Exhibit 10.1
EXECUTION VERSION
 
SENIOR SECURED CONVERTIBLE NOTE PURCHASE AGREEMENT
dated as of March 4, 2008
by and among
WESTMORELAND COAL COMPANY,
TONTINE PARTNERS, L.P.
and
TONTINE CAPITAL PARTNERS, L.P.,
as Purchasers
and
TONTINE CAPITAL ASSOCIATES, L.P.,
as Collateral Agent
 

 

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TABLE OF CONTENTS
SENIOR SECURED CONVERTIBLE NOTE PURCHASE AGREEMENT

          Section   Page  
1. DEFINITIONS
    1  
 
       
2. PURCHASE OF NOTES
    9  
2.1 Purchase of Notes
    9  
2.2 Closing
    10  
2.3 Use of Proceeds
    10  
2.4 Payment of Principal and Interest
    10  
2.5 Prepayments
    11  
2.6 Receipt of Payments
    11  
2.7 Application of Payments
    12  
2.8 Sharing of Payments
    12  
2.9 Access
    12  
2.10 Taxes
    13  
 
       
3. PURCHASERS’ REPRESENTATIONS AND WARRANTIES
    14  
3.1 Existence
    14  
3.2 Authorization
    14  
3.3 Accredited Investor
    14  
3.4 Transfer Restrictions
    14  
 
       
4. COMPANY’S REPRESENTATIONS AND WARRANTIES
    15  
4.1 Corporate Existence; Compliance with Law
    15  
4.2 Corporate Power; Authorization; Enforceable Obligations
    15  
4.3 Authorization and Issuance of Notes
    16  
4.4 Authorized and Outstanding Shares of Capital Stock
    16  
4.5 Financial Statements
    17  
4.6 SEC Documents
    17  
4.7 Securities Laws
    18  
4.8 Taxes
    18  
4.9 No Litigation
    18  
4.10 Patents, Trademarks, Copyrights and Licenses
    19  
4.11 No Material Adverse Effect
    19  

 

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TABLE OF CONTENTS
SENIOR SECURED CONVERTIBLE NOTE PURCHASE AGREEMENT

          Section   Page  
5. COVENANTS
    19  
5.1 Affirmative Covenants
    19  
5.2 Negative Covenants
    22  
5.3 WRI Covenants
    23  
5.4 American Stock Exchange Approval
    23  
 
       
6. CONDITIONS PRECEDENT
    23  
6.1 Conditions Precedent
    23  
6.2 Additional Conditions
    25  
 
       
7. ADDITIONAL PURCHASER RIGHTS
    26  
7.1 Director Rights
    26  
7.2 Observer Rights
    26  
7.3 Rights Offering
    27  
7.4 Preemptive Rights
    27  
 
       
8. CONVERSION
    28  
8.1 Conversion of Notes
    28  
 
       
9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
    33  
9.1 Events of Default
    33  
9.2 Remedies
    35  
9.3 Waivers by Company
    36  
9.4 Right of Set-Off
    36  
9.5 Appointment of the Collateral Agent
    36  
 
       
10. INDEMNIFICATION
    37  
 
       
11. MISCELLANEOUS
    37  
11.1 Complete Agreement; Modification of Agreement; Sale of Interest
    37  
11.2 Fees and Expenses
    38  
11.3 No Waiver by Purchaser
    39  
11.4 Remedies
    40  
11.5 Waiver of Jury Trial
    40  
11.6 Severability
    40  
11.7 Binding Effect; Benefits
    40  

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TABLE OF CONTENTS
SENIOR SECURED CONVERTIBLE NOTE PURCHASE AGREEMENT

          Section   Page  
11.8 Conflict of Terms
    40  
11.9 Governing Law
    40  
11.10 Notices
    41  
11.11 Survival
    42  
11.12 Section and Other Headings
    42  
11.13 Counterparts
    42  
11.14 Publicity
    42  
11.15 Confidential Information
    43  
11.16 Compliance with First Interstate Loan Documents
    43  
11.17 Termination of Standby Purchase Agreement
    44  

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TABLE OF CONTENTS
SENIOR SECURED CONVERTIBLE NOTE PURCHASE AGREEMENT

          Section       Page
Annexes
       
 
       
Annex I
- Allocation of Notes    
 
       
Schedules
                 
Schedule 4.2
- Corporate Power; Authorization; Enforceable Obligations    
Schedule 4.4
- Stock and Warrants    
Schedule 4.5
- Financial Statements    
Schedule 4.6
- SEC Documents    
Schedule 4.9
- Litigation    
Schedule 4.11
- Material Adverse Effect    
 
       
Exhibits
       
 
       
Exhibit A
  Form of Note    
Exhibit B
  Registration Rights Agreement    
Exhibit C-1
  Opinion of Company Counsel    
Exhibit C-2
  Opinion of Company General Counsel    
Exhibit D
  Form of Guaranty    
Exhibit E
  Form of Pledge Agreement    
Exhibit F
  Form of Security Agreement    
Exhibit G
  Form of Consent    

