UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) - June 26, 2015
 
SIFCO Industries, Inc.
(Exact name of registrant as specified in its charter)
 
 

 
 
 
 
 
Ohio
 
1-5978
 
34-0553950
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
 
970 East 64th Street, Cleveland Ohio
 
44103
(Address of principal executive offices)
 
(ZIP Code)
Registrant’s telephone number, including area code: (216) 881-8600
N.A.
(Former name or former address, if changed since last report.)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
 

o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






Item 1.01
Entry into a Material Definitive Agreement.
On June 26, 2015, SIFCO Industries, Inc. (the “Company”) entered into a Credit and Security Agreement (the “Credit Agreement”), with KeyBank National Association and the lenders from time to time party thereto.

The new facility has a term of five years and is comprised of (i) a revolving credit facility in a maximum amount of up to $25 million, which reduces to $20 million on January 1, 2016, and (ii) a term loan of $20 million. Amounts borrowed under the new facility will be used to repay the amounts outstanding under the Company’s prior credit facility with Fifth Third Bank, for the acquisition of C Blade S.pA. Forging & Manufacturing, and for working capital and general corporate purposes. The new facility also has an accordion feature which allows the Company to increase the availability by up to $15 million upon the consent of the existing lenders or upon additional lenders being joined to the facility. Amounts borrowed under the credit facility are secured by substantially all the assets of the Company and its U.S. subsidiaries and a pledge of 65% of the stock of its non-U.S. subsidiaries. Borrowings will bear interest at the LIBOR rate, prime rate, or the eurocurrency reference rate depending on the type of loan requested by the Company, in each case plus the applicable margin as set forth in the Credit Agreement. The Credit Agreement contains certain financial covenants that require the Company to maintain less than a maximum debt to EBITDA ratio and more than a minimum fixed charge coverage ratio, as well as other customary terms and conditions.

The foregoing description of the Credit Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Credit Agreement attached to this Form 8-K as Exhibit 4.1 and incorporated herein by reference.

As previously reported in its Current Report on Form 8-K filed on March 17, 2015, the Company entered into a Share Purchase Agreement (the “Share Purchase Agreement”) to purchase all of the outstanding equity of C Blade S.p.A. Forging & Manufacturing (“C Blade”), located in Maniago, Italy, from Riello Investimenti Partners SGR S.p.A., Giorgio Visentini, Giorgio Frassini, Giancarlo Sclabi and Matteo Talmassons. On June 30, 2015, the Company entered into an amendment to the Share Purchase Agreement (the “Amendment”). The Amendment states that the possession of the C Blade shares would be given to the purchaser at 12:01am on July 1, 2015. For a more detailed description of the transaction, see 2.01 - Completion of Acquisition or Disposal of Assets.

The Company issued a press release announcing the closing of the C Blade acquisition and the entry into the Credit Agreement. The full text of the press release issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.

Item 2.01
Completion of Acquisition or Disposal of Assets.
On July 1, 2015, the Company, through its wholly-owned subsidiary, SIFCO Italy Holdings S.R.L., completed the purchase of all of the outstanding equity of C Blade. The purchase price for the C Blade shares was approximately $17.2 million payable in cash, net of the current indebtedness of C Blade assumed by the Company, and subject to certain adjustments related principally to the delivered working capital level as provided under the Share Purchase Agreement. The foregoing description of the Share Purchase Agreement and the Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the Share Purchase Agreement and the Amendment attached to this Form 8-K as Exhibits 2.1 and 2.2 and incorporated herein by reference.

Item 2.03
Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of the Registrant.
The disclosure in Item 1.01 regarding the Credit Agreement, and Exhibit 4.1 of this report are incorporated herein by reference.

Item 9.01
Financial Statements and Exhibits.
(d)     Exhibits

2.1
Share Purchase Agreement, dated March 16, 2015, by and among the Company, Riello Investimenti Partners SGR S.p.A., Giorgio Visentini, Giorgio Frassini, Giancarlo Sclabi and Matteo Talmassons.*

2.2
Amendment to Share Purchase Agreement, dated June 30, 2015, by and among the Company, Riello Investimenti Partners SGR S.p.A., Giorgio Visentini, Giorgio Frassini, Giancarlo Sclabi and Matteo Talmassons.

4.1
Credit and Security Agreement, dated June 26, 2015, by and among the Company, KeyBank National Association and the lenders from time to time party thereto.






99.1
Press Release, dated July 1, 2015.

*Schedules omitted pursuant to Item 601(b)(2) of Regulation S-K under the Securities Exchange Act of 1934. The Company agrees to furnish a supplemental copy of any omitted schedule to the SEC upon request.
 
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 

 
 
 
 
 
SIFCO Industries, Inc.
 
 
(Registrant)
 
 
Date: July 2, 2015
 
 
/s/ Salvatore Incanno
 
 
Salvatore Incanno
 
 
Vice President - Finance and Chief Financial Officer
 
 
(Principal Financial Officer)
 
    








By courier anticipated by email
    



Milan, March 16, 2015




To:

SIFCO Industries, Inc.

970 East 64th Street

Cleveland, Ohio 44103

To the kind attention of the Chief Executive Officer Mr. Michael Lipscomb

Email: mlipscomb@sifco.com





RE: Proposal of Share Purchase Agreement




Dear Sirs,    

We make reference to our recent discussions in order to propose you to enter into a share purchase
agreement pursuant to the terms and conditions set forth herein below.



* * *










Share Purchase Agreement
by and between
Riello Investimenti Partners SGR S.p.A.
Giorgio Visentini
Giorgio Frassini
Giancarlo Sclabi
Matteo Talmassons
and
SIFCO Industries, Inc.






Table of contents

1.    DEFINITIONS – INTERPRETATION – ANNEXES    5
2.    SUBJECT MATTER AND PURCHASE PRICE    12
3.    CONDITION PRECEDENT TO THE CLOSING    16
4.    CLOSING    18
5.    COVENANTS OF THE PARTIES    19
6.    REPRESENTATIONS AND WARRANTIES OF THE SELLERS    22
7.    REPRESENTATIONS AND WARRANTIES OF PURCHASER    29
8.    INDEMNIFICATION    30
9.    MISCELLANEA    35





3




SHARE PURCHASE AGREEMENT
This share purchase agreement (the “ Agreement ”) is entered into by and among:
I.
Riello Investimenti Partners SGR S.p.A. , a company incorporated under the laws of Italy, having its registered office in Milano, Via Melone 2, registered with the Companies Register of Milano, registration number and tax code n. 04129580280, corporate capital of Euro 1,000,000.00 fully paid-in, registered with n. 93 to the “Albo delle società di gestione del risparmio” held by Banca d’Italia pursuant to article 35 D. LGs 58/1998 (“ RIP ”), in the name and on behalf of the fund “GATE” (“ Fund ”), managed by RIP pursuant to the “regolamento di gestione” approved by Banca d’Italia on March 22, 2007, hereby represented by Luigi Terranova, duly authorized pursuant to resolution of the Board of Directors of RIP, attached hereto as Annex I ;
II.
Giorgio Visentini , born in Venezia (Italy), on February 17, 1948, fiscal code VSNGRG48B17L736T (“ GV ”), hereby represented by Giancarlo Sclabi, duly authorized pursuant to a power of attorney, attached hereto as Annex II ;
III.
Giorgio Frassini , born in Padova (Italy), on January 22, 1947, fiscal code FRSGRG47A22G224E (“ GF ”) hereby represented by Giancarlo Sclabi, duly authorized pursuant to a power of attorney, attached hereto as Annex III ;
IV.
Giancarlo Sclabi , born in Losanna (Switzerland), on October 23, 1958, fiscal code SCLGCR58R23Z133P (“ GS ”);
V.
Matteo Talmassons , born in Udine (Italy), on August 15, 1975, fiscal code TLMMTT75M15L483V (“ MT ”) hereby represented by Giancarlo Sclabi, duly authorized pursuant to a power of attorney, attached hereto as Annex V ;
(RIP, the Fund, GV, GF, GS and MT are, also defined, collectively, as the “ Sellers ” and, each of them, individually, as a “ Seller ”)
- on one side -
VI.
SIFCO Industries, Inc. , a company incorporated under the laws of the State of Ohio, or an Affiliate to be formed by SIFCO Industries, Inc. (“ Purchaser ”), hereby represented by Michael Lipscomb, duly authorized pursuant to resolution of the Board of Directors of Purchaser, attached hereto as Annex VI ;
- on the other side -
(Sellers and Purchaser are also defined, collectively, as the “Parties” and each of them, individually, as a “ Party ”).
WHEREAS
(A)
The Sellers own n. 670,112 shares, representing the 95.73% of the corporate capital of C Blade S.p.A. Forging & Manufacturing, an Italian joint stock company ( società per azioni ) active in the field of the international turbine blades manufacturing, with registered office in Maniago (PN), Via Genova n. 1, registered with the Companies Register of Pordenone, registration number and tax code n. 01391770938, corporate capital of Euro 3,500,000.00 fully paid-in (the “ Company ”), and divided into n. 700,000 shares, each share having a par value of Euro 5.00.
(B)
The corporate capital of the Company is divided among the Sellers as follow:




(i)
RIP, on behalf of the Fund, with n. 576,295 shares, with an aggregate par value of Euro 2,881,475.00, incorporated in the share certificates n. 1 and 4, representing the 82.33% of the corporate capital of the Company;
(ii)
GV with n. 53,610 shares, with an aggregate par value of Euro 268,050.00, incorporated in the share certificate n. 2, representing the 7,66% of the corporate capital of the Company;
(iii)
GF with n. 29.485 shares, with an aggregate par value of Euro 147,425.00, incorporated in the share certificate n. 3, representing the 4,21% of the corporate capital of the Company;
(iv)
GS with n. 5.361 shares, with an aggregate par value of Euro 26,805.00, incorporated in the share certificate n. 5, representing the 0,77% of the corporate capital of the Company;
(v)
MT n. 5.361 shares, with an aggregate par value of Euro 26,805.00, incorporated in the share certificate n. 6, representing the 0,77% of the corporate capital of the Company;
(the above are collectively defined as the “ Company Shares ”).
(C)
The Company owns n. 29.888 shares, with an aggregate par value of Euro 149,440.00, incorporated in the share certificate n. 7, representing the 4,27% of the corporate capital of the Company (the “ Company Own Shares ”).
(D)
Without prejudice of the provisions of Section 6.24.2, the Purchaser has conducted a thorough and accurate business, financial, legal, accounting and tax advisors due diligence on the information and documents provided by the Sellers and their consultants during the due diligence exercise and the negotiation of this Agreement.
(E)
The Purchaser is willing to purchase, and the Sellers are willing to sell to the Purchaser, the Company Shares at the terms and conditions provided for in this Agreement.
NOW THEREFORE, in consideration of the foregoing and the above premises which represent a substantial part of this Agreement the Parties agree as follows.
1.
DEFINITIONS – INTERPRETATION – ANNEXES
1.1
Definitions
In this Agreement, and in the Recitals and Annexes hereto, terms not otherwise defined, shall have the meanings ascribed to them below.
1.1.1
2013 Financial Statements ” means the financial statements as defined in Article 2423 of the ICC as of December 31, 2013, prepared in accordance with the accounting principles as historically applied by the Company, and attached hereto as Annex 1.1.1 .
1.1.2
2014 Italian GAAP Financial Statements ” means the financial statements prepared in accordance with Italian GAAP pursuant to Section 5.3 hereof to be delivered by the Sellers pursuant to Section 3.1.2 and it will be attached hereto as Annex 1.1.2 at the time of Closing, which shall include a balance sheet, income statement, and statement of cash flows.
1.1.3
2014 U.S. GAAP Financial Statements ” means the 2014 Italian GAAP Financial Statements as conformed to U.S. GAAP pursuant to Section 5.3.
1.1.4
Adjusted EBITDA ” means earnings before interest, taxes, depreciation and amortization as of December 31, 2014 as resulting from the 2014 Italian GAAP Financial Statements




(and determined by using the Italian GAAP) plus or minus adjustments as defined in Annex 1.1.4 .
1.1.5
Affiliate ” means, with respect to any Person, an individual, corporation, partnership, firm, association, unincorporated organization or other entity directly or indirectly controlling, controlled by, or under common control with, such Person.
1.1.6
Agreement ” means this Agreement, including the Recitals herein and the Annexes hereto, as subsequently amended and modified.
1.1.7
Antitrust Authority ” means the Italian Antitrust Authority (i.e., Autorità Garante della Concorrenza e del Mercato ) and/or the European Commission.
1.1.8
Audit ” has the meaning set forth under Section 3.1.3.
1.1.9
Bank Guarantee ” means a non-first demand guarantee issued by a bank or an insurance company, having a duration of 4 (four) years and for the maximum guaranteed amount equal to Euro 4,000,000.00, substantially in the form attached hereto as Annex 1.1.9.
1.1.10
Business Day ” means any calendar day other than Saturday, Sunday and any other day on which credit institutions are authorized or required to close in Milano and Pordenone.
1.1.11
CAP ” has the meaning set forth under Section 8.2.3.
1.1.12
Closing ” means the carrying out of the activities necessary, under applicable Law, for the purchase and sale of the Company Shares, free and clear of any Encumbrance, the payment of the Purchase Price and, in general, the execution and exchange of all documents and agreements and the performance and consummation of all the obligations and transactions required to be executed, exchanged, performed or consummated on the Closing Date pursuant to Article 4.
1.1.13
Closing Adjustment ” has the meaning set forth under Section 2.3.1(c).
1.1.14
Closing Date ” shall mean a date ten (10) Business Days after the fulfillment (or waiver) of the last of the Purchaser’s Conditions Precedent under Sections 3.1.2 and 3.1.3 or such other date as may be mutually agreed by the Parties.
1.1.15
Closing Indebtedness ” the Indebtedness of the Company as of 11:59 p.m. on the day immediately preceding the Closing Date.
1.1.16
Closing Indebtedness Statement ” has the meaning set forth under Section 2.3.2(b).
1.1.17
Closing Working Capital ” means the Working Capital of the Company determined as of 11:59 p.m. on the day immediately preceding the Closing Date.
1.1.18
Closing Working Capital Statement ” has the meaning set forth under Section 2.3.1(d).
1.1.19
Company ” has the meaning set forth in Recital (A).
1.1.20
Company Own Shares ” has the meaning set forth in Recital (C).
1.1.21
Company Shares ” has the meaning set forth in Recital (B).
1.1.22
Direct Claim ” has the meaning set forth under Section 8.3.2.




1.1.23
Disputed Amounts ” has the meaning set forth under Section 2.3.1(f)(iii).
1.1.24
Employee ” has the meaning set forth under Section 6.15.1.
1.1.25
Encumbrance ” means any security interest, pledge, mortgage, lien, charge, encumbrance or restriction on the use, voting or transfer.
1.1.26
Escrow Account ” means the bank account opened by RIP, also in the name and on behalf of the Sellers, with the Escrow Agent and governed by the Escrow Agreement.
1.1.27
Escrow Agent ” means Intesa Sanpaolo S.p.A.
1.1.28
Escrow Agreement ” means the Escrow Agreement among Sellers, Purchaser, and Escrow Agent to be executed on Closing Date in a form substantially identical to the draft attached hereto an Annex 1.1.28 .
1.1.29
Escrow Amount ” means an amount equal to 15% of the Purchase Price, which is to be deposited with the Escrow Agent and held in escrow pursuant to the Escrow Agreement and which is to be held to satisfy (i) any Post-Closing Adjustment and the Final Indebtedness Adjustment owed to Purchaser and (ii) indemnification obligation of Sellers pursuant to Section 8 of this Agreement, to the extent provided for and pursuant to the Escrow Agreement.
1.1.30
Estimated Closing Indebtedness ” has the meaning set forth under Section 2.3.2(a).
1.1.31
Estimated Closing Indebtedness Statement ” has the meaning set forth under Section 2.3.2(a).
1.1.32
Estimated Closing Working Capital ” has the meaning set forth under Section 2.3.1(b).
1.1.33
Estimated Closing Working Capital Statement ” has the meaning set forth under Section 2.3.1(b).
1.1.34
Final Indebtedness Adjustment ” has the meaning set forth under Section 2.3.2(c).
1.1.35
Fund ” has the meaning set forth in the preamble of this Agreement.
1.1.36
Fundamental Representations ” has the meaning set forth under Section 8.2.1(b).
1.1.37
GF ” has the meaning set forth in the preamble of this Agreement.
1.1.38
Governmental Authority ” means any legislative, executive or judicial governmental entity (international, foreign, state or local) or any department, commission, board, agency, bureau, official or other regulatory, administrative or judicial authority thereof.
1.1.39
GS ” has the meaning set forth in the preamble of this Agreement.
1.1.40
GV ” has the meaning set forth in the preamble of this Agreement.
1.1.41
ICC ” means the Italian civil code, as approved by Royal Decree no. 262 of March 16, 1942, as subsequently amended and integrated.
1.1.42
Indebtedness ” means, with respect to the Company, those obligations listed on Annex 1.1.42 .




1.1.43
Indemnification Claim ” has the meaning set forth under Section 8.3.2.
1.1.44
Indemnification Notice ” has the meaning set forth under Section 8.3.2.
1.1.45
Independent Accountant ” has the meaning set forth under Section 2.3.1(f)(iii).
1.1.46
Intellectual Property Rights ” means trademarks, service mark, trade and business name, right in designs, licenses, patents, software licenses, copyrights, and rights in know-how in each case whether registered or unregistered and including applications for the grant of any of the foregoing.
1.1.47
Interim Management Accounts ” means, collectively, (i) the pro-forma management accounts of the Company as of January 31, 2015 attached hereto as Annex 1.1.47 and (ii) an update of the pro-forma management accounts of the Company attached hereto as Annex 1.1.47 (to be delivered by the Sellers to the Purchaser pursuant to Section 5.3.5) as of (a) the last day of the month preceding the month in which the Closing shall occur, in case the Closing Date will fall after the 20 th of a month or (b) the last day of the second month preceding the month in which the Closing shall occur, in case the Closing Date will fall between the 1 st and the 20 th (included) of a month.
1.1.48
Interim Period ” has the meaning set forth under Section 5.2.1.
1.1.49
Italian GAAP ” means the accounting principles set forth in the ICC as defined and interpreted by OIC (“ Organismo Italiano Contabilitá ”) and by the Italian Accountants’ Organization (“ Consigli Nazionali dei Dottori Commercialisti e dei Ragionieri ”) as in effect as of the relevant time.
1.1.50
Law ” means any national, federal, state, provincial or local law, statute, ordinance, rule, regulation, code, order, judgment, injunction or decree.
1.1.51
Loss ” means any actual and direct damage within the meaning of Article 1223 of the ICC, with the express exclusion of any indirect or consequential damage.
1.1.52
Material Adverse Effect ” means with respect to any Party, any event, occurrence, fact, condition or change that: (a) is, individually or in the aggregate, materially adverse to the business, results of operations, condition (financial or otherwise) or assets of such Party; (b) is, individually or in the aggregate, materially adverse to the ability of such Party to consummate the transactions contemplated hereby on a timely basis; or (c) results in material damages to, the destruction of, or the long-term closure of any manufacturing facility of the Company; provided, however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition or change, directly or indirectly, arising out of or attributable to: (i) general (domestic, foreign or global) economic, business or political conditions; (ii) conditions generally affecting the industry in which such Party operates; (iii) any changes in financial or securities markets in general; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required or permitted by this Agreement; (vi) any changes in applicable Laws or accounting rules, including Italian GAAP; or (vii) the public announcement, pendency or completion of the transactions contemplated by this Agreement; provided further, however, that any event, occurrence, fact, condition or change referred to in clauses (i) through (iv) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred to the extent that such event, occurrence, fact, condition or change has a materially disproportionate effect on such Party compared to other participants in the industry in which such Party conducts its business;




1.1.53
Material Contracts ” has the meaning set forth under Section 6.14.1.
1.1.54
Minimum EBITDA Threshold ” has the meaning set forth under Section 2.2(a)(i).
1.1.55
MT ” has the meaning set forth in the preamble of this Agreement.
1.1.56
Net Return to Sellers ” means the Purchase Price minus Estimated Closing Indebtedness plus/minus the Closing Adjustment.
1.1.57
Party(ies) ” has the meaning set forth in the preamble of this Agreement.
1.1.58
Permits ” has the meaning set forth under Section 6.16.
1.1.59
Person ” means any individual, corporation, partnership, firm, association, unincorporated organization or other entity.
1.1.60
Post-Closing Adjustment ” has the meaning set forth under Section 2.3.1(e).
1.1.61
Purchase Price ” has the meaning set forth under Section 2.2.
1.1.62
Purchaser ” has the meaning set forth in the preamble of this Agreement.
1.1.63
Purchaser’s Conditions Precedent ” has the meaning set forth under Section 3.1.
1.1.64
Real Properties ” has the meaning set forth under Section 6.11.2.
1.1.65
Resolution Period ” has the meaning set forth under Section 2.3.1(f)(ii).
1.1.66
Review Period ” has the meaning set forth under Section 2.3.1(f)(i).
1.1.67
RIP ” has the meaning set forth in the preamble of this Agreement.
1.1.68
Seller(s) ” has the meaning set forth in the preamble of this Agreement.
1.1.69
Sellers’ Condition Precedent ” has the meaning set forth under Section 3.4.
1.1.70
Sellers’ Knowledge ” shall mean the knowledge of Luigi Terranova, Giorgio Visentini, Giorgio Frassini, Giancarlo Sclabi, Matteo Talmassons, Andrea Pessotto, Corrado Campolin, Gianluca Toneatto, Fabio Pellegrino, Marco Vamerin, Barbara Bravin, Dennis Facchin, Caroline Coutrout, Andrea Nadalutti, or Giancarlo Pagnutti, based on the position and powers of each of them in the Company.
1.1.71
Signing Date ” shall mean the date of execution of this Agreement by exchange of correspondence.
1.1.72
Statement of Objections ” has the meaning set forth under Section 2.3.1(f)(ii).
1.1.73
Target Working Capital ” means the average Working Capital of the twelve calendar months in 2014.
1.1.74
Tax ” means any foreign, federal, state or local income, gross receipts, license, payroll, employments, excise, severance, stamp, occupation, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use transfer, registration, value added, estimated, or other tax




imposed by any Governmental Authority and any additions to tax, fines, penalties payable in connection therewith.
1.1.75
Term ” has the meaning set forth under Section 3.1.
1.1.76
Third Party Claim ” has the meaning set forth under Section 8.3.2.
1.1.77
Threshold ” has the meaning set forth under Section 8.2.2(b).
1.1.78
Undisputed Amounts ” has the meaning set forth under Section 2.3.1(f)(iii).
1.1.79
U.S. GAAP ” means United States generally accepted accounting principles in effect from time to time.
1.1.80
Working Capital ” means the current assets set forth on Annex 1.1.80 minus the current liabilities set forth on Annex 1.1.80 , determined in accordance with Italian GAAP.
1.2
Interpretative Rules
Unless otherwise expressly provided, for the purposes of this Agreement the following rules of interpretation shall apply.
(a)
Interpretation . All the Parties have participated in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no presumption or burden of proof shall arise favouring or disfavouring any Party by virtue of the authorship of any provisions of this Agreement.
(b)
Gender and number . Any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa.
(c)
Headings . The provisions of the table of contents, the division of this Agreement into Articles, Section and other subsections and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement.
(d)
Sections and Articles . All references in this Agreement to any “Section” and/or any “Article” are to the corresponding section and/or article, respectively, of this Agreement, unless otherwise specified.
(e)
Control . The term “control” has the meaning ascribed to it in Article 2359 of the ICC and the words “controlling” and “controlled” shall be construed accordingly.
(f)
Annexes . The Annexes attached to this Agreement shall be, and shall be construed and interpreted as, an integral part of this Agreement.
1.3
Annexes
The following Annexes are attached to, and incorporated in, and form part of, this Agreement:
Annex I :        Powers of RIP’s representative
Annex II :        Powers of GV’s representative
Annex III :        Powers of GF’s representative




Annex V :        Powers of MT’s representative
Annex VI :        Powers of Purchaser’s representative
Annex 1.1.1 :          2013 Financial Statements
Annex 1.1.4 :          Adjusted EBITDA
Annex 1.1.9 :          Bank Guarantee
Annex 1.1.28 :        Escrow Agreement
Annex 1.1.42 :        Indebtedness
Annex 1.1.47 :          Interim Management Accounts
Annex 1.1.80 :        Working Capital
Annex 2.3.1(a) :        Inventory Procedures
Annex 6.11.2 :        Real Properties    
Annex 6.11.3 :        Plant, machineries and equipment
Annex 6.12.2 :        Tax
Annex 6.13 :        Litigation
Annex 6.14.1 :        Material Contracts
Annex 6.14.3 :        Material Contracts with change of control clauses
Annex 6.15.1 :        Employees
Annex 6.15.2 :        Social security and welfare charges
Annex 6.15.3 :        Compensation and benefit of the executives
Annex 6.15.5 :        Labor disputes; labor strike and stoppage
Annex 6.15.9 :        INAIL
Annex 6.16 :        Permits
Annex 6.18 :        Insurance polices
Annex 6.19 :        Intellectual Property Rights
Annex 6.20 :        Customers
Annex 6.21 :        Suppliers
Annex 8.1.1 :        Specific Indemnification Matters.




2.
SUBJECT MATTER AND PURCHASE PRICE
2.1
Sale and purchase of the Company Shares
2.1.1
Upon the terms and subject to the conditions of this Agreement, Sellers undertake to sell and transfer to the Purchaser, and the Purchaser hereby undertakes to purchase and acquire from the Sellers, effective as of the Closing Date and upon the consummation of the Closing, the Company Shares, free and clear from any Encumbrance, in consideration of the Purchase Price set forth in this Agreement. By executing this Agreement each Seller irrevocably and unconditionally waives its pre-emption rights over the portion of the Company Shares owned by the other Sellers and gives its consent to the transfer of the Company Shares to the Purchaser at the terms and conditions set forth herein and undertakes to cause the Board of Directors of the Company to approve the transfer pursuant to section 10 of the By-laws, if applicable.
2.1.2
The Sellers acknowledge and agree that the Purchaser is interested and willing to purchase all and not less than all the Company Shares. Should any of the Sellers fail to consummate the Closing and to sell its Company Shares, the Purchaser shall not be obliged to purchase the remaining Company Shares. Therefore, each Seller hereby guarantees the correct and due fulfillment by the other Sellers of each and all obligations provided herein, also to the extent and effect of art. 1381 of the ICC.
2.2
Purchase Price
(a)
The purchase price for the Company Shares has been agreed by the Parties as follows (the “ Purchase Price ”):
(i)
If the Adjusted EBITDA is less than 4,800,000 Euros (the “ Minimum EBITDA Threshold ”), the Purchaser shall not be obligated to proceed with the Closing and to consummate the transactions contemplated by this Agreement;
(ii)
If the Adjusted EBITDA is at least 4,800,000 Euros but less than 4,900,000 Euros, the Purchase Price shall be 25,000,000 Euros;
(iii)
If the Adjusted EBITDA is at least 4,900,000 Euros but less than 5,000,000 Euros, the Purchase Price shall be 25,500,000 Euros;
(iv)
If the Adjusted EBITDA is at least 5,000,000 Euros but less than 5,100,000 Euros, the Purchase Price shall be 26,000,000 Euros;
(v)
If the Adjusted EBITDA is 5,100,000 Euros or more, the Purchase Price shall be 26,500,000 Euros.
(b)
At least 5 (five) Business Days before the Closing, Sellers shall deliver to Purchaser the Adjusted EBITDA, prepared with assistance of PricewaterhouseCoopers, along with reasonable supporting documentation. On or prior to the Closing Date, Purchaser may object to the Adjusted EBITDA calculation by delivering to Sellers a written statement setting forth Purchaser’s objections in reasonable detail, indicating each disputed item or amount and the basis for Purchaser’s disagreement therewith. Purchaser and Sellers shall, with assistance from PricewaterhouseCoopers, negotiate in good faith to resolve such objections.




