  IN  ANY  ACTION  OR  PROCEEDING  ARISING  OUT  OF  OR  RELATING  TO  THIS  AGREEMENT  OR  ANY  OTHER  TRANSACTION  DOCUMENT,  AND  EACH  PARTY  HERETO  HEREBY  IRREVOCABLY  AGREES  THAT  ALL  CLAIMS  IN  RESPECT  OF  SUCH  ACTION      OR  PROCEEDING  (I)  IF  BROUGHT  BY  THE  BUYER  OR  THE  SERVICER,  SHALL  BE  HEARD AND DETERMINED, AND (II) IF BROUGHT BY ANY ORIGINATOR, MAY BE  HEARD AND DETERMINED, IN EACH CASE, IN SUCH NEW YORK STATE COURT OR,  TO  THE  EXTENT  PERMITTED  BY  LAW,  IN  SUCH  FEDERAL  COURT.   NOTHING  IN  THIS SECTION 10.7 SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT  OR  ANY  OTHER  CREDIT  PARTY  TO  BRING  ANY  ACTION  OR  PROCEEDING  AGAINST ANY ORIGINATOR OR ANY OF THEIR RESPECTIVE PROPERTIES IN THE  COURTS  OF  OTHER  JURISDICTIONS.   EACH  PARTY            HERETO  HEREBY  IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO,  THE  DEFENSE  OF  AN  INCONVENIENT  FORUM  TO  THE  MAINTENANCE  OF  SUCH  ACTION  OR  PROCEEDING.   THE  PARTIES  HERETO  AGREE  THAT  A  FINAL  JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND  MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN  ANY OTHER MANNER PROVIDED BY LAW.               (b)   EACH  PARTY  HERETO  CONSENTS  TO  THE  SERVICE  OF  ANY  AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF  COPIES  OF  SUCH  PROCESS  TO  IT  AT  ITS  ADDRESS  SPECIFIED  IN SCHEDULE  IV.   NOTHING  IN  THIS    SECTION  10.7   SHALL  AFFECT  THE  RIGHT  OF  THE  ADMINISTRATIVE  AGENT  OR  ANY  OTHER  CREDIT  PARTY  TO  SERVE  LEGAL  PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.         SECTION 10.8   WAIVER  OF  JURY  TRIAL.   EACH  PARTY  HERETO  HEREBY  WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY  JURY  IN  ANY  JUDICIAL  PROCEEDING  INVOLVING,  DIRECTLY  OR  INDIRECTLY,  ANY  MATTER  (WHETHER  SOUNDING  IN  TORT,  CONTRACT  OR  OTHERWISE)  IN                                         35   107601487\V-5                                                                    

 

   ANY  WAY  ARISING  OUT  OF,  RELATED  TO,  OR  CONNECTED  WITH  THIS  AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.         SECTION 10.9   Captions  and  Cross  References;  Incorporation  by  Reference.   The  various  captions  (including,  without  limitation,  the  table  of  contents)  in  this  Agreement  are  included for convenience only and shall not affect the meaning or interpretation of any provision  of this Agreement.  References in this Agreement to any underscored Article, Section, Schedule  or Exhibit are to such Article, Section, Schedule or Exhibit of this Agreement, as the case may  be.  The Schedules and Exhibits hereto are hereby incorporated by reference into and made a part  of this Agreement.         SECTION 10.10  Execution in Counterparts.  This Agreement may be executed in any  number of counterparts, each of which when so executed shall be deemed to be an original and  all of which when taken together shall constitute one and the same agreement.  Delivery of an  executed counterpart hereof by facsimile or other electronic means shall be equally effective as  delivery of an originally executed counterpart.         SECTION 10.11  Acknowledgment  and  Agreement.   By  execution  below,  each  Originator expressly acknowledges and agrees that all of the Buyer’s rights, title, and interests in,  to,  and  under  this  Agreement  (but  not  its  obligations),  shall  be  assigned  by  the  Buyer  to  the  Administrative  Agent  (for  the  benefit  of  the  Lenders)  pursuant  to  the  Receivables  Financing  Agreement,  and  each  Originator  consents  to  such  assignment.   Each  of  the  parties  hereto  acknowledges and agrees that the Lenders, the Group Agents and the Administrative Agent are  third-party  beneficiaries  of  the  rights  of  the  Buyer  arising  hereunder  and  under  the  other  Transaction Documents to which any Originator is a party, and notwithstanding anything to the  contrary  contained  herein  or  in  any  other  Transaction  Document,  during  the  occurrence  and  continuation  of  an  Event  of  Default  under  the  Receivables  Financing  Agreement,  the  Administrative Agent, and not the Buyer, shall have the sole right to exercise all such rights and  related remedies.         SECTION 10.12  No  Proceeding.   Each  Originator  hereby  agrees  that  it  will  not  institute, or join any other Person in instituting, against the Buyer any Insolvency Proceeding for  at least one year and one day following the Final Payout Date.  Each Originator further agrees  that notwithstanding any provisions contained in this Agreement to the contrary, the Buyer shall  not,  and  shall  not  be  obligated  to,  pay  any  amount  in  respect  of  any  Subordinated  Note  or  otherwise  to  such  Originator  pursuant  to  this  Agreement  unless  the  Buyer  has  received  funds  which may, subject to Section 3.01 of the Receivables Financing Agreement, be used to make  such  payment.   Any  amount  which  the  Buyer  does  not  pay  pursuant  to  the  operation  of  the  preceding  sentence  shall  not  constitute  a  claim  (as  defined  in  §101  of  the  Bankruptcy  Code)  against or corporate obligation of the Buyer by such Originator for any such insufficiency unless  and until the provisions of the foregoing sentence are satisfied.  The agreements in this Section  10.12 shall survive any termination of this Agreement.         SECTION 10.13  Mutual  Negotiations.   This  Agreement  and  the  other  Transaction  Documents are the product of mutual negotiations by the parties thereto and their counsel, and no  party shall be deemed the draftsperson of this Agreement or any other Transaction Document or  any provision hereof or thereof or to have provided the same.  Accordingly, in the event of any                                         36   107601487\V-5                                                                    