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EXECUTION VERSION
SENIOR SECURED CONVERTIBLE NOTE PURCHASE AGREEMENT
          SENIOR SECURED CONVERTIBLE NOTE PURCHASE AGREEMENT, dated as of
March 4, 2008, by and among Westmoreland Coal Company, a Delaware corporation
(“Company”), Tontine Partners, L.P., a Delaware limited partnership and Tontine
Capital Partners, L.P., a Delaware limited partnership, (each of the forgoing,
“Purchaser” and collectively, “Purchasers”) and Tontine Capital Associates,
L.P., a Delaware limited partnership as Collateral Agent (as defined herein).
W I T N E S S E T H :
          WHEREAS, Company has agreed to issue and sell to Purchasers, and
Purchasers have agreed to purchase from Company, upon the terms and conditions
hereinafter provided, senior secured convertible promissory notes in an
aggregate principal amount of $15,000,000, which are initially convertible into
an aggregate of 1,500,000 shares of Common Stock (as defined herein) of Company;
          WHEREAS, Company’s wholly-owned subsidiary, Westmoreland Resources,
Inc., a Delaware corporation (“WRI”), shall guaranty Company’s Obligations under
this Agreement and the Notes pursuant to that certain Guaranty (as defined
herein);
          WHEREAS, Company, WRI and Purchasers have agreed to enter into that
certain Pledge Agreement (as defined herein) pursuant to which Company shall
grant the Collateral Agent (as defined herein) a second-priority security
interest in all of the outstanding shares of WRI for the benefit of Purchasers;
          WHEREAS, WRI and Purchasers have agreed to enter into that certain
Security Agreement (as defined herein), pursuant to which WRI shall grant a
second-priority security interest in substantially all of its assets as security
for the Obligations hereunder for the benefit of Purchasers;
          NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, it is agreed as follows:
1. DEFINITIONS
          “Affiliate” shall have the meaning set forth in Rule 12b-2 under the
Exchange Act.
          “Agreement” shall mean this Senior Secured Convertible Note Purchase
Agreement including all amendments, modifications and supplements hereto and any
appendices, exhibits and schedules hereto or thereto, and shall refer to the
Agreement as the same may be in effect at the time such reference becomes
operative.
          “Balance Sheet” shall have the meaning set forth in Section 4.5(a)
hereof.

 

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          “Business Day” shall mean any day that is not a Saturday, a Sunday or
a day on which banks are required or permitted to be closed in the State of New
York.
          “Cash Equivalents” shall mean (i) marketable direct obligations issued
or unconditionally guaranteed by the United States of America or any agency
thereof maturing within one year from the date of acquisition thereof;
(ii) commercial paper maturing no more than one year from the date of creation
thereof and at the time of their acquisition having the highest rating
obtainable from either Standard & Poor’s Corporation or Moody’s Investors
Service, Inc.; and (iii) certificates of deposit, maturing not more than one
year from the date of creation thereof, issued by (A) commercial banks
incorporated under the laws of the United States of America, each having
combined capital, surplus and undivided profits of not less than $200,000,000
and having a rating of “A” or better by a nationally recognized rating agency or
(B) First Interstate Bank.
          “Change of Control” shall mean any of the following: (a) any person or
group of persons (within the meaning of the Exchange Act) (other than Tontine
and its Affiliates) shall have acquired beneficial ownership (within the meaning
of Rule 13d-3 promulgated by the SEC under the Exchange Act) of 30% or more of
the issued and outstanding shares of Common Stock of Company; (b) Company shall
be a party to a merger or consolidation in which Company is not the survivor or
in which Company’s stockholders immediately prior thereto own less than a
majority of the outstanding voting stock of the survivor; (c) Company shall have
sold, leased or otherwise transferred all or substantially all of its assets on
a consolidated basis; or (d) Company shall cease to own all of the outstanding
stock of WRI.
          “Charges” shall mean all federal, state, county, city, municipal,
local, foreign or other governmental (including, without limitation, PBGC) taxes
at the time due and payable, levies, assessments, charges, liens, claims or
encumbrances upon or relating to (i) Company’s or any of its Subsidiaries’
employees, payroll, income or gross receipts, (ii) Company’s or any of its
Subsidiaries’ ownership or use of any of its assets, or (iii) any other aspect
of Company’s or any of the Subsidiaries’ business.
          “Closing” shall have the meaning set forth in Section 2.2 hereof.
          “Closing Date” shall have the meaning set forth in Section 2.2 hereof.
          “Collateral Agent” shall have the meaning set forth in Section 9.5
hereof.
          “Common Stock” shall mean Company’s common stock, par value $2.50 per
share.
          “Company” shall have the meaning set forth in the preamble of this
Agreement.
          “Company SEC Documents” shall have the meaning set forth in
Section 4.6 hereof.

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          “Confidential Information” shall have the meaning set forth in
Section 11.15 hereof.
          “Consent” shall mean that certain Consent executed by First Interstate
Bank and each Credit Party a copy of which is attached hereto as Exhibit G,
including all amendments, modifications and supplements thereto and any
appendices, exhibits and schedules thereto.
          “Conversion” shall have the meaning set forth in Section 8.1(a)
hereof.
          “Conversion Price” shall have the meaning set forth in Section 8.1(a)
hereof.
          “Conversion Shares” shall mean the Common Stock issuable upon
Conversion of the Notes.
          “Credit Party” and “Credit Parties” shall mean individually, Company
or the Guarantor or collectively, Company and the Guarantor.
          “Current Market Price” shall mean, in respect of any share of Common
Stock on any date herein specified, the average of the daily market prices for
30 consecutive Business Days commencing 45 days before such date. The daily
market price for each such Business Day shall be (i) the last sale price on such
day on the principal stock exchange, including the NASDAQ Stock Market on which
such Common Stock is then listed or admitted to trading, (ii) if no sale takes
place on such day on any such exchange, the average of the last reported closing
bid and asked prices on such day as officially quoted on any such exchange,
(iii) if the Common Stock is not then listed or admitted to trading on any stock
exchange, the average of the last reported closing bid and asked prices on such
day in the over-the-counter market, as furnished by the National Association of
Securities Dealers Automatic Quotation System or the National Quotation Bureau,
Inc., (iv) if neither such corporation at the time is engaged in the business of
reporting such prices, as furnished by any similar firm then engaged in such
business, or (v) if there is no such firm, as furnished by any member of the
National Association of Securities Dealers (“NASD”) selected mutually by the
Required Purchasers and Company or, if they cannot agree upon such selection, as
selected by two such members of the NASD, one of which shall be selected by the
Required Purchasers and one of which shall be selected by Company.
          “Date of Issuance” shall have the meaning set forth in Section 7.4
hereof.
          “Default” shall mean any event which, with the passage of time or
notice or both, would, unless cured or waived, become an Event of Default.
          “Designee” shall have the meaning set forth in Section 7.2 hereof.
          “Election Notice” shall have the meaning set forth in Section 7.4
hereof.