(c)
Subject to the adjustments prescribed in Section 2.3, the Purchase Price shall be paid divided among the Sellers as follow:
(i)      86% (eighty-six per cent) to RIP;
(ii)      8% (eight per cent) to GV;
(iii)      4.40% (four point forty per cent) to GF;
(iv)      0.80% (zero point eighty per cent) to GS;
(v)      0.80% (zero point eighty per cent) to MT.
2.3
Purchase Price Adjustment
2.3.1
Working Capital Adjustment
(a)
On Closing Date the Sellers shall deliver to the Purchaser a printed copy of the inventory as of 48 hours prior to Closing Date. The day after Closing, the Sellers will conduct a joint physical count of the inventory of the Company in order to verify that the inventory showed in the printed copy exists. Representatives of the Purchaser and from Grant Thornton will observe the conduct of the physical inventory. The physical count will be done based on the procedures attached hereto as Annex 2.3.1(a) . The Parties agree that the inventory already recorded in the 2014 Italian GAAP Financial Statements - prepared pursuant to Section 5.3 - which is still physically exiting at Closing Date will have the same value indicated in the 2014 Italian GAAP Financial Statements and the new inventory will be valued by applying the same Italian GAAP principles used for the preparation of the 2014 Italian GAAP Financial Statements.
(b)
At least 5 (five) Business Days before the Closing, Sellers shall, with assistance from PricewaterhouseCoopers, prepare and deliver to Purchaser a statement setting forth their good faith estimate of Closing Working Capital (the “ Estimated Closing Working Capital ”), which statement shall contain a calculation of Estimated Closing Working Capital (the “ Estimated Closing Working Capital Statement ”). The Estimated Closing Working Capital Statement shall be prepared in accordance with Italian GAAP using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the 2014 Italian GAAP Financial Statements. In determining the Estimated Closing Working Capital, the Parties agree that the estimate of the inventory value shall be made as provided in Section 2.3.1(a) above.
(c)
The “ Closing Adjustment ” shall be an amount equal to the Estimated Closing Working Capital minus Target Working Capital. If the Closing Adjustment is a positive number, the Purchase Price shall be increased by the amount of the Closing Adjustment. If the Closing Adjustment is a negative number, the Purchase Price shall be reduced by the amount of the Closing Adjustment.
(d)
Within 60 (sixty) days after the Closing Date, Purchaser shall prepare and deliver to Sellers a statement setting forth its calculation of Closing Working Capital (the “ Closing Working Capital Statement ”). The Closing Working Capital Statement shall be prepared in accordance with Italian GAAP using the same accounting methods, practices, principles, policies and procedures, with consistent




classifications, judgments and valuation and estimation methodologies that were used in the preparation of the 2014 Italian GAAP Financial Statements.
(e)
The post-closing adjustment shall be an amount equal to the Closing Working Capital minus the Estimated Closing Working Capital (the “ Post-Closing Adjustment ”). If the Post-Closing Adjustment is a positive number, Purchaser shall pay to Sellers an amount equal to the Post-Closing Adjustment. If the Post-Closing Adjustment is a negative number, Sellers shall pay to Purchaser an amount equal to the Post-Closing Adjustment from the Escrow Amount.
(f)
Examination and Review
(i)
Examination. After receipt of the Closing Working Capital Statement, Sellers shall have 45 (forty-five) days (the “ Review Period ”) to review the Closing Working Capital Statement. During the Review Period, Sellers and Sellers’ Accountants shall have reasonable access to the books and records of the Company, the personnel of, and work papers prepared by, Purchaser and/or Purchaser’s accountants to the extent that they relate to the Closing Working Capital Statement and to such historical financial information (to the extent in Purchaser’s possession) relating to the Closing Working Capital Statement as Sellers may reasonably request for the purpose of reviewing the Closing Working Capital Statement and to prepare a Statement of Objections (defined below), provided, that such access shall be in a manner that does not interfere with the normal business operations of Purchaser or the Company.
(ii)
Objection. On or prior to the last day of the Review Period, Sellers may object to the Closing Working Capital Statement by delivering to Purchaser a written statement setting forth Sellers’ objections in reasonable detail, indicating each disputed item or amount and the basis for Sellers’ disagreement therewith (the “ Statement of Objections ”). If Sellers fail to deliver the Statement of Objections before the expiration of the Review Period, the Closing Working Capital Statement and the Post-Closing Adjustment, as the case may be, reflected in the Closing Working Capital Statement shall be deemed to have been accepted by Sellers. If Sellers deliver the Statement of Objections before the expiration of the Review Period, Purchaser and Sellers shall negotiate in good faith to resolve such objections within 30 days after the delivery of the Statement of Objections (the “ Resolution Period ”), and, if the same are so resolved within the Resolution Period, the Post-Closing Adjustment and the Closing Working Capital Statement with such changes as may have been previously agreed in writing by Purchaser and Sellers, shall be final and binding.
(iii)
Resolution of Disputes. If Sellers and Purchaser fail to reach an agreement with respect to all of the matters set forth in the Statement of Objections before expiration of the Resolution Period, then any amounts remaining in dispute (“ Disputed Amounts ” and any amounts not so disputed, the “ Undisputed Amounts ”) shall be submitted for resolution to the office of Reconta Ernst & Young S.p.A. with office in Milano, via della Chiusa 2 or, if Reconta Ernst & Young S.p.A. is unable to serve, Purchaser and Sellers shall appoint by mutual agreement the office of an impartial nationally recognized firm of independent certified public accountants other than Seller’s accountants or Buyer’s accountants (the “ Independent Accountant ”) who, acting as experts and not arbitrators, shall resolve the




Disputed Amounts only and make any adjustments to the Post-Closing Adjustment, as the case may be, and the Closing Working Capital Statement. The Parties agree that all adjustments shall be made without regard to materiality. The Independent Accountant shall only decide the specific items under dispute by the Parties and their decision for each Disputed Amount must be within the range of values assigned to each such item in the Closing Working Capital Statement and the Statement of Objections, respectively.
(iv)
Fees of the Independent Accountant. The fees and expenses of the Independent Accountant shall be paid by Sellers, on the one hand, and by Purchaser, on the other hand, based upon the percentage that the amount actually contested but not awarded to Sellers or Purchaser, respectively, bears to the aggregate amount actually contested by Sellers and Purchaser.
(v)
Determination by Independent Accountant. The Independent Accountant shall make a determination solely based on the provisions of this Agreement as soon as practicable within 30 days (or such other time as the Parties shall agree in writing) after their engagement, and their resolution of the Disputed Amounts and their adjustments to the Closing Working Capital Statement and/or the Post-Closing Adjustment shall be conclusive and binding upon the Parties.
(vi)
Payments of Post-Closing Adjustment. Except as otherwise provided herein, any payment of the Post-Closing Adjustment shall (A) be due (x) within five Business Days of acceptance of the applicable Closing Working Capital Statement or (y) if there are Disputed Amounts, then within five Business Days of the resolution described in clause (v) above; and (B) be paid by wire transfer of immediately available funds to such account as is directed by Purchaser or Sellers, as the case may be. Any payment of the Post-Closing Adjustment owed by Sellers to Purchaser shall be paid from the Escrow Amount.
2.3.2
Indebtedness Adjustment
(a)
At least 5 (five) Business Days before the Closing, Sellers shall, with assistance from PricewaterhouseCoopers, prepare and deliver to Purchaser a statement setting forth its good faith estimate of Closing Indebtedness (the “ Estimated Closing Indebtedness ”), which statement shall contain a list of each item of Closing Indebtedness (the “ Estimated Closing Indebtedness Statement ”). The Estimated Closing Indebtedness will be deducted from the Purchase Price payable to the Sellers on the Closing Date.
(b)
Within 60 (sixty) days after the Closing Date, Purchaser shall prepare and deliver to Sellers – together with the Closing Working Capital Statement - a statement setting forth its calculation of Closing Indebtedness, which statement shall contain a list of each item of Closing Indebtedness (the “ Closing Indebtedness Statement ”). The Closing Indebtedness shall be determined in a manner consistent with the Estimated Closing Indebtedness.
(c)
If the Closing Indebtedness Statement shows the Closing Indebtedness exceeds the Estimated Closing Indebtedness, the Purchase Price will be decreased, on a Euro for Euro basis, by the amount of such shortfall and Sellers will remit such amount to Purchaser. If the Closing Indebtedness Statement shows the Closing




Indebtedness is less than the Estimated Closing Indebtedness, the Purchase Price will be increased, on a Euro for Euro basis, by the amount of such excess and Purchaser will remit such amount to Sellers. This resulting shortfall or excess is referred to as the “ Final Indebtedness Adjustment .” All such payments required to be made pursuant to this Section 2.3.2(c) shall be made in compliance with Section 2.3.1(f)(vi).
(d)
The procedures governing disputes of the Closing Working Capital in Section 2.3.1(f) above shall also govern any disputes of the Closing Indebtedness. For the purposes of Section 2.3, the Sellers hereby irrevocably jointly appoint RIP as common legal representative, for the purposes of exercising their rights and obligation, with the representation power to act on their behalf, taking any action RIP deems necessary, appropriate and useful in this connection, including but not limited to, the power to object to the proposed adjustments and execute the procedures governing disputes in Section 2.3.1(f).
2.4
Payment of the Purchase Price and the Escrow Amount
On the Closing Date, Purchaser shall pay to the Sellers or on behalf of the Sellers:
2.4.1
According to the percentages indicated under Section 2.2 above - an amount equal to (i) the Purchase Price, minus (ii) the Escrow Amount minus (iii) the Estimated Closing Indebtedness and (iv) plus or minus (as the case may be) the Closing Adjustment, in immediately available funds with value date (i.e., “ data valuta ”) on the Closing Date, by wire transfer to the bank accounts to be communicated by each Seller to Purchaser at least 5 (five) Business Days prior to the Closing Date; and
2.4.2
the Escrow Amount, in immediately available funds with value date (i.e., “ data valuta ”) on the Closing Date, by wire transfer to the Escrow Account.
2.5
Purchaser Right of Designation
The Parties acknowledge and agree that Purchaser may designate a Person to become a party to this Agreement and purchase Company Shares pursuant to Article 1401 of the ICC, provided that such designation is made in accordance with the following provisions: (i) anything in Article 1403 of the ICC notwithstanding, each designation will be validly made if notified in writing to the Sellers, together with the acceptance of the designated Person, at least 10 (ten) Business Days prior to Closing; (ii) the designated Person is an Affiliate of Purchaser; (iii) Purchaser will be jointly and severally liable with such designated Person for the performance of all the obligations and covenants set forth under or in connection with this Agreement and (iv) such designation has no impact on any antitrust and/or tax issues. Following such designation, any reference to “Purchaser” under this Agreement shall refer to such designee.
3.
CONDITION PRECEDENT TO THE CLOSING
3.1
Conditions Precedent to Purchaser’s Obligations
The obligations of Purchaser to proceed with the Closing and to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or the Purchaser’s waiver, at or prior to the following dates, of the following conditions (the “ Purchaser’s Conditions Precedent ”):
3.1.2
that from the date of this Agreement until the Closing Date, there shall not have occurred any Material Adverse Effect; and




On or prior to June 30, 2015 (the “ Term ”):
3.1.3
the delivery by the Sellers to Purchaser of the 2014 Italian GAAP Financial Statements prepared by the Company, with assistance of PricewaterhouseCoopers;
3.1.4
the completion by Grant Thornton of an audit of the 2014 U.S. GAAP Financial Statements as of and for the period ended December 31, 2014, as set forth in Section 5.3, which shall contain an unqualified audit opinion (the “ Audit ”); and
3.1.5
the Adjusted EBITDA is equal to or greater than the Minimum EBITDA Threshold pursuant to Section 2.2(a)(i).
3.2
It is understood that:
(i) the Purchaser’s Conditions Precedent are agreed in the exclusive interest of the Purchaser and may therefore be waived by the Purchaser at any time in writing. Any waiver by the Purchaser will, however, not exempt or free the Sellers from their indemnification obligations hereunder; and
(ii) the Purchaser’s Condition Precedent set forth in section 3.1.3 is executed to fulfill internal compliance requirements of the Purchaser’s group and therefore it shall have no impact on the determination of the Adjusted EBITDA and, as a consequence, on the determination of the Purchase Price.
3.3
If one or more Purchaser’s Conditions Precedent does(do) not occur (or is not waived in writing by the Purchaser) within the Closing Date or the Term (as the case may be), this Agreement shall be automatically terminated (unless the Parties agree to postpone the Closing Date or the Term) and each Party shall be fully released from all its obligations arising from this Agreement, without prejudice to right to indemnification of any non-breaching Party in the event that the non-fulfillment of any of the Purchaser’s Conditions Precedent is due and attributable to any other Party. The aforesaid termination shall have no impact on the obligations arising from (i) Section 9.1 relating to duty of confidentiality, (ii) Section 9.2 relating to the public announcements, (iii) Section 9.5 relating to certain expenses, (iv) Sections 9.9 and 9.10 relating to applicable law and dispute resolution and (v) this Article 3.
3.4
Condition Precedent to Sellers’ Obligations
The obligations of the Sellers to proceed with the Closing and to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or the Sellers’ waiver, at Closing Date, of the condition that the Net Return to Sellers shall be equal to or greater than 12,500,000 Euros (the “ Sellers’ Condition Precedent ”).
3.5
It is understood that the Sellers’ Condition Precedent are agreed in the exclusive interest of the Sellers and may therefore be waived by the Sellers at any time in writing. Any waiver by the Sellers will, however, not exempt or free the Purchaser from its indemnification obligations hereunder.
3.6
If the Sellers’ Condition Precedent does not occur (or is not waived in writing by the Sellers) within the Closing Date, this Agreement shall be automatically terminated (unless the Parties agree to postpone the Closing Date or the Term) and each Party shall be fully released from all its obligations arising from this Agreement, without prejudice to right to indemnification of any non-breaching Party in the event that the non-fulfillment of the Sellers’ Condition Precedent is due and attributable to any other Party. The aforesaid termination shall have no impact on the obligations arising from (i) Section 9.1 relating to duty of confidentiality, (ii) Section 9.2 relating to the public announcements, (iii) Section 9.5 relating to certain expenses, (iv) Sections 9.9 and 9.10 relating to applicable law and dispute resolution and (v) this Article 3.




4.
CLOSING
4.1
Date and place of Closing
The Closing shall take place at the offices of Gianni, Origoni, Grippo, Cappelli & Partners, in Milan, on the Closing Date before the Notary Public designated by the Purchaser. Possession of the Company Shares will be given to Purchaser as of 12:00 a.m. on the Closing Date.
4.2
Actions and deliveries at Closing
In addition to any other action to be taken and to any other instrument to be executed or delivered pursuant to this Agreement, on the Closing Date or, where possible, prior to the Closing Date:
4.2.3
the Sellers shall:
(a)
cause all directors and all statutory auditors (both permanent and alternate) of the Company to submit and deliver their resignation letters (copies of which shall be delivered to the Purchaser by the Sellers), effective as of the Closing Date, provided that the resignation letter shall contain a release of the Company from any obligations of the Company towards directors and statutory auditors in relation to such offices, except for the fees, considerations and bonuses accrued up to Closing and not paid yet at that date;
(b)
procure that a shareholders meeting of the Company be validly held in order to resolve in favor of the full release, to the maximum extent allowed under Italian Law and pursuant to Article 2393 and Article 2407 of the ICC, of the directors and statutory auditors of the Company (who will have resigned from office pursuant to point (i) above) from any and all liabilities arising out of their activities and functions carried out as directors and/or statutory auditors, as the case may be, for the entire period of their office and until the Closing Date;
(c)
procure that a shareholders’ meeting of the Company be held in order to resolve in favor of the appointment of a new Board of Directors and, possibly, a new Board of Statutory Auditors, whose members shall be designated in advance in writing by the Purchaser, at least 3 (three) Business Days prior to the Closing Date;
(d)
duly endorse and deliver to the Purchaser the certificates representing the Company Shares in order to transfer full, good and valid title, free and clear of any Encumbrance, to the Company Shares to the Purchaser, being it understood that no document or instrument executed in connection with the transfer of the Company Shares shall have the effect of amending or novating the Agreement;
(e)
sign the Escrow Agreement with the Escrow Agent and the Purchaser;
(f)
cause the Company to duly record in its shareholders’ ledger the transfer of the Company Shares in favor of the Purchaser; and
(g)
deliver a closing certificate signed by the Sellers updating the information on the Annexes to the date of Closing and attaching the 2014 Italian GAAP Financial Statements as an Annex.
4.2.4
the Purchaser shall:




(a)
pay to the Sellers the Purchase Price in accordance with Sections 2.2 and 2.4 above;
(b)
sign the Escrow Agreement with the Escrow Agent and the Seller and deposit the Escrow Amount with the Escrow Agent;
(c)
deliver a letter in which it undertakes (i) not to initiate, or permit to be initiated or continued, at any time, any action, suit, claim or litigation based on Articles 2393, 2393-bis, 2395, and 2407 of the ICC against the directors and/or statutory auditors of the Company who will have resigned from their offices; and (ii) to hold harmless and indemnify any of such directors and/or statutory auditors for any and all liabilities, costs (including reasonable legal fees) and damages that may arise as a consequence of any action, suit, claim or litigation, relating to their offices as directors and/or statutory auditors or their existence of direction and coordination activity, as the case may be, brought against them pursuant to Articles 2393, 2393 bis, 2395 and 2407 of the ICC in breach of its obligation under (a) above.
4.2.5
the Parties shall execute and deliver, or cause to be executed and delivered, to the Parties any documents as may be necessary, under applicable Law, to effect the transactions contemplated in this Agreement in accordance with any applicable Law.
4.3
One Transaction and No Novation
All actions and transactions constituting the Closing pursuant to Section 4.2 shall be regarded as one single transaction so that, at the option of the Party having interest in the performance of the relevant specific action or transaction, no action or transaction constituting the Closing shall be deemed to have taken place if and until all other actions and transactions constituting the Closing shall have been properly performed in accordance with the provisions of this Agreement. No document executed or activity carried out on the Closing Date shall have the effect of amending or novating any provision of this Agreement.
5.
COVENANTS OF THE PARTIES
5.1
Supplement of Annexes
From time to time after the date of this Agreement but in any event not later than the Closing Date, Sellers will supplement or amend the Annexes with respect to any matter existing before or occurring after the date of this Agreement that would have been required to be set forth or described in the Annexes or which is necessary to correct any information set forth in the Annexes which has been rendered inaccurate thereby.
5.2
Interim Period
5.2.1
Except as otherwise provided for in this Section 5.2 or in any other relevant provisions of this Agreement or otherwise approved in writing by the Purchaser after the date hereof (which approval cannot be unreasonably withheld or delayed) or otherwise required by mandatory applicable Law, during the period from the Signing Date to the Closing Date (the “ Interim Period ”) the Sellers shall cause the Company to conduct its business (i) only in the ordinary course, properly and consistently with its past practice and (ii) in compliance with Law and Permits except where non-compliance would not have a Material Adverse Effect. In particular, but without limitation of the generality of the foregoing and subject to the aforesaid exceptions, the Sellers shall not sell or create any Encumbrance over the Company Shares or the Company Own Shares or other interest in the share capital of the Company and shall cause the Company:




(a)
not to acquire, in any form, lease or otherwise dispose of any participations in the equity of other companies, or acquire or lease (as lessor or lessee), in any form, any business or branch of business nor sale or lease or dispose of the Company’s business;
(b)
not to issue, or authorize the issuance of, any shares and/or option to subscribe shares in favor of third parties or grant any right to acquire the Company Shares, the Company Own Shares, any new share of the Company and/or any bonds and/or convertible bonds or other debt securities;
(c)
not to (a) declare, set aside or pay any dividend or distribution of reserve to the Sellers; or split, reacquire, redeem, combine or reclassify any of its shares; (b) undertake liquidation or dissolution or (c) create any subsidiary or (d) make any change to the by-laws of the Company;
(d)
not to enter into any new agreement for the borrowing of any funds except in the ordinary course of business and consistent with past practice;
(e)
not to prepay any borrowed money, refinance any debt, except in the ordinary course of business, consistent with past practice;
(f)
not to make any loans or advances to any other person, or guarantee any third party obligations;
(g)
not to enter into any new agreements, transactions or other arrangements of any nature whatsoever with the Sellers, related parties or with any officer, director, manager, executive employee of the Company, except for agreements, transactions and/or arrangements which are contemplated under any agreement and/or contractual arrangement already in force as of the date hereof (which have been disclosed to the Purchaser prior to the date hereof);
(h)
not to enter into any agreement, transaction or other arrangement for the transfer or disposal of any tangible asset, property or real properties currently owned by Company having a value exceeding Euro 50,000 except for sale agreements regarding the products manufactured by the Company in the ordinary course of business and for any agreement and/or any other commitment that is already in force as of the date hereof (which have been disclosed to the Purchaser prior to the date hereof);
(i)
not to enter into either a long-term (i.e., for a term exceeding 12 months) agreement which if terminated would trigger the payment of penalties for an amount higher than Euro 100,000, or an agreement involving a consideration in excess of Euro 50,000 per year other than in the ordinary course of business;
(j)
not to hire any new employee or fire any employee having the qualification of executive ( dirigente ) or any employee who reports directly to the executives ( dirigenti ), and not to increase the compensation of such employees currently employed by Company or provide, or agree to provide, a gratuitous payment or benefit to any such employee, except if such increase or benefit is required by Law or by collective labor agreements or agreements entered into prior to the execution of this Agreement;




(k)
not to sell, transfer, pledge or mortgage any intangible assets, if any, currently owned by the Company having a value exceeding Euro 50,000, except for any agreement and/or commitment that is already in force as of the date hereof;
(l)
not to waive any right having a value in excess of Euro 50,000;
(m)
not to enter into any agreement providing for capital expenditure in excess of Euro 50,000;
(n)
to maintain existing insurance over each insurable asset of the Company and for the conduct of its business in line with past practice and at existing level;
(o)
not to exercise any termination or withdrawal right under any Material Contract except for cause or default of the counterparty;
(p)
not to enter into any purchase order or sales agreement in excess of Euro 500,000 or with a term greater than 12 months; and
(q)
not to agree to do any of the above actions not permitted under the Interim Period.
5.2.2
During the period from the Signing Date to the Closing Date, the Sellers shall cause the Company:
(h)
to use its best efforts to ensure that the Chief Executive Officer, Chief Financial Officer, and Sales Manager of the Company are available to participate in meetings with the Purchaser in the United States at the Purchaser’s expense;
(i)
to provide the Purchaser and PricewaterhouseCoopers with cooperation and the documentation, books, and records of the Company that are reasonably requested by the Purchaser or PricewaterhouseCoopers, as the case may be, and reasonably necessary for the performance of the activities under Section 5.3.1;
(j)
to provide Grant Thornton with cooperation and the documentation, books, and records of the Company that are reasonably requested by Grant Thornton and reasonably necessary in order for Grant Thornton to complete the Audit;
(k)
to allow the Purchaser to review in detail the Company’s annual budget for 2015 and discuss the Company’s strategic plan for 2015-2018; and
(l)
to repay Indebtedness using any cash that would otherwise be available for distributions to the Sellers.
5.3
Appointment of PricewaterhouseCoopers and Grant Thornton and delivery of the Interim Management Accounts
5.3.1
Within two weeks of signing this Agreement, Purchaser will engage PricewaterhouseCoopers for its services of:
(a) assisting the Company’s management in preparing the 2014 Italian GAAP Financial Statements and the Company’s management in determining the Adjusted EBITDA; and
(b) assisting the Company’s management in preparing, as promptly as possible from the delivery by Sellers to the Purchaser and PricewaterhouseCoopers of the 2014 Italian GAAP Financial Statements, the 2014 U.S. GAAP Financial Statements to be used for the Audit.




5.3.2
Within two weeks of signing this Agreement, Sellers will engage, upon instruction of the Purchaser, Grant Thornton to conduct, as promptly as possible from the delivery by the Sellers to the Purchaser and PricewaterhouseCoopers of 2014 U.S. GAAP Financial Statements, the Audit of the 2014 U.S. GAAP Financial Statements. The costs of PricewaterhouseCoopers’ work and Grant Thornton’s work pursuant to Sections 5.3.1 and 5.3.2 will be borne by Purchaser.
5.3.3
The Sellers shall cooperate in good faith with Grant Thornton and Purchaser so as to allow Grant Thornton to complete the Audit and so as to allow Purchaser to prepare pro forma financial information of the Company in accordance with Regulation S-X and meeting the requirements of Form 8-K of the Securities Exchange Act of 1934 for purposes of the Purchaser’s reports or other filings (including any registration statement, any amendment thereto, or any prospectus supplement in connection therewith) with the United States Securities and Exchange Commission, including providing Purchaser and its representatives access to the books and records of the Company. The Parties acknowledge and agree that the Sellers will follow the instruction of the Purchaser for the above procedure and the Purchaser will be the only Party responsible for the relevant filing and registrations.
5.3.4
The Sellers hereby consent to the filing of the 2014 U.S. GAAP Financial Statements and the pro forma financial information with the United States Securities and Exchange Commission (to the extent required); it being understood that all the activities related to such filing will be done and prepared by the Purchaser and the Seller will act upon Purchaser’s instruction.
5.3.5
At Closing, the Sellers shall deliver to Purchaser the updated Interim Management Accounts as of (a) the last day of the month preceding the month in which the Closing shall occur, in case the Closing Date will fall after the 20 th of a month or (b) the last day of the second month preceding the month in which the Closing shall occur, in case the Closing Date will fall between the 1 st and the 20 th (included) of a month.
6.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller with no joint liability, with the exception of RIP who shall be jointly and severally liable, hereby makes the following representations and warranties in Section 6, each of which shall be true and correct as of the Signing Date and as of the Closing Date (or as of such date to which such representation or warranty expressly is made). Notwithstanding anything to the contrary herein, the Sellers will have several liability for the representations and warranties in Sections 6.2.2, 6.2.3, and 6.5. Sellers’ representations and warranties shall be deemed qualified by the exceptions and qualifications provided for in this Agreement which shall be deemed to apply to any and all of the Sellers’ representations and warranties even if not expressly referred to under the relevant representation.
6.1
Organization and standing
6.1.3
RIP is a company “ società per azioni duly organized, validly existing and in good standing under the Laws of Italy and has the full power and authority to conduct its business as presently conducted and to own its portion of the Company Shares, and has obtained all consents, approvals, licenses and authorizations pursuant to article 35 of the D. Lgs 58/1998 and any other applicable Laws to validly manage the assets of the Fund and it is entitled to carry out its own activity.
6.1.4
The Fund is a closed-end equity investment fund reserved to qualified investors ( fondo di investimento mobiliare di tipo chiuso ) duly established and validly existing under the Laws




of Italy and has obtained all consents, approvals, licenses and authorization required for its incorporation pursuant to article 35 of the D. Lgs 58/1998 and any other applicable Laws.
6.1.5
From the date of the establishment, the Fund has not undertaken any obligation or incurred any liability other than those assumed by the Fund in the ordinary course of business for the management of the Fund and pursuant to its management rules.
6.1.6
No winding-up has been started or threatened in writing in respect of and against the Fund and no action has been taken which may result in the starting of any winding-up of the Fund.
6.1.7
The management rules of the Fund are in full force and effect.
6.2
Authorization
6.2.6
All corporate actions and formalities required to be taken by or on behalf of RIP and/or the Fund to enter into and to execute this Agreement, have been duly and properly taken.
6.2.7
GV, GF and MT are married under separate property regime; GS is married under community property regime.
6.2.8
Each Seller (i) has duly executed and delivered this Agreement, which constitutes a valid and binding obligation of each Seller and is enforceable against each Seller in accordance with its terms, assuming the valid and effective undertaking of the obligations set forth herein by the Purchaser, and (ii) will have, on the Closing Date, the full right and authority to transfer and deliver the relevant portion of the Company Shares to the Purchaser in accordance with the terms of this Agreement.
6.2.9
No application to, or filing with, or consent, authorization or approval of, or license, permit, registration, declaration or exemption by, any Governmental Authority or other Person is required in connection with the execution and performance of this Agreement or any of the transactions contemplated hereby by the Sellers.
6.3
No conflict
The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not conflict with, or result in the breach of, or constitute a default under or require any notice under, the articles of incorporation or the by-laws of RIP or violate any judgement, order, injunction, award, decree, law or regulation applicable to any of the Sellers and do not:
(d)
conflict with any agreement, obligation or other transaction or arrangement to which the Fund is a party or which is binding upon the Fund or of any of the assets of the Fund; and
(e)
conflict with the management rules of the Fund.
6.4
No Brokers
No banker, broker, finder or other intermediary has been retained to act on behalf of each Seller or the Company, or has been otherwise involved in the negotiation, preparation or consummation of the transactions contemplated hereby who might be entitled to any fee or commission by the Purchaser or the Company in connection with the transactions contemplated by this Agreement.
6.5
Ownership and transfer of titles




Each Seller has good and marketable title to the respective portion of the Company Shares, free and clear of any Encumbrance and, upon consummation of the actions constituting the Closing, each Seller will transfer good and marketable title to the Company Shares free and clear of any Encumbrance.
6.6
Organization and standing; capitalization; subsidiaries and no conflict
6.6.1
The Company is a joint stock company ( società per azioni ) duly organized, validly existing and in good standing under the Laws of Italy and has the full power and authority to conduct its business as presently conducted and to own its assets and properties as presently owned.
6.6.2
The corporate capital of the Company is equal to Euro 3,500,000.00, fully paid in and divided into 700,000 shares, each share having a par value equal to Euro 5.00, which are owned beneficially and as of record by the Sellers, with respect to the Company Shares, or the Company, with respect to the Company Own Shares. The Company Shares and the Company Own Shares have been duly authorized and validly issued and are fully paid in and are not subject to any Encumbrance. No new shares or other securities are reserved for issuance and there are not outstanding or authorized option or warrant relating to the corporate capital of the Company or other commitment pursuant to which the Company is or may become obliged to issue shares or other equity interest in favour of third parties.
6.6.3
The Company has no equity interest in any company or Person, expect for the Company Own Shares and for the following participations:
(a)
a participation of a par value of Euro 250.00 in the Italian joint-stock consortium company Pordenone Energia – Società Consortile per Azioni; and
(b)
a participation of a par value of Euro 131.00 in the Italian limited-liability consortium company Rete – Impresa Società Consortile a Responsabilità Limitata.
6.6.4
The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not conflict with, or result in the breach of, or constitute a default under the articles of incorporation or the by-laws of the Company or violate any judgment, order, injunction, award, decree, law or regulation applicable to the Company.
6.7
Financial Statements
6.7.1
At the time of Closing, the 2014 Italian GAAP Financial Statements have been prepared in accordance with Italian GAAP applied on a consistent basis and give a true and correct view (“ in modo veritiero e corretto ” pursuant to Article 2423 of the ICC) of the economic and financial situation of the Company as of the reference date.
6.7.2
The books and records of the Company have been kept in compliance with applicable Laws and reflect all transactions required to be reflected therein in accordance with such Laws.
6.7.3
The 2013 Financial Statements have been prepared in accordance with the accounting principles as historically applied by the Company.
6.7.4
The Interim Management Accounts has been prepared in accordance with the Company’s past practices and give a true and fair view of the assets and liabilities of the Company as of the relevant reference dates, subject to normal and recurring year-end adjustments.
6.8
Conduct of business




Since January 1, 2015, the business of the Company has been conducted in the ordinary course of business consistent with past practice.
6.9
Receivables
The Company’s receivables indicated in the Financial Statement and the other receivables as of the Closing Date are (and will be) validly existing, include appropriate reserves, derive from activities in the ordinary course of business of the Company and will be payable (“ esigibili ”) at the relevant payment date.
6.10
Products
6.10.1
Raw materials, semi-finished products, works in progress and finished products of the Company recorded in the 2014 Italian GAAP Financial Statements are physically existing as of the reference date and have been valued according to Italian GAAP, net of sufficient reserves.
6.10.2
Raw materials, semi-finished products, works in progress and finished products resulting from the physical count made in accordance with Section 2.3.1(a), at Closing Date, will be in normal operating condition and repair and marketable in the ordinary course of business.
6.11
Tangible properties and assets.
6.11.1
The Company has full and legal title to the use of all the movable and fixed assets currently used in connection with its businesses, as currently conducted. Each of such assets is free and clear from any Encumbrance.
6.11.2
Annex 6.11.2 contains a complete list of the real estate properties owned or used by the Company (“ Real Properties ”). The Company has valid title to the Real Properties and such title is not subject to any Encumbrance. The Company does not lease – as landlord or tenant – any real estate properties.
6.11.3
Annex 6.11.3 contains a complete list of the plant and machineries and equipment owned, leased – or otherwise used – by the Company; the relevant lease agreements and other contractual relationships through which the Company has title to use the above assets are in full force and effect and have been executed at arm’s length. The plant and machineries and equipment are in normal operating conditions and are transferred on an as-is basis (“ visti e piaciuti ”).The Purchaser expressly declares to have verified their status of wear and tear and expressly acknowledges and accepts the above.
6.12
Tax
6.12.1
All Tax returns, reports and forms required by any applicable Law to be filed by or on behalf of the Company prior to the date hereof have been and, for the period until the Closing Date, will be duly and in a timely manner (within any applicable extension periods) filed as prescribed by applicable Law and such Tax returns are substantially and formally true complete and correct.
6.12.2
Except for what indicated in Annex 6.12.2 , all Taxes for which payment is due prior to the Closing Date have been (or will be) paid prior to that date or will be properly registered in the Company’s records.
6.12.3
No material claims are being threatened in writing by any Governmental Authority with respect to any Taxes of the Company.