 

   inconsistency  or  ambiguity  of  any  provision  of  this  Agreement  or  any  other  Transaction  Document, such inconsistency or ambiguity shall not be interpreted against any party because of  such party’s involvement in the drafting thereof.         SECTION 10.14  Severability.  Any provisions of this Agreement which are prohibited  or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of  such prohibition  or unenforceability without invalidating the remaining  provisions hereof,  and  any  such  prohibition  or  unenforceability  in  any  jurisdiction  shall  not  invalidate  or  render  unenforceable such provision in any other jurisdiction.         SECTION 10.15  Limited Recourse.  Except as explicitly set forth herein, the obligations  of the Buyer under this Agreement or any other Transaction Documents to which it is a party are  solely the obligations of the Buyer.  No recourse under any Transaction Document shall be had  against, and no liability shall attach to, any officer, employee, director, or beneficiary, whether  directly  or  indirectly,  of  the  Buyer.   The  agreements  in  this Section  10.15 shall  survive  any  termination of this Agreement.                               [Signature Pages Follow]                                          37   107601487\V-5                                                                    

 

 

 

 

 

                                                                        Schedule I                     LIST AND LOCATION OF EACH ORIGINATOR                 Originator                               Location  Applied Industrial Technologies, Inc.                   Ohio  Applied Industrial Technologies - CA LLC               Delaware  Applied Industrial Technologies -- PA LLC            Pennsylvania  Applied Industrial Technologies - Dixie, Inc.         Tennessee                                       Schedule I-1   107601487\V-5                                                                    

 

                                                                       Schedule II               LOCATION OF BOOKS AND RECORDS OF ORIGINATORS                 Originator                      Location of Books and Records                                                              Applied Industrial Technologies, Inc.  One Applied Plaza, MS-56, Cleveland, Ohio                                         44115  Applied Industrial Technologies - CA LLC One Applied Plaza, MS-56, Cleveland, Ohio                                         44115  Applied Industrial Technologies -- PA LLC One Applied Plaza, MS-56, Cleveland, Ohio                                         44115  Applied Industrial Technologies - Dixie, Inc. One Applied Plaza, MS-56, Cleveland, Ohio                                         44115                                     Schedule II-1   107601487\V-5                                                                    

 

                                                                       Schedule III                                  TRADE NAMES   With respect to Applied Industrial Technologies, Inc.:       1. Packaged Merchandise Co.     2. Omnex     3. Applied Industrial Technologies                                       Schedule III-1   107601487\V-5                                                                    

 