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          “Environmental Laws” shall mean all federal, state and local laws,
statutes, ordinances and regulations, now or hereafter in effect, and in each
case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including, without limitation, any
applicable judicial or administrative order, consent decree or judgment,
relating to the regulation and protection of human health, safety, the
environment and natural resources (including, without limitation, ambient air,
surface water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation). Environmental Laws include but are
not limited to the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. § 9601 et seq.); the Hazardous
Material Transportation Act, as amended (49 U.S.C. § 1801 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. § 136 et
seq.); the Resource Conservation and Recovery Act, as amended (42 U.S.C. § 6901
et seq.); the Toxic Substance Control Act, as amended (15 U.S.C. § 2601 et
seq.); the Clean Air Act, as amended (42 U.S.C. § 740 et seq.); the Federal
Water Pollution Control Act, as amended (33 U.S.C. § 1251 et seq.); the
Occupational Safety and Health Act, as amended (29 U.S.C. § 651 et seq.); and
the Safe Drinking Water Act, as amended (42 U.S.C. § 300f et seq.), and any and
all regulations promulgated thereunder, and all analogous state and local
counterparts or equivalents and any transfer of ownership notification or
approval statutes.
          “ERISA” shall mean the Employee Retirement Income Security Act of 1974
(or any successor legislation thereto), as amended from time to time and any
regulations promulgated thereunder.
          “ERISA Affiliate” shall mean, with respect to Company, any trade or
business (whether or not incorporated) under common control with Company and
which, together with Company, are treated as a single employer within the
meaning of Sections 414(b), (c), (m) or (o) of the IRC, excluding Purchaser and
each other person which would not be an ERISA Affiliate if Purchaser did not own
any issued and outstanding shares of Stock of Company.
          “Event of Default” shall have the meaning set forth in Section 9.1
hereof.
          “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended, and all rules and regulations promulgated thereunder.
          “Exempt Securities” shall have the meaning set forth in Section 7.4(a)
hereof.
          “First Interstate Loan Agreement” shall have the meaning set forth in
Section 5.3 hereof.
          “First Interstate Loan Documents” shall mean the First Interstate Loan
Agreement, the related promissory notes, guaranty, pledge agreement, security
agreement and any other related security documents and agreements.

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          “Fiscal Year” shall mean the twelve month period ending December 31.
Subsequent changes of the fiscal year of Company shall not change the term
“Fiscal Year,” unless the Required Purchasers shall consent in writing to such
changes.
          “GAAP” shall mean generally accepted accounting principles in the
United States of America as in effect from time to time.
          “Governmental Authority” shall mean any nation or government, any
state or other political subdivision thereof, and any agency, department or
other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
          “Guarantor” shall mean WRI.
          “Guaranty” shall mean that certain Guaranty, executed by the
Guarantor, substantially in the form attached hereto as Exhibit H, as such
Guaranty may be amended, supplemented or otherwise modified from time to time,
in accordance with the terms thereof.
          “Indebtedness” of any Person shall mean (i) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services (including, without limitation, reimbursement and all other obligations
with respect to surety bonds, letters of credit and bankers’ acceptances,
whether or not matured, but not including obligations to trade creditors
incurred in the ordinary course of business), (ii) all obligations evidenced by
notes, bonds, debentures or similar instruments, (iii) all indebtedness created
or arising under any conditional sale or other title retention agreements with
respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited
to repossession or sale of such property), (iv) all capital lease obligations,
(v) all indebtedness of the types described in clauses (i) through (iv) above
that is guaranteed by such Person and (vi) all Indebtedness referred to in
clause (i), (ii), (iii), (iv) or (v) above secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien upon or in property (including, without limitation,
accounts and contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness.
          “Interest Payment Date” shall have the meaning assigned to such term
in Section 2.4(b) hereof.
          “IRC” shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto.
          “IRS” shall mean the Internal Revenue Service, or any successor
thereto.
          “Issue Price” shall have the meaning set forth in Section 7.4 hereof.