6.13
Litigation
Except for the claims set forth in Annex 6.13 , the Company is not party (as plaintiff or defendant) to any litigation conducted or threatened in writing by any Person or Governmental Authority against the Company before a Court and/or arbitration panel.
6.14
Material Contracts
6.14.1
Annex 6.14.1 contains a true, complete and accurate list, to the extent they are in force (in total or in part) as of the date hereof, of the following written contracts (“ Material Contracts ”):
(a)
any contract entered into by the Company materially restricting the Company from engaging in any line of business or limiting the freedom of the Company to compete in any line of business operated by it in any geographic area or requiring it to share any profits derived from the business;
(b)
any joint venture, consortium (excluding consortia mandatorily provided for by the Law), European economic interest grouping, partnership, “associazione in partecipazione” agreement, as well as other equivalent legal cooperation forms provided for under the applicable Laws of the relevant jurisdiction binding the Company;
(c)
any contract entered into by the Company which imposes commitments on the Company for future monetary obligations by the Company;
(d)
any contract that contains a commitment by the Company for capital expenditures;
(e)
any lease agreement entered into by the Company;
(f)
any loan agreement and credit agreement whereby the Company has borrowed (or undertaken, or been allowed, to borrow) money; and
(g)
any contract whereby an employee of the Company has undertaken not to perform any business activity that is in competition with the Company. Annex 6.14.1 includes the monthly compensation paid to each employee for such non-competition obligation.
6.14.2
Each Material Contract is valid, binding and enforceable against the Company in accordance with its terms, and is in full force and effect, as of the date hereof and has been performed, and will be performed, in all material respects, until the Closing Date, by the Company in accordance with the terms and conditions thereof.
6.14.3
The Company has not received as of the date hereof any written notice that (i) it is in default under any Material Contract or (ii) the counterparty to any Material Contract intends to terminate such Material Contract. Except for those Material Contracts expressly indicated in Annex 6.14.3 , no Material Contract contains a right of the counterparty to terminate or withdraw from the relevant agreement due to the change of control of the Company.
6.15
Employees
6.15.1
Annex 6.15.1 lists all persons currently having an employment relationship with the Company as of the Signing Date (the “ Employees ”) and indicates (i) those employees who have a fixed-term contract, and (ii) those persons who are temporary workers. Each




Employee has been properly recorded as an employee in the appropriate books of the Company.
6.15.2
Except as set forth in Annex 6.15.2 , all social security and welfare charges required to be paid by Company under any applicable social security, labor, welfare and health law and under any bargaining agreement in respect of each Employee have been paid or adequately reserved or accrued for.
6.15.3
None of the executives ( dirigenti ) or the Commercial, Forge Shop, or Machine Shop Managers (collectively, the “ Management ”) has given to the Company, as of the Signing Date, any written notice of termination of his employment with the Company. Annex 6.15.3 sets forth all the components of the compensation (including base salary, non-competition compensation, retention pact compensation, and any other compensation elements), benefits (including the amount paid by the Company for such benefits), and retention packages applicable to each of the Management as of the Closing Date, in connection with their employment, the success of the transaction contemplated hereby or for any other reason.
6.15.4
To Sellers’ Knowledge, the suppliers and subcontractors providing activities for the benefit of the Company have conducted their business in a way that the employees, consultants and self-employed workers acting for such suppliers and subcontractors have no reasonable grounds to bring against the Company any claim which arises from the performance, up to the Closing Date, of the above activities by the suppliers and subcontractors.
6.15.5
Except as set forth in Annex 6.15.5 , as of the date hereof (i) the Company is not party to any dispute, whether judicial or non-judicial, with any Employee or any person claiming the status of employee of the Company and (ii) the Company has not been affected by any labor strike or stoppage. The Company has not carried out any plant closing, mass layoff or collective dismissal of former employees.
6.15.6
The Company has duly fulfilled all obligations deriving from the Law 68/99 (concerning mandatory employment of disabled employees) and from the specific agreement entered into on February 1, 2013 with the Province of Pordenone allowing the Company to employ a reduced number of disabled workers.
6.15.7
The Company has duly complied with the repayment plan entered on May 27, 2013 with reference to a debt against INPS of a total amount of Euro 621.703,00 (due to omitted payment of social security contributions) and as of December 31, 2014, n. 3 installments remain to be paid for a total sum of Euro 77,608.00.
6.15.8
None of the employees terminated between 2009 and the Closing Date have challenged the dismissal or proposed claims concerning their resignation.
6.15.9
Except as set forth in Annex 6.15.9 , the Company has timely and accurately reported all accidents to the Istituto Nazionale per l’Assicurazione contro gli Infortuni sul Lavoro (“ INAIL ”) and Annex 6.15.9 lists those incidents where INAIL seeks reimbursement from the Company.
6.16
Permits
The Company has the permits, authorizations, fit for use certificates, and licenses required by applicable Law for the conduct of its business as it is currently conducted and listed on Annex 6.16 (collectively, the “ Permits ”) and, as of the date hereof, has not received by any competent




Governmental Authority any written notice for the revocation or suspension of such Permits and licenses.
6.17
Environmental
6.17.1
The Company is and has been at all times and in all material respects in compliance with any applicable environmental Laws.
6.17.2
The Company has not received any written notification of its any material non-compliance with any environmental Laws.
6.17.3
The consummation of the transactions contemplated by this Agreement and the other documents contemplated hereby will not result in a breach of, or give rise to a right of termination of, any environmental permits.
6.18
Insurance
As of the date hereof, the Company maintains the insurance policies for the conduct and operation of its business that are set out in Annex 6.18 . The Company will maintain up to the Closing Date substantially the same level of insurance coverage provided by the insurance policies provided under such Annex 6.18 .
6.19
Intellectual Property
Annex 6.19 contains a correct and complete list of all the Intellectual Property Rights owned by the Company. The Company is the owner of or legitimate holder of the Intellectual Property Rights used for the performance of its business. The Company is the exclusive owner of the customer database and has not granted to any third party the right to use its customer database other than in the ordinary course of business. To the Sellers’ Knowledge, the Company has not and does not infringe third parties’ Intellectual Property Rights nor are there third parties that have formulated claims in relation to the Company’s Intellectual Property Rights. The ownership of the customer database, and the Intellectual Property Rights used by Company, are not being infringed by any Person.
6.20
Customers
Annex 6.20 contains a correct and complete list of the ten largest customers by Euro volume of the Company for the year ended December 31, 2014. None of such customers has terminated or reduced or, to Sellers’ Knowledge, threatened to reduce, its relationship with the Company.
6.21
Suppliers
Annex 6.21 contains a correct and complete list of the ten largest suppliers by Euro volume of the Company for the year ended December 31, 2014, including any suppliers that may be a sole or primary source supplier of raw materials, goods equipment or services to the Company. None of such suppliers has increased or threatened to increase the pricing terms given to the Company, other than in the ordinary course of business, or has ceased or, to Sellers’ Knowledge, threatened to cease to continue to be suppliers to the Company after the Closing.
6.22
Warranty
The products sold and services provided by the Company now, and at all times during the two (2) year period prior to the Closing, conform to and meet the standards required by applicable contract and Law, including all applicable customer and governmental specifications. No warranty or product liability claims has been made against the Company in the last two (2) years. No claims of customers




or others based on an alleged or admitted defect of material, workmanship, or design or otherwise in, or in respect of, the Company’s products are pending or, to Sellers’ Knowledge, threatened in writing.
6.23
Undisclosed Liabilities
There are no liabilities that would be required by Italian GAAP to be reflected in the 2014 Italian GAAP Financial Statements, other than (a) liabilities reflected or reserved against in the 2014 Italian GAAP Financial Statements or (b) liabilities that were incurred since the reference date of the 2014 Italian GAAP Financial Statements in the ordinary course of business consistent with past practice or (c) in any case covered by the Indebtedness Adjustment.
6.24
Limitation on representations and warranties
6.24.1
The Purchaser acknowledges and agrees that, except as otherwise expressly set forth in this Agreement and specifically the representations and warranties in Article 6, neither each Seller nor any of its members, partners, trustees, beneficiaries, directors, officers, managers, employees, attorneys, accountants, contractors, consultants, agents or representatives, have made any representation, warranty, guaranty, promise, projection or prediction whatsoever with respect to the Company and/or its business, written or oral, express or implied or arising by operation of law, including but not limited to any representation and warranties relating to the financial projections, budget or management analyses to the future performance and/or profitability of the Company. The representations and warranties contained herein represent all the representations and warranties of each Seller.
6.24.2
The Purchaser is relying only on the representations and warranties expressly made by each Seller in this Agreement and Sellers’ representations and warranties contained in this Agreement shall not be affected by any investigation or review of the business or accounts of the Company conducted by Purchaser or by its accountants, counsel or other representatives prior to the date hereof or the Closing Date, nor by any actual or alleged prior knowledge by Purchaser of any breach or violation of such warranties and representations.
7.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby makes the following representations and warranties to each Seller, each of which shall be true and correct as of the date hereof and as of the Closing Date.
7.1
Organization and Standing
The Purchaser is a corporation duly organized, validly existing under its Laws of incorporation and has full power and authority to conduct its business as presently conducted and to own its assets and properties as presently owned.
7.2
Authorization
7.2.2
All corporate acts and other proceedings required to be taken by or on behalf of the Purchaser to authorize the Purchaser to enter into and to carry out this Agreement have been duly and properly taken, and, assuming the valid and effective undertaking of the obligations set forth herein by each Seller, this Agreement has been duly executed and delivered by the Purchaser and constitutes the valid and binding obligation of the Purchaser enforceable against the Purchaser in accordance with its terms.




7.2.3
No application to, or filing with, or consent, authorization or approval of, or license, permit, registration, declaration or exemption by, any Governmental Authority or authority or other Person is required by the Purchaser in connection with the execution and performance of this Agreement or any of the transactions contemplated hereby.
7.3
No Conflict
The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not conflict with, or result in a breach of, or constitute a default under, or give rise to a right of termination, cancellation or acceleration of, the articles of incorporation or the by-laws of the Purchaser or violate any judgement, order, injunction, award, decree, law or regulation applicable to the Purchaser.
7.4
No Broker
No banker, broker, finder or other intermediary has been retained to act on behalf of the Purchaser, or has been otherwise involved in the negotiation, preparation or consummation of the transactions contemplated hereby who might be entitled to any fee or commission by each Seller connection with the transactions contemplated by this Agreement.
8.
INDEMNIFICATION
8.1
Indemnification obligations of the Sellers
8.1.4
Subject to the consummation of the Closing and in accordance with the other provisions of this Article 8, each of the Sellers, with no joint liability except for RIP who shall be jointly and severally liable, shall indemnify the Purchaser in respect of:
(a)
any and all Losses actually incurred or suffered by the Purchaser which are a direct consequences of a breach by the Sellers of the representations and warranties given in Article 6; provided that the Sellers shall have several liability for the representations and warranties in Section 6.2.2, 6.2.3, and 6.5;
(b)
any and all Losses actually incurred or suffered by the Purchaser which are a direct consequences of a breach of the undertakings and covenants (other than as a result of any breach of the representations and warranties) of the Sellers contained in this Agreement; and
(c)
any and all Losses actually incurred or suffered by the Purchaser related to the matters set forth on Annex 8.1.1 .
8.2
Limitation of indemnification obligations
8.2.1
Without prejudice to any other limitations set forth herein, in no event shall any of the Sellers be liable vis-à-vis the Purchaser under this Article 8 in respect of:
(a)
any actual or alleged breach of the representations and warranties set forth in Article 6 referred to therein (other than representations and warranties referred to under this Section 8.2.1, point (ii) below) which is notified to the Sellers pursuant to Section 8.3 after the expiry of the 24 month after the Closing Date; notwithstanding the foregoing, (a) claims related to the representations and warranties set forth in Section 6.12 (Tax) may be asserted until 30 days after the statute of limitations period for an assessment or reassessment of such matters under applicable Law expires, (b) claims related to the representations and warranties set forth in Section




6.4 (No Brokers), 6.15 (Employees), and 6.17 (Environmental) or regarding the matters listed in Annex 8.1.1 may be asserted until the fifth (5th) anniversary of the Closing Date, and the Sellers shall have liability vis-à-vis the Purchaser for such liabilities until such later date.
(b)
Claims related to any actual or alleged breach of the representations and warranties set forth in Sections 6.2 (Authorization), 6.5 (Ownership and transfer of titles), and 6.6 (Organization and standing; capitalization; subsidiaries) (collectively, the “ Fundamental Representations ”) shall survive indefinitely and may be asserted at any time and the Sellers shall have liability vis-à-vis the Purchaser indefinitely with respect thereto.
8.2.2
In no event shall any of the Sellers be liable vis-à-vis the Purchaser under this Article 8:
(a)
if the amount of the Losses due pursuant to Article 8, in connection with any single occurrence, or series of similar occurrences based on substantially the same legal grounds, giving rise to liability pursuant thereto does not exceed Euro 10,000;
(b)
if the aggregate of all amounts due pursuant to Article 8 does not exceed Euro 150,000 (the “ Threshold ”) in the aggregate, provided that (x) all sums in respect of which Sellers’ liability shall be excluded pursuant to point (a) above shall not be taken into account for the purposes of the Threshold and (y) in case the Threshold is exceeded, the Sellers shall be liable only for the exceeding amount.
8.2.3
In addition and without prejudice to the above, the Sellers’ maximum liability shall not exceed in the aggregate Euro 4,000,000.00 (the “ CAP ”) (except for the liability of Sellers arising from the breach of the Fundamental Representations for which the maximum liability will be the Purchase Price); it being understood that the maximum liability of each Seller shall not exceed the following percentage of the CAP:
(d)
up to 100% (one hundred per cent) of the CAP (and of any Loss due) for RIP;
(e)
up to 8% (eight per cent) of the CAP (and of any Loss due) for GV;
(f)
up to 4.40% (four point forty per cent) of the CAP (and of any Loss due) for GF;
(g)
up to 0.80% (zero point eighty per cent) of the CAP (and of any Loss due) for GS;
(h)
up to 0.80% (zero point eighty per cent) of the CAP (and of any Loss due) for MT.
8.2.4
In addition and without prejudice to the above, the Losses to be indemnified pursuant to this Article 8 shall be net of:
(a)
the amount of any insurance coverage of the Purchaser or the Company, in case and to the extent that any Loss to be indemnified by the Sellers is covered by any insurance policy of the Purchaser and / or the Company, as the case may be;
(b)
the amount paid to the Purchaser or the Company by any third party with respect to the Loss to be indemnified by the Sellers;
(c)
any amount deductible by and/or Tax saving of the Purchaser or the Company for income Tax, in case and to the extent that any Loss to be indemnified by the Sellers is deductible by the Purchaser or the Company for income Tax purposes in any given fiscal year and the deduction of such Loss actually determines (taking into




account any Tax paid or accrued on the indemnity received by Purchaser hereunder) a Tax saving for the Purchaser or the Company, as the case may be;
(d)
the amount of any specific provision or reserve, in the event and to the extent that any Loss to be indemnified is covered by any provision or reserve under the 2014 Italian GAAP Financial Statements.
8.2.5
If the Purchaser is entitled to indemnification for a Loss under more than one provision of this Agreement (also with respect to the Adjustment provisions pursuant to Section 2.3), the Purchaser shall be entitled to indemnification only once for such Loss and only in connection with the breach of the more specific representation and warranty. By way of example, for any breach of a representation and warranty which could be also considered as a breach of a representation and warranty on the Financial Statement, the Purchaser will be entitled to claim only for the breach of such specific representation and warranty (and not for the more general breach of the representation and warranty on the Financial Statement) with no duplication whatsoever. In addition to the above, in no event shall the Purchaser be entitled to indemnification for a Loss for breach of a representation and warranty for any matter covered by the Post-Closing Adjustment and/or the Final Indebtedness Adjustment.
8.2.6
Should at any time between the Closing Date and the date upon which the Sellers’ liability expires pursuant to Section 8.2.1 above, a Law or regulatory rule or administrative order be enacted giving the right to settle or agree in whole or in part any Tax obligation of the Company, the Sellers shall be entitled to ask the Purchaser that the Company avails itself of the amnesty. In the event that the Purchaser does not accept such request, the amount of the indemnification that the Purchaser may recover from the Sellers in connection with matters that would be covered by the amnesty may not exceed the amount that would have been payable by the Company as a result of the acceptance of the amnesty. All costs, taxes, expenses and/or charges of any nature arising from such amnesty shall be charged, pro-quota, to the Sellers.
8.2.7
The representations and warranties of the Sellers, and the Purchaser’s right to indemnification with respect thereto, shall not be affected or deemed waived by reason of any due diligence investigation made by or on behalf of the Purchaser or by reason of the fact that the Purchaser knew or should have known that any such representation or warranty is, was or might be inaccurate.
8.3
Indemnification Procedure
8.3.1
If any event occurs which could give rise to the Sellers’ indemnification obligations under this Article 8, the following provisions shall apply. For the purposes of Section 8.3, Section 8.4 and Section 9.10, the Sellers hereby irrevocably jointly appoint RIP as common legal representative, for the purposes of the exercising their rights and obligation, with the representation power to act on their behalf, taking any action deem necessary, appropriate and useful in this connection, including but not limited to, the power to settle Indemnification Claims.
8.3.2
Should the Purchaser become aware of any event, act, claim or omission, or other matter in relation to which the Sellers may be requested to indemnify it under this Article 8 (hereinafter “ Indemnification Claim ”), the Purchaser shall give notice thereof in writing to RIP, copy to the other Sellers as soon as reasonably practicable and in any event within 25 (twenty five) Business Days from the date in which it becomes aware of the Indemnification Claim (or in the shorter period required by reference to time bars or limitation periods or in those cases where delay by the Purchaser may render the Sellers’ right to defend excessively onerous or in an unjustifiable way). Such communication (hereinafter the “ Indemnification




Notice ”) shall specify whether the Indemnification Claim originates from a third party claim against the Purchaser and/or the Company (hereinafter “ Third Party Claim ”) or whether the Indemnification Claim is not of such nature (hereinafter “ Direct Claim ”) and must also indicate in reasonable details the grounds of fact upon which the Indemnification Claim is based as well as the amount of Indemnification Claim, if possible. The Purchaser shall provide RIP (and its advisors) with reasonable access during normal business hours to personnel of the Purchaser and/or the Company, as the case may be, and to any premises, accounts, documents and records which are relevant to such Indemnification Claim, and shall provide the assistance reasonably required to allow it to defend its rights before and during a possible legal or arbitration dispute as well as all appropriate steps for the protection of their interests.
8.3.3
In case of a Direct Claim, following receipt by RIP of the Indemnification Notice, RIP shall have 30 (thirty) Business Days as of the date of receipt of the Indemnification Claim, to challenge the Indemnification Claim on behalf of all the Sellers. In the event that the Indemnification Notice is not challenged by RIP within the above mentioned period of 30 Business Days, the Indemnification Claim referred in the Indemnification Notice shall be deemed to have been accepted by RIP (and, as a consequence, by all the Sellers) for the purposes of its indemnification obligations pursuant to this Agreement.
8.3.4
In the event the Indemnification Notice is challenged by RIP in accordance with Section 8.3.3, then during a period of 30 (thirty) Business Days following the date of challenge of the Indemnification Claim by RIP, the latter and the Purchaser shall attempt to resolve any differences which they may have with respect to any matters constituting the subject matter of such notice. If, at the end of such period, RIP and the Purchaser fail to reach an agreement in writing with respect to all such matters, then all matters as to which an agreement is not so reached may be submitted to binding arbitration pursuant to Section 9.10 hereof.
8.4
Third Party Claims
8.4.5
In Case of a Third Party Claim, RIP shall have the right (but not the obligation) to assume the defense of such Third Party Claim, at Sellers’ expense, provided that the Purchaser, at its costs and expenses, may participate in, but shall not control, the defense of such Third Party Claim, with its counsel. In each case, the Purchaser will cooperate in any reasonable manner with RIP, including making available evidence reasonably within its control, directly or indirectly and using its best efforts so as to ensure that the persons needed as witnesses who are employed by Purchaser and/or Company make themselves available to appear as witnesses, in each case as needed for such defense.
8.4.6
In the event that RIP (i) elects not to assume the defense of such Third Party Claim within the 20 (twenty) Business Day after the Purchaser has given the Indemnification Notice, the Purchaser shall properly, diligently and duly defend, and shall cause Company to properly, diligently and duly defend, as the case may be, the Third Party Claim in an effective and cost-efficient manner; provided that RIP, at Sellers’ costs and expenses, may participate in, but shall not control, the defense of such Third Party Claim, with its counsel.
8.4.7
The Purchaser shall not and shall cause Company not to make or accept any settlement agreements with respect to any Indemnification Claim, without the prior written consent of RIP, that will be free to consent or not, at their sole discretion.
8.4.8
If a firm offer is made to the Purchaser or the Company to settle any claim, action or demand which RIP, but not the Purchaser, is willing to accept, the Purchaser and Company shall be free not to enter into such settlement and to commence or continue litigation, at their own




expense, but any Sellers’ liability under Article 8 shall be eventually limited to the amount of the proposed settlement.
8.5
Payment of the Losses
The Losses shall be paid to the Purchaser, or, upon its written request, to the Company, with no duplication whatsoever, within 30 days from:
(a)
the expiry date of the 25 Business Day term set forth in Section 8.3.3, in case no challenge of the indemnification is made by RIP;
(b)
the date in which the Parties found a settlement written agreement pursuant to Section 8.3.4;
(c)
the date of a final and not- appealable decision by the arbitration court pursuant to Section 9.10, condemning the Sellers to pay the Losses;
(d)
the date of a final and not appealable decision of a court in case of a Third Party Claim; or
(e)
the date of a settlement of a Third Party Claim, if the settlement has been authorized by RIP in writing.
8.6
Manner of Satisfying Losses
Payments owed by Sellers in satisfaction of Sellers’ indemnification obligations pursuant to this Article 8 shall be (i) paid out of the Escrow Amount according to the procedures set forth in the Escrow Agreement, during the time period that the Escrow Account is in place (ii) from the Bank Guarantee, during the time period that the Bank Guarantee is in place, and (iii) then the balance of such Losses shall be paid directly by Sellers.
8.7
Exclusive remedy
Absent fraud, intentional misrepresentation or willful misconduct, the indemnification provisions in this Article 8 shall be the sole and exclusive remedy of the Parties with respect to any claim for indemnification for Losses arising from or in connection with this Agreement. No claim shall be asserted against the Sellers in respect of any warranty, representation, indemnity, covenant, undertaking, obligation toward third parties, liability under any statute or legal principle or otherwise arising out, of or in connection with, the transactions contemplated
8.8
Bank Guarantee
Upon completion and payment of the Post-Closing Adjustment and the Final Indebtedness Adjustment, if any, the Sellers shall be entitled to receive, from the Escrow Agent the payment of the Escrow Amount (in the amount remaining after the Post-Closing Adjustment and the Final Indebtedness Adjustment) and accrued interests, conditional upon delivery to the Escrow Agent of a Bank Guarantee, as collateral for the indemnification obligations of the Sellers, having a maximum duration of 4 (four) years and for the maximum guaranteed amount equal to Euro 4,000,000.00, pursuant to the provisions of the Escrow Agreement. The maximum guaranteed amount shall be reduced as follows:
amount Euro 4,000,000.00 for the first twelve (12) months from closing; reduction to Euro 3,000,000.00 (plus the amount of any claim outstanding at such date) from the 13th – 24th months from closing; reduction to Euro 2,000,000.00 (plus the amount of any claim outstanding at such




date) from the 25th – 36th months from closing; reduction to Euro 1,000,000.00 (plus the amount of any claim outstanding at such date) from the 37th – 48th months from closing.
9.
MISCELLANEA
9.1
Duty of confidentiality
9.1.8
The Parties acknowledge and agree that the existence of this Agreement and the terms and other information set forth herein shall be subject in all respects to the Confidentiality Agreement entered into by the Parties on March 10, 2014. This entire Section 9.1.1 shall survive the termination of this Agreement.
9.1.9
The Parties shall not be deemed in breach of this Section 9.1 by virtue of (i) any disclosure made pursuant to the provisions or requirements of any applicable Law or any rule issued by any regulatory or stock exchange authority having jurisdiction on any of the Parties, or (ii) issuing any public announcement in accordance with the terms of Section 9.2.
9.2
Public announcements
Except as otherwise mandatorily required under any Law or rule issued by a Governmental Authority or other regulatory or stock exchange authority having jurisdiction on the Purchaser or the Sellers or their respective Affiliates, no publicity, release or announcement concerning the execution or delivery of this Agreement, any of the provisions contained herein or the transactions contemplated hereby shall be issued without the prior written consent and approval, as to both form and content, of the other Party, provided that such consent or approval cannot be unreasonably withheld and that the Parties shall cooperate as to the timing and contents of any such press release or public announcement.
9.3
Assignment
Except as otherwise provided for in Section 2.5 above, neither Party may assign any of its rights interests or obligations hereunder without the prior written consent of the other Parties and any attempt to assign this Agreement without such consent shall have no effect.
9.4
Notices
9.4.5
All notices, request, demands or other communications required or permitted under this Agreement shall be given in writing and delivered personally or by overnight courier, registered or certified mail, or sent by email or facsimile, as follows:
if to the Purchaser :
Michael Lipscomb
Chief Executive Officer
SIFCO Industries, Inc.
970 East 64th Street
Cleveland, Ohio 44103
Fax 011-216-274-9734
mlipscomb@sifco.com
with copy (which shall not constitute notice) to:
c/o Megan L. Mehalko, Esq.
Benesch, Friedlander, Coplan & Aronoff LLP




200 Public Square, 23rd Floor
Cleveland, Ohio 44114
Fax 011-216-363-4588
Email: mmehalko@beneschlaw.com
if to RIP :
Luigi Terranova
Managing Director
Riello Investimenti Partners SGR S.p.A.
Via Melone n. 2
20121 Milano
Fax: +39 02 8056159
Email: l.terranova@riellopartners.it
with a copy (which shall not constitute notice) to :
Avv. Alberto Nanni
c/o Gianni, Origoni, Grippo, Cappelli & Partners
Piazza Belgioioso n. 2
20121 Milano
Fax: + 39 02 76009628
if to GV and/or GF and/or GS and/or MT , jointly to:
Giancarlo Sclabi
Via Nuova n. 43
33030 San Vito di Fagagna (UD)
Email: sclabifamily@gmail.com
with a copy (which shall not constitute notice) to :
Avv. Alberto Nanni
c/o Gianni, Origoni, Grippo, Cappelli & Partners
Piazza Belgioioso n. 2
20121 Milano
Fax: + 39 02 76009628
or at such other address and/or telefax number as either Party may hereafter furnish to the other by written notice, as herein provided.
9.4.6
If personally delivered, such communication shall be deemed delivered upon actual receipt; if sent by telecopier or facsimile transmission, such communication shall be deemed delivered the day of the transmission, or if the transmission is not made on a Business Day, the first Business Day after transmission (and sender shall bear the burden of proof of delivery); if sent by overnight courier, such communication shall be deemed delivered upon receipt; and if sent by registered or certified mail, such communication shall be deemed delivered as of the date of delivery indicated on the receipt issued by the relevant postal service or, if the addressee fails or refuses to accept delivery, as of the date of such failure or refusal.
9.5
Taxes and other expenses




9.5.1
Irrespective of whether the Closing shall have occurred, each of the Purchaser and the Sellers shall pay their own fees, expenses and disbursements incurred by it in connection with the negotiation, preparation and implementation of this Agreement, including (without limitation) any fees and disbursements owing to such Party’s respective auditors, advisors and legal counsel.
9.5.2
The fees and expenses due to the Notary Public in connection with his/her services provided for the execution and performance of the activities provided for herein in connection with the sale of the Company Shares as well as any Tax due in relation thereto shall be borne and paid by the Purchaser.
9.6
Entire Agreement
This Agreement constitutes the entire agreement between the Parties hereto in respect of the subject matter hereof and supersedes all other prior agreements and understandings, both written and oral, between the Parties in respect of the subject matter hereof.
9.7
Amendments in Writing
No changes to, no amendment to and no waiver of any rights under this Agreement shall be effective unless made in writing and signed by the Parties.
9.8
Severability
If any of the provisions of this Agreement is or becomes invalid, illegal or unenforceable under the Laws of any jurisdiction, the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired. The Parties shall nevertheless negotiate in good faith in order to agree the terms of mutually satisfactory provisions, achieving as closely as possible the same commercial effect, to be substituted for the provisions so found to be void or unenforceable.
9.9
Applicable Law
This Agreement shall be governed by, and construed and interpreted in accordance with, the Laws of the Republic of Italy.
9.10
Disputes resolution
9.10.1
Any disputes that may arise from this Agreement shall be settled by arbitration in accordance with the procedural rules of the Camera Arbitrale Nazionale ed Internazionale di Milano . The seat of the arbitration shall be Milan, Italy and its language will be English. For the purposes of this Section 9.10, the Sellers shall be considered as one single Party, and shall be represented by RIP. In case, notwithstanding the above, the Sellers will be considered as different parties, then the rules for the multi-parties arbitration of the Camera Arbitrale Nazionale ed Internazionale di Milano will apply.
9.10.2
The arbitration panel shall consist of three arbitrators: one to be appointed by the Purchaser, one to be appointed by RIP (on behalf of the Sellers) and the third arbitrator, who will act as Chairman of the panel, shall be appointed by the arbitrators designated by the Parties. In case the two arbitrators do not reach an agreement for the appointment of the Chairman of the panel within 30 (thirty) days from their appointment and/or any of the Party does not appoint its arbitrator within 30 (thirty) days of the appointment of the arbitrator by the other Party, as the case may be, the Chairman of the panel, and/or the arbitrator not appointed by the relevant Party, will be appointed by the Arbitral Council of the Chamber of National and International Arbitration of Milan.