                                                                       Schedule IV                                NOTICE ADDRESSES   (A)   in the case of the Buyer, at the following address:   AIT Receivables LLC  One Applied Plaza, MS-4  Cleveland, Ohio 44115  Attention:  Shaun McElhannon, CTP  Telephone:  (216) 426-4887  Facsimile:  (216) 426-4826  Email:  smcelhannon@applied.com   (B)   in the case of the Servicer, at the following address:   Applied Industrial Technologies, Inc.  One Applied Plaza, MS-56  Cleveland, Ohio 44115  Attention:  Fred D. Bauer, Esq.  Telephone:  (216) 426-4000  Facsimile:  (216) 426-4826  Email:  fbauer@applied.com   (C)   in the case of each Originator, at the following addresses:   Applied Industrial Technologies, Inc.  One Applied Plaza, MS-56  Cleveland, Ohio 44115  Attention:  Fred D. Bauer, Esq.  Telephone:  (216) 426-4000  Facsimile:  (216) 426-4826  Email:  fbauer@applied.com   Applied Industrial Technologies - CA LLC  One Applied Plaza, MS-56  Cleveland, Ohio 44115  Attention:  Fred D. Bauer, Esq.  Telephone:  (216) 426-4000  Facsimile:  (216) 426-4826  Email:  fbauer@applied.com   Applied Industrial Technologies -- PA LLC  One Applied Plaza, MS-56  Cleveland, Ohio 44115  Attention:  Fred D. Bauer, Esq.  Telephone:  (216) 426-4000                                    Schedule IV-1   107601487\V-5                                                                    

 

   Facsimile:  (216) 426-4826  Email:  fbauer@applied.com   Applied Industrial Technologies - Dixie, Inc.  One Applied Plaza, MS-56  Cleveland, Ohio 44115  Attention:  Fred D. Bauer, Esq.  Telephone:  (216) 426-4000  Facsimile:  (216) 426-4826  Email:  fbauer@applied.com                                           Schedule IV-2   107601487\V-5                                                                    

 

                                                                         Exhibit A                            FORM OF PURCHASE REPORT   Originator: [Name of Originator]   Purchaser:  AIT Receivables LLC   Payment Date: ________________ ___, 20___   1.    Outstanding Balance of Receivables Purchased:    2.    Fair Market Value Discount:          1⁄{1 + (Prime Rate x Days’ Sales Outstanding)}                                365         Where:         Prime Rate   =   __________         Days’ Sales Outstanding   =  __________   3.    Purchase Price  (1 x 2)  =  $ __________   4.    Reductions in the Purchase Price  =  $ __________   5.    Net Purchase Price  (3 – 4)  =  $ __________                                      Exhibit A-1   107601487\V-5                                                                    

 

                                                                         Exhibit B                          FORM OF SUBORDINATED NOTE                                                               New York, New York                                                                    [____], 20[__]         FOR  VALUE  RECEIVED,  the  undersigned,  AIT  RECEIVABLES  LLC,  a  Delaware  limited liability company (the “Buyer”), promises to pay to the order of [________________], a  [______________] (the “Originator”), on the terms and subject to the conditions set forth herein  and in the Purchase and Sale Agreement referred to below, the aggregate unpaid Purchase Price  of all Receivables purchased by the Buyer from the Originator pursuant to such Purchase and  Sale Agreement, as such unpaid Purchase Price is shown in the records of the Servicer.         1.    Purchase  and  Sale  Agreement.   This  Subordinated  Note  is  one  of  the  Subordinated  Notes  described  in,  and  is  subject  to  the  terms  and  conditions  set  forth  in,  that  certain Purchase and Sale Agreement dated as of August 31, 2018 (as the same may be amended,  restated,  supplemented  or  otherwise  modified  from  time  to  time,  the  “Purchase  and  Sale  Agreement”),  among  the  Buyer,  Applied  Industrial  Technologies,  Inc.,  as  Servicer,  the  Originator, and the other originators from time to time party thereto.  Reference is hereby made  to the Purchase and Sale Agreement for a statement of certain other rights and obligations of the  Buyer and the Originator.         2.    Definitions.  Capitalized terms used (but not defined) herein have the meanings  assigned  thereto  in  the  Purchase  and  Sale  Agreement  and  in Article  I of  the  Receivables  Financing  Agreement  (as  defined  in  the  Purchase  and  Sale  Agreement).   In  addition,  as  used  herein, the following terms have the following meanings:               “Bankruptcy Proceedings” has the meaning set forth in clause (b) of paragraph 9        hereof.               “Final Maturity Date” means the Payment Date immediately following the date        that falls one year and one day after the Termination Date.               “Prime Rate” means a per annum rate equal to the “U.S. Prime Rate” as published        in the “Money Rates” section of The Wall Street Journal or if such information ceases to        be  published  in  The  Wall  Street  Journal,  such  other  publication  as  determined  by  the        Buyer in its sole discretion.               “Senior Interest Holders” means, collectively, the Lenders, the Group Agents, the        Administrative  Agent,  the  Borrower  Indemnified  Parties,  the  Servicer  Indemnified        Parties and the Affected Persons.               “Senior  Interests”  means,  collectively,  (i)  the  Aggregate  Interest,  (ii)  the        Aggregate Capital, (iii) the fees referred to in Section 2.03 of the Receivables Financing        Agreement, (iv) all amounts payable pursuant to Sections 4.01, 4.02, 4.03, 12.01 or 13.04        of the Receivables Financing Agreement and (v) all other obligations of the Buyer and                                     Exhibit B-1   107601487\V-5                                                                    