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          “Lien” shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, easement or encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing statement perfecting a
security interest as to assets owned by the relevant Person under the Uniform
Commercial Code or comparable law of any jurisdiction).
          “Loan Documents” shall mean this Agreement, the Notes, the Security
Agreement, the Pledge Agreement, the Guaranty, the Consent and all other
agreements, instruments, documents and certificates, including, without
limitation, pledges, powers of attorney, consents, assignments, contracts,
notices, and all other written matter whether heretofore, now or hereafter
executed by or on behalf of Company, and delivered to each Purchaser, in its
capacity as purchaser of the Notes hereunder, in connection with this Agreement
or the transactions contemplated hereby.
          “Losses” shall have the meaning set forth in Section 10 hereof.
          “Material Adverse Effect” shall mean a material adverse effect on
(i) the financial condition, or on the earnings, financial position, operations,
assets, results of operation, business or prospects of Company and its
Subsidiaries taken as a whole, or (ii) Company’s ability to pay the Obligations
in accordance with the terms hereof.
          “Maturity Date” shall have the meaning set forth in Section 2.1
hereof.
          “Maximum Lawful Rate” shall have the meaning set forth in
Section 2.4(f) hereof.
          “Multiemployer Plan” shall mean a “multiemployer plan” as defined in
Section 4001(a)(3) of ERISA, and to which Company, any of its Subsidiaries or
any ERISA Affiliate is making, is obligated to make, has made or been obligated
to make, contributions on behalf of participants who are or were employed by any
of them.
          “Note” and “Notes” shall mean individually or collectively, the senior
secured subordinated convertible promissory notes of Company in the aggregate
principal amount of $15,000,000 to be issued to Purchasers hereunder on the
Closing Date, substantially in the form of Exhibit A hereto.
          “Notice of Issuance” shall have the meaning set forth in Section 7.4
hereof.
          “Obligations” shall mean all amounts owing by Company to each
Purchaser and any of its respective assignees pursuant hereto or the Notes,
including, without limitation, all principal, interest, fees, expenses,
attorneys’ fees and any other sum chargeable to Company under any of the Loan
Documents.

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          “Observer Rights” shall have the meaning set forth in Section 7.2
hereof.
          “Offered Securities” shall have the meaning set forth in Section 7.4
hereof.
          “Other Taxes” shall have the meaning set forth in Section 2.10(b).
          “Organic Change” shall have the meaning set forth in Section 8.1(g)
hereof.
          “PBGC” shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
          “Pension Plan” shall all “employee pension plans”, as defined in
Section 3(2) of ERISA.
          “Person” shall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, entity or
government (whether federal, state, county, city, municipal or otherwise,
including, without limitation, any instrumentality, division, agency, body or
department thereof).
          “Plan” shall mean all “employee benefit plans”, as defined in
Section 3(3) of ERISA, and any other employee benefit arrangements or payroll
practices, including, without limitation, severance pay, sick leave, vacation
pay, salary continuation for disability, consulting or other compensation
agreements, retirement, deferred compensation, bonus, stock purchase,
hospitalization, medical insurance, life insurance and scholarship programs.
          “Pledge Agreement” shall mean that certain Pledge Agreement executed
by Company and WRI, a copy of which is attached hereto as Exhibit F, including
all amendments, modifications and supplements thereto and any appendices,
exhibits and schedules thereto.
          “Preferred Stock” shall mean Company’s Series A Preferred Stock, par
value $1.00 per share.
          “Purchaser” and “Purchasers” shall have the meaning set forth in the
preamble of this Agreement.
          “Registration Rights Agreement” shall mean the Registration Rights
Agreement by and between Company and Purchasers, substantially in the form
attached hereto as Exhibit C, as such agreement may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
          “Restricted Payment” shall mean (i) the declaration of any dividend or
the incurrence of any liability to make any other payment or distribution of
cash or other

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property or assets in respect of Company’s Stock or (ii) any payment on account
of the purchase, redemption or other retirement of Company’s Stock or any other
payment or distribution made in respect of any Stock of Company, either directly
or indirectly.
          “Required Purchasers” shall mean Persons who hold at least a majority
of the outstanding principal amount of the Notes.
          “Retiree Welfare Plan” shall refer to any Welfare Plan providing for
continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant’s termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant.
          “SEC” shall mean the U.S. Securities and Exchange Commission, or any
successor thereto.
          “Securities Act” shall mean the Securities Act of 1933, as amended,
and all rules and regulations promulgated thereunder.
          “Security Agreement” shall mean that certain Security Agreement
executed by WRI, a copy of which is attached hereto as Exhibit E, including all
amendments, modifications and supplements thereto and any appendices, exhibits
and schedules thereto.
          “Security Documents” shall mean the Security Agreement, the Pledge
Agreement and each other security document or pledge agreement delivered in
accordance with applicable local or foreign law to grant a valid, perfected
security interest in any property as collateral for the Obligations, and all UCC
or other financing statements or instruments of perfection required by this
Agreement, the Security Agreement or any other such security document or pledge
agreement to be filed with respect to the security interests in property and
fixtures created pursuant to the Security Agreement and any other document or
instrument utilized to pledge or grant or purport to pledge or grant a security
interest or lien on any property as collateral for the Obligations.
          “Stock” shall mean all shares, options, warrants, general or limited
partnership interests, limited liability company membership interest,
participations or other equivalents (regardless of how designated) of or in a
corporation, partnership, limited liability company or equivalent entity whether
voting or nonvoting, including, without limitation, common stock, preferred
stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of
the General Rules and Regulations promulgated by the SEC under the Exchange
Act).
          “Subsidiary” shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or