9.10.3
The expenses of the arbitration proceedings shall be borne by the Parties in accordance with the applicable determinations of the arbitration panel.
9.10.4
For any matter which cannot be subject to the arbitration, the Court of Milan shall have exclusive jurisdiction.





*** *** ***
Should you agree with our above proposal, please transcribe the text of this Share Purchase Agreement and return to us two original copies (one to Riello Investimenti Partners SGR S.p.A. and one to Mr. Giancarlo Sclabi) of such document duly executed (and initialized on each page, including the annexes) for your irrevocable and unconditioned acceptance.

Riello Investimenti Partners SGR S.p.A.


/s/ Luigi Terranova
Name: Luigi Terranova
Title: Managing Director


Giorgio Visentini


/s/ Giancarlo Sclabi
Name: Giancarlo Sclabi
Title: Attorney-in-fact


Giorgio Frassini


/s/ Giancarlo Sclabi
Name: Giancarlo Sclabi
Title: Attorney-in-fact


Giancarlo Sclabi


/s/ Giancarlo Sclabi


Matteo Talmassons


/s/ Giancarlo Sclabi
Name: Giancarlo Sclabi
Title: Attorney-in-fact


SIFCO Industries, Inc.
/s/ Michael S. Lipscomb
Name: Michael S. Lipscomb
Title: Chairman & CEO










Milan, June 30, 2015

To:

Riello Investimenti Partners SGR S.p.A.
To the kind attention of the Managing Director Mr. Luigi Terranova

and

Mr. Giancarlo Sclabi
Giorgio Visentini
Giorgio Frassini
Giancarlo Sclabi
Matteo Talmassons

RE: Effective date of transfer of shares of C BLADE S.P.A. FORGING & MANUFACTURING

Dear Sirs,

We received today from you a proposal to amend article 4.1 of the SPA copied below, which we hereby irrevocably and unconditionally accept.
* * *

Milan, June 30, 2015

To:

SIFCO Italy Holdings s.r.l.
c/o SIFCO Industries, Inc.

970 East 64th Street

Cleveland, Ohio 44103

To the kind attention of Mr. Salvatore Incanno

Delivered by hand

RE: Effective date of transfer of shares of C BLADE S.P.A. FORGING & MANUFACTURING


Dear Sirs,

We make reference to the shares purchase agreement (the “ SPA ”) executed on March 16, 2015 between Sifco Industries Inc. and the undersigned Sellers providing for the acquisition by Sifco Industries Inc. from the Sellers of no. 670,112 shares, representing the 95.73% of the corporate capital of C Blade S.p.A. Forging & Manufacturing (the “ Company Shares ”).

We hereby intend to propose to amend and substitute Article 4.1 of the SPA as follows, in order to clarify the agreement among the Parties regarding the effective date of the transfer of possession of the Company Shares:

“4.1 Date and place of Closing
The Closing shall take place on June 30, 2015 at the Milan offices of Carnelutti Law Firm and before the Notary Public Dott. Federico Mottola Lucano of the Notary Firm, Zabban - Notari - Rampolla & Associati, designated by the Purchaser. Possession of the Company Shares will be given to Purchaser as of 12:01 a.m. on July 1, 2015.”


SIFCO ITALY HOLDINGS S.R.L.
Sede Legale Roma (RM) Largo Angelo Fochetti 29 Cap 00154
Iscritta al Registro delle Imprese di Roma - Codice fiscale / Partita IVA 13430151004 - Capitale sociale Euro 10.000,00 i.v.




Should you agree with our proposal to amend Article 4.1 of the SPA as indicated above, please transcribe the text of this letter and return to us two original copies (one addressed to Riello Investimenti Partners SGR S.p.A. and one to Mr. Giancarlo Sclabi) of such document duly executed for your irrevocable and unconditioned acceptance.
Riello Investimenti Partners SGR S.p.A.
 
Giorgio Visentini
/s/ Luigi Terranova
 
/s/ Giorgio Visentini
 
 
 
Giorgio Frassini
 
Giancarlo Sclabi
/s/Giorgio Frassini
 
/s/ Giancarlo Sclabi
 
 
 
Matteo Talmassons
 
 
/s/ Matteo Talmassons
 
 
 
 
 
 
 
 
Best regards
 
 
 
 
 
/s/ Salvatore Incanno
 
 
Salvatore Incanno, manager
 
 
 
 
 
 
 
 


SIFCO ITALY HOLDINGS S.R.L.
Sede Legale Roma (RM) Largo Angelo Fochetti 29 Cap 00154
Iscritta al Registro delle Imprese di Roma - Codice fiscale / Partita IVA 13430151004 - Capitale sociale Euro 10.000,00 i.v.




==========================================================================================================================================







CREDIT AND SECURITY AGREEMENT


among


SIFCO INDUSTRIES, INC.
as Borrower


THE LENDERS NAMED HEREIN
as Lenders


and


KEYBANK NATIONAL ASSOCIATION
as Lead Arranger, Sole Book Runner, Administrative Agent,
Swing Line Lender and Issuing Lender


_____________________

dated as of
June 26, 2015
_____________________












==========================================================================================================================================




TABLE OF CONTENTS

Page


ARTICLE I. DEFINITIONS    1
Section 1.1. Definitions
1
Section 1.2. Accounting Terms
32
Section 1.3. Terms Generally
32
ARTICLE II. AMOUNT AND TERMS OF CREDIT    32
Section 2.1. Amount and Nature of Credit
33
Section 2.2. Revolving Credit Commitment
33
Section 2.3. Term Loan Commitment
39
Section 2.4. Interest
39
Section 2.5. Evidence of Indebtedness
41
Section 2.6. Notice of Loans and Credit Events; Funding of Loans
41
Section 2.7. Payment on Loans and Other Obligations
43
Section 2.8. Prepayment
44
Section 2.9. Commitment and Other Fees
45
Section 2.10. Modifications to Commitment
46
Section 2.11. Computation of Interest and Fees
48
Section 2.12. Mandatory Payments
48
Section 2.13. Swap Obligations Make-Well Provision
51
ARTICLE III. ADDITIONAL PROVISIONS RELATING TO EURODOLLAR LOANS; INCREASED CAPITAL; TAXES    51
Section 3.1. Requirements of Law
51
Section 3.2. Taxes
53
Section 3.3. Funding Losses
55
Section 3.4. Change of Lending Office
56
Section 3.5. Eurodollar Rate Lending Unlawful; Inability to Determine Rate
56
Section 3.6. Replacement of Lenders
56
Section 3.7. Discretion of Lenders as to Manner of Funding
57
ARTICLE IV. CONDITIONS PRECEDENT    57
Section 4.1. Conditions to Each Credit Event
57
Section 4.2. Conditions to the First Credit Event
58
Section 4.3. Post-Closing Conditions
61
ARTICLE V. COVENANTS    62
Section 5.1. Insurance
62
Section 5.2. Money Obligations
63
Section 5.3. Financial Statements and Information
63
Section 5.4. Financial Records
64
Section 5.5. Franchises; Change in Business
65
Section 5.6. ERISA Pension and Benefit Plan Compliance
65
Section 5.7. Financial Covenants
66
Section 5.8. Borrowing
66
Section 5.9. Liens
67

1

TABLE OF CONTENTS

Page


Section 5.10. Regulations T, U and X
68
Section 5.11. Investments, Loans and Guaranties
68
Section 5.12. Merger and Sale of Assets
69
Section 5.13. Acquisitions
70
Section 5.14. Notice
70
Section 5.15. Restricted Payments
71
Section 5.16. Environmental Compliance
71
Section 5.17. Affiliate Transactions
72
Section 5.18. Use of Proceeds
72
Section 5.19. Corporate Names and Locations of Collateral
72
Section 5.20. Subsidiary Guaranties, Security Documents and Pledge of Stock or Other Ownership Interest
72
Section 5.21. Collateral
73
Section 5.22. Property Acquired Subsequent to the Closing Date and Right to Take Additional Collateral
75
Section 5.23. Restrictive Agreements
76
Section 5.24. Other Covenants and Provisions
76
Section 5.25. Amendment of Organizational Documents
76
Section 5.26. Fiscal Year of Borrower
77
Section 5.27. Interest Rate Protection
77
Section 5.28. Acquisition Agreement
77
Section 5.29. Banking Relationship
77
Section 5.30. Further Assurances
77
ARTICLE VI. REPRESENTATIONS AND WARRANTIES    77
Section 6.1. Corporate Existence; Subsidiaries; Foreign Qualification
77
Section 6.2. Corporate Authority
78
Section 6.3. Compliance with Laws and Contracts
78
Section 6.4. Litigation and Administrative Proceedings
79
Section 6.5. Title to Assets
79
Section 6.6. Liens and Security Interests
79
Section 6.7. Tax Returns
80
Section 6.8. Environmental Laws
80
Section 6.9. Locations
80
Section 6.10. Continued Business
81
Section 6.11. Employee Benefits Plans
81
Section 6.12. Consents or Approvals
82
Section 6.13. Solvency
82
Section 6.14. Financial Statements
82
Section 6.15. Regulations
83
Section 6.16. Material Agreements
83
Section 6.17. Intellectual Property
83
Section 6.18. Insurance
83
Section 6.19. Deposit Accounts and Securities Accounts
83
Section 6.20. Accurate and Complete Statements
83

2

TABLE OF CONTENTS

Page


Section 6.21. Investment Company; Other Restrictions
84
Section 6.22. Defaults
84
ARTICLE VII. SECURITY    84
Section 7.1. Security Interest in Collateral
84
Section 7.2. Collections and Receipt of Proceeds by Borrower
84
Section 7.3. Collections and Receipt of Proceeds by Administrative Agent
85
Section 7.4. Administrative Agent’s Authority Under Pledged Notes
87
Section 7.5. Commercial Tort Claims
87
Section 7.6. Use of Inventory and Equipment
87
ARTICLE VIII. EVENTS OF DEFAULT    88
Section 8.1. Payments
88
Section 8.2. Special Covenants
88
Section 8.3. Other Covenants
88
Section 8.4. Representations and Warranties
88
Section 8.5. Cross Default
88
Section 8.6. ERISA Default
89
Section 8.7. Change in Control
89
Section 8.8. Judgments
89
Section 8.9. Material Adverse Change
89
Section 8.10. Security
89
Section 8.11. Validity of Loan Documents
89
Section 8.12. Solvency
90
ARTICLE IX. REMEDIES UPON DEFAULT    90
Section 9.1. Optional Defaults
91
Section 9.2. Automatic Defaults
91
Section 9.3. Letters of Credit
91
Section 9.4. Offsets
91
Section 9.5. Equalization Provisions
92
Section 9.6. Collateral
93
Section 9.7. Other Remedies
94
Section 9.8. Application of Proceeds
94
ARTICLE X. THE ADMINISTRATIVE AGENT    95
Section 10.1. Appointment and Authorization
96
Section 10.2. Note Holders
96
Section 10.3. Consultation With Counsel
96
Section 10.4. Documents
96
Section 10.5. Administrative Agent and Affiliates
97
Section 10.6. Knowledge or Notice of Default
97
Section 10.7. Action by Administrative Agent
97
Section 10.8. Release of Collateral or Guarantor of Payment
98
Section 10.9. Delegation of Duties
98

3

TABLE OF CONTENTS

Page


Section 10.10. Indemnification of Administrative Agent
98
Section 10.11. Successor Administrative Agent
99
Section 10.12. Issuing Lender
99
Section 10.13. Swing Line Lender
99
Section 10.14. Administrative Agent May File Proofs of Claim
100
Section 10.15. No Reliance on Administrative Agent’s Customer Identification Program
100
Section 10.16. Other Agents
100
ARTICLE XI. MISCELLANEOUS    101
Section 11.1. Lenders’ Independent Investigation
101
Section 11.2. No Waiver; Cumulative Remedies
101
Section 11.3. Amendments, Waivers and Consents
101
Section 11.4. Notices
103
Section 11.5. Costs, Expenses and Documentary Taxes
103
Section 11.6. Indemnification
104
Section 11.7. Obligations Several; No Fiduciary Obligations
104
Section 11.8. Execution in Counterparts
104
Section 11.9. Binding Effect; Borrower’s Assignment
105
Section 11.10. Lender Assignments
105
Section 11.11. Sale of Participations
107
Section 11.12. Replacement of Affected Lenders
108
Section 11.13. Patriot Act Notice
108
Section 11.14. Severability of Provisions; Captions; Attachments
108
Section 11.15. Investment Purpose
108
Section 11.16. Entire Agreement
109
Section 11.17. Limitations on Liability of the Issuing Lender
109
Section 11.18. General Limitation of Liability
109
Section 11.19. No Duty
109
Section 11.20. Legal Representation of Parties
110
Section 11.21. Governing Law; Submission to Jurisdiction
110
Jury Trial Waiver
Signature Page 1


Exhibit A    Form of Revolving Credit Note
Exhibit B    Form of Swing Line Note
Exhibit C    Form of Term Note
Exhibit D    Form of Notice of Loan
Exhibit E    Form of Compliance Certificate
Exhibit F    Form of Assignment and Acceptance Agreement

Schedule 1    Commitments of Lenders
Schedule 2    Guarantors of Payment
Schedule 3    Pledged Securities
Schedule 4    Existing Italian Indebtedness
Schedule 5.8    Indebtedness

4

TABLE OF CONTENTS

Page


Schedule 5.9    Liens
Schedule 5.11    Permitted Foreign Subsidiary Loans, Guaranties and Investments
Schedule 6.1    Corporate Existence; Subsidiaries; Foreign Qualification
Schedule 6.4    Litigation and Administrative Proceedings
Schedule 6.5(a)    Real Estate Owned by the Companies
Schedule 6.5(b)    Assets with Certificates of Title Owned by the Companies
Schedule 6.9    Locations
Schedule 6.11(a)    U.S. Employee Benefits Plans
Schedule 6.11(b)    Foreign Benefit Plans and Foreign Pension Plans
Schedule 6.16    Material Agreements
Schedule 6.17    Intellectual Property
Schedule 6.18    Insurance
Schedule 6.19    Deposit Accounts and Securities Accounts
Schedule 7.4    Pledged Notes
Schedule 7.5    Commercial Tort Claims



5




This CREDIT AND SECURITY AGREEMENT (as the same may from time to time be amended, restated or otherwise modified, this “Agreement”) is made effective as of the 26 th  day of June, 2015 among:

(a)    SIFCO INDUSTRIES, INC., an Ohio corporation (the “Borrower”);

(b)    the lenders listed on Schedule 1 hereto and each other Eligible Transferee, as hereinafter defined, that from time to time becomes a party hereto pursuant to Section 2.10(b) or 11.10 hereof (collectively, the “Lenders” and, individually, each a “Lender”); and

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



WITNESSETH:

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

NOW, THEREFORE, it is mutually agreed as follows:


ARTICLE I. DEFINITIONS

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

“Account” means an account, as that term is defined in the U.C.C.

“Account Debtor” means an account debtor, as that term is defined in the U.C.C., or any other Person obligated to pay all or any part of an Account in any manner and includes (without limitation) any Guarantor thereof.

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

“Additional Commitment” means that term as defined in Section 2.10(b)(i) hereof.






“Additional Lender” means an Eligible Transferee that shall become a Lender during the Commitment Increase Period pursuant to Section 2.10(b) hereof.

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

“Additional Lender Assumption Effective Date” means that term as defined in Section 2.10(b)(ii) hereof.

“Additional Term Loan Facility” means that term as defined in Section 2.10(b)(i) hereof.

“Additional Term Loan Facility Amendment” means that term as defined in Section 2.10(c)(ii) hereof.

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

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

“Advantage” means any payment (whether made voluntarily or involuntarily, by offset of any deposit or other indebtedness or otherwise) received by any Lender (a) prior to an Equalization Event, in respect of the Applicable Debt, if such payment results in that Lender having less than its pro rata share (based upon its Applicable Commitment Percentage) of the Applicable Debt then outstanding, and (b) on and after an Equalization Event, in respect of the Obligations, if such payment results in that Lender having less than its pro rata share (based upon its Equalization Percentage) of the Obligations then outstanding.

“Affected Lender” means a Defaulting Lender, an Insolvent Lender or a Downgraded Lender.

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

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

“Anti-Corruption Laws” means all laws, rules, and regulations of any jurisdiction applicable to the Companies from time to time concerning or relating to bribery or corruption.


2




“Applicable Commitment Fee Rate” means:

(a)    for the period from the Closing Date through November 30, 2015, thirty (30.00) basis points; and

(b)    commencing with the Consolidated financial statements of the Borrower for the fiscal quarter ending September 30, 2015, the number of basis points set forth in the following matrix, based upon the result of the computation of the Leverage Ratio as set forth in the Compliance Certificate for such fiscal period and, thereafter, as set forth in each successive Compliance Certificate, as provided below:

Leverage Ratio
Applicable Commitment Fee Rate
Less than 1.50 to 1.00
15.00 basis points
Greater than or equal to 1.50 to 1.00 but less than 2.00 to 1.00
20.00 basis points
Greater than or equal to 2.00 to 1.00 but less than 2.50 to 1.00
25.00 basis points
Greater than or equal to 2.50 to 1.00 but less than 3.00 to 1.00
30.00 basis points
Greater than or equal to 3.00 to 1.00
35.00 basis points

After December 1, 2015, changes to the Applicable Commitment Fee Rate shall be effective on the first day of each calendar month following the date upon which the Administrative Agent should have received, pursuant to Section 5.3(c) hereof, the Compliance Certificate. The above pricing matrix does not modify or waive, in any respect, the requirements of Section 5.7 hereof, the rights of the Administrative Agent and the Lenders to charge the Default Rate, or the rights and remedies of the Administrative Agent and the Lenders pursuant to Articles VIII and IX hereof. Notwithstanding anything herein to the contrary, (i) during any period when the Borrower shall have failed to timely deliver the Consolidated financial statements pursuant to Section 5.3(a) or (b) hereof, or the Compliance Certificate pursuant to Section 5.3(c) hereof, until such time as the appropriate Consolidated financial statements and Compliance Certificate are delivered, the Applicable Commitment Fee Rate shall, at the election of the Administrative Agent (which may be retroactively effective), be the highest rate per annum indicated in the above pricing grid regardless of the Leverage Ratio at such time, and (ii) in the event that any financial information or certification provided to the Administrative Agent in the Compliance Certificate is shown to be inaccurate (regardless of whether this Agreement or the Commitment is in effect when such inaccuracy is discovered), and such inaccuracy, if corrected, would have led to the application of a different Applicable Commitment Fee Rate for any period (an “Applicable Commitment Fee Period”) than the Applicable Commitment Fee Rate applied for such Applicable Commitment Fee Period, then (A) the Borrower shall promptly deliver to the Administrative Agent a corrected Compliance Certificate for such Applicable Commitment Fee Period, (B) the Applicable Commitment Fee Rate shall be determined based on such corrected Compliance Certificate, and (C) either (1) the Borrower shall promptly pay to the Administrative Agent the accrued additional fees owing as a result of an increased Applicable Commitment Fee Rate for such Applicable Commitment Fee Period, or (2)

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the appropriate Lenders shall promptly reimburse the Borrower for the amount of any additional fees charged as a result of a decreased Applicable Commitment Fee Rate for such Applicable Commitment Fee Period.

“Applicable Commitment Percentage” means, for each Lender:

(a)    with respect to the Revolving Credit Commitment, the percentage, if any, set forth opposite such Lender’s name under the column headed “Revolving Credit Commitment Percentage”, as set forth on Schedule 1 hereto, subject to assignments of interests pursuant to Section 11.10 hereof; and

(b)    with respect to the Term Loan Commitment (or the Term Loan if the Term Loan Commitment is no longer in effect), the percentage, if any, set forth opposite such Lender’s name under the column headed “Term Loan Commitment Percentage”, as set forth on Schedule 1 hereto, subject to assignments of interests pursuant to Section 11.10 hereof.

“Applicable Debt” means:

(a)    with respect to the Revolving Credit Commitment, collectively, (i) all Indebtedness incurred by the Borrower to the Revolving Lenders pursuant to this Agreement and the other Loan Documents, and includes, without limitation, the principal of and interest on all Revolving Loans and all Swing Loans and all obligations with respect to Letters of Credit, (ii) each extension, renewal or refinancing of the foregoing, in whole or in part, (iii) the commitment, prepayment and other fees and amounts payable hereunder in connection with the Revolving Credit Commitment, and (iv) all Related Expenses incurred in connection with the foregoing; and

(b)    with respect to the Term Loan Commitment, collectively, (i) all Indebtedness incurred by the Borrower to the Term Lenders pursuant to this Agreement and the other Loan Documents, and includes, without limitation, the principal of and interest on the Term Loan, (ii) each extension, renewal or refinancing of the foregoing in whole or in part, (iii) all prepayment and other fees and amounts payable hereunder in connection with the Term Loan Commitment, and (iv) all Related Expenses incurred in connection with the foregoing.

“Applicable Margin” means:

(a)    for the period from the Closing Date through November 30, 2015, two hundred seventy-five (275.00) basis points for Eurodollar Loans and one hundred seventy-five (175.00) basis points for Base Rate Loans; and

(b)    commencing with the Consolidated financial statements of the Borrower for the fiscal quarter ending September 30, 2015, the number of basis points (depending upon whether Loans are Eurodollar Loans or Base Rate Loans) set forth in the following matrix, based upon the result of the computation of the Leverage Ratio as set forth in the Compliance

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Certificate for such fiscal period and, thereafter, as set forth in each successive Compliance Certificate, as provided below:


Leverage Ratio
Applicable Basis Points for Eurodollar Loans
Applicable Basis Points for Base Rate Loans
Less than 1.50 to 1.00
200.00
100.00
Greater than or equal to 1.50 to 1.00 but less than 2.00 to 1.00
225.00
125.00
Greater than or equal to 2.00 to 1.00 but less than 2.50 to 1.00
250.00
150.00
Greater than or equal to 2.50 to 1.00 but less than 3.00 to 1.00
275.00
175.00
Greater than or equal to 3.00 to 1.00
300.00
200.00

After December 1, 2015, changes to the Applicable Margin shall be effective on the first day of each calendar month following the date upon which the Administrative Agent should have received, pursuant to Section 5.3(c) hereof, the Compliance Certificate. The above pricing matrix does not modify or waive, in any respect, the requirements of Section 5.7 hereof, the rights of the Administrative Agent and the Lenders to charge the Default Rate, or the rights and remedies of the Administrative Agent and the Lenders pursuant to Articles VIII and IX hereof. Notwithstanding anything herein to the contrary, (i) during any period when the Borrower shall have failed to timely deliver the Consolidated financial statements pursuant to Section 5.3(a) or (b) hereof, or the Compliance Certificate pursuant to Section 5.3(c) hereof, until such time as the appropriate Consolidated financial statements and Compliance Certificate are delivered, the Applicable Margin shall, at the election of the Administrative Agent (which may be retroactively effective), be the highest rate per annum indicated in the above pricing grid for Loans of that type, regardless of the Leverage Ratio at such time, and (ii) in the event that any financial information or certification provided to the Administrative Agent in the Compliance Certificate is shown to be inaccurate (regardless of whether this Agreement or the Commitment is in effect when such inaccuracy is discovered), and such inaccuracy, if corrected, would have led to the application of a different Applicable Margin for any period (an “Applicable Margin Period”) than the Applicable Margin applied for such Applicable Margin Period, then (A) the Borrower shall promptly deliver to the Administrative Agent a corrected Compliance Certificate for such Applicable Margin Period, (B) the Applicable Margin shall be determined based on such corrected Compliance Certificate, and (C) either (1) the Borrower shall promptly pay to the Administrative Agent the accrued additional interest owing as a result of an increased Applicable Margin for such Applicable Margin Period, or (2) the appropriate Lenders shall promptly reimburse the Borrower for the amount of any additional interest charged as a result of a decreased Applicable Margin for such Applicable Margin Period.

“Annualized Consolidated EBITDA” means (a) for the fiscal quarter of the Borrower ending on September 30, 2015, Consolidated EBITDA for such quarter times four, (b) for the fiscal quarter of the Borrower ending on December 31, 2015, Consolidated EBITDA for the most recently completed two fiscal quarters times two, and (c) for the fiscal quarter of the Borrower ending on

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March 31, 2016, Consolidated EBITDA for the most recently completed three fiscal quarters times one and one-third.

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

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

“Bailee’s Waiver” means a bailee’s waiver, in form and substance reasonably satisfactory to the Administrative Agent , delivered by a Credit Party in connection with this Agreement, as such waiver may from time to time be amended, restated or otherwise modified.

“Bank Product Agreements” means those certain cash management services and other agreements entered into from time to time between a Company and the Administrative Agent or a Lender (or an affiliate of a Lender) in connection with any of the Bank Products.

“Bank Product Obligations” means all obligations, liabilities, contingent reimbursement obligations, fees and expenses owing by a Company to the Administrative Agent or any Lender (or an affiliate of a Lender) pursuant to or evidenced by the Bank Product Agreements.

“Bank Products” means a service or facility extended to a Company by the Administrative Agent or any Lender (or an affiliate of a Lender) for (a) credit cards and credit card processing services, (b) debit cards, purchase cards and stored value cards, (c) ACH transactions, and (d) cash management, including controlled disbursement, accounts or services.

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

“Base Rate” means, for any day, a rate per annum equal to the highest of (a) the Prime Rate, (b) one‑half of one percent (.50%) in excess of the Federal Funds Effective Rate, and (c) one percent (1.00%) in excess of the London interbank offered rate for loans in Eurodollars for a period of one month (or, if such day is not a Business Day, such rate as calculated on the most recent Business Day). Any change in the Base Rate shall be effective immediately from and after such change in the Base Rate. Notwithstanding the foregoing, if at any time the Base Rate as determined above is less than zero, it shall be deemed to be zero for purposes of this Agreement.

“Base Rate Loan” means a Revolving Loan described in Section 2.2(a) hereof, or a portion of the Term Loan described in Section 2.3 hereof, that shall be denominated in Dollars and on which the Borrower shall pay interest at the Derived Base Rate.

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


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

“Capital Distribution” means a payment made, liability incurred or other consideration given by a Company to any Person that is not a Company, (a) for the purchase, acquisition, redemption, repurchase, payment or retirement of any capital stock or other equity interest of such Company, or (b) as a dividend, return of capital or other distribution (other than any stock dividend, stock split or other equity distribution payable only in capital stock or other equity of such Company) in respect of such Company’s capital stock or other equity interest.

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

“Cash Collateral Account” means a commercial Deposit Account designated “cash collateral account” and maintained by the Borrower with the Administrative Agent , without liability by the Administrative Agent or the Lenders to pay interest thereon, from which account the Administrative Agent , on behalf of the Lenders, shall have the exclusive right to withdraw funds until all of the Secured Obligations are paid in full.

“Cash Equivalent” means cash equivalent as determined in accordance with GAAP.

“Cash Security” means all cash, instruments, Deposit Accounts, Securities Accounts and cash equivalents, in each case whether matured or unmatured, whether collected or in the process of collection, upon which a Credit Party presently has or may hereafter have any claim or interest, wherever located, including but not limited to any of the foregoing that are presently or may hereafter be existing or maintained with, issued by, drawn upon, or in the possession of the Administrative Agent or any Lender.

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

“Change in Control” means:

(a)    the acquisition of, or, if earlier, the shareholder or director approval of the acquisition of, ownership or voting control, directly or indirectly, beneficially (within the meaning of Rules 13d-3 and 13d-5 of the Exchange Act) or of record, on or after the Closing Date, by any Person or group (within the meaning of Sections 13d and 14d of the Exchange Act), of shares representing more than fifty percent (50%) of the aggregate ordinary Voting Power represented by the issued and outstanding equity interests of the Borrower;


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(b)    if, at any time during any period of twenty-four (24) consecutive months, a majority of the members of the board of directors of the Borrower cease to be composed of individuals (i) who were members of that board of directors on the first day of such period, (ii) whose election or nomination to that board of directors was approved by individuals referred to in subpart (i) above that constituted, at the time of such election or nomination, at least a majority of that board of directors, or (iii) whose election or nomination to that board of directors was approved by individuals referred to in subparts (i) and (ii) above that constituted, at the time of such election or nomination, at least a majority of that board of directors; or

(c)    if, prior to the date that is eighteen (18) months after the Closing Date, any individual holding the position of Chief Executive Officer, Chief Financial Officer or Controller of the Borrower shall cease to hold such position.