 

         the  Servicer  that  are  due  and  payable,  to  (a)  the  Lenders,  the  Group  Agents,  the        Administrative Agent and their respective successors, permitted transferees and assigns        arising in connection with the Transaction Documents and (b) any Borrower Indemnified        Party,  Servicer  Indemnified  Party  or  Affected  Person  arising  in  connection  with  the        Receivables  Financing  Agreement  or  any  other  Transaction  Document,  in  each  case,        howsoever  created,  arising  or  evidenced,  whether  direct  or  indirect,  absolute  or        contingent, now or hereafter existing, or due or to become due, together with any and all        Interest  accruing  on  any  such  amount after  the  commencement  of  any  Bankruptcy        Proceedings, notwithstanding any provision or rule of law that might restrict the rights of        any Senior Interest Holder, as against the Buyer or anyone else, to collect such interest.               “Subordination  Provisions”  means,  collectively,  clauses  (a)  through  (l)  of        paragraph 9 hereof.         3.    Interest.   Subject  to  the  Subordination  Provisions  set  forth  below,  the  Buyer  promises to pay interest on this Subordinated Note as follows:  to (but excluding) the date on  which the entire aggregate unpaid Purchase Price is fully paid, the aggregate unpaid Purchase  Price from time to time outstanding shall bear interest at a rate per annum equal to the Prime  Rate.         4.    Interest Payment Dates.  Subject to the Subordination Provisions set forth below,  the Buyer shall pay accrued interest on this Subordinated Note on each Monthly Settlement Date,  and shall pay accrued interest on the amount of each principal payment made in cash on a date  other than a Monthly Settlement Date at the time of such principal payment.         5.    Basis  of  Computation.   Interest  accrued  hereunder  shall  be  computed  for  the  actual number of days elapsed on the basis of a 365- or 366-day year, as the case may be.         6.    Principal  Payment  Dates.   Subject  to  the  Subordination  Provisions  set  forth  below, payments of the principal amount of this Subordinated Note shall be made as follows:               (a)   The  principal  amount  of  this  Subordinated  Note  shall  be  reduced  by  an        amount equal to each payment deemed made pursuant to Section 3.3 of the Purchase and        Sale Agreement.               (b)   The entire outstanding principal amount of this Subordinated Note shall be        paid on the Final Maturity Date.               (c)   Subject  to  the  Subordination  Provisions  set  forth  below,  the  principal        amount of and accrued interest on this Subordinated Note may be prepaid by, and in the        sole discretion of the Buyer, on any Business Day without premium or penalty.         7.    Payment Mechanics.  All payments of principal and interest hereunder are to be  made in lawful money of the United States of America in the manner specified in Article III of  the Purchase and Sale Agreement.         8.    Enforcement Expenses.  In addition to and not in limitation of the foregoing, but  subject  to  the  Subordination  Provisions  set  forth  below  and  to  any  limitation  imposed  by                                     Exhibit B-2   107601487\V-5                                                                    

 