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might have voting power by reason of the happening of any contingency) is at the
time, directly or indirectly, owned legally or beneficially by such Person
and/or one or more Subsidiaries of such Person, and (b) any partnership or other
entity in which such Person and/or one or more Subsidiaries of such Person shall
have an interest (whether in the form of voting or participation in profits or
capital contribution) of more than 50%.
          “Taxes” shall have the meaning set forth in Section 2.10(a) hereof.
          “Tontine” shall mean, collectively, Tontine Partners, L.P. and Tontine
Capital Partners, L.P.
          “Transaction Documents” shall mean this Agreement, the Loan Documents
and the Registration Rights Agreement.
          “Welfare Plan” shall mean any welfare plan, as defined in Section 3(1)
of ERISA, which is maintained or contributed to by Company, any of its
Subsidiaries or any ERISA Affiliate.
          “Withdrawal Liability” means, at any time, the aggregate amount of the
liabilities, if any, pursuant to Section 4201 of ERISA, and any increase in
contributions pursuant to Section 4243 of ERISA with respect to all
Multiemployer Plans.
          “WRI” shall have the meaning set forth in the recitals of this
Agreement.
          Any accounting term used in this Agreement shall have, unless
otherwise specifically provided herein, the meaning customarily given such term
in accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain terms or computations are explicitly modified
by the phrase “in accordance with GAAP” shall in no way be construed to limit
the foregoing. The words “herein,” “hereof” and “hereunder” and other words of
similar import refer to this Agreement as a whole, including the Exhibits and
Schedules hereto, as the same may from time to time be amended, modified or
supplemented, and not to any particular section, subsection or clause contained
in this Agreement. Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter.
2. PURCHASE OF NOTES
          2.1 Purchase of Notes. Subject to the terms and conditions set forth
in this Agreement, each Purchaser severally agrees to purchase from Company, and
Company agrees to issue and sell to each Purchaser, on the Closing Date, the
Notes in the principal amounts set forth by each Purchaser’s name on Annex I
hereto, for an aggregate purchase price of $15,000,000, containing the terms set
forth herein and in Exhibit A

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hereto. The original aggregate principal amount of the Notes shall be
$15,000,000, and the maturity date thereof shall be March 4, 2013 (the “Maturity
Date”).
          2.2 Closing. The closing of the purchase and sale of the Notes (the
“Closing”) shall take place within five Business Days after the satisfaction or
waiver of the conditions set forth in Section 6 hereof or such date and time as
shall be mutually agreed to by the parties hereto (the “Closing Date”) at the
offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York, or
such other place as shall be mutually agreed to by the parties hereto.
          On the Closing Date, Company will deliver to each Purchaser the Note
payable to each such Purchaser against delivery by each such Purchaser of the
purchase price therefor by wire transfer of immediately available funds to the
account of Company.
          2.3 Use of Proceeds. Company shall use the proceeds of the purchase
price hereunder for working capital, capital expenditures, project development
and general corporate purposes in accordance with the terms of this Agreement,
but Company shall not use such proceeds to repay any Indebtedness under the
First Interstate Loan Documents.
          2.4 Payment of Principal and Interest.
          (a) Company shall pay the aggregate outstanding principal of the Notes
on the Maturity Date. Company shall pay interest on the aggregate principal
amount of the Notes on each Interest Payment Date, as set forth below.
          (b) Interest on each Note shall accrue from the most recent date on
which interest has been paid for such Note as provided in Section 2.4(d) or, if
no interest has been paid, from the date of issuance listed on the relevant
Note. Interest shall accrue at a rate equal to 9.00% per annum based on the
amounts outstanding from time to time under each Note, including any increased
principal amounts of the Notes resulting from an “in kind” interest payment
under Section 2.4(d)(ii) and shall be computed on the basis of a 360-day year.
Company shall pay interest to Purchasers quarterly in arrears on the last day of
each March, June, September and December, commencing on March 31, 2008 (each
such date, an “Interest Payment Date”) as provided in Section 2.4(d).
          (c) If any payment on each Note becomes due and payable on a day other
than a Business Day, the maturity thereof shall be extended to the next
succeeding Business Day and, with respect to payments of principal, interest
thereon shall be payable at the then applicable rate during such extension.
          (d) Company may, at its option, pay interest on the Notes (i) in cash
or (ii) in kind (as of the relevant Interest Payment Date) by increasing the
principal amount of each Note in an aggregate amount equal to the interest due
on such Interest Payment Date; provided, however, that Company may not pay
interest on the Notes in kind (as of the relevant Interest Payment Date) by
increasing the principal amount of each Note if

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this would cause the aggregate principal amount of the Notes to exceed
$18,779,460. Any cash interest payment shall be made in accordance with
Section 2.6 herein.
          (e) So long as any Event of Default shall be continuing, the interest
rate applicable to each Note shall be increased by 2.00% per annum above the
rate otherwise applicable.
          (f) Notwithstanding anything to the contrary set forth in this
Section 2.4, if at any time until payment in full of the Notes, the interest
rate payable thereon exceeds the highest rate of interest permissible under any
law which a court of competent jurisdiction shall, in a final determination,
deem applicable hereto (the “Maximum Lawful Rate”), then in such event and so
long as the Maximum Lawful Rate would be so exceeded, the rate of interest
payable on the Notes shall be equal to the Maximum Lawful Rate; provided,
however, that if at any time thereafter the interest rate payable thereon is
less than the Maximum Lawful Rate, Company shall continue to pay interest
thereunder at the Maximum Lawful Rate until such time as the total interest
received by Purchasers is equal to the total interest which they would have
received had the interest rate on the Notes been (but for the operation of this
paragraph) the interest rate payable since the Closing Date. Thereafter, the
interest rate payable shall be the stated interest rate unless and until such
rate again exceeds the Maximum Lawful Rate, in which event this paragraph shall
again apply. In no event shall the total interest received by Purchasers
pursuant to the terms hereof exceed the amount which they could lawfully have
received had the interest due hereunder been calculated for the full term hereof
at the Maximum Lawful Rate. In the event the Maximum Lawful Rate is calculated
pursuant to this paragraph, such interest shall be calculated at a daily rate
equal to the Maximum Lawful Rate divided by the number of days in the year in
which such calculation is made. In the event that a court of competent
jurisdiction, notwithstanding the provisions of this Section 2.4(f), shall make
a final determination that Purchasers have received interest hereunder or under
any of the Loan Documents in excess of the Maximum Lawful Rate, Purchasers
shall, to the extent permitted by applicable law, promptly apply such excess
first to any interest due and not yet paid under the Notes, then to the
outstanding principal of the Notes, then to other unpaid Obligations and
thereafter shall refund any excess to Company or as a court of competent
jurisdiction may otherwise order.
          2.5 Prepayments. Company shall have the right at any time, without
premium or penalty and on thirty (30) days’ prior written notice to Purchasers,
to voluntarily prepay all or any portion (in multiples of not less than $500,000
or the amount outstanding on the Notes) of the Notes; provided, however,
Purchasers shall retain conversion rights in respect of the Notes for such
period of thirty (30) days after Company has given such notice. Each prepayment
shall be accompanied by the payment of accrued and unpaid interest on the amount
being prepaid, through the date of prepayment. Any partial repayment of any
principal amount of any Notes shall be on a pro rata basis with respect to all
Notes then outstanding.
          2.6 Receipt of Payments. Company shall make each payment under the
Notes not later than 2:00 P.M. (New York City time) on the day when due in
lawful