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

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

“Collateral” means (a) all of the Borrower’s existing and future (i) personal property, (ii) Accounts, Investment Property, instruments, contract rights, chattel paper, documents, supporting obligations, letter‑of‑credit rights, Pledged Securities, Pledged Notes (if any), Commercial Tort Claims, General Intangibles, Inventory and Equipment, (iii) funds now or hereafter on deposit in the Cash Collateral Account (if any), and (iv) Cash Security; and (b) Proceeds and products of any of the foregoing ; provided that Collateral shall exclude (A) any fixed asset that is subject to a purchase money security interest or capital lease permitted under this Agreement to the extent that and only so long as the agreements with respect to such purchase money security interest or capital lease, as the case may be, specifi cally prohibit additional Liens, (B) licenses and contracts which by the terms of such licenses and contracts prohibit the assignment of such agreements (to the extent such prohibition is enforceable at law), (C) any letter-of-credit right for a specified purpose, to the extent the Borrower is required by applicable law to apply the proceeds of such letter-of-credit right for such specified purpose, and (D) voting equity interests of any CFC that is a Foreign Subsidiary, solely to the extent that such equity interests represent more than sixty-five percent (65%) of the outstanding voting equity interests of such CFC.

“Commercial Tort Claim” means a commercial tort claim, as that term is defined in the U.C.C. ( Schedule 7.5 hereto lists all Commercial Tort Claims of the Companies in existence as of the Closing Date.)

“Commitment” means the obligation hereunder of the Lenders, during the Commitment Period, to make Loans and to participate in Swing Loans and the issuance of Letters of Credit pursuant to the Revolving Credit Commitment and the Term Loan Commitment, up to the Total Commitment Amount.


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“Commitment Increase Period” means the period from the Closing Date to the date that is six months prior to the last day of the Commitment Period .

“Commitment Period” means the period from the Closing Date to June 25, 2020, or such earlier date on which the Commitment shall have been terminated pursuant to Article IX hereof.

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

“Companies” means the Borrower and all Subsidiaries.

“Company” means the Borrower or a Subsidiary.

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

“Consideration” means, in connection with an Acquisition, the aggregate consideration paid or to be paid, including borrowed funds, cash, deferred payments, the issuance of securities or notes, the assumption or incurring of liabilities (direct or contingent), the payment of consulting fees or fees for a covenant not to compete and any other consideration paid or to be paid for such Acquisition.

“Consignee’s Waiver” means a consignee’s waiver (or similar agreement), in form and substance reasonably satisfactory to the Administrative Agent , delivered by a Credit Party in connection with this Agreement, as such waiver may from time to time be amended, restated or otherwise modified.

“Consolidated” means the resultant consolidation of the financial statements of the Borrower and its Subsidiaries in accordance with GAAP, including principles of consolidation consistent with those applied in preparation of the consolidated financial statements referred to in Section 6.14 hereof.

“Consolidated Capital Expenditures” means, for any period, the amount of capital expenditures of the Borrower, as determined on a Consolidated basis.

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

“Consolidated EBITDA” means, for any period, as determined on a Consolidated basis:

(a)    Consolidated Net Earnings for such period plus, without duplication, the aggregate amounts deducted in determining such Consolidated Net Earnings in respect of:

(i)    Consolidated Interest Expense;

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(ii)    Consolidated Income Tax Expense;

(iii)    Consolidated Depreciation and Amortization Charges;

(iv)    reasonable non-recurring non-cash losses not incurred in the ordinary course of business;

(v)    non-cash losses attributable to foreign exchange translation gains or losses;

(vi)    non-recurring extraordinary cash losses or expenses not incurred in the ordinary course of business that are reasonably acceptable to the Administrative Agent and supported by documentation reasonably acceptable to the Administrative Agent;

(vii)    operating profit determined on a last-in first-out basis;

(viii)    amortization of intangibles;

(ix)    losses incurred in connection with the impairment of operating assets;

(x)    last-in first-out adjustments;

(xi)    severance costs and recruiting, relocation and search fees and expenses for executives and restructuring costs and expenses, in an aggregate amount not to exceed Three Hundred Fifty Thousand Dollars ($350,000) during any consecutive four fiscal quarters of the Borrower ;

(xii)    non-cash compensation expense, or other non-cash expenses or charges, for such period arising from the granting of stock options, stock appreciation rights, or similar equity arrangements, in an aggregate amount not to exceed One Million Dollars ($1,000,000) during any consecutive four fiscal quarters of the Borrower ;

(xiii)    salary pension settlement expenses, in an aggregate amount not to exceed Two Hundred Fifty Thousand Dollars ($250,000) during any consecutive four fiscal quarters of the Borrower ;

(iv)    transaction expenses and fees related to any Acquisition, merger, amalgamation or consolidation permitted pursuant to Sections 5.12 or 5.13 hereof;

(xv)    the fair market value adjustment amortization of purchased Inventory;


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(xvi)    one-time costs and expenses incurred during the five consecutive fiscal quarters of the Borrower immediately following the Closing Date and in connection with the expansion of the Orange plant , in an aggregate amount not to exceed Six Hundred Thousand Dollars ($600,000);

(xvii)    one-time costs and expenses incurred in connection with the purchase of steam generators, in an aggregate amount not to exceed Twenty-Five Thousand Dollars ($25,000);

(xviii)    one-time costs and expenses incurred during the four consecutive fiscal quarters of the Borrower immediately following the Closing Date and in connection with the purchase of accelerated filers , in an aggregate amount not to exceed Seven Hundred Eighty Thousand Dollars ($780,000);

(xix)    one-time costs and expenses directly incurred in connection with this Agreement and the Target Acquisition, in an aggregate amount not to exceed One Million Five Hundred Seventy-Five Thousand Dollars ($1,575,000); and

(xx)    one-time expenses, charges and fees (including expenses, charges and fees paid to the Administrative Agent and the Lenders) incurred during the specified period and after the Closing Date in connection with the administration (including in connection with any waiver, amendment, supplementation or other modification thereto of the Loan Documents) of the Loan Documents, in an aggregate amount not to exceed Three Hundred Twenty-Five Thousand Dollars ($325,000) during any fiscal year; minus

(b)    to the extent included in Consolidated Net Earnings for such period, (A) non-recurring non-cash gains not incurred in the ordinary course of business, (B) non-cash gains attributable to foreign exchange translation gains or losses, (C) non-recurring extraordinary cash gains not incurred in the ordinary course of business, and (D) gains incurred in connection with the impairment of operating assets .

“Consolidated Fixed Charges” means, for any period, as determined on a Consolidated basis, the aggregate, without duplication, of (a) Consolidated Interest Expense paid in cash, (b) Consolidated Income Tax Expense paid in cash, (c) regularly scheduled principal payments on Consolidated Funded Indebtedness, (d) Capital Distributions, and (e) Consolidated Unfunded Capital Expenditures; provided that, for the purposes of calculating the Fixed Charge Coverage Ratio, Consolidated Unfunded Capital Expenditures shall exclude (i) costs related to the Forge plant project that are incurred during the fiscal quarter of the Borrower ending September 30, 2015, up to an aggregate amount not to exceed Four Hundred Thousand Dollars ($400,000), (ii) costs related to the Orange plant project that are incurred during the fiscal quarter of the Borrower ending September 30, 2015, up to an aggregate amount not to exceed One Hundred Fifty Thousand Dollars ($150,000), and (iii) costs related to the Alliance plant project that are incurred during the fiscal quarter of the Borrower ending September 30, 2015, up to an aggregate amount not to exceed Fifty Thousand Dollars ($50,000).

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“Consolidated Funded Indebtedness” means, at any date, all Indebtedness (including, but not limited to, short‑term, long‑term and Subordinated Indebtedness, if any) of the Borrower, as determined on a Consolidated basis.

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

“Consolidated Interest Expense” means, for any period, the interest expense (including, without limitation, the “imputed interest” portion of Capitalized Lease Obligations, synthetic leases and asset securitizations, if any, and excluding deferred financing costs) of the Borrower for such period, as determined on a Consolidated basis.

“Consolidated Net Earnings” means, for any period, the net income (loss) of the Borrower for such period, as determined on a Consolidated basis.

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

“Consolidated Unfunded Capital Expenditures” means, for any period, Consolidated Capital Expenditures that are not directly financed by the Companies with long-term Indebtedness (other than Revolving Loans) or Capitalized Lease Obligations, as determined on a Consolidated basis.

“Consolidated Working Capital” means, at any date, (a) the current assets of the Borrower (excluding cash and Cash Equivalents), minus (b) the current liabilities of the Borrower (excluding the current maturities of long-term Indebtedness); as determined on a Consolidated basis.

“Control Agreement” means a Deposit Account Control Agreement or Securities Account Control Agreement.

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

“Credit Event” means the making by the Lenders of a Loan, the conversion by the Lenders of a Base Rate Loan to a Eurodollar Loan, the continuation by the Lenders of a Eurodollar Loan after the end of the applicable Interest Period, the making by the Swing Line Lender of a Swing Loan, or the issuance (or amendment or renewal) by the Issuing Lender of a Letter of Credit.

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

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


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

“Defaulting Lender” means a Lender, as reasonably determined by the Administrative Agent , that (a) has failed (which failure has not been cured) to fund any Loan or any participation interest in Letters of Credit or Swing Loans required to be made hereunder in accordance with the terms hereof (unless such Lender shall have notified the Administrative Agent and the Borrower in writing of its good faith determination that a condition under Section 4.1 hereof to its obligation to fund any Loan shall not have been satisfied); (b) has notified the Borrower or the Administrative Agent in writing that it does not intend to comply with any of its funding obligations under this Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Agreement or generally under other agreements in which it commits to extend credit; (c) has failed, within three Business Days after receipt of a written request from the Administrative Agent or the Borrower to confirm that it will comply with the terms of this Agreement relating to its obligation to fund prospective Loans or participations in Letters of Credit or Swing Loans, and such request states that the requesting party has reason to believe that the Lender receiving such request may fail to comply with such obligation, and states such reason; or (d) has failed to pay to the Administrative Agent or any other Lender when due an amount owed by such Lender to the Administrative Agent or any other Lender pursuant to the terms of this Agreement, unless such amount is subject to a good faith dispute or such failure has been cured. Any Defaulting Lender shall cease to be a Defaulting Lender when the Administrative Agent determines, in its reasonable discretion, that such Defaulting Lender is no longer a Defaulting Lender based upon the characteristics set forth in this definition.

“Deposit Account” means a deposit account, as that term is defined in the U.C.C; provided that Deposit Account shall exclude any Deposit Account that is a trust or “special account” on the records of the financial institution where such Deposit Account is located that is exclusively comprised of funds for (a) payroll (and related payroll taxes), (b) 401(k) and other retirement plans and employee benefits, including rabbi trusts for deferred compensation, (c) health care benefits, and (d) escrow arrangements (e.g., environmental indemnity accounts).

“Deposit Account Control Agreement” means each Deposit Account Control Agreement among a Credit Party, the Administrative Agent and a depository institution, dated on or after the Closing Date, to be in form and substance reasonably satisfactory to the Administrative Agent , as the same may from time to time be amended, restated or otherwise modified.

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

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


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

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

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

“Dormant Subsidiary” means a Domestic Subsidiary that (a) is not a Credit Party or the direct or indirect equity holder of a Credit Party, (b) has aggregate assets of less than Fifty Thousand Dollars ($50,000), and (c) has no direct or indirect Subsidiaries with aggregate assets, for such Domestic Subsidiary and all such Subsidiaries, of more than Fifty Thousand Dollars ($50,000).

“Downgraded Lender” means a Lender that has a non-credit enhanced senior unsecured debt rating below investment grade from either Moody’s or Standard & Poor’s, or any other nationally recognized statistical rating organization recognized as such by the SEC, and that has been designated by the Administrative Agent, in its reasonable discretion, as a Downgraded Lender . Any Downgraded Lender shall cease to be a Downgraded Lender when the Administrative Agent determines, in its reasonable discretion, that such Downgraded Lender is no longer a Downgraded Lender based upon the characteristics set forth in this definition.

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

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

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

“Equalization Event” means the earlier of (a) the occurrence of an Event of Default under Section 8.12 hereof, or (b) the acceleration of the maturity of the Obligations after the occurrence of an Event of Default.

“Equalization Maximum Amount” means that term as defined in Section 9.5(b)(i) hereof.

“Equalization Percentage” means that term as defined in Section 9.5(b)(ii) hereof.

“Equipment” means equipment, as that term is defined in the U.C.C.

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

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“ERISA Event” means (a) the existence of a condition or event with respect to an ERISA Plan that presents a material risk of the imposition of an excise tax or any other liability on a Company or of the imposition of a Lien on the assets of a Company; (b) the engagement by a Company in a non-exempt “prohibited transaction” (as defined under ERISA Section 406 or Code Section 4975) or a breach of a fiduciary duty under ERISA that could result in material liability to a Company; (c) the application by a Controlled Group member for a waiver from the minimum funding requirements of Code Section 412 or ERISA Section 302 or a Controlled Group member is required to provide security under Code Section 401(a)(29); (d) the occurrence of a Reportable Event with respect to any Pension Plan as to which notice is required to be provided to the PBGC; (e) the withdrawal by a Controlled Group member from a Multiemployer Plan in a “complete withdrawal” or a “partial withdrawal” (as such terms are defined in ERISA Sections 4203 and 4205, respectively); (f) the plan actuary for a Multiemployer Plan has certified to the plan sponsor and the Secretary of the Department of Treasury that the Multiemployer Plan is in endangered status or critical status as those terms are defined in ERISA Section 305; (g) the failure of an ERISA Plan (and any related trust) that is intended to be qualified under Code Sections 401 and 501 to be so qualified or the failure of any “cash or deferred arrangement” under any such ERISA Plan to meet the requirements of Code Section 401(k) in either case, if such failure is reasonably likely to result in a material liability; (h) the taking by the PBGC of any steps to terminate a Pension Plan or appoint a trustee to administer a Pension Plan, or the taking by a Controlled Group member of any steps to terminate a Pension Plan; (i) the failure by a Controlled Group member or an ERISA Plan to satisfy, in all material respects, any requirements of law applicable to an ERISA Plan if such failure is reasonably likely to result in a material liability; (j) the commencement, existence or threatening of a claim, action, suit, audit or investigation with respect to an ERISA Plan, other than a routine claim for benefits that is reasonably likely to result in a material liability; or (k) any incurrence by or any expectation of the incurrence by a Controlled Group member of any liability for post-retirement benefits under any Welfare Plan, other than as required by ERISA Section 601, et. seq. or Code Section 4980B.

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

“Eurocurrency Liabilities” shall have the meaning assigned to that term in Regulation D of the Board of Governors of the Federal Reserve System, as in effect from time to time.

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

“Eurodollar Loan” means a Revolving Loan described in Section 2.2(a) hereof, or a portion of the Term Loan described in Section 2.3 hereof, that shall be denominated in Dollars and on which the Borrower shall pay interest at the Derived Eurodollar Rate.

“Eurodollar Rate” means, with respect to a Eurodollar Loan, for any Interest Period, a rate per annum equal to the quotient obtained (rounded upwards, if necessary, to the nearest 1/16 th of

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

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

“Excess Cash Flow” means, for any period, as determined on a Consolidated basis, an amount equal to (a) Consolidated EBITDA; minus (b) the sum, without duplication, of (i) the aggregate amount of the principal payments or prepayments (voluntary or mandatory) made with respect to Consolidated Funded Indebtedness for such period, (ii) Consolidated Interest Expenses paid in cash, (iii) Consolidated Income Tax Expense paid in cash, and (iv) Consolidated Unfunded Capital Expenditures.

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

“Excluded Swap Obligations” means, with respect to any Credit Party, any Swap Obligation if, and to the extent that, all or a portion of the guarantee of such Credit Party of, or the grant by such Credit Party of a security interest to secure, such Swap Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Credit Party’s failure to constitute an “eligible contract participant” as defined in the Commodity Exchange Act (determined after giving effect to any “keepwell, support or other agreement” for the benefit of such Credit Party and any and all guarantees of such Credit Party’s Swap Obligations by other Credit Parties), at the time such guarantee or grant of security interest of such Credit Party becomes, or would become, effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such guarantee or security interest is, or becomes, illegal.

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“Excluded Taxes” means, in the case of the Administrative Agent and each Lender, (a) taxes imposed on or measured by its overall net income, branch profits taxes, and franchise taxes, in each case, imposed by the jurisdiction (or any political subdivision thereof) under the laws of which the Administrative Agent or such Lender, as the case may be, is organized or in which its principal office is located, or, in the case of any Lender, in which its applicable lending office is located, or that are imposed as a result of a present or former connection between the Administrative Agent or such Lender and the jurisdiction imposing such Tax (other than connections arising solely from the Administrative Agent or such Lender having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document) , (b) taxes attributable to the Administrative Agent’s or such Lender’s failure to comply with Sections 3.2(d), 3.2(e) or 11.10(f) hereof, as applicable, and (c) any withholding tax imposed with respect to the Administrative Agent or such Lender, as the case may be, pursuant to FATCA .

“Existing Italian Indebtedness” means that certain Indebtedness as set forth in further detail on Schedule 4 hereto.

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

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

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

“Fixed Charge Coverage Ratio” means, on a Consolidated basis, the ratio of (a) Consolidated EBITDA to (b) Consolidated Fixed Charges; provided that, (i) for the fiscal quarter of the Borrower ending on September 30, 2015, the Fixed Charge Coverage Ratio shall be measured for the most recently completed fiscal quarter, (ii) for the fiscal quarter of the Borrower ending on December 31, 2015, the Fixed Charge Coverage Ratio shall be measured for the most recently completed two fiscal quarters, (iii) for the fiscal quarter of the Borrower ending on March 31, 2016, the Fixed Charge Coverage Ratio shall be measured for the most recently completed three fiscal quarters, and (iv) for the fiscal quarter of the Borrower ending on June 30, 2016 and each fiscal quarter thereafter, the Fixed Charge Coverage Ratio shall be measured for the most recently completed four fiscal quarters.

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“Foreign Benefit Plan” means each material plan, fund, program or policy established under the law of a jurisdiction other than the United States (or a state or local government thereof), whether formal or informal, funded or unfunded, insured or uninsured, providing employee benefits, including medical, hospital care, dental, sickness, accident, disability, life insurance, pension, retirement or savings benefits, under which one or more Companies have any liability with respect to any employee or former employee, but excluding any Foreign Pension Plan.

“Foreign Pension Plan” means a pension plan required to be registered under the law of a jurisdiction other than the United States (or a state or local government thereof), that is maintained or contributed to by one or more Companies for their employees or former employees.

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

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

“General Intangibles” means (a) general intangibles, as that term is defined in the U.C.C.; and (b) choses in action, causes of action, intellectual property, customer lists, corporate or other business records, inventions, designs, patents, patent applications, service marks, registrations, trade names, trademarks, copyrights, licenses, goodwill, computer software, rights to indemnification and tax refunds.

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

“Guarantor” means a Person that shall have pledged its credit or property in any manner for the payment or other performance of the indebtedness, contract or other obligation of another and includes (without limitation) any guarantor (whether of payment or of collection), surety, co-maker, endorser or Person that shall have agreed conditionally or otherwise to make any purchase, loan or investment in order thereby to enable another to prevent or correct a default of any kind.

“Guarantor of Payment” means each of the Companies designated a “Guarantor of Payment” on Schedule 2 hereto, each of which is executing and delivering a Guaranty of Payment on the

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Closing Date, and any other Person that shall execute and deliver a Guaranty of Payment to the Administrative Agent, or become a party by joinder to the Guaranty of Payment that was executed on the Closing Date, subsequent to the Closing Date.

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

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

“Hedge Agreement” means any (a) hedge agreement, interest rate swap, cap, collar or floor agreement, or other interest rate management device entered into by a Company with any Person in connection with any Indebtedness of such Company, or (b) currency swap agreement, forward currency purchase agreement or similar arrangement or agreement designed to protect against fluctuations in currency exchange rates entered into by a Company.

“Indebtedness” means, for any Company, without duplication, (a) all obligations to repay borrowed money, direct or indirect, incurred, assumed, or guaranteed, (b) all obligations in respect of the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business), (c) all obligations under conditional sales or other title retention agreements, (d) all obligations (contingent or otherwise) under any letter of credit or banker’s acceptance, (e) all net obligations under any currency swap agreement, interest rate swap, cap, collar or floor agreement or other interest rate management device or any Hedge Agreement (for the avoidance of doubt, any such obligations that constitute Indebtedness pursuant to any other subpart of this definition shall be excluded from this subpart (e) to avoid duplication), (f) all synthetic leases, (g) all Capitalized Lease Obligations, (h) all obligations of such Company with respect to asset securitization financing programs, (i) all obligations to advance funds to, or to purchase assets, property or services from, any other Person in order to maintain the financial condition of such Person, (j) all indebtedness of the types referred to in subparts (a) through (i) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Company is a general partner or joint venturer, unless such indebtedness is expressly made non-recourse to such Company, (k) any other transaction (including forward sale or purchase agreements, but excluding trade accounts payable in the ordinary course of business) having the commercial effect of a borrowing of money entered into by such Company to finance its operations or capital requirements, and (l) any guaranty of any obligation described in subparts (a) through (k) above.

“Insolvent Lender” means a Lender, as reasonably determined by the Administrative Agent , that (a) has become or is not Solvent or is the subsidiary of a Person that has become or is not Solvent; or (b) has become the subject of a proceeding under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment,

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or is a subsidiary of a Person that has become the subject of a proceeding under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall not be an Insolvent Lender solely by virtue of the ownership or acquisition of an equity interest in such Lender or a parent company thereof by a Governmental Authority or an instrumentality thereof so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any Insolvent Lender shall cease to be an Insolvent Lender when the Administrative Agent determines, in its reasonable discretion, that such Insolvent Lender is no longer an Insolvent Lender based upon the characteristics set forth in this definition.

“Intellectual Property Security Agreement” means each Intellectual Property Security Agreement, executed and delivered on or after the Closing Date by the Borrower or a Guarantor of Payment, wherein the Borrower or such Guarantor of Payment, as the case may be, has granted to the Administrative Agent, for the benefit of the Lenders, a security interest in all intellectual property owned by the Borrower or such Guarantor of Payment, as the same may from time to time be amended, restated or otherwise modified.

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

“Interest Period” means, with respect to a Eurodollar Loan , the period commencing on the date such Eurodollar Loan is made and ending on the last day of such period, as selected by the Borrower pursuant to the provisions hereof, and, thereafter (unless such Eurodollar Loan is converted to a Base Rate Loan), each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of such period, as selected by the Borrower pursuant to the provisions hereof. The duration of each Interest Period for a Eurodollar Loan shall be one month, two months, three months or six months, in each case as the Borrower may select upon notice, as set forth in Section 2.6 hereof; provided that, if the Borrower shall fail to so select the duration of any Interest Period at least three Business Days prior to the Interest Adjustment Date applicable to such Eurodollar Loan, the Borrower shall be deemed to have converted such Eurodollar Loan to a Base Rate Loan at the end of the then current Interest Period. Notwithstanding the foregoing, no Interest Period shall extend beyond the last day of the Commitment Period.

“Interest Rate Protection” means, with respect to Indebtedness of the Borrower, that either (a) the Borrower shall have obtained a fixed rate of interest on such Indebtedness, or (b) the Borrower shall have entered into a Hedge Agreement or Hedge Agreements; either of which shall be upon such terms and conditions as shall be satisfactory to the Administrative Agent.

“Inventory” means inventory, as that term is defined in the U.C.C.


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“Investment Property” means investment property, as that term is defined in the U.C.C., unless the Uniform Commercial Code as in effect in another jurisdiction would govern the perfection and priority of a security interest in investment property, and, in such case, “investment property” shall be defined in accordance with the law of that jurisdiction as in effect from time to time.

“Issuing Lender” means, as to any Letter of Credit transaction hereunder, the Administrative Agent as issuer of the Letter of Credit, or, in the event that the Administrative Agent shall be unable to issue a Letter of Credit, such other Revolving Lender as shall be acceptable to the Administrative Agent and shall agree to issue the Letter of Credit in its own name, but in each instance on behalf of the Revolving Lenders.

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

“Landlord’s Waiver” means a landlord’s waiver or mortgagee’s waiver, each in form and substance reasonably satisfactory to the Administrative Agent, delivered by a Credit Party in connection with this Agreement, as such waiver may from time to time be amended, restated or otherwise modified.

“Lender” means that term as defined in the first paragraph of this Agreement and, as the context requires, shall include the Issuing Lender and the Swing Line Lender.

“Lender Credit Exposure” means, for any Lender, at any time, the aggregate of such Lender’s respective pro rata shares of the Revolving Credit Exposure and the Term Loan Exposure.

“Letter of Credit” means a commercial documentary letter of credit or standby letter of credit that shall be issued by the Issuing Lender for the account of the Borrower or any other Company, including amendments thereto, if any, and shall have an expiration date no later than the earlier of (a) three hundred sixty‑four (364) days after its date of issuance (provided that such Letter of Credit may provide for the renewal thereof for additional one year periods), or (b) thirty (30) days prior to the last day of the Commitment Period.

“Letter of Credit Commitment” means the commitment of the Issuing Lender, on behalf of the Revolving Lenders, to issue Letters of Credit in an aggregate face amount of up to Five Million Dollars ($5,000,000).

“Letter of Credit Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all issued and outstanding Letters of Credit, and (b) the aggregate of the draws made on Letters of Credit that have not been reimbursed by the Borrower or converted to a Revolving Loan pursuant to Section 2.2(b)(v) hereof.

“Letter of Credit Fee” means, with respect to any Letter of Credit, for any day, an amount equal to (a) the face amount of such Letter of Credit, multiplied by (b) the Applicable Margin for Revolving Loans that are Eurodollar Loans in effect on such day divided by three hundred sixty (360).


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“Leverage Ratio” means, as determined on a Consolidated basis, the ratio of (a) Consolidated Funded Indebtedness (for the most recently completed fiscal quarter of the Borrower); to (b) Consolidated EBITDA (for the most recently completed four fiscal quarters of the Borrower); provided that, for purposes of calculating the Leverage Ratio for the fiscal quarters of the Borrower ending on September 30, 2015, December 31, 2015 and March 31, 2016, such ratio shall equal (i) Consolidated Funded Indebtedness (for the most recently completed fiscal quarter of the Borrower); to (ii) Annualized Consolidated EBITDA.

“Lien” means any mortgage, deed of trust, security interest, lien (statutory or other), charge, assignment, hypothecation, encumbrance on, pledge or deposit of, or conditional sale, lease (other than Operating Leases), sale with a right of redemption or other title retention agreement and any capitalized lease with respect to any property (real or personal) or asset, and the filing of, or agreement to give, any financing statement perfecting a security interest or providing a notice filing (other than a notice filing with respect to a bailment, a consignment or an operating lease) of a lien or security interest under the law of any jurisdiction.

“Loan” means a Revolving Loan, a Swing Loan or the Term Loan.

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

“Mandatory Prepayment” means that term as defined in Section 2.12(c) hereof.

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

“Material Indebtedness Agreement” means any debt instrument, lease (capital, operating or otherwise), guaranty, contract, commitment, agreement or other arrangement evidencing or entered into in connection with any Indebtedness of any Company or the Companies equal to or in excess of the amount of Two Million Dollars ($2,000,000).

“Material Recovery Determination Notice” means that term as defined in Section 2.12(c)(iii) hereof.

“Material Recovery Event” means (a) any casualty loss in respect of assets of a Company covered by casualty insurance, and (b) any compulsory transfer or taking under threat of compulsory transfer of any asset of a Company by any Governmental Authority; provided that, in the case of

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either subpart (a) or (b) hereof, the proceeds received by the Companies from such loss, transfer or taking exceeds Five Hundred Thousand Dollars ($500,000).

“Maximum Amount” means, for each Lender, the amount set forth opposite such Lender’s name under the column headed “Maximum Amount” as set forth on Schedule 1 hereto, subject to (a) decreases pursuant to Section 2.10(a) hereof, (b) increases pursuant to Section 2.10(b) hereof, and (c) assignments of interests pursuant to Section 11.10 hereof; provided that the Maximum Amount for the Swing Line Lender shall exclude the Swing Line Commitment (other than its pro rata share), and the Maximum Amount of the Issuing Lender shall exclude the Letter of Credit Commitment (other than its pro rata share thereof).

“Maximum Rate” means that term as defined in Section 2.4(e) hereof.

“Maximum Revolving Amount” means Twenty-Five Million Dollars ($25,000,000), as such amount (a) shall decrease by Five Million Dollars ($5,000,000) on January 1, 2016, (b) may be increased pursuant to Section 2.10(b) hereof, or (c) may be decreased pursuant to Section 2.10(a)(i) hereof.

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

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

“Non‑Consenting Lender” means that term as defined in Section 11.3(c) hereof.

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

“Note” means a Revolving Credit Note, the Swing Line Note or a Term Note, or any other promissory note delivered pursuant to this Agreement.

“Notice of Loan” means a Notice of Loan in the form of the attached Exhibit D .

“Obligations” means, collectively, (a) all Indebtedness and other obligations now owing or hereafter incurred by the Borrower to the Administrative Agent , the Swing Line Lender, the Issuing Lender, or any Lender pursuant to this Agreement and the other Loan Documents, and includes the principal of and interest on all Loans, and all obligations of the Borrower or any other Credit Party pursuant to Letters of Credit; (b) each extension, renewal, consolidation or refinancing of any of the foregoing, in whole or in part; (c) the commitment and other fees, and any prepayment fees, payable pursuant to this Agreement or any other Loan Document; (d) all fees and charges in connection with Letters of Credit; (e) every other liability, now or hereafter owing to the Administrative Agent or any Lender by any Company pursuant to this Agreement or any other Loan Document; and (f) all Related Expenses.

“OFAC” means that term as defined in Section 6.3(d) hereof.