   Applicable Law, the Buyer agrees to pay all expenses, including Attorney Costs, incurred by the  Originator in seeking to collect any amounts payable hereunder which are not paid when due.         9.    Subordination  Provisions.  The Buyer  covenants and agrees,  and the Originator  and any other holder of this Subordinated Note (collectively, the Originator and any such other  holder are called the “Holder”), by its acceptance of this Subordinated Note, likewise covenants  and agrees on behalf of itself and any Holder, that the payment of the principal amount of and  interest on this Subordinated Note is hereby expressly subordinated in right of payment to the  payment and performance of the Senior Interests to the extent and in the manner set forth in the  following clauses of this paragraph 9:               (a)   No  payment  or  other  distribution  of  the  Buyer’s  assets  of  any  kind  or        character,  whether  in  cash,  securities,  or  other  rights  or  property,  shall  be  made  on        account of this Subordinated Note except to the extent such payment or other distribution        is  (i)  permitted  under  Section  7.01(r)  of  the  Receivables  Financing  Agreement  or  (ii)        made pursuant to clause (a), (b) or (c) of paragraph 6 of this Subordinated Note;               (b)   In  the  event  of  any  dissolution,  winding  up,  liquidation,  readjustment,        reorganization  or  other  similar  event  relating  to  the  Buyer,  whether  voluntary  or        involuntary, partial or complete, and whether in bankruptcy, insolvency or receivership        proceedings, or upon an assignment for the benefit of creditors, or any other marshalling        of the assets and liabilities of the Buyer or any sale of all or substantially all of the assets        of  the  Buyer  other  than  as  permitted  by  the  Purchase  and  Sale  Agreement  (such        proceedings  being  herein  collectively  called  “Bankruptcy  Proceedings”),  the  Senior        Interests shall first be paid and performed in full and in cash before the Originator shall        be  entitled  to  receive  and  to  retain  any  payment  or  distribution  in  respect  of  this        Subordinated  Note.   In  order  to  implement  the  foregoing:   (i)  all  payments and        distributions of any kind or character in respect of this Subordinated Note to which the        Holder  would  be  entitled  except  for  this clause  (b) shall  be  made  directly  to  the        Administrative Agent (for the benefit of the Senior Interest Holders); (ii) the Holder shall        promptly file a claim or claims, in the form required in any Bankruptcy Proceedings, for        the  full  outstanding  amount  of  this  Subordinated  Note,  and  shall  use  commercially        reasonable  efforts  to  cause  said  claim  or  claims  to  be  approved  and  all payments  and        other distributions in respect thereof to be made directly to the Administrative Agent (for        the benefit of the Senior Interest Holders) until the Senior Interests shall have been paid        and performed in full and in cash; and (iii) the Holder hereby irrevocably agrees that the        Administrative Agent (acting on behalf of the Lenders), may in the name of the Holder or        otherwise, demand, sue for, collect, receive and receipt for any and all such payments or        distributions,  and  file,  prove  and  vote  or  consent  in  any  such  Bankruptcy  Proceedings        with  respect  to  any  and  all claims of the Holder relating to  this  Subordinated Note, in        each  case  until  the  Senior  Interests  shall  have  been  paid  and  performed  in  full  and  in        cash;               (c)   In the event that the Holder receives any payment or other distribution of        any kind or character from the Buyer or from any other source whatsoever, in respect of        this  Subordinated  Note,  other  than  as  expressly  permitted  by  the  terms  of  this        Subordinated Note, such payment or other distribution shall be received in trust for the                                     Exhibit B-3   107601487\V-5                                                                    

 

                     Senior  Interest  Holders  and  shall  be  turned  over  by  the  Holder  to  the  Administrative       Agent (for the benefit of the Senior Interest Holders) forthwith.  The Holder will mark its       books and records so as clearly to indicate that this Subordinated Note is subordinated in       accordance  with  the  terms  hereof.   All  payments  and  distributions  received  by  the       Administrative Agent in respect of this Subordinated Note, to the extent received in or       converted into cash, may be applied by the Administrative Agent (for the benefit of the       Senior Interest Holders) first to the payment of any and all expenses (including Attorney       Costs) paid or incurred by the Senior Interest Holders in enforcing these Subordination       Provisions, or in endeavoring to collect or realize upon this Subordinated Note, and any       balance thereof shall, solely as between the Originator and the Senior Interest Holders, be       applied  by  the  Administrative  Agent  (in  the  order  of  application  set  forth  in  Section       3.01(a) of  the  Receivables  Financing  Agreement)  toward  the  payment  of  the  Senior       Interests; but as between the Buyer and its creditors, no such payments or distributions of       any kind or character shall be deemed to be payments or distributions in respect of the       Senior Interests;              (d)   Notwithstanding  any  payments  or  distributions  received  by  the  Senior       Interest Holders in respect of this Subordinated Note, while any Bankruptcy Proceedings       are pending the Holder shall not be subrogated to the then existing rights of the Senior       Interest Holders in respect of the Senior Interests until the Senior Interests have been paid       and performed in full and in cash.  If no Bankruptcy Proceedings are pending, the Holder       shall only be entitled to exercise any subrogation rights that it may acquire (by reason of       a payment or distribution to the Senior Interest Holders in respect of this Subordinated       Note) to the extent that any payment arising out of the exercise of such rights would be       permitted under Section 7.01(r) of the Receivables Financing Agreement;              (e)   These  Subordination  Provisions  are  intended  solely  for  the  purpose  of       defining the relative rights of the Holder, on the one hand, and the Senior Interest Holders       on the other hand.  Nothing contained in these Subordination Provisions or elsewhere in       this Subordinated Note is intended to or shall impair, as between the Buyer, its creditors       (other than the Senior Interest Holders) and the Holder, the Buyer’s obligation, which is       unconditional  and  absolute,  to  pay  the  Holder  the  principal  of  and  interest  on  this       Subordinated Note as and when the same shall become due and payable in accordance       with  the terms  hereof or to  affect  the relative rights  of the Holder and creditors of the       Buyer (other than the Senior Interest Holders);              (f)   The  Holder  shall  not,  until  the  Senior  Interests  have  been  paid  and       performed in full and in cash, (i) cancel, waive, forgive, transfer or assign, or commence       legal  proceedings  to  enforce  or  collect,  or  subordinate  to  any  obligation  of  the  Buyer,       howsoever  created,  arising  or  evidenced,  whether  direct  or  indirect,  absolute  or       contingent, or now or hereafter existing, or due or to become due, other than the Senior       Interests,  this  Subordinated  Note  or  any  rights  in  respect  hereof  or  (ii)  convert  this       Subordinated Note into an equity interest in the Buyer, unless the Holder shall, in either       case, have received the prior written consent of the Administrative Agent;              (g)   The  Holder  shall  not,  without  the  advance  written  consent  of  the       Administrative  Agent  and  each  Lender,  commence,  or  join  with  any  other  Person  in                                    Exhibit B-4  107601487\V-5                                                                                 