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money of the United States of America in immediately available funds to each
Purchaser’s depository bank in the United States as designated by each Purchaser
from time to time for deposit in each such Purchaser’s depositary account. For
purposes only of computing interest under the Notes, all payments shall be
applied by each Purchaser to the Notes held by such Purchaser on the day payment
has been credited by such Purchaser’s depository bank to such Purchaser’s
account in immediately available funds.
          2.7 Application of Payments. Company irrevocably waives the right to
direct the application of any and all payments at any time or times hereafter
received by Purchasers from or on behalf of Company pursuant to the terms of
this Agreement, and Company irrevocably agrees that Purchasers shall have the
continuing exclusive right to apply any and all such payments against the
Obligations of Company and in repayment of the Notes as it may deem advisable;
provided that, so long as an Event of Default (or an event which with notice or
lapse of time or both would become an Event of Default) has not occurred and is
continuing, the same shall be applied in the following order: (i) then due and
payable fees and expenses; (ii) then due and payable interest payments on the
Notes; and (iii) then due and payable principal payments on the Notes.
          2.8 Sharing of Payments. If any holder of a Note or a portion thereof
shall obtain any payment (whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise) on account of the Notes held by it in
excess of its ratable share of payments on account of the Notes held by all
holders thereof, such holder shall forthwith purchase from each other holder
such participations in the Notes held by such other holders as shall be
necessary to cause such purchasing holder to share the excess payment ratably
with each other holder; provided, however, that if all or any portion of such
excess payment is thereafter recovered from such purchasing holder, such
purchase shall be rescinded and such holder shall repay to the purchasing holder
the purchase price to the extent of such recovery together with an amount equal
to such holder’s ratable share (according to the proportion of (i) the amount of
such holder’s required repayment to (ii) the total amount so recovered from the
purchasing holder) of any interest or other amount paid or payable by the
purchasing holder in respect of the total amount so recovered. Company agrees
that any holder so purchasing a participation from another holder pursuant to
this Section 2.8 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such holder were the direct creditor of Company in
the amount of such participation. Company further agrees to make all payments on
the Notes to all holders thereof on a pro rata basis, based on the principal
amount of the Notes held by each.
          2.9 Access. The Collateral Agent or any Purchaser and their respective
officers, employees and/or agents shall have the right, exercisable as
frequently as it determines to be appropriate, during normal business hours, to
visit and inspect the properties and facilities of Company and its Subsidiaries
and to inspect, audit and make extracts from all of Company’s and its
Subsidiaries’ records, files, corporate books and books of account and to
discuss the affairs, finances and accounts of Company and its Subsidiaries with
the principal officers of Company, all at such reasonable times, upon reasonable
notice and as often as the Collateral Agent or Purchasers may reasonably

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request. Company shall deliver any document or instrument reasonably necessary
for the Collateral Agent or Purchasers, as each may request, to obtain records
from any service bureau maintaining records for Company or its Subsidiaries.
Company shall instruct its and its Subsidiaries’ banking and other financial
institutions to make available to the Collateral Agent or Purchasers such
information and records as it may reasonably request.
          2.10 Taxes. (a) Any and all payments by Company hereunder or under the
Notes shall be made, in accordance with this Section 2.10, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding taxes imposed on or measured by the net income of any Purchaser (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as “Taxes”). If Company shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under any Note to any Purchaser, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section 2.10) such Purchaser receives an amount equal to the sum it would have
received had no such deductions been made, (ii) Company shall make such
deductions, and (iii) Company shall pay the full amount deducted to the relevant
taxing or other authority in accordance with applicable law. Notwithstanding
anything to the contrary herein, any Purchaser that is not organized under the
laws of the United States of America, any State thereof, or the District of
Columbia shall not be entitled to the benefits of this Section 2.10.
          (b) In addition, Company agrees to pay any present or future stamp or
documentary taxes or any other sales, transfer, exercise, mortgage recording or
property taxes, charges or similar levies that arise from any payment made
hereunder or under the Notes or from the execution, sale, transfer, delivery or
registration of, or otherwise with respect to, any of the Transaction Documents
(hereinafter referred to as “Other Taxes”).
          (c) Company shall indemnify each Purchaser for the full amount of
Taxes or Other Taxes (including without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 2.10) paid by
each such Purchaser and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
or Other Taxes were correctly or legally asserted; provided, however, that
Company shall not be liable for such Taxes or Other Taxes to the extent that any
such Taxes or Other Taxes result from such Purchaser’s gross negligence or
willful misconduct as determined by a final judgment of a court of competent
jurisdiction. This indemnification shall be made within 30 days from the date
each such Purchaser makes written demand therefor.
          (d) Within 30 days after the date of any payment of Taxes, Company
shall furnish to each such Purchaser the original or a certified copy of a
receipt evidencing payment thereof.