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“Operating Leases” means all real or personal property leases under which any Company is bound or obligated as a lessee or sublessee and which, under GAAP, are not required to be capitalized on a balance sheet of such Company; provided that Operating Leases shall not include any such lease under which any Company is also bound as the lessor or sublessor.

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

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

“Overall Commitment Percentage” means, for any Lender, the percentage determined by dividing (a) the sum, based upon such Lender’s Applicable Commitment Percentages, of (i) the principal outstanding on the Term Loan, (ii) the aggregate principal amount of Revolving Loans outstanding, (iii) the Swing Line Exposure, and (iv) the Letter of Credit Exposure; by (b) the sum of (A) the aggregate principal amount of all Loans outstanding, plus (B) the Letter of Credit Exposure.

“Participant” means that term as defined in Section 11.11 hereof.

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

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

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

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

(a)    the investments by the Borrower or a Domestic Subsidiary in a Foreign Subsidiary, in such amounts existing as of the Closing Date and set forth on Schedule 5.11 hereto;

(b)    the loans by the Borrower or a Domestic Subsidiary to a Foreign Subsidiary, in such amounts existing as of the Closing Date and set forth on Schedule 5.11 hereto (and any extension, renewal or refinancing thereof but, only to the extent that the principal amount thereof does not increase after the Closing Date);


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(c)    the loans by the Borrower to SIFCO Irish Holdings Limited for the purpose of consummating the Target Acquisition, in an aggregate amount not to exceed Twenty Million Dollars ($20,000,000);

(d)    any investment by a Foreign Subsidiary in, or loan from a Foreign Subsidiary to, or guaranty from a Foreign Subsidiary of Indebtedness of, a Company; and

(e)    any other loan or investment by the Borrower or a Domestic Subsidiary to or in a Foreign Subsidiary, up to the aggregate amount, when combined with any Letters of Credit issued for the account of a Foreign Subsidiary, not to exceed Five Hundred Thousand Dollars ($500,000) at any time outstanding.

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

“Pledge Agreement” means each of the Pledge Agreements, relating to the Pledged Securities, executed and delivered by the Borrower or a Guarantor of Payment, as applicable, in favor of the Administrative Agent, for the benefit of the Lenders, dated on or after the Closing Date, as any of the foregoing may from time to time be amended, restated or otherwise modified.

“Pledged Notes” means the promissory notes payable to a Credit Party (in an original principal amount in excess of One Hundred Thousand Dollars ($100,000), as described on Schedule 7.4 hereto, and any additional or future promissory notes that may hereafter from time to time be payable to the Borrower.
 
“Pledged Securities” means all of the shares of capital stock or other equity interest of a direct Subsidiary of a Credit Party, whether now owned or hereafter acquired or created, and all proceeds thereof; provided that Pledged Securities shall exclude shares of voting capital stock or other voting equity interests in any Foreign Subsidiary that is a CFC in excess of sixty-five percent (65%) of the total outstanding shares of voting capital stock or other voting equity interest of such Foreign Subsidiary, whether held directly or indirectly through a disregarded entity. ( Schedule 3 hereto lists, as of the Closing Date, all of the Pledged Securities.)

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

“Proceeds” means (a) proceeds, as that term is defined in the U.C.C., and any other proceeds, and (b) whatever is received upon the sale, exchange, collection or other disposition of Collateral or proceeds, whether cash or non-cash. Cash proceeds include, without limitation, moneys, checks and Deposit Accounts. Proceeds include, without limitation, any Account arising when the right to payment is earned under a contract right, any insurance payable by reason of loss or damage to

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the Collateral, and any return or unearned premium upon any cancellation of insurance. Except as expressly authorized in this Agreement, the right of the Administrative Agent and the Lenders to Proceeds specifically set forth herein, or indicated in any financing statement, shall never constitute an express or implied authorization on the part of the Administrative Agent or any Lender to a Company’s sale, exchange, collection or other disposition of any or all of the collateral securing the Obligations.

“Processor’s Waiver” means a processor’s waiver (or similar agreement), in form and substance reasonably satisfactory to the Administrative Agent , delivered by a Credit Party in connection with this Agreement, as such waiver may from time to time be amended, restated or otherwise modified.

“Register” means that term as described in Section 11.10(i) hereof.

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

“Related Expenses” means any and all costs, liabilities and expenses (including, without limitation, losses, damages, penalties, claims, actions, reasonable and documented attorneys’ fees, legal expenses, judgments, suits and disbursements) (a) incurred by the Administrative Agent , or imposed upon or asserted against the Administrative Agent or any Lender, in any attempt by the Administrative Agent and the Lenders to (i) obtain, preserve, perfect or enforce any Loan Document or any security interest evidenced by any Loan Document; (ii) obtain payment, performance or observance of any and all of the Obligations; or (iii) maintain, insure, audit, collect, preserve, repossess or dispose of any of the collateral securing the Obligations or any part thereof, including, without limitation, costs and expenses for appraisals, assessments and audits of any Company or any such collateral; or (b) incidental or related to subpart (a) above, including, without limitation, interest thereupon from the date incurred, imposed or asserted until paid at the Default Rate.

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

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

“Required Lenders” means the holders, based upon each Lender’s Applicable Commitment Percentages, of at least fifty-one percent (51%) of an amount (the “Total Amount”) equal to the sum of:

(a)    (i) during the Commitment Period, the Maximum Revolving Amount , or (ii) after the Commitment Period, the Revolving Credit Exposure; and
 
(b)    the principal outstanding on the Term Loan;

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provided that (A) the portion of the Total Amount held or deemed to be held by any Defaulting Lender or Insolvent Lender shall be excluded for purposes of making a determination of Required Lenders, and (B) if there shall be two or more Lenders (that are not Defaulting Lenders or Insolvent Lenders), Required Lenders shall constitute at least two Lenders.

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

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

“Restricted Payment” means, with respect to any Company, (a) any Capital Distribution, (b) any amount paid by such Company in repayment, redemption, retirement or repurchase, directly or indirectly, of any Subordinated Indebtedness or Existing Italian Indebtedness, or (c) any amount paid by such Company in respect of any management, consulting or other similar arrangement with any equity holder (other than a Company) of a Company or an Affiliate; provided that Restricted Payments shall not include compensation paid to employees (including pursuant to any benefit or incentive plan) or commissions paid to sales representatives which are also equity holders or payments to directors which are also equity holders for their service on the board of directors, in each case in the ordinary course of business and in a manner consistent with past business practice.

“Revolving Credit Commitment” means the obligation hereunder, during the Commitment Period, of (a) the Revolving Lenders (and each Revolving Lender) to make Revolving Loans, (b) the Issuing Lender to issue, and each Revolving Lender to participate in, Letters of Credit pursuant to the Letter of Credit Commitment, and (c) the Swing Line Lender to make, and each Revolving Lender to participate in, Swing Loans pursuant to the Swing Line Commitment; up to an aggregate principal amount outstanding at any time equal to the Maximum Revolving Amount .

“Revolving Credit Exposure” means, at any time, the sum of (a) the aggregate principal amount of all Revolving Loans outstanding, (b) the Swing Line Exposure, and (c) the Letter of Credit Exposure.

“Revolving Credit Note” means a Revolving Credit Note, in the form of the attached Exhibit A , executed and delivered pursuant to Section 2.5(a) hereof.


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“Revolving Lender” means a Lender with a percentage of the Revolving Credit Commitment as set forth on Schedule 1 hereto, or that acquires a percentage of the Revolving Credit Commitment pursuant to Section 2.10(b) or 11.10 hereof.

“Revolving Loan” means a loan made to the Borrower by the Revolving Lenders in accordance with Section 2.2(a) hereof.

“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by the Office of Foreign Assets Control or the U.S. Department of State or (b) the United Nations Security Council, the European Union or Her Majesty’s Treasury of the United Kingdom.

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

“Secured Obligations ” means, collectively, (a) the Obligations , (b) all obligations and liabilities of the Companies owing to a Lender (or an entity that is an affiliate of a then existing Lender) under Hedge Agreements, and (c) the Bank Product Obligations owing to a Lender (or an entity that is an affiliate of a then existing Lender) under Bank Product Agreements; provided that Secured Obligations of a Credit Party shall not include Excluded Swap Obligations owing from such Credit Party.

“Securities Account” means a securities account, as that term is defined in the U.C.C.

“Securities Account Control Agreement” means each Securities Account Control Agreement among a Company, the Administrative Agent and a Securities Intermediary, dated on or after the Closing Date, to be in form and substance reasonably satisfactory to the Administrative Agent, as the same may from time to time be amended, restated or otherwise modified.

“Securities Intermediary” means a clearing corporation or a Person, including, without limitation, a bank or broker, that in the ordinary course of its business maintains Securities Accounts for others and is acting in that capacity.

“Security Agreement” means each Security Agreement, executed and delivered by a Guarantor of Payment in favor of the Administrative Agent, for the benefit of the Lenders, dated on or after the Closing Date, as the same may from time to time be amended, restated or otherwise modified.

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

“Security Document” means each Security Agreement, each Security Agreement Joinder, each Pledge Agreement, each Intellectual Property Security Agreement, each Processor’s Waiver, each Consignee’s Waiver, each Landlord’s Waiver, each Bailee’s Waiver, each Control Agreement,

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each U.C.C. Financing Statement or similar filing as to a jurisdiction located outside of the United States filed in connection herewith or perfecting any interest created in any of the foregoing documents, and any other document pursuant to which any Lien is granted by a Company or any other Person to the Administrative Agent , for the benefit of the Lenders, as security for the Secured Obligations, or any part thereof, and each other agreement executed or provided to the Administrative Agent in connection with any of the foregoing, as any of the foregoing may from time to time be amended, restated or otherwise modified or replaced.

“Solvent” means, with respect to any Person, that (a) the fair value of such Person’s assets is in excess of the total amount of such Person’s debts, as determined in accordance with the Bankruptcy Code, (b) the present fair saleable value of such Person’s assets is in excess of the amount that will be required to pay such Person’s debts as such debts become absolute and matured, (c) such Person is able to realize upon its assets and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as such liabilities mature in the normal course of business, (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond its ability to pay as such debts and liabilities mature, and (e) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which its property would constitute an unreasonably small amount of capital. As used in this definition, the term “debts” includes any legal liability, whether matured or unmatured, liquidated or unliquidated, absolute, fixed or contingent, as determined in accordance with the Bankruptcy Code.

“Specific Commitment” means the Revolving Credit Commitment or the Term Loan Commitment.

“Standard & Poor’s” means Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc., and any successor to such company.

“Subordinated Indebtedness” means Indebtedness that shall have been subordinated (by written terms or written agreement being, in either case, in form and substance reasonably satisfactory to the Administrative Agent ) in favor of the prior payment in full of the Obligations.

“Subsidiary” means, with respect to any Person, (a) a corporation more than fifty percent (50%) of the Voting Power of which is owned, directly or indirectly, by such Person or by one or more other subsidiaries of such Person or by such Person and one or more subsidiaries of such Person, (b) a partnership, limited liability company or unlimited liability company of which such Person, one or more other subsidiaries of such Person or such Person and one or more subsidiaries of such Person, directly or indirectly, is a general partner or managing member, as the case may be, or otherwise has an ownership interest greater than fifty percent (50%) of all of the ownership interests in such partnership, limited liability company or unlimited liability company, or (c) any other Person (other than a corporation, partnership, limited liability company or unlimited liability company) in which such Person, one or more other subsidiaries of such Person or such Person and one or more subsidiaries of such Person, directly or indirectly, has at least a majority interest in the Voting Power or the power to elect or direct the election of a majority of directors or other governing body of such Person. Unless the context otherwise requires, Subsidiary herein shall be a reference to a Subsidiary of the Borrower.

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“Swap Obligations” means, with respect to any Company, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

“Swing Line Commitment” means the commitment of the Swing Line Lender to make Swing Loans to the Borrower, on a discretionary basis, up to the aggregate amount at any time outstanding of Two Million Five Hundred Thousand Dollars ($2,500,000).

“Swing Line Exposure” means, at any time, the aggregate principal amount of all Swing Loans outstanding.

“Swing Line Lender” means KeyBank, as holder of the Swing Line Commitment.

“Swing Line Note” means the Swing Line Note , in the form of the attached Exhibit B , executed and delivered pursuant to Section 2.5(b) hereof.

“Swing Loan” means a loan that shall be denominated in Dollars made to the Borrower by the Swing Line Lender under the Swing Line Commitment, in accordance with Section 2.2(c) hereof.

“Swing Loan Maturity Date” means, with respect to any Swing Loan, the earliest of (a) demand by the Swing Line Lender, (b) thirty (30) days after the date such Swing Loan is made, or (c) the last day of the Commitment Period.

“Target” means C Blade S.p.A. Forging & Manufacturing, an Italian joint stock company.

“Target Acquisition” means the Acquisition by the Borrower of Target pursuant to the Target Acquisition Documents.

“Target Acquisition Documents” means the Target Purchase Agreement and each material document executed and delivered in connection therewith.

“Target Purchase Agreement” means that certain Share Purchase Agreement, dated March 16, 2015, by and among, Riello Investimenti Partners SGR S.p.A., Giorgio Visentini, Giorgio Frassini, Giancarlo Sclabi, Matteo Talmsassons, and the Borrower.

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

“Term Lender” means a Lender with a percentage of the Term Loan Commitment as set forth on Schedule 1 hereto, or that acquires a percentage of the Term Loan Commitment pursuant to Section 11.10 hereof.

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“Term Loan” means the loan made to the Borrower by the Term Lenders in accordance with Section 2.3 hereof.

“Term Loan Commitment” means the obligation hereunder of the Term Lenders to make the Term Loan in the original principal amount of Twenty Million Dollars ($20,000,000), with each Term Lender’s obligation to participate therein being in the amount set forth opposite such Term Lender’s name under the column headed “Term Loan Commitment Amount” as set forth on Schedule 1 hereto, subject to assignments of interests pursuant to Section 11.10 hereof.

“Term Loan Exposure” means, at any time, the outstanding principal amount of the Term Loan and any Additional Term Loan Facility.

“Term Note” means a Term Note, in the form of the attached Exhibit C executed and delivered pursuant to Section 2.5(c) hereof.

“Total Commitment Amount” means Forty-Five Million Dollars ($45,000,000), as such amount (a) shall decrease by Five Million Dollars ($5,000,000) on January 1, 2016, (b) may be increased pursuant to Section 2.10(b) hereof, or (c) may be decreased pursuant to Section 2.10(a) hereof.

“U.C.C.” means the Uniform Commercial Code, as in effect from time to time in the State of Ohio.

“U.C.C. Financing Statement” means a financing statement filed or to be filed in accordance with the Uniform Commercial Code, as in effect from time to time, in the relevant state or states.

“United States” means the United States of America, its several states and its territories.

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

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

Section 1.2. Accounting Terms .

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


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

Section 1.3. Terms Generally . The foregoing definitions shall be applicable to the singular and plural forms of the foregoing defined terms. Unless otherwise defined in this Article I, terms that are defined in the U.C.C. are used herein as so defined.


ARTICLE II. AMOUNT AND TERMS OF CREDIT

Section 2.1. Amount and Nature of Credit .

(a)    Subject to the terms and conditions of this Agreement, the Lenders, during the Commitment Period and to the extent hereinafter provided, shall make Loans to the Borrower, participate in Swing Loans made by the Swing Line Lender to the Borrower, and issue or participate in Letters of Credit at the request of the Borrower, in such aggregate amount as the Borrower shall request pursuant to the Commitment; provided that in no event shall the aggregate principal amount of all Loans and Letters of Credit outstanding under this Agreement be in excess of the Total Commitment Amount.

(b)    Each Lender, for itself and not one for any other, agrees to make Loans, participate in Swing Loans, and issue or participate in Letters of Credit, during the Commitment Period, on such basis that, immediately after the completion of any borrowing by the Borrower or the issuance of a Letter of Credit:

(i)    the aggregate outstanding principal amount of Loans made by such Lender (other than Swing Loans made by the Swing Line Lender), when combined with such Lender’s pro rata share, if any, of the Letter of Credit Exposure and the Swing Line Exposure, shall not be in excess of the Maximum Amount for such Lender; and

(ii)    with respect to each Specific Commitment, the aggregate outstanding principal amount of Loans (other than Swing Loans) made by such Lender with respect to such Specific Commitment shall represent that percentage of the aggregate principal amount

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then outstanding on all Loans (other than Swing Loans) within such Specific Commitment that shall be such Lender’s Applicable Commitment Percentage.

Within each Specific Commitment, each borrowing (other than Swing Loans which shall be risk participated on a pro rata basis) from the Lenders shall be made pro rata according to the respective Applicable Commitment Percentages of the Lenders.

(c)    The Loans may be made as Revolving Loans as described in Section 2.2(a) hereof, as the Term Loan as described in Section 2.3 hereof, and as Swing Loans as described in Section 2.2(c) hereof, and Letters of Credit may be issued in accordance with Section 2.2(b) hereof.

Section 2.2. Revolving Credit Commitment .

(a)     Revolving Loans . Subject to the terms and conditions of this Agreement, during the Commitment Period, the Revolving Lenders shall make a Revolving Loan or Revolving Loans to the Borrower in such amount or amounts as the Borrower, through an Authorized Officer, may from time to time request, but not exceeding in aggregate principal amount at any time outstanding hereunder the Revolving Credit Commitment, when such Revolving Loans are combined with the Letter of Credit Exposure and the Swing Line Exposure. The Borrower shall have the option, subject to the terms and conditions set forth herein, to borrow Revolving Loans, maturing on the last day of the Commitment Period, by means of any combination of Base Rate Loans or Eurodollar Loans. Subject to the provisions of this Agreement, the Borrower shall be entitled under this Section 2.2(a) to borrow Revolving Loans, repay the same in whole or in part and re-borrow Revolving Loans hereunder at any time and from time to time during the Commitment Period. The aggregate outstanding amount of all Revolving Loans shall be payable in full on the last day of the Commitment Period.

(b)     Letters of Credit .

(i)     Generally . Subject to the terms and conditions of this Agreement, during the Commitment Period, the Issuing Lender shall, in its own name, on behalf of the Revolving Lenders, issue such Letters of Credit for the account of the Borrower or any other Company (provided that with respect to any Company that is not a Guarantor of Payment, the Borrower shall be a co-applicant, and be jointly and severally liable, with respect to each Letter of Credit issued for the account of such Company) , as the Borrower may from time to time request. The Borrower shall not request any Letter of Credit (and the Issuing Lender shall not be obligated to issue any Letter of Credit) if, after giving effect thereto, (A) the Letter of Credit Exposure would exceed the Letter of Credit Commitment, or (B) the Revolving Credit Exposure would exceed the Revolving Credit Commitment. The issuance of each Letter of Credit shall confer upon each Revolving Lender the benefits and liabilities of a participation consisting of an undivided pro rata interest in the Letter of Credit to the extent of such Revolving Lender’s Applicable Commitment Percentage.

(ii)     Request for Letter of Credit . Each request for a Letter of Credit shall be delivered to the Administrative Agent (and to the Issuing Lender, if the Issuing Lender is a

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Lender other than the Administrative Agent) by an Authorized Officer not later than 11:00 A.M. (Eastern time) three Business Days prior to the date of the proposed issuance of the Letter of Credit. Each such request shall be in a form acceptable to the Administrative Agent (and the Issuing Lender, if the Issuing Lender is a Lender other than the Administrative Agent) and shall specify the face amount thereof, whether such Letter of Credit is a commercial documentary or a standby Letter of Credit, the account party, the beneficiary, the requested date of issuance, amendment, renewal or extension, the expiry date thereof, and the nature of the transaction or obligation to be supported thereby. Concurrently with each such request, the Borrower, and any other Company for whose account the Letter of Credit is to be issued, shall execute and deliver to the Issuing Lender an appropriate application and agreement, being in the standard form of the Issuing Lender for such letters of credit, as amended to conform to the provisions of this Agreement if required by the Administrative Agent. The Administrative Agent shall give the Issuing Lender and each Revolving Lender notice of each such request for a Letter of Credit.

(iii)     Commercial Documentary Letters of Credit Fees . With respect to each Letter of Credit that shall be a commercial documentary letter of credit and the drafts thereunder, whether issued for the account of the Borrower or any other Company , the Borrower agrees to (A) pay to the Administrative Agent, for the pro rata benefit of the Lenders, a non-refundable commission based upon the face amount of such Letter of Credit, which shall be paid quarterly in arrears, on each Regularly Scheduled Payment Date, in an amount equal to the aggregate sum of the Letter of Credit Fee for such Letter of Credit for each day of such quarter; (B) pay to the Administrative Agent, for the sole benefit of the Issuing Lender, an additional Letter of Credit fee, which shall be paid on the date that such Letter of Credit is issued, amended or renewed, at the rate of one-eighth percent (1/8%) of the face amount of such Letter of Credit; and (C) pay to the Administrative Agent, for the sole benefit of the Issuing Lender, such other issuance, amendment, renewal, negotiation, draw, acceptance, telex, courier, postage and similar transactional fees as are customarily charged by the Issuing Lender in respect of the issuance and administration of similar letters of credit under its fee schedule as in effect from time to time.

(iv)     Standby Letters of Credit Fees . With respect to each Letter of Credit that shall be a standby letter of credit and the drafts thereunder, if any, whether issued for the account of the Borrower or any other Company, the Borrower agrees to (A) pay to the Administrative Agent, for the pro rata benefit of the Revolving Lenders, a non-refundable commission based upon the face amount of such Letter of Credit, which shall be paid quarterly in arrears, on each Regularly Scheduled Payment Date, in an amount equal to the aggregate sum of the Letter of Credit Fee for such Letter of Credit for each day of such quarter; (B) pay to the Administrative Agent, for the sole benefit of the Issuing Lender, an additional Letter of Credit fee, which shall be paid on each date that such Letter of Credit shall be issued, amended or renewed at the rate of one-eighth percent (1/8%) of the face amount of such Letter of Credit; and (C) pay to the Administrative Agent, for the sole benefit of the Issuing Lender, such other issuance, amendment, renewal, negotiation, draw, acceptance, telex, courier, postage and similar transactional fees as are customarily charged

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by the Issuing Lender in respect of the issuance and administration of similar letters of credit under its fee schedule as in effect from time to time.

(v)     Refunding of Letters of Credit with Revolving Loans . Whenever a Letter of Credit shall be drawn, the Borrower shall promptly reimburse the Issuing Lender for the amount drawn. In the event that the amount drawn shall not have been reimbursed by the Borrower within one Business Day of the drawing of such Letter of Credit, at the sole option of the Administrative Agent (and the Issuing Lender, if the Issuing Lender is a Lender other than the Administrative Agent), the Borrower shall be deemed to have requested a Revolving Loan, subject to the provisions of Sections 2.2(a) and 2.6 hereof (other than the requirement set forth in Section 2.6(d) hereof), in the amount drawn. Such Revolving Loan shall be evidenced by the Revolving Credit Notes (or, if a Lender has not requested a Revolving Credit Note, by the records of the Administrative Agent and such Lender). Each Revolving Lender agrees to make a Revolving Loan on the date of such notice, subject to no conditions precedent whatsoever. Each Revolving Lender acknowledges and agrees that its obligation to make a Revolving Loan pursuant to Section 2.2(a) hereof when required by this Section 2.2(b)(v) shall be absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limitation, the occurrence and continuance of a Default or Event of Default, and that its payment to the Administrative Agent, for the account of the Issuing Lender, of the proceeds of such Revolving Loan shall be made without any offset, abatement, recoupment, counterclaim, withholding or reduction whatsoever and whether or not the Revolving Credit Commitment shall have been reduced or terminated. The Borrower irrevocably authorizes and instructs the Administrative Agent to apply the proceeds of any borrowing pursuant to this Section 2.2(b)(v) to reimburse, in full (other than the Issuing Lender’s pro rata share of such borrowing), the Issuing Lender for the amount drawn on such Letter of Credit. Each such Revolving Loan shall be deemed to be a Base Rate Loan unless otherwise requested by and available to the Borrower hereunder. Each Revolving Lender is hereby authorized to record on its records relating to its Revolving Credit Note (or, if such Revolving Lender has not requested a Revolving Credit Note, its records relating to Revolving Loans) such Revolving Lender’s pro rata share of the amounts paid and not reimbursed on the Letters of Credit.

(vi)     Participation in Letters of Credit . If, for any reason, the Administrative Agent (and the Issuing Lender if the Issuing Lender is a Lender other than the Administrative Agent) shall be unable to or, in the opinion of the Administrative Agent, it shall be impracticable to, convert any amount drawn under a Letter of Credit to a Revolving Loan pursuant to the preceding subsection (v), the Administrative Agent (and the Issuing Lender if the Issuing Lender is a Lender other than the Administrative Agent) shall have the right to request that each Revolving Lender fund a participation in the amount due with respect to such Letter of Credit, and the Administrative Agent shall promptly notify each Revolving Lender thereof (by facsimile or email (in each case confirmed by telephone, or telephone confirmed in writing)). Upon such notice, but without further action, the Issuing Lender hereby agrees to grant to each Revolving Lender, and each Revolving Lender hereby agrees to acquire from the Issuing Lender, an undivided participation interest in the amount due with respect to such Letter of Credit in an amount equal to such Revolving Lender’s

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Applicable Commitment Percentage of the principal amount due with respect to such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the Issuing Lender, such Revolving Lender’s ratable share of the amount due with respect to such Letter of Credit (determined in accordance with such Revolving Lender’s Applicable Commitment Percentage). Each Revolving Lender acknowledges and agrees that its obligation to acquire participations in the amount due under any Letter of Credit that is drawn but not reimbursed by the Borrower pursuant to this subsection (vi) shall be absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limitation, the occurrence and continuance of a Default or Event of Default, and that each such payment shall be made without any offset, abatement, recoupment, counterclaim, withholding or reduction whatsoever and whether or not the Revolving Credit Commitment shall have been reduced or terminated. Each Revolving Lender shall comply with its obligation under this subsection (vi) by wire transfer of immediately available funds, in the same manner as provided in Section 2.6 hereof with respect to Revolving Loans. Each Revolving Lender is hereby authorized to record on its records such Revolving Lender’s pro rata share of the amounts paid and not reimbursed on the Letters of Credit.

(vii)     Requests for Letters of Credit When One or More Revolving Lenders are Affected Lenders . No Letter of Credit shall be requested or issued hereunder if any Revolving Lender is at such time an Affected Lender hereunder, unless the Administrative Agent (and the Issuing Lender) has entered into satisfactory (to the Administrative Agent) arrangements with the Borrower or such Affected Lender to eliminate or mitigate the reimbursement risk with respect to such Affected Lender (including, without limitation, the posting of cash collateral).

(viii)     Letters of Credit Issued and Outstanding When One or More Revolving Lenders are Affected Lenders . With respect to any Letters of Credit that have been issued and are outstanding at the time any Revolving Lender is an Affected Lender, the Administrative Agent (and the Issuing Lender) shall have the right to require that the Borrower or such Affected Lender cash collateralize, in form and substance reasonably satisfactory to the Administrative Agent (and the Issuing Lender) (but in no event in an amount greater than one hundred five percent (105%) of the reimbursement risk with respect to such Affected Lender), such Letters of Credit so as to eliminate or mitigate the reimbursement risk with respect to such Affected Lender.

(c)     Swing Loans .

(i)     Generally . Subject to the terms and conditions of this Agreement, during the Commitment Period, the Swing Line Lender shall make a Swing Loan or Swing Loans to the Borrower in such amount or amounts as the Borrower, through an Authorized Officer, may from time to time request and to which the Swing Line Lender may agree; provided that the Borrower shall not request any Swing Loan if, after giving effect thereto, (A) the Revolving Credit Exposure would exceed the Revolving Credit Commitment, or (B) the

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Swing Line Exposure would exceed the Swing Line Commitment. Each Swing Loan shall be due and payable on the Swing Loan Maturity Date applicable thereto.

(ii)     Refunding of Swing Loans . If the Swing Line Lender so elects, by giving notice to the Borrower and the Revolving Lenders, the Borrower agrees that the Swing Line Lender shall have the right, in its sole discretion, to require that the then outstanding Swing Loans be refinanced as a Revolving Loan. Such Revolving Loan shall be a Base Rate Loan unless otherwise requested by and available to the Borrower hereunder. Upon receipt of such notice by the Borrower and the Revolving Lenders, the Borrower shall be deemed, on such day, to have requested a Revolving Loan in the principal amount of such Swing Loan in accordance with Sections 2.2(a) and 2.6 hereof (other than the requirement set forth in Section 2.6(d) hereof). Such Revolving Loan shall be evidenced by the Revolving Credit Notes (or, if a Revolving Lender has not requested a Revolving Credit Note, by the records of the Administrative Agent and such Revolving Lender). Each Revolving Lender agrees to make a Revolving Loan on the date of such notice, subject to no conditions precedent whatsoever. Each Revolving Lender acknowledges and agrees that such Revolving Lender’s obligation to make a Revolving Loan pursuant to Section 2.2(a) hereof when required by this Section 2.2(c)(ii) is absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limitation, the occurrence and continuance of a Default or Event of Default, and that its payment to the Administrative Agent, for the account of the Swing Line Lender, of the proceeds of such Revolving Loan shall be made without any offset, abatement, recoupment, counterclaim, withholding or reduction whatsoever and whether or not the Revolving Credit Commitment shall have been reduced or terminated. The Borrower irrevocably authorizes and instructs the Administrative Agent to apply the proceeds of any borrowing pursuant to this Section 2.2(c)(ii) to repay in full such Swing Loan. Each Revolving Lender is hereby authorized to record on its records relating to its Revolving Credit Note (or, if such Revolving Lender has not requested a Revolving Credit Note, its records relating to Revolving Loans) such Revolving Lender’s pro rata share of the amounts paid to refund such Swing Loan.