 

                     commencing,  any  Bankruptcy  Proceedings  with  respect  to  the  Buyer  until  at  least  one       year and one day shall have passed since the Senior Interests shall have been paid and       performed in full and in cash;              (h)   If, at any time, any payment (in whole or in part) of any Senior Interest is       rescinded  or  must  be  restored  or  returned  by  a  Senior  Interest  Holder  (whether  in       connection with  Bankruptcy Proceedings  or otherwise), these Subordination Provisions       shall continue to be effective or shall be reinstated, as the case may be, as though such       payment had not been made;              (i)   Each  of  the  Senior  Interest  Holders  may,  from  time  to  time,  at  its  sole       discretion, without notice to the Holder, and without waiving any of its rights under these       Subordination Provisions, take any or all of the following actions:  (i) retain or obtain an       interest  in  any  property  to  secure  any  of  the  Senior  Interests;  (ii)  retain  or  obtain  the       primary or secondary obligations of any other obligor or obligors with respect to any of       the Senior Interests; (iii) extend or renew for one or more periods (whether or not longer       than  the  original  period),  alter  or  exchange  any  of  the  Senior  Interests,  or  release  or       compromise any obligation of any nature with respect to any of the Senior Interests; (iv)       amend, supplement, amend and restate, or otherwise modify any Transaction Document;       and (v) release its security interest in, or surrender, release or permit any substitution or       exchange for all or any part of any rights or property securing any of the Senior Interests,       or  extend  or  renew  for  one  or  more  periods  (whether  or  not  longer  than  the  original       period), or release, compromise, alter or exchange any obligations of any nature of any       obligor with respect to any such rights or property;              (j)   The  Holder  hereby  waives:   (i)  notice  of  acceptance  of  these       Subordination  Provisions  by  any  of  the  Senior  Interest  Holders;  (ii)  notice  of  the       existence, creation, non-payment or non-performance of all or any of the Senior Interests;       and (iii) all diligence in enforcement, collection or protection of, or realization upon, the       Senior Interests, or any thereof, or any security therefor;              (k)   Each of the Senior Interest Holders may, from time to time, on the terms       and  subject to  the  conditions  set  forth  in  the  Transaction  Documents  to  which  such       Persons are party, but without notice to the Holder, assign or transfer any or all of the       Senior  Interests,  or  any  interest  therein;  and,  notwithstanding  any  such  assignment  or       transfer or any subsequent assignment or transfer thereof, such Senior Interests shall be       and remain Senior Interests for the purposes of these Subordination Provisions, and every       immediate and successive assignee or transferee of any of the Senior Interests or of any       interest  of  such  assignee  or  transferee  in  the  Senior  Interests  shall  be  entitled  to  the       benefits  of  these  Subordination  Provisions  to  the  same  extent  as  if  such  assignee  or       transferee were the assignor or transferor; and              (l)   These  Subordination  Provisions  constitute  a  continuing  offer  from  the       Holder  to  all  Persons  who  become  the  holders  of,  or  who  continue  to  hold,  Senior       Interests;  and  these  Subordination  Provisions  are  made  for  the  benefit  of  the  Senior       Interest Holders, and the Administrative Agent may proceed to enforce such provisions       on behalf of each of such Persons.                                    Exhibit B-5  107601487\V-5                                                                                 