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          (e) Without prejudice to the survival of any other agreement of
Company hereunder, the agreements and obligations of Company contained in this
Section 2.10 shall survive the payment in full of the Notes.
3. PURCHASERS’ REPRESENTATIONS AND WARRANTIES
          Each Purchaser makes the following representations and warranties to
Company, each and all of which shall survive the execution and delivery of this
Agreement and the Closing hereunder:
          3.1 Existence. Such Purchaser is an entity duly organized, validly
existing and in good standing under the laws of its state of organization.
          3.2 Authorization. This Agreement has been duly and validly
authorized, executed and delivered by such Purchaser and constitutes a binding
obligation of such Purchaser, enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity).
          3.3 Accredited Investor. Such Purchaser is an “accredited investor”
within the meaning of Rule 501(a) under the Securities Act and is acquiring its
Note and the Conversion Shares for investment for its own account, with no
present intention of dividing its participation with others or reselling or
otherwise distributing the same in violation of the Securities Act or any
applicable state securities laws.
          3.4 Transfer Restrictions. Such Purchaser understands that: (i) other
than pursuant to the Registration Rights Agreement with respect to the
Conversion Shares, the resale of the Note and the Conversion Shares has not been
and is not being registered under the Securities Act or any applicable state
securities laws, and the Note and the Conversion Shares may not be sold or
otherwise transferred unless (a) the Note and the Conversion Shares are sold or
transferred pursuant to an effective registration statement under the Securities
Act, (b) at Company’s request, other than in connection with any transfer to any
Affiliate of Tontine, such Purchaser shall have delivered to Company an opinion
of counsel (which opinion shall be in form, substance and scope reasonably
satisfactory to Company’s counsel) to the effect that the Note and the
Conversion Shares to be sold or transferred may be sold or transferred pursuant
to an exemption from such registration, or (c) the Note and the Conversion
Shares are sold pursuant to Rule 144 promulgated under the Securities Act;
(ii) any sale of such Note and the Conversion Shares made in reliance on
Rule 144 under the Securities Act may be made only in accordance with the terms
of such Rule; and (iii) except as set forth in the Registration Rights Agreement
with respect to the Conversion Shares, neither Company nor any other Person is
under any obligation to register such Note and the Conversion Shares under the
Securities Act or any state securities laws or to comply with the terms

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and conditions of any exemption thereunder. Such Purchaser acknowledges that an
appropriate restrictive legend will be placed on the certificate or certificates
representing the Note and the Conversion Shares that may be issued pursuant to
this Agreement.
4. COMPANY’S REPRESENTATIONS AND WARRANTIES
          Company makes the following representations and warranties to each
Purchaser, each and all of which shall survive the execution and delivery of
this Agreement and the Closing hereunder:
          4.1 Corporate Existence; Compliance with Law. Each of Company and WRI
(i) is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware; (ii) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business requires such
qualification (except for jurisdictions in which such failure to so qualify or
to be in good standing would not have a Material Adverse Effect); (iii) has the
requisite corporate power and authority and the legal right to own, pledge,
mortgage or otherwise encumber and operate its properties, to lease the property
it operates under lease, and to conduct its business as now being conducted;
(iv) has, or has applied for, all material licenses, permits, consents or
approvals from or by, and has made all material filings with, and has given all
material notices to, all Governmental Authorities having jurisdiction, to the
extent required for such ownership, operation and conduct; (v) is in compliance
with its certificate or articles of incorporation and by-laws; and (vi) is in
compliance with all applicable provisions of law, including ERISA and
Environmental Laws, except for such non-compliance which would not have a
Material Adverse Effect.
          4.2 Corporate Power; Authorization; Enforceable Obligations. Except as
set forth on Schedule 4.2, the execution, delivery and performance by each
Credit Party of the Transaction Documents to which it is a party and all
instruments and documents to be delivered by each Credit Party, the issuance and
sale of the Notes by Company and the consummation of the other transactions
contemplated by any of the foregoing: (i) are within such Credit Party’s
corporate power and authority; (ii) have been duly authorized by all necessary
or proper corporate action; (iii) are not in contravention of any provision of
such Credit Party’s certificate of incorporation or by-laws; (iv) will not
violate any law or regulation, or any order or decree of any court or
governmental instrumentality; (v) will not conflict with or result in the breach
or termination of, constitute a default under or accelerate any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which such Credit Party is a party or by which such Credit Party
or any of its property is bound which, taken individually or in the aggregate,
is material to such Credit Party; (vi) other than those Liens created pursuant
to the Transaction Documents, will not result in the creation or imposition of
any Lien upon any of the property of such Credit Party; and (vii) do not require
the consent or approval of, or any filing with, any Governmental Authority or
any other Person (except (A) for those filings required by the Registration
Rights Agreement, (B) the filing of a Form D with the SEC, (C) the filing of
UCC-1 financing statements