(iii)     Participation in Swing Loans . If, for any reason, the Swing Line Lender is unable to or, in the opinion of the Administrative Agent, it is impracticable to, convert any Swing Loan to a Revolving Loan pursuant to the preceding Section 2.2(c)(ii), then on any day that a Swing Loan is outstanding (whether before or after the maturity thereof), the Administrative Agent shall have the right to request that each Revolving Lender fund a participation in such Swing Loan, and the Administrative Agent shall promptly notify each Revolving Lender thereof (by facsimile or email (in each case confirmed by telephone, or telephone confirmed in writing)). Upon such notice, but without further action, the Swing Line Lender hereby agrees to grant to each Revolving Lender, and each Revolving Lender hereby agrees to acquire from the Swing Line Lender, an undivided participation interest in the right to share in the payment of such Swing Loan in an amount equal to such Revolving Lender’s Applicable Commitment Percentage of the principal amount of such Swing Loan. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the benefit of the Swing Line Lender, such Revolving Lender’s

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ratable share of such Swing Loan (determined in accordance with such Revolving Lender’s Applicable Commitment Percentage). Each Revolving Lender acknowledges and agrees that its obligation to acquire participations in Swing Loans pursuant to this Section 2.2(c)(iii) is absolute and unconditional and shall not be affected by any circumstance whatsoever, including, without limitation, the occurrence and continuance of a Default or an Event of Default, and that each such payment shall be made without any offset, abatement, recoupment, counterclaim, withholding or reduction whatsoever and whether or not the Revolving Credit Commitment shall have been reduced or terminated. Each Revolving Lender shall comply with its obligation under this Section 2.2(c)(iii) by wire transfer of immediately available funds, in the same manner as provided in Section 2.6 hereof with respect to Revolving Loans to be made by such Revolving Lender.

(iv)     Requests for Swing Loan When One or More Revolving Lenders are Affected Lenders . No Swing Loan shall be requested or issued hereunder if any Revolving Lender is at such time an Affected Lender hereunder, unless the Administrative Agent has entered into satisfactory (to the Administrative Agent and the Swing Line Lender ) arrangements with the Borrower or such Affected Lender to eliminate or mitigate the reimbursement risk with respect to such Affected Lender (including, without limitation, the posting of cash collateral).

(v)     Swing Loans Outstanding When One or More Revolving Lenders are Affected Lenders . With respect to any Swing Loans that are outstanding at the time any Revolving Lender is an Affected Lender, the Administrative Agent shall have the right to require that the Borrower or such Affected Lender cash collateralize, in form and substance reasonably satisfactory to the Administrative Agent (but in no event in an amount greater than one hundred five percent (105%) of the reimbursement risk with respect to such Affected Lender), such Swing Loans so as to eliminate or mitigate the reimbursement risk with respect to such Affected Lender.

Section 2.3. Term Loan Commitment . Subject to the terms and conditions of this Agreement, the Term Lenders shall make the Term Loan to the Borrower on the Closing Date, in the amount of the Term Loan Commitment. The Term Loan shall be payable in quarterly installments of Seven Hundred Fourteen Thousand Two Hundred Eighty-Five and 71/100 Dollars ($714,285.71) for each quarter, commencing September 30, 2015, and continuing on each Regularly Scheduled Payment Date thereafter, with the balance thereof payable in full on June 25, 2020. The Borrower shall notify the Administrative Agent , in accordance with the notice provisions of Section 2.6 hereof, whether the Term Loan will be a Base Rate Loan or one or more Eurodollar Loans. The Term Loan may be a mixture of a Base Rate Loan and one or more Eurodollar Loans. Once the Term Loan is made, any portion of the Term Loan repaid may not be re‑borrowed. The Term Loan Commitment shall terminate on the date that the Term Loan has been made.

Section 2.4. Interest .

(a)     Revolving Loans .


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(i)     Base Rate Loan . The Borrower shall pay interest on the unpaid principal amount of a Revolving Loan that is a Base Rate Loan outstanding from time to time from the date thereof until paid at the Derived Base Rate from time to time in effect. Interest on such Base Rate Loan shall be payable, commencing June 30, 2015, and continuing on each Regularly Scheduled Payment Date thereafter and at the maturity thereof.

(ii)     Eurodollar Loans . The Borrower shall pay interest on the unpaid principal amount of each Revolving Loan that is a Eurodollar Loan outstanding from time to time, with the interest rate to be fixed in advance on the first day of the Interest Period applicable thereto through the last day of the Interest Period applicable thereto (but subject to changes in the Applicable Margin for Eurodollar Loans), at the Derived Eurodollar Rate. Interest on such Eurodollar Loan shall be payable on each Interest Adjustment Date with respect to an Interest Period (provided that, if an Interest Period shall exceed three months, the interest must also be paid every three months, commencing three months from the beginning of such Interest Period).

(b)     Swing Loans . The Borrower shall pay interest to the Administrative Agent, for the sole benefit of the Swing Line Lender (and any Revolving Lender that shall have funded a participation in such Swing Loan), on the unpaid principal amount of each Swing Loan outstanding from time to time from the date thereof until paid at the Derived Base Rate from time to time in effect. Interest on each Swing Loan shall be payable on the Swing Loan Maturity Date applicable thereto. Each Swing Loan shall bear interest for a minimum of one day.

(c)     Term Loan .

(i)     Base Rate Loan . With respect to any portion of the Term Loan that is a Base Rate Loan, the Borrower shall pay interest on the unpaid principal amount thereof outstanding from time to time from the date thereof until paid, commencing June 30, 2015, and continuing on each Regularly Scheduled Payment Date thereafter and at the maturity thereof, at the Derived Base Rate from time to time in effect.

(ii)     Eurodollar Loans . With respect to any portion of the Term Loan that is a Eurodollar Loan, the Borrower shall pay interest on the unpaid principal amount of such Eurodollar Loan outstanding from time to time, with the interest rate to be fixed in advance on the first day of the Interest Period applicable thereto through the last day of the Interest Period applicable thereto (but subject to changes in the Applicable Margin for Eurodollar Loans), at the Derived Eurodollar Rate. Interest on such Eurodollar Loan shall be payable on each Interest Adjustment Date with respect to an Interest Period (provided that, if an Interest Period shall exceed three months, the interest must also be paid every three months, commencing three months from the beginning of such Interest Period).

(d)     Default Rate . Anything herein to the contrary notwithstanding, if an Event of Default shall occur and be continuing, then, upon the election of the Administrative Agent or the Required Lenders, (i) the principal of each Loan and the unpaid interest thereon shall bear interest, until paid, at the Default Rate, (ii) the fee for the aggregate undrawn amount of all issued and outstanding

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Letters of Credit shall be increased by two percent (2%) in excess of the rate otherwise applicable thereto, and (iii) in the case of any other amount not paid when due from the Borrower hereunder or under any other Loan Document, such amount shall bear interest at the Default Rate; provided that, during an Event of Default under Section 8.1 or 8.12 hereof, the applicable Default Rate shall apply without any election or action on the part of the Administrative Agent or any Lender.

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

Section 2.5. Evidence of Indebtedness .

(a)     Revolving Loans . Upon the request of a Revolving Lender, to evidence the obligation of the Borrower to repay the portion of the Revolving Loans made by such Revolving Lender and to pay interest thereon, the Borrower shall execute a Revolving Credit Note, payable to the order of such Revolving Lender in the principal amount equal to its Applicable Commitment Percentage of the Maximum Revolving Amount , or, if less, the aggregate unpaid principal amount of Revolving Loans made by such Revolving Lender; provided that the failure of a Revolving Lender to request a Revolving Credit Note shall in no way detract from the Borrower’s obligations to such Revolving Lender hereunder.

(b)     Swing Loans . Upon the request of the Swing Line Lender, to evidence the obligation of the Borrower to repay the Swing Loans and to pay interest thereon, the Borrower shall execute a Swing Line Note, payable to the order of the Swing Line Lender in the principal amount of the Swing Line Commitment, or, if less, the aggregate unpaid principal amount of Swing Loans made by the Swing Line Lender; provided that the failure of the Swing Line Lender to request a Swing Line Note shall in no way detract from the Borrower’s obligations to the Swing Line Lender hereunder.

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


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Section 2.6. Notice of Loans and Credit Events; Funding of Loans .

(a)     Notice of Loans and Credit Events . The Borrower, through an Authorized Officer, shall provide to the Administrative Agent a Notice of Loan prior to (i) 11:00 A.M. (Eastern time) on the proposed date of borrowing of, or conversion of a Loan to, a Base Rate Loan, (ii) 11:00 A.M. (Eastern time) three Business Days prior to the proposed date of borrowing of, continuation of, or conversion of a Loan to, a Eurodollar Loan, and (iii) 2:00 P.M. (Eastern time) on the proposed date of borrowing of a Swing Loan (or such later time as agreed to from time to time by the Swing Line Lender). An Authorized Officer of the Borrower may verbally request a Loan, so long as a Notice of Loan is received by the end of the same Business Day, and, if the Administrative Agent or any Lender provides funds or initiates funding based upon such verbal request, the Borrower shall bear the risk with respect to any information regarding such funding that is later determined to have been incorrect . The Borrower shall comply with the notice provisions set forth in Section 2.2(b) hereof with respect to Letters of Credit.

(b)     Funding of Loans . The Administrative Agent shall notify the appropriate Lenders of the date, amount and Interest Period (if applicable) promptly upon the receipt of a Notice of Loan (other than for a Swing Loan, or a Revolving Loan to be funded as a Swing Loan) , and, in any event, by 2:00 P.M. (Eastern time) on the date such Notice of Loan is received. On the date that the Credit Event set forth in such Notice of Loan is to occur, each such Lender shall provide to the Administrative Agent , not later than 3:00 P.M. (Eastern time), the amount in Dollars, in federal or other immediately available funds, required of it. If the Administrative Agent shall elect to advance the proceeds of such Loan prior to receiving funds from such Lender, the Administrative Agent shall have the right, upon prior notice to the Borrower, to debit any account of the Borrower in the amount of funds not received or otherwise receive such amount from the Borrower, promptly after demand, in the event that such Lender shall fail to reimburse the Administrative Agent in accordance with this subsection (b). The Administrative Agent shall also have the right to receive interest from such Lender at the Federal Funds Effective Rate in the event that such Lender shall fail to provide its portion of the Loan on the date requested and the Administrative Agent shall elect to provide such funds.

(c)     Conversion and Continuation of Loans .

(i)    At the request of the Borrower to the Administrative Agent , subject to the notice and other provisions of this Agreement, the appropriate Lenders shall convert a Base Rate Loan to one or more Eurodollar Loans at any time and shall convert a Eurodollar Loan to a Base Rate Loan on any Interest Adjustment Date applicable thereto. Swing Loans may be converted by the Swing Line Lender to Revolving Loans in accordance with Section 2.2(c)(ii) hereof.

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


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(d)     Minimum Amount for Loans . Each request for:

(i)    a Base Rate Loan shall be in an amount of not less than Two Hundred Fifty Thousand Dollars ($250,000), increased by increments of Fifty Thousand Dollars ($50,000);

(ii)    a Eurodollar Loan shall be in an amount of not less than Five Hundred Thousand Dollars ($500,000), increased by increments of Fifty Thousand Dollars ($50,000); and

(iii)    a Swing Loan shall be in an amount of not less than Fifty Thousand Dollars ($50,000) , or such lower amount as may be agreed to by the Swing Line Lender .

(e)     Interest Periods . The Borrower shall not request that Eurodollar Loans be outstanding for more than six different Interest Periods at the same time.

(f)     Advancing of Non Pro-Rata Revolving Loans . Notwithstanding anything in this Agreement to the contrary, if the Borrower requests a Revolving Loan pursuant to Section 2.6(a) hereof (and all conditions precedent set forth in Section 4.1 hereof are met) at a time when one or more Revolving Lenders are Defaulting Lenders, the Administrative Agent shall have the option, in its sole discretion, to require the non-Defaulting Lenders to honor such request by making a non pro-rata Revolving Loan to the Borrower in an amount equal to (i) the amount requested by the Borrower, minus (ii) the portions of such Revolving Loan that should have been made by such Defaulting Lenders. For purposes of such Revolving Loans, the Revolving Lenders that are making such Revolving Loan shall do so in an amount equal to their Applicable Commitment Percentages of the amount requested by the Borrower. For the avoidance of doubt, in no event shall the aggregate outstanding principal amount of Loans made by a Lender (other than Swing Loans made by the Swing Line Lender), when combined with such Lender’s pro rata share, if any, of the Letter of Credit Exposure and the Swing Line Exposure, be in excess of the Maximum Amount for such Lender.

Section 2.7. Payment on Loans and Other Obligations .

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

(b)     Payments from Borrower . All payments (including prepayments) to the Administrative Agent of the principal of or interest on each Loan or other payment, including but not limited to principal, interest, fees or any other amount owed by the Borrower under this Agreement, shall be made in Dollars. All payments described in this subsection (b) shall be remitted to the Administrative Agent , at the address of the Administrative Agent for notices referred to in Section 11.4 hereof for the account of the appropriate Lenders (or the Issuing Lender or the Swing Line Lender, as appropriate) not later than 11:00 A.M. (Eastern time) on the due date thereof in immediately available funds. Any such payments received by the Administrative Agent (or the Issuing Lender or the Swing Line Lender) after 11:00 A.M. (Eastern time) shall be deemed to have been made and received on the next Business Day.

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(c)     Payments to Lenders . Upon the Administrative Agent’s receipt of payments hereunder, the Administrative Agent shall immediately distribute to the appropriate Lenders (except with respect to Swing Loans, which shall be paid to the Swing Line Lender and any Lender that has funded a participation in the Swing Loans, or, with respect to Letters of Credit, certain of which payments shall be paid to the Issuing Lender) their respective ratable shares, if any, of the amount of principal, interest, and commitment and other fees received by the Administrative Agent for the account of such Lender. Payments received by the Administrative Agent shall be delivered to the Lenders in immediately available funds. Each appropriate Lender shall record any principal, interest or other payment, the principal amounts of Base Rate Loans, Eurodollar Loans, Swing Loans and Letters of Credit, all prepayments and the applicable dates, including Interest Periods, with respect to the Loans made, and payments received by such Lender, by such method as such Lender may generally employ; provided that failure to make any such entry shall in no way detract from the obligations of the Borrower under this Agreement or any Note. The aggregate unpaid amount of Loans, types of Loans, Interest Periods and similar information with respect to the Loans and Letters of Credit set forth on the records of the Administrative Agent shall be rebuttably presumptive evidence with respect to such information, including the amounts of principal, interest and fees owing to each Lender.

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

(e)      Affected Lender . To the extent that the Administrative Agent receives any payments or other amounts for the account of a Revolving Lender that is an Affected Lender, at the discretion of the Administrative Agent , such Affected Lender shall be deemed to have requested that the Administrative Agent use such payment or other amount (or any portion thereof, at the discretion of the Administrative Agent ) first, to cash collateralize its unfunded risk participation in Swing Loans and the Letters of Credit pursuant to Sections 2.2(b)(vi), 2.2(c)(iii) and 2.6(b) hereof, and, with respect to any Defaulting Lender, second, to fulfill its obligations to make Loans.

(f)     Payment of Non Pro-Rata Revolving Loans . Notwithstanding anything in this Agreement to the contrary, at the sole discretion of the Administrative Agent , in order to pay Revolving Loans made to the Borrower that were not advanced pro rata by the Revolving Lenders, any payment of any Loan may first be applied to such Revolving Loans that were not advanced pro rata.

Section 2.8. Prepayment .

(a)     Right to Prepay .


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(i)    The Borrower shall have the right at any time or from time to time to prepay, on a pro rata basis for all of the appropriate Lenders (except with respect to Swing Loans, which shall be paid to the Swing Line Lender and any Lender that has funded a participation in such Swing Loan), all or any part of the principal amount of the Loans then outstanding representing the obligations under any Specific Commitment with the proceeds of such prepayment to be distributed on a pro rata basis to the holders of the Specific Commitment being prepaid. Such payment shall include interest accrued on the amount so prepaid to the date of such prepayment and any amount payable under Article III hereof with respect to the amount being prepaid. Prepayments of Base Rate Loans shall be without any premium or penalty. Each prepayment of the Term Loan and the Additional Term Loan Facility (if any) shall be applied to the principal installments thereof in the inverse order of their respective maturities.

(ii)    The Borrower shall have the right, at any time or from time to time, to prepay, for the benefit of the Swing Line Lender (and any Revolving Lender that has funded a participation in such Swing Loan), all or any part of the principal amount of the Swing Loans then outstanding, as designated by the Borrower, plus interest accrued on the amount so prepaid to the date of such prepayment.

(iii)     Notwithstanding anything in this Section 2.8 or otherwise to the contrary, at the discretion of the Administrative Agent , in order to prepay Revolving Loans made to the Borrower that were not advanced pro rata by all of the Revolving Lenders, any prepayment of a Revolving Loan shall first be applied to Revolving Loans made by the Revolving Lenders during any period in which a Defaulting Lender or Insolvent Lender shall exist.

(b)     Notice of Prepayment . The Borrower shall give the Administrative Agent irrevocable written notice of prepayment of (i) a Base Rate Loan or Swing Loan by no later than 11:00 A.M. (Eastern time) on the Business Day on which such prepayment is to be made, and (ii) a Eurodollar Loan by no later than 1:00 P.M. (Eastern time) three Business Days before the Business Day on which such prepayment is to be made. Swing Loans may be prepaid without advance notice if prepaid through a “sweep” cash management arrangement with the Administrative Agent.

(c)     Minimum Amount for Eurodollar Loans . Each prepayment of a Eurodollar Loan shall be in the principal amount of not less than the lesser of Five Hundred Thousand Dollars ($500,000), or the principal amount of such Loan, or, with respect to a Swing Loan, the principal balance of such Swing Loan, except in the case of a mandatory payment pursuant to Section 2.12(c) or Article III hereof.

Section 2.9. Commitment and Other Fees .

(a)     Commitment Fee . The Borrower shall pay to the Administrative Agent, for the ratable account of the Revolving Lenders, as a consideration for the Revolving Credit Commitment, a commitment fee, for each day from the Closing Date through the last day of the Commitment Period, in an amount equal to (i) (A) the Maximum Revolving Amount at the end of such day, minus (B) the Revolving Credit Exposure (exclusive of the Swing Line Exposure) at the end of such day,

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multiplied by (ii) the Applicable Commitment Fee Rate in effect on such day divided by three hundred sixty (360). The commitment fee shall be payable quarterly in arrears, commencing on June 30, 2015 and continuing on each Regularly Scheduled Payment Date thereafter, and on the last day of the Commitment Period.

(b)     Administrative Agent Fee . The Borrower shall pay to the Administrative Agent, for its sole benefit, the fees set forth in the Administrative Agent Fee Letter.

(c)     Collateral Audit and Appraisal Fees . The Borrower shall promptly reimburse the Administrative Agent, for its sole benefit, for all reasonable and documented costs and expenses relating to (i) collateral field audits, (ii) fixed asset appraisals, and (iii) any other collateral assessment expenses that may be conducted from time to time by or on behalf of the Administrative Agent, the scope and frequency of which shall be in the reasonable discretion of the Administrative Agent; provided that, absent an Event of Default, the Borrower need not reimburse the Administrative Agent for more than two collateral field audits during a calendar year.

(d)     Authorization to Debit Account . Each Credit Party hereby agrees that the Administrative Agent has the right to debit from any Deposit Account of the Borrower or any other Credit Party, amounts owing to the Administrative Agent and the Lenders by the Borrower under this Agreement and the other Loan Documents for payment of fees, expenses and other amounts incurred or owing in connection therewith.

Section 2.10. Modifications to Commitment .

(a)     Optional Reduction of Revolving Credit Commitment . The Borrower may at any time and from time to time permanently reduce in whole or ratably in part the Maximum Revolving Amount to an amount not less than the then existing Revolving Credit Exposure, by giving the Administrative Agent not fewer than five Business Days’ written notice of such reduction, provided that any such partial reduction shall be in an aggregate amount, for all of the Lenders, of not less than One Million Dollars ($1,000,000), increased in increments of Five Hundred Thousand Dollars ($500,000). The Administrative Agent shall promptly notify each Revolving Lender of the date of each such reduction and such Revolving Lender’s proportionate share thereof. After each such partial reduction, the commitment fees payable hereunder shall be calculated upon the Maximum Revolving Amount as so reduced. If the Borrower reduces in whole the Revolving Credit Commitment, on the effective date of such reduction (the Borrower having prepaid in full the unpaid principal balance, if any, of the Loans, together with all interest (if any) and commitment and other fees accrued and unpaid with respect thereto, and provided that no Letter of Credit Exposure or Swing Line Exposure shall exist), all of the Revolving Credit Notes shall be delivered to the Administrative Agent marked “Canceled” and the Administrative Agent shall redeliver such Revolving Credit Notes to the Borrower. Any partial reduction in the Maximum Revolving Amount shall be effective during the remainder of the Commitment Period. Upon each decrease of the Maximum Revolving Amount and the Total Commitment Amount shall be decreased by the same amount.

(b)     Increase in Commitment .

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(i)    At any time during the Commitment Increase Period, the Borrower may request that the Administrative Agent increase the Total Commitment Amount by (A) increasing the Maximum Revolving Amount , or (B) adding an additional term loan facility to this Agreement (the “Additional Term Loan Facility”) (which Additional Term Loan Facility shall be subject to subsection (c) below); provided that the aggregate amount of all increases (revolver and term) made pursuant to this subsection (b) shall not exceed Fifteen Million Dollars ($15,000,000). Each such request for an increase shall be in an amount of at least Two Million Five Hundred Thousand Dollars ($2,500,000), increased by increments of Five Hundred Thousand Dollars ($500,000), and may be made by either (1) increasing, for one or more Revolving Lenders, with their prior written consent, their respective Revolving Credit Commitments, (2) adding a new commitment for one or more Lenders, with their prior written consent, with respect to the Additional Term Loan Facility, or (3) including one or more Additional Lenders, each with a new commitment under the Revolving Credit Commitment or the Additional Term Loan Facility, as a party to this Agreement (each an “Additional Commitment” and, collectively, the “Additional Commitments”).

(ii)    During the Commitment Increase Period, all of the Lenders agree that the Administrative Agent , in its reasonable discretion, may permit one or more Additional Commitments upon satisfaction of the following requirements: (A) each Additional Lender, if any, shall execute an Additional Lender Assumption Agreement, (B) each Additional Commitment from an Additional Lender, if any, shall be in an amount of at least Two Million Five Hundred Thousand Dollars ($2,500,000), (C) the Administrative Agent shall provide to the Borrower and each Lender a revised Schedule 1 to this Agreement, including revised Applicable Commitment Percentages for each of the Lenders, if appropriate, at least three Business Days prior to the date of the effectiveness of such Additional Commitments (each an “Additional Lender Assumption Effective Date”), and (D) the Borrower shall execute and deliver to the Administrative Agent and the applicable Lenders such replacement or additional Notes as shall be required by the Administrative Agent (and requested by such Lender or Lenders). The Lenders hereby authorize the Administrative Agent to execute each Additional Lender Assumption Agreement on behalf of the Lenders.

(iii)    On each Additional Lender Assumption Effective Date with respect to the Specific Commitment being increased, as appropriate, the Lenders shall make adjustments among themselves with respect to the Loans then outstanding and amounts of principal, interest, commitment fees and other amounts paid or payable with respect thereto as shall be necessary, in the opinion of the Administrative Agent , in order to reallocate among the applicable Lenders such outstanding amounts, based on the revised Applicable Commitment Percentages and to otherwise carry out fully the intent and terms of this Section 2.10(b) (and the Borrower shall pay to the applicable Lenders any amounts that would be payable pursuant to Section 3.3 hereof if such adjustments among the applicable Lenders would cause a prepayment of one or more Eurodollar Loans). In connection therewith, it is understood and agreed that the Maximum Amount of any Lender will not be increased (or decreased except pursuant to subsection (a) above) without the prior written consent of such Lender. The Borrower shall not request any increase in the Total Commitment Amount pursuant to

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this subsection (b) if a Default or an Event of Default shall then exist, or, after giving pro forma effect to any such increase, would exist. At the time of any such increase, at the request of the Administrative Agent, the Credit Parties and the Lenders shall enter into an amendment to evidence such increase and to address related provisions as deemed necessary or appropriate by the Administrative Agent. Upon each increase of the Maximum Revolving Amount or addition of the Additional Term Loan Facility, the Total Commitment Amount shall be increased by the same amount.

(c)     Additional Term Loan Facility .

(i)    The Additional Term Loan Facility (A) shall rank pari passu in right of payment with the Revolving Loans and the Term Loan, (B) shall not mature earlier than the last day of the Commitment Period (but may have amortization prior to such date), and (C) shall be treated substantially the same as (and in any event no more favorably than) the Revolving Loans and the Term Loan, including, without limitation, similar amortization and interest for the Additional Term Loan Facility.

(ii)    The Additional Term Loan Facility may be added hereunder pursuant to an amendment or restatement (the “Additional Term Loan Facility Amendment”) of this Agreement and, as appropriate, the other Loan Documents, executed by the Borrower, each Lender providing a commitment with respect to the Additional Term Loan Facility, each Additional Lender providing a commitment with respect to the Additional Term Loan Facility, and the Administrative Agent. Notwithstanding anything herein to the contrary, the Additional Term Loan Facility Amendment may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Loan Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent, to effect the provisions of Section 2.10(b) and (c) hereof (including, without limitation, amendments to the definitions in this Agreement and Section 9.8 hereof for the purpose of treating such Additional Term Loan Facility pari passu with the other Loans).

Section 2.11. Computation of Interest and Fees . Interest on Loans, Letter of Credit fees, Related Expenses, and commitment and other fees and charges hereunder shall be computed on the basis of a year having three hundred sixty (360) days and calculated for the actual number of days elapsed.

Section 2.12. Mandatory Payments .

(a)     Revolving Credit Exposure . If, at any time, the Revolving Credit Exposure shall exceed the Revolving Credit Commitment, the Borrower shall, as promptly as practicable, but in no event later than the next Business Day, pay an aggregate principal amount of the Revolving Loans sufficient to bring the Revolving Credit Exposure within the Revolving Credit Commitment.

(b)     Swing Line Exposure . If, at any time, the Swing Line Exposure shall exceed the Swing Line Commitment, the Borrower shall, as promptly as practicable, but in no event later than

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the next Business Day, pay an aggregate principal amount of the Swing Loans sufficient to bring the Swing Line Exposure within the Swing Line Commitment.

(c)     Mandatory Prepayments . The Borrower shall make Mandatory Prepayments (each a “Mandatory Prepayment”) in accordance with the following provisions:

(i)     Excess Cash Flow . If the Leverage Ratio, calculated for a fiscal year of the Borrower (commencing with the fiscal year ending September 30, 2016) is:

(A)    greater than or equal to 3.00 to 1.00, then the Borrower shall, on or before December 31 st of the same calendar year, make a Mandatory Prepayment in an amount of not less than fifty percent (50%) of the Excess Cash Flow (if any) for such fiscal year; or

(B)    less than 3.00 to 1.00 but greater than or equal to 2.00 to 1.00, then the Borrower shall, on or before December 31 st of the same calendar year, make a Mandatory Prepayment in an amount of not less than twenty-five percent (25%) of the Excess Cash Flow (if any) for such fiscal year.

(ii)     Sale of Assets . Upon the sale or other disposition of any assets by a Company (permitted pursuant to Section 5.12 hereof) to any Person other than to another Company or in the ordinary course of business, and, to the extent the proceeds of such sale or other disposition are in excess of Two Hundred Fifty Thousand Dollars ($250,000) during any fiscal year of the Borrower and are not to be reinvested in fixed assets or other similar assets within one hundred eighty (180) days of such sale or other disposition, the Borrower shall make a Mandatory Prepayment, on the date of such sale or other disposition, in an amount equal to one hundred percent (100%) of the proceeds of such disposition net of amounts required to pay taxes and reasonable costs applicable to such sale or disposition.

(iii)     Material Recovery Event . Within ten days after the occurrence of a Material Recovery Event, the Borrower shall furnish to the Administrative Agent written notice thereof. Within thirty (30) days after such Material Recovery Event, the Borrower shall notify the Administrative Agent of the Borrower’s determination as to whether or not to replace, rebuild or restore the affected property (a “Material Recovery Determination Notice”). If the Borrower decides not to replace, rebuild or restore such property, or if the Borrower has not delivered the Material Recovery Determination Notice within thirty (30) days after such Material Recovery Event, then the net proceeds of insurance paid in connection with such Material Recovery Event, when received, shall be paid as a Mandatory Prepayment. If the Borrower decides to replace, rebuild or restore such property, then any such replacement, rebuilding or restoration must be (A) commenced within six months of the date of the Material Recovery Event, and (B) substantially completed within twelve (12) months of such commencement date or such longer period of time necessary to complete the work with reasonable diligence and approved in writing by the Administrative Agent, in its reasonable discretion, with such casualty insurance proceeds and other funds available to the appropriate Companies for replacement, rebuilding or restoration of such property.

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Any amounts of such net insurance proceeds in connection with such Material Recovery Event not applied to the costs of replacement or restoration shall be applied as a Mandatory Prepayment.

(iv)     Additional Indebtedness . If, at any time, any of the Companies shall incur Indebtedness other than Indebtedness permitted pursuant to Section 5.8 hereof (which other Indebtedness not permitted by Section 5.8 hereof shall not be incurred without the prior written consent of the Administrative Agent and the Required Lenders), the Borrower shall make a Mandatory Prepayment, on the date that such Indebtedness is incurred, in an amount equal to one hundred percent (100%) of the net cash proceeds of such Indebtedness, net of costs and expenses related thereto.

(v)     Additional Equity . Within thirty (30) days after any equity offering (other than the offering or exercise of stock options or other equity awards pursuant to management incentive plans or any such offering the proceeds of which are used to purchase fixed assets that are used or useful in the business of any Company) by the Borrower, the Borrower shall make a Mandatory Prepayment in an amount equal to fifty percent (50%) of the net cash proceeds of such equity offering.

(d)     Application of Mandatory Prepayments .