 

         10.   General.  No failure or delay on the part of the Originator in exercising any power  or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any  such power or right preclude any other or further exercise thereof or the exercise of any other  power  or  right.   No  amendment,  modification  or  waiver  of,  or  consent  with  respect  to,  any  provision of this Subordinated Note shall in any event be effective unless (i) the same shall be in  writing and signed and delivered by the Buyer and the Holder and (ii) all consents required for  such  actions  under  the  Transaction  Documents  shall  have  been  received  by  the  appropriate  Persons.         11.   Maximum  Interest.  Notwithstanding  anything  in  this  Subordinated  Note  to  the  contrary, the Buyer shall never be required to pay unearned interest on any amount outstanding  hereunder  and  shall  never  be  required  to  pay  interest  on  the  principal  amount  outstanding  hereunder at a rate in excess of the maximum nonusurious interest rate that may be contracted  for, charged or received under applicable federal or state law (such maximum rate being herein  called the “Highest  Lawful Rate”).   If the effective rate of interest  which would  otherwise be  payable under this Subordinated Note would exceed the Highest Lawful Rate, or if the holder of  this  Subordinated  Note  shall  receive  any  unearned  interest  or  shall  receive  monies  that  are  deemed to constitute interest which would increase the effective rate of interest payable by the  Buyer under this Subordinated Note to a rate in excess of the Highest Lawful Rate, then (i) the  amount of interest which would otherwise be payable by the Buyer under this Subordinated Note  shall be reduced to the amount allowed by Applicable Law, and (ii) any unearned interest paid  by the Buyer or any interest paid by the Buyer in excess of the Highest Lawful Rate shall be  refunded to the Buyer.  Without limitation of the foregoing, all calculations of the rate of interest  contracted for, charged or received by the Originator under this Subordinated Note that are made  for the purpose of determining whether such rate exceeds the Highest Lawful Rate applicable to  the  Originator  (such  Highest  Lawful  Rate  being  herein called  the  “Originator’s  Maximum  Permissible  Rate”)  shall  be  made,  to  the  extent  permitted  by  usury  laws  applicable  to  the  Originator  (now  or  hereafter  enacted),  by  amortizing,  prorating  and  spreading  in  equal  parts  during the actual period during which any amount has been outstanding hereunder all interest at  any time contracted for, charged or received by the Originator in connection herewith.  If at any  time and from time to time (i) the amount of interest payable to the Originator on any date shall  be computed at  the  Originator’s Maximum  Permissible Rate pursuant  to  the provisions of the  foregoing sentence and (ii) in respect of any subsequent interest computation period the amount  of interest otherwise payable to the Originator would be less than the amount of interest payable  to the Originator computed at the Originator’s Maximum Permissible Rate, then the amount of  interest payable to the Originator in respect of such subsequent interest computation period shall  continue to be computed at the Originator’s Maximum Permissible Rate until the total amount of  interest payable to the Originator shall equal the total amount of interest which would have been  payable to the Originator if the total amount of interest had been computed without giving effect  to the provisions of the foregoing sentence.         12.   No Negotiation.  This Subordinated Note is not negotiable.         13.   Governing  Law.   THIS  SUBORDINATED  NOTE,  INCLUDING  THE  RIGHTS  AND  DUTIES  OF  THE  PARTIES  HERETO,  SHALL  BE  GOVERNED  BY,  AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW  YORK  (INCLUDING  SECTIONS  5-1401  AND  5-1402  OF  THE  GENERAL                                     Exhibit B-6   107601487\V-5                                                                    

 

   OBLIGATIONS LAW OF THE STATE OF NEW YORK, BUT WITHOUT REGARD TO  ANY OTHER CONFLICTS OF LAW PROVISIONS THEREOF).         14.   Captions.  Paragraph captions used in this Subordinated Note are for convenience  only  and  shall  not  affect  the  meaning  or  interpretation  of  any  provision  of  this  Subordinated  Note.                               [Signature Page Follows]                                         Exhibit B-7   107601487\V-5                                                                    

 

         IN WITNESS WHEREOF, the Buyer has caused this Subordinated Note to be executed  as of the date first written above.                                       AIT RECEIVABLES LLC,                                      as the Buyer                                       By:                                                                       Name:                                                                     Title:                                                                       Exhibit B-8   107601487\V-5                                                                    