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with the Secretary of State of Delaware and (D) to the extent previously
obtained or made). At or prior to the Closing Date, each of the Transaction
Documents shall have been duly executed and delivered by each Credit Party party
thereto and each shall then constitute a legal, valid and binding obligation of
such Credit Party, enforceable against it in accordance with its terms, subject
to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
          4.3 Authorization and Issuance of Notes. The issuance of the Notes has
been duly authorized by all necessary corporate action on the part of Company
and, upon delivery to each Purchaser of each Note against payment in accordance
with the terms hereof, each Note will have been validly issued, free and clear
of all pledges, liens, encumbrances and preemptive rights. The issuance of
shares of Common Stock upon conversion of the Notes has been duly authorized by
all necessary corporate action on the part of Company. When issued upon
conversion of the Notes, such Conversion Shares will have been validly issued
and fully paid and non-assessable, and none of the Conversion Shares will have
been issued in violation of the preemptive rights of any security holders of
Company arising as a matter of law or under or pursuant to Company’s certificate
of incorporation, as amended, Company’s bylaws, as amended, or any agreement or
instrument to which Company is a party or by which it is bound. Company has duly
reserved 1,877,946 shares of Common Stock for issuance pursuant to the terms of
the Notes. Under the rules of the American Stock Exchange, the laws of the State
of Delaware and any other applicable law, the issuance of the shares of Common
Stock upon conversion of the Notes by Purchasers does not require approval of
the stockholders of Company.
          4.4 Authorized and Outstanding Shares of Capital Stock.
          (a) After giving effect to the Closing and as at the Closing Date
(except with respect to (a)(i)(A) below, which is as of January 31, 2008), the
authorized capital stock of Company consists of (i) 30,000,000 shares of Common
Stock, of which, (A) 9,436,915 shares are issued and outstanding, (B) 1,094,001
shares are reserved for issuance upon conversion of the Preferred Stock,
(C) 150,000 shares are reserved for issuance upon exercise of Company’s warrants
issuable pursuant to Company’s extension of its $30,000,000 bridge loan facility
from SOF Investments, L.P., (D) 343,366 shares are reserved for issuance upon
exercise of options and other awards granted under Company’s stock option and
incentive plans, (E) 310,266 stock appreciation rights are issued and
outstanding under Company’s incentive plans and (F) 1,877,946 shares are
reserved for issuance upon Conversion of the Notes on the Maturity Date assuming
no interest is paid in cash, and (ii) 5,000,000 shares of Preferred Stock, of
which 160,129 shares are issued and outstanding, as of the date hereof. The
number of shares of Common Stock issuable upon conversion of the Preferred
Stock, upon exercise of Company’s warrants issuable pursuant to Company’s
extension of its bridge loan facility from SOF Investments, L.P., and upon
exercise of options and other awards granted

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under Company’s stock option and incentive plans is subject to adjustment in the
manner specified in the Certificate of Designation governing the Preferred
Stock, the Note Purchase Agreement dated June 29, 2006 (and the form of warrant
included therein), as amended, including by the Second Amendment dated as of
October 1, 2007 and the stock option and incentive plans, respectively. All of
the outstanding shares of Common Stock and Preferred Stock have been duly
authorized, are validly issued, fully paid and nonassessable and were offered,
sold and issued in compliance with all applicable federal and state securities
laws and without violating any contractual obligation or any other preemptive or
similar rights.
               Except as set forth on Schedule 4.4, (i) there is no existing
option, warrant, call, commitment or other agreement to which Company is a party
requiring, and there are no convertible securities of Company outstanding which
upon conversion would require, the issuance of any additional shares of Stock of
Company or other securities convertible into shares of equity securities of
Company, other than the Notes, and (ii) there are no agreements to which Company
is a party with respect to the voting or transfer of the Stock of Company.
Except as set forth on Schedule 4.4, there are no stockholders’ preemptive
rights or rights of first refusal or other similar rights with respect to the
issuance of Stock by Company.
          4.5 Financial Statements. (a) Except as provided in Schedule 4.5, the
previously filed and subsequently withdrawn audited consolidated balance sheet
of Company as at December 31, 2006, and the related consolidated statements of
income and cash flows for the year then ended, and the draft unaudited
consolidated balance sheet of Company as at September 30, 2007 (the “Balance
Sheet”) and the related draft unaudited consolidated statements of income, and
cash flows for the nine months then ended, copies of which have previously been
delivered to Purchaser, have been, except as noted therein, prepared in
conformity with GAAP consistently applied throughout the periods involved and
present fairly in all material respects the consolidated financial position of
Company as at the dates thereof, and the consolidated results of its operations
and cash flows for the periods then ended, subject, in the case of the interim
financial statements, to normal year-end audit adjustments.
          (b) Except as set forth on Schedule 4.5, neither Company nor any of
its Subsidiaries has any material obligations, contingent or otherwise,
including, without limitation, liabilities for Charges, long-term leases or
unusual forward or long-term commitments which are not reflected in the Balance
Sheet, other than those incurred since September 30, 2007, in the ordinary
course of business.
          (c) Except as set forth on Schedule 4.5, no dividends or other
distributions have been declared, paid or made upon any shares of capital Stock
of Company, nor have any shares of capital Stock of Company been redeemed,
retired, purchased or otherwise acquired for value by Company since
September 30, 2007.
          4.6 SEC Documents. Except as set forth on Schedule 4.6, since
January 1, 2005, Company has filed with the Commission all forms, reports,
schedules,

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statements and other documents required to be filed by it through the date
hereof under the Exchange Act, or the Securities Act (all such documents, as
supplemented and amended since the time of filing, collectively, the “