(i)     Involving a Company Prior to an Event of Default . So long as no Event of Default shall then exist, each Mandatory Prepayment required to be made pursuant to subsection (c) above shall be applied (A) first, on a pro rata basis among the Term Loan and the Additional Term Loan Facility if any), until paid in full, and (B) second, to any outstanding Revolving Loans.

(ii)     Involving a Company After an Event of Default . If a Mandatory Prepayment is required to be made pursuant to subsection (c) above at the time that an Event of Default shall then exist, then such Mandatory Prepayment shall be paid by the Borrower to the Administrative Agent to be applied to the following, on a pro rata basis among: (A) the Revolving Credit Exposure (with payments to be made in the following order: Revolving Loans, Swing Loans, and to be held by the Administrative Agent in a special account as security for any Letter of Credit Exposure pursuant to subpart (iii) below), (B) the unpaid principal balance of the Term Loan, and (C) the unpaid principal balance of the Additional Term Loan Facility (if any).

(iii)     Involving Letters of Credit . Any amounts to be distributed for application to a Revolving Lender’s liabilities with respect to any Letter of Credit Exposure as a result of a Mandatory Prepayment shall be held by the Administrative Agent in an interest bearing trust account (the “Special Trust Account”) as collateral security for such liabilities until the earlier of (A) a drawing on any Letter of Credit, at which time such amounts, together with interest accrued thereon, shall be released by the Administrative Agent and applied to such liabilities, or (B) the date that such Event of Default has been cured or waived in writing by the Administrative Agent, at which time such amounts, together with interest accrued

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thereon, shall be released by the Administrative Agent and applied by the Administrative Agent in accordance with the provisions of subpart (i) above. If any such Letter of Credit shall expire without having been drawn upon in full, the amounts held in the Special Trust Account with respect to the undrawn portion of such Letter of Credit, together with interest accrued thereon, shall be applied by the Administrative Agent in accordance with the provisions of subparts (i) and (ii) above.

(e)     Mandatory Payments Generally . Unless otherwise designated by the Borrower, each Mandatory Prepayment made with respect to a Specific Commitment pursuant to subsection (a) or (c) hereof shall be applied in the following order: (i) first, to the outstanding Base Rate Loans, and (ii) second, to the outstanding Eurodollar Loans, provided that, in each case, if the outstanding principal amount of any Eurodollar Loan shall be reduced to an amount less than the minimum amount set forth in Section 2.6(d) hereof as a result of such prepayment, then such Eurodollar Loan shall be converted into a Base Rate Loan on the date of such prepayment. Any prepayment of a Eurodollar Loan pursuant to this Section 2.12 shall be subject to the prepayment provisions set forth in Article III hereof. Each Mandatory Prepayment made with respect to the Term Loan and the Additional Term Loan Facility (if any) shall be applied to the payments of principal in the inverse order of their respective maturities.

Section 2.13. Swap Obligations Make-Well Provision . The Borrower, to the extent that it is an “eligible contract participant” as defined in the Commodity Exchange Act, hereby absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Credit Party in order for such Credit Party to honor its obligations under the Loan Documents in respect of the Swap Obligations. The obligations of the Borrower under this Section 2.13 shall remain in full force and effect until all Obligations are paid in full. The Borrower intends that this Section 2.13 constitute, and this Section 2.13 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Credit Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.


ARTICLE III. ADDITIONAL PROVISIONS RELATING TO

EURODOLLAR LOANS; INCREASED CAPITAL; TAXES

Section 3.1. Requirements of Law .

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

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

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

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

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

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

(c)    For purposes of this Section 3.1 and Section 3.5(a) hereof, the Dodd-Frank Act, any requests, rules, guidelines or directives concerning capital adequacy promulgated by the Bank for International Settlements, or the Basel Committee on Banking Regulations and Supervisory Practices (or any successor or similar authority) under Basel III, and any rules, regulations, orders, requests, guidelines and directives adopted, promulgated or implemented in connection with any of the foregoing, regardless of the date adopted, issued, promulgated or implemented, are deemed to have been introduced and adopted after the Closing Date.

(d)    A certificate as to any additional amounts payable pursuant to this Section 3.1 submitted by any Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive absent manifest error. In determining any such additional amounts, such Lender may use any method of averaging and attribution that it (in its sole discretion) shall deem applicable.

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The obligations of the Borrower pursuant to this Section 3.1 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

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

Section 3.2. Taxes .

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

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

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

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amount so refunded to which such Lender shall not have been so entitled, or the amount by which the net income taxes of such Lender shall not have been so reduced, as the case may be.

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

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

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

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be entitled to additional compensation otherwise payable under this Section 3.2 if such additional compensation would not have been required had such Lender so complied.

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

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

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

Section 3.3. Funding Losses . The Borrower agrees to indemnify each Lender, promptly after receipt of a written request therefor, and to hold each Lender harmless from, any loss or expense that such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a borrowing of, conversion into or continuation of Eurodollar Loans after the Borrower has given a notice (including a written or verbal notice that is subsequently revoked) requesting the same in accordance with the provisions of this Agreement, (b) default by the Borrower in making any prepayment of or conversion from Eurodollar Loans after the Borrower has given a notice (including a written or verbal notice that is subsequently revoked) thereof in accordance with the provisions of this Agreement, (c) the making of a prepayment of a Eurodollar Loan on a day that is not the last day of an Interest Period applicable thereto, (d) any conversion of a Eurodollar Loan to a Base Rate Loan on a day that is not the last day of an Interest Period applicable thereto, or (e) any compulsory assignment of such Lender’s interests, rights and obligations under this Agreement pursuant to Section 11.3(c) or 11.12 hereof. Such indemnification shall be in an amount equal to the excess, if any, of (i) the amount of interest that would have accrued on the amounts so prepaid, or not so borrowed, converted or continued, for the period from the date of such prepayment or of such failure to borrow, convert or continue to the last day of such Interest Period (or, in the case of a failure to borrow, convert or continue, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Loans provided for herein over (ii) the amount of interest (as reasonably determined by such Lender) that would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the appropriate London interbank market, along with any administration fee charged by such Lender. A certificate as to any amounts payable pursuant to this Section 3.3 submitted to the Borrower (with a copy to the Administrative Agent) by any Lender shall be conclusive absent

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manifest error. The obligations of the Borrower pursuant to this Section 3.3 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

Section 3.4. Change of Lending Office . Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 3.1 or 3.2(a) hereof with respect to such Lender, it will, if requested by the Borrower, use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office (or an affiliate of such Lender, if practical for such Lender) for any Loans affected by such event with the object of avoiding the consequences of such event; provided, that such designation is made on terms that, in the sole judgment of such Lender, cause such Lender and its lending office(s) to suffer no economic, legal or regulatory disadvantage; and provided, further, that nothing in this Section shall affect or postpone any of the obligations of the Borrower or the rights of any Lender pursuant to Section 3.1 or 3.2(a) hereof.

Section 3.5. Eurodollar Rate Lending Unlawful; Inability to Determine Rate .

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

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

Section 3.6. Replacement of Lenders . The Borrower shall be permitted to replace any Lender that requests reimbursement for amounts owing pursuant to Section 3.1 or 3.2(a) hereof, or asserts its inability to make a Eurodollar Loan pursuant to Section 3.5 hereof; provided that (a) such replacement does not conflict with any Requirement of Law, (b) no Default or Event of Default shall have occurred and be continuing at the time of such replacement, (c) prior to any such

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replacement, such Lender shall have taken no action under Section 3.4 hereof so as to eliminate the continued need for payment of amounts owing pursuant to Section 3.1 or 3.2(a) hereof or, if it has taken any action, such request has still been made, (d) the replacement financial institution shall purchase, at par, all Loans and other amounts owing to such replaced Lender on or prior to the date of replacement and assume all commitments and obligations of such replaced Lender, (e) the Borrower shall be liable to such replaced Lender under Section 3.3 hereof if any Eurodollar Loan owing to such replaced Lender shall be purchased other than on the last day of the Interest Period relating thereto, (f) the replacement Lender, if not already a Lender, shall be satisfactory to the Administrative Agent, (g) the replaced Lender shall be obligated to make such replacement in accordance with the provisions of Section 11.10 hereof (provided that the Borrower (or the succeeding Lender, if such Lender is willing) shall be obligated to pay the assignment fee referred to therein), and (h) until such time as such replacement shall be consummated, the Borrower shall pay all additional amounts (if any) required pursuant to Section 3.1 or 3.2(a) hereof, as the case may be; provided that a Lender shall not be required to make any such assignment if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to replace such Lender cease to apply.

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


ARTICLE IV. CONDITIONS PRECEDENT

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

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

(b)     the Borrower shall have submitted a Notice of Loan (or with respect to a Letter of Credit, complied with the provisions of Section 2.2(b)(ii) hereof) and otherwise complied with Section 2.6 hereof;

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


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(d)    each of the representations and warranties contained in Article VI hereof shall be true in all material respects as if made on and as of the date of such Credit Event, except to the extent that any thereof expressly relate to an earlier date.

Each request by the Borrower for a Credit Event shall be deemed to be a representation and warranty by the Borrower as of the date of such request as to the satisfaction of the conditions precedent specified in subsections (c) and (d) above.

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

(a)     Notes as Requested . The Borrower shall have executed and delivered to (i) each Revolving Lender requesting a Revolving Credit Note such Revolving Lender’s Revolving Credit Note, (ii) each Term Lender requesting a Term Note such Term Lender’s Term Note, and (iii) the Swing Line Lender the Swing Line Note, if requested by the Swing Line Lender.

(b)     Subsidiary Documents . Each Guarantor of Payment shall have executed and delivered to the Administrative Agent (i) the Guaranty of Payment, in form and substance satisfactory to the Administrative Agent , and (ii) the Security Agreement and such other documents or instruments, as may be required by the Administrative Agent to create or perfect the Liens of the Administrative Agent in the assets of such Guarantor of Payment, all to be in form and substance satisfactory to the Administrative Agent .

(c)     Pledge Agreements . The Borrower and each Guarantor of Payment that has a Subsidiary shall have (i) executed and delivered to the Administrative Agent , for the benefit of the Lenders, a Pledge Agreement, in form and substance satisfactory to the Administrative Agent , with respect to the Pledged Securities, (ii) executed and delivered to the Administrative Agent , for the benefit of the Lenders, appropriate transfer powers for each of the Pledged Securities that are certificated, and (iii) delivered to the Administrative Agent , for the benefit of the Lenders, the Pledged Securities (to the extent such Pledged Securities are certificated).

(d)     Intellectual Property Security Agreements . The Borrower and each Guarantor of Payment that owns federally registered intellectual property shall have executed and delivered to the Administrative Agent, for the benefit of the Lenders, an Intellectual Property Security Agreement, in form and substance satisfactory to the Administrative Agent.

(e)     Lien Searches . With respect to the property owned or leased by each Credit Party, and any other property securing the Obligations, the Borrower shall have caused to be delivered to the Administrative Agent (i) the results of Uniform Commercial Code lien searches, satisfactory to the Administrative Agent, (ii) the results of federal and state tax lien and judicial lien searches, satisfactory to the Administrative Agent and the Lenders, and (iii) Uniform Commercial Code termination statements reflecting termination of all U.C.C. Financing Statements previously filed by any Person and not expressly permitted pursuant to Section 5.9 hereof.

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

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

(h)     Legal Opinion . The Borrower shall have delivered to the Administrative Agent an opinion of counsel for the Borrower and each other Credit Party, in form and substance reasonably satisfactory to the Administrative Agent and the Lenders.

(i)     Insurance Policies . The Borrower shall have delivered to the Administrative Agent certificates of insurance on ACORD 25 and 27 or 28 form satisfactory to the Administrative Agent and the Lenders, providing for adequate real property, personal property and liability insurance for each Company, with the Administrative Agent, on behalf of the Lenders, listed as lender’s loss payee and additional insured, as appropriate.

(j)     Financial Reports . The Borrower shall have delivered to the Administrative Agent, in each case in form and substance satisfactory to the Administrative Agent, (i) a copy of the Form 10-Q quarterly report of the Borrower for the fiscal quarter ended March 31, 2015, (ii) copies of the Form 10-K annual reports of the Borrower for the fiscal years ended September 30, 2014, September 30, 2013 and September 30, 2012, (iii) a draft of the audited financial statements of the Target for the fiscal year ended December 31, 2014; in each case, prepared on a Consolidated basis, in form and substance reasonably satisfactory to the Administrative Agent, and (iv) all management letters and reports prepared by independent public accountants for the fiscal years ended September 30, 2014, September 30, 2013 and September 30, 2012.

(k)     Pro-Forma Projections . The Borrower shall have delivered to the Administrative Agent annual pro-forma projections of financial statements (which report shall include balance sheets and statements of income (loss) and cash-flow) of the Borrower for the fiscal year ending September 30, 2015, prepared on a Consolidated basis, in form and substance reasonably satisfactory to the Administrative Agent.

(l)     Leverage Ratio . The Borrower shall have delivered to the Administrative Agent and the Lenders evidence, certified by a Financial Officer and in form and substance reasonably

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satisfactory to the Administrative Agent, that the Leverage Ratio, as determined for the most recently completed twelve (12) months prior to the Closing Date, is less than 3.00 to 1.00; provided that, for purposes of calculating the Leverage Ratio pursuant to this Section 4.2(l), Consolidated EBITDA shall be calculated to include the “EBITDA” of the Target (with appropriate pro forma adjustments acceptable to the Administrative Agent and calculated on the same basis as set forth in the definition of Consolidated EBITDA).

(m)     Advertising Permission Letter . The Borrower shall have delivered to the Administrative Agent an advertising permission letter, authorizing the Administrative Agent to publicize the transaction and specifically to use the name of the Borrower in connection with “tombstone” advertisements in one or more publications selected by the Administrative Agent.

(n)     Administrative Agent Fee Letter and Other Fees . The Borrower shall have (i) executed and delivered to the Administrative Agent, the Administrative Agent Fee Letter and (A) paid to the Administrative Agent, for its sole account, the fees stated therein that are due and payable on the Closing Date, and (B) paid to the Administrative Agent, for the benefit of the Lenders, the fees stated therein that are due and payable to the Lenders on the Closing Date, and (ii) paid all reasonable and documented legal fees and expenses of the Administrative Agent in connection with the preparation and negotiation of the Loan Documents.

(o)     Existing Credit Agreement . The Borrower shall have terminated the Credit and Security Agreement among the Borrower, certain other Credit Parties and Fifth Third Bank, dated as of October 28, 2011, as amended, which termination shall be deemed to have occurred upon payment in full of all of the Indebtedness outstanding thereunder and termination of the commitments established therein.

(p)     Closing Certificate . The Borrower shall have delivered to the Administrative Agent and the Lenders an officer’s certificate certifying that, as of the Closing Date, (i) all conditions precedent set forth in this Article IV have been satisfied, (ii) no Default or Event of Default exists or immediately after the first Credit Event will exist, and (iii) each of the representations and warranties contained in Article VI hereof are true and correct in all material respects as of the Closing Date.

(q)     Letter of Direction . The Borrower shall have delivered to the Administrative Agent a letter of direction authorizing the Administrative Agent, on behalf of the Lenders, to disburse the proceeds of the Loans, which letter of direction includes the authorization to transfer funds under this Agreement and the wire instructions that set forth the locations to which such funds shall be sent.

(r)     No Material Adverse Change . No material adverse change, in the reasonable opinion of the Administrative Agent, shall have occurred in the financial condition, operations or prospects of the Companies taken as a whole since September 30, 2014.


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(s)     Miscellaneous . The Borrower shall have provided to the Administrative Agent and the Lenders such other items and shall have satisfied such other conditions as may be reasonably required by the Administrative Agent or the Lenders.

Section 4.3. Post-Closing Conditions . On or before each of the dates specified in this Section 4.3 (unless a longer period is agreed to in writing by the Administrative Agent), the Borrower shall satisfy each of the following items specified in the subsections below:

(a)     Acquisition Documents . No later than July 1, 2015, the Borrower shall have provided to the Administrative Agent copies of the Target Acquisition Documents and all documents executed in connection therewith, certified by a Financial Officer as true and complete, which documents shall be in form and substance satisfactory to the Administrative Agent, including evidence that (i) the total cash Consideration for the Target Acquisition contemplated therein does not exceed Thirty Million Dollars ($30,000,000) , and (ii) the Target Acquisition contemplated therein have been consummated in accordance with the terms of the Target Acquisition Documents and in compliance with applicable law and regulatory approvals.

(b)     Audited Financial Report of Target . No later than fifteen (15) days after the Closing Date, the Borrower shall have delivered to the Administrative Agent the audited financial statements of the Target for the fiscal year ended December 31, 2014, prepared on a Consolidated basis, in form and substance reasonably satisfactory to the Administrative Agent, and that reflect no material changes (as determined by the Administrative Agent in its sole and reasonable discretion) since the draft financial statements delivered to the Administrative Agent pursuant to Section 4.2(j) hereof.

(c)     Insurance Endorsements . No later than thirty (30) days after the Closing Date, the Borrower shall have delivered to the Administrative Agent proof of endorsements satisfactory to Lender, providing for adequate real property, personal property and liability insurance for each Company, with the Administrative Agent listed as mortgagee, lender’s loss payee and additional insured, as appropriate.

(d)     Landlords’ Waivers . No later than sixty (60) days after the Closing Date, the Borrower shall have delivered a Landlord’s Waiver, in form and substance satisfactory to the Administrative Agent and the Lenders, for each location of the Borrower or a Guarantor of Payment where any of the collateral securing any part of the Obligations is located, unless such location is owned by the Company that owns the collateral located there.

(e)     Consignees’ Waivers . No later than sixty (60) days after the Closing Date, the Borrower shall have delivered a Consignee’s Waiver for each location where the Borrower or a Guarantor of Payment maintains any Inventory with a consignee, together with filed U.C.C. Financing Statements, in form and substance satisfactory to the Administrative Agent.

(f)     Certificates of Title . No later than sixty (60) days after the Closing Date, with respect to any Equipment or Inventory of any Credit Party for which certificates of title are issued or outstanding, the Borrower shall have delivered to the Administrative Agent all of such certificates of title and shall have caused the interest of the Administrative Agent to be properly noted thereon.

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(g)     Deposit Accounts . No later than ninety (90) days after the Closing Date, the Companies shall close each Deposit Account maintained by a Credit Party at any financial institution other than the Administrative Agent. Prior to such closure, the Credit Parties shall endeavor to remit all excess funds in such Deposit Accounts to the Deposit Accounts held at the Administrative Agent.

(h)     Foreign Pledged Securities . No later than ninety (90) days after the Closing Date, the Borrower shall have delivered to the Administrative Agent, for the benefit of the Lenders, (i) the Pledged Securities of Foreign Subsidiaries (provided that, if the Administrative Agent, in its reasonable discretion, after consultation with the Borrower , determines that the cost of delivery of any such Pledged Securities is impractical or cost-prohibitive, then the Administrative Agent may agree to forego (until such time as the Administrative Agent determines it is practical to do so) the delivery of such Pledged Securities), and (ii) with respect to the Pledged Securities of any Foreign Subsidiary for which foreign perfection is required under Section 5.20(c) hereof, any documentation (including legal opinions from foreign counsel) reasonably required by the Administrative Agent regarding the perfection of such Pledged Securities.


ARTICLE V. COVENANTS

Section 5.1. Insurance . Each Company shall at all times maintain insurance upon its Inventory, Equipment and other personal and real property (including, if applicable, insurance required by the National Flood Insurance Reform Act of 1994) in such form, written by such companies, in such amounts, for such periods, and against such risks as is customarily maintained by comparable companies engaged in the same of similar lines of business, with provisions reasonably satisfactory to the Administrative Agent for, with respect to Credit Parties, payment of all losses thereunder to the Administrative Agent, for the benefit of the Lenders, and such Company as their interests may appear (with lender’s loss payable and additional insured endorsements, as appropriate, in favor of the Administrative Agent, for the benefit of the Lenders), and, if required by the Administrative Agent, the Borrower shall deposit the policies with the Administrative Agent. Any such policies of insurance shall provide for no fewer than thirty (30) days prior written notice of cancellation to the Administrative Agent and the Lenders. Any sums received by the Administrative Agent, for the benefit of the Lenders, in payment of insurance losses, returns, or unearned premiums under the policies shall be applied as set forth in Section 2.12(c) and (d) hereof . The Administrative Agent is hereby authorized to act as attorney-in-fact for the Companies, after the occurrence and during the continuance of an Event of Default, in obtaining, adjusting, settling and canceling such insurance and indorsing any drafts. In the event of failure to provide such insurance as herein provided, the Administrative Agent may, at its option, provide such insurance and the Borrower shall pay to the Administrative Agent, upon demand, the cost thereof. Should the Borrower fail to pay such sum to the Administrative Agent upon demand, at the election of the Administrative Agent, interest shall accrue thereon, from the date of demand until paid in full, at the Default Rate. Within ten days of the Administrative Agent’s written request, the Borrower shall furnish to the Administrative Agent such information about the insurance of the Companies as the Administrative Agent may from time to time reasonably request, which information shall be

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prepared in form and detail reasonably satisfactory to the Administrative Agent and certified by a Financial Officer.

Section 5.2. Money Obligations . Each Company shall pay in full (a) prior in each case to the date when penalties would attach, all material taxes, assessments and governmental charges and levies (except only those so long as and to the extent that the same shall be contested in good faith by appropriate and timely proceedings and for which adequate provisions have been established in accordance with GAAP) for which it may be or become liable or to which any or all of its properties may be or become subject; (b) all of its material wage obligations to its employees in compliance with the Fair Labor Standards Act (29 U.S.C. §§ 206‑207) or any comparable provisions , and, in the case of the Foreign Subsidiaries, those obligations under foreign laws with respect to employee source deductions, obligations and employer obligations to its employees ; and (c) all of its other material obligations calling for the payment of money (except only those so long as and to the extent that the same shall be contested in good faith and for which adequate provisions have been established in accordance with GAAP) before such payment becomes overdue.

Section 5.3. Financial Statements and Information .

(a)     Quarterly Financials . The Borrower shall deliver to the Administrative Agent and the Lenders, within forty-five (45) days after the end of each quarterly period of each fiscal year of the Borrower, balance sheets of the Companies as of the end of such period and statements of income (loss), stockholders’ equity and cash flow for the quarter and fiscal year to date periods, all prepared on a Consolidated basis, in form and detail reasonably satisfactory to the Administrative Agent and certified by a Financial Officer; provided that notice by the Borrower to Administrative Agent that the Borrower has filed with the SEC its Form 10-Q quarterly report of the Companies for such quarterly period within such time period shall be deemed to satisfy the requirements of this subsection (a), so long as such financial statements and reports shall be readily available to the Administrative Agent.

(b)     Annual Audit Report . The Borrower shall deliver to the Administrative Agent and the Lenders, within ninety (90) days after the end of each fiscal year of the Borrower, an annual audit report of the Companies for that year prepared on a Consolidated basis, in form and detail reasonably satisfactory to the Administrative Agent and certified by an unqualified opinion of an independent public accountant reasonably satisfactory to the Administrative Agent, which report shall include balance sheets and statements of income (loss), stockholders’ equity and cash-flow for that period; provided that notice by the Borrower to Administrative Agent that the Borrower has filed with the SEC its Form 10-K annual report of the Companies for such annual period within such time period shall be deemed to satisfy the requirements of this subsection (b), so long as such financial statements and reports shall be readily available to the Administrative Agent.

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


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(d)     Management Reports . The Borrower shall deliver to the Administrative Agent and the Lenders, concurrently with the delivery of the quarterly and annual financial statements set forth in subsections (a) and (b) above, a copy of any management report, letter or similar writing furnished to the Companies by the accountants in respect of the systems, operations, financial condition or properties of the Companies.

(e)     Annual Budget . The Borrower shall deliver to the Administrative Agent , within forty-five (45) days after the end of each fiscal year of the Borrower, an annual budget of the Companies for the then current fiscal year, to be in form and detail reasonably satisfactory to the Administrative Agent.

(f)     Shareholder and SEC Documents . The Borrower shall deliver to the Administrative Agent and the Lenders, as soon as available, copies of all notices, reports, definitive proxy or other statements and other documents sent by the Borrower to its shareholders, to the holders of any of its debentures or bonds or the trustee of any indenture securing the same or pursuant to which they are issued, or sent by the Borrower (in final form) to any securities exchange or over the counter authority or system, or to the SEC or any similar federal agency having regulatory jurisdiction over the issuance of the Borrower ’s securities; provided that notice by the Borrower to Administrative Agent that the Borrower has filed with the SEC any such notices, reports, definitive proxy or other statements and other documents shall be deemed to satisfy the requirements of this subsection (f), so long as such financial statements and reports shall be readily available to the Administrative Agent.

(g)     Financial Information of the Companies and the Credit Parties . The Borrower shall deliver to the Administrative Agent and the Lenders, within fifteen (15) days of the written request of the Administrative Agent or any Lender, such other information about the financial condition, properties and operations of any Company as the Administrative Agent or such Lender may from time to time reasonably request, which information shall be submitted in form and detail reasonably satisfactory to the Administrative Agent or such Lender and certified by a Financial Officer of the Company or Companies in question, as applicable.

Section 5.4. Financial Records . Each Company shall at all times maintain true and complete, in all material respects, records and books of account, including, without limiting the generality of the foregoing, appropriate provisions for possible losses and liabilities, all in accordance with GAAP, and at all reasonable times (during normal business hours, other than during the existence of an Event of Default, and upon reasonable notice to such Company) permit the Administrative Agent or any Lender, or any representative of the Administrative Agent or such Lender, to examine such Company’s books and records and to make excerpts therefrom and transcripts thereof; provided that, absent an Event of Default, the Borrower need not reimburse the Administrative Agent for more than two such examinations during a calendar year.


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Section 5.5. Franchises; Change in Business .

(a)    Each Company (other than a Dormant Subsidiary) shall preserve and maintain at all times its existence, and its rights and franchises necessary for its business, except as otherwise permitted pursuant to Section 5.12 hereof.

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

Section 5.6. ERISA Pension and Benefit Plan Compliance .

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

(b)     Foreign Pension Plans and Benefit Plans .

(i)    For each existing, or hereafter adopted, Foreign Pension Plan and Foreign Benefit Plan, the Borrower and any appropriate Foreign Subsidiary shall in a timely fashion comply with and perform in all material respects all of its obligations under and in respect of such Foreign Pension Plan or Foreign Benefit Plan, including under any funding

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agreements and all applicable laws (including any fiduciary, funding, investment and administration obligations).

(ii)    All employer or employee payments, contributions or premiums required to be remitted, paid to or in respect of each Foreign Pension Plan or Foreign Benefit Plan shall be paid or remitted by the Borrower and any appropriate Foreign Subsidiary in a timely fashion in accordance with the terms thereof, any funding agreements and all applicable laws.

(iii)    The Borrower and any appropriate Foreign Subsidiary shall deliver to the Administrative Agent (A) if requested by the Administrative Agent , copies of each annual and other return, report or valuation with respect to each Foreign Pension Plan as filed with any applicable Governmental Authority; and (B) promptly after receipt thereof, a copy of any material direction, order, notice, ruling or opinion that the Borrower and any appropriate Foreign Subsidiary may receive from any applicable Governmental Authority with respect to any Foreign Pension Plan.

Section 5.7. Financial Covenants .

(a)     Leverage Ratio . The Borrower shall not suffer or permit at any time the Leverage Ratio to exceed (i) 3.00 to 1.00 on September 30, 2015 through September 29, 2016, (ii) 2.75 to 1.00 on September 30, 2016 through September 29, 2017, and (iii) 2.50 to 1.00 on September 30, 2017 and thereafter.

(b)     Fixed Charge Coverage Ratio . The Borrower shall not suffer or permit at any time the Fixed Charge Coverage Ratio to be less than 1.20 to 1.00 on September 30, 2015 and thereafter.

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

(a)    the Loans, the Letters of Credit and any other Indebtedness under this Agreement;

(b)    any loans granted to, or Capitalized Lease Obligations entered into by, any Company for the purchase or lease of fixed assets (and refinancings of such loans or Capitalized Lease Obligations ), which loans and Capitalized Lease Obligations shall only be secured by the fixed assets being purchased or leased, so long as the aggregate principal amount of all such loans and Capitalized Lease Obligations for all Companies shall not exceed One Hundred Thousand Dollars ($100,000) at any time outstanding;

(c)    the Indebtedness existing on the Closing Date, in addition to the other Indebtedness permitted to be incurred pursuant to this Section 5.8, as set forth in Schedule 5.8 hereto (and any extension, renewal or refinancing thereof but only to the extent that the principal amount thereof does not increase after the Closing Date);


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(d)    loans to, and guaranties of Indebtedness of, a Company from a Company so long as each such Company is a Credit Party;

(e)    Indebtedness under any Hedge Agreement, so long as such Hedge Agreement shall have been entered into in the ordinary course of business and not for speculative purposes;

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

(g)    secured Indebtedness of Foreign Subsidiaries, in an aggregate principal amount for all Foreign Subsidiaries not to exceed One Million Dollars ($1,000,000) at any time outstanding, so long as the Borrower shall be in pro forma compliance with Section 5.7 hereof at the time of incurrence of such Indebtedness; or

(h)     other unsecured Indebtedness, in addition to the Indebtedness listed above, in an aggregate principal amount for all Companies not to exceed One Hundred Thousand Dollars ($100,000) at any time outstanding.

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

(a)    Liens for taxes not yet due or that are being actively contested in good faith by appropriate proceedings and for which adequate reserves shall have been established in accordance with GAAP;

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

(c)    any Lien granted to the Administrative Agent, for the benefit of the Lenders (and any affiliates thereof);

(d)    the Liens existing on the Closing Date as set forth in Schedule 5.9 hereto and replacements, extensions, renewals, refundings or refinancings thereof, but only to the extent that the amount of debt secured thereby, and the amount and description of property subject to such Liens, shall not be increased;

(e)    purchase money Liens on fixed assets securing the loans and Capitalized Lease Obligations pursuant to Section 5.8(b) hereof, provided that such Lien is limited to the purchase price and only attaches to the property being acquired;


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