 

                                                                         Exhibit C                          FORM OF JOINDER AGREEMENT         THIS JOINDER AGREEMENT, dated as of ___________, 20___ (this “Agreement”) is  executed  by__________,  a  ______________  organized  under  the  laws  of  __________  (the  “Additional Originator”), with its principal place of business located at __________.                                  BACKGROUND:         A.    AIT RECEIVABLES LLC, a Delaware limited liability company (the “Buyer”)  and  the  various  entities  from  time  to  time  party  thereto,  as  Originators  (collectively,  the  “Originators”), have entered into that certain Purchase and Sale Agreement, dated as of August  31,  2018 (as  amended,  restated,  supplemented  or  otherwise  modified  through  the  date  hereof,  and as it may be further amended, restated, supplemented or otherwise modified from time to  time, the “Purchase and Sale Agreement”).         B.    The Additional Originator desires to become an Originator pursuant to Section 4.3  of the Purchase and Sale Agreement.         NOW,  THEREFORE,  in  consideration  of  the  foregoing  and  other  good  and  valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby  acknowledged,  the  Additional  Originator hereby agrees as follows:         SECTION 1.  Definitions.  Capitalized terms used in this Agreement and not otherwise  defined herein shall have the meanings assigned thereto in the Purchase and Sale Agreement or  in the Receivables Financing Agreement (as defined in the Purchase and Sale Agreement).         SECTION 2.  Transaction Documents.  The Additional Originator hereby agrees that it  shall be bound by all of the terms, conditions and provisions of, and shall be deemed to be a  party to (as if it were an original signatory to), the Purchase and Sale Agreement and each of the  other relevant Transaction Documents.  From and after the later of the date hereof and the date  that the Additional Originator has  complied with all of the requirements  of Section 4.3 of the  Purchase and Sale Agreement, the Additional Originator shall be an Originator for all purposes  of  the  Purchase  and  Sale  Agreement  and  all  other  Transaction  Documents.   The  Additional  Originator hereby acknowledges that it has received copies of the Purchase and Sale Agreement  and the other Transaction Documents.         SECTION 3.  Representations and Warranties.  The Additional Originator hereby makes  all of the representations and warranties set forth in Article V (to the extent applicable) of the  Purchase  and Sale Agreement as  of the date hereof (unless  such representations  or warranties  relate  to  an  earlier  date,  in  which  case  as  of  such  earlier  date),  as  if  such  representations  and  warranties were fully set forth herein.  The Additional Originator hereby represents and warrants  that  its  “location”  (as  defined  in  the  applicable  UCC)  is  [____________________],  and  the  offices  where  the  Additional  Originator  keeps  all  of  its  books  and  records  concerning  the  Receivables and Related Security is as follows:                                     Exhibit C-1   107601487\V-5                                                                    

 

               ___________________________              ___________________________              ___________________________         SECTION 4.  Miscellaneous.   This  Agreement,  including  the  rights  and  duties  of  the  parties hereto, shall be governed by, and construed in accordance with, the laws of the State of  New York (including Sections 5-1401 and 5-1402 of the General Obligations Law of the State of  New York, but without regard to any other conflicts of law provisions thereof).  This Agreement  is executed by the Additional Originator for the benefit of the Buyer, and its assigns, and each of  the foregoing parties may rely hereon.  This Agreement shall be binding upon, and shall inure to  the benefit of, the Additional Originator and its successors and permitted assigns.                               [Signature Pages Follow]                                      Exhibit C-2   107601487\V-5                                                                    

 

         IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed by  its duly authorized officer as of the date and year first above written.                                       [[NAME OF ADDITIONAL ORIGINATOR]],                                      as the Additional Originator                                       By:                                                                       Name:                                                                     Title:                                 Consented to:   AIT RECEIVABLES LLC,  as the Borrower   By:                                   Name:                                 Title:                                 Acknowledged by:   PNC        BANK,         NATIONAL  ASSOCIATION,  as  the  Administrative  Agent  and  a  Group  Agent   By:                                   Name:                                 Title:                                 REGIONS BANK,  as a Group Agent   By:                                   Name:                                 Title:                                                                    Exhibit C-3   107601487\V-5                                                                    

 

   APPLIED                INDUSTRIAL  TECHNOLOGIES, INC.,  as the Servicer   By:                                   Name:                                 Title:                                 By:                                   Name:                                 Title:                                                                       Exhibit C-4   107601487\V-5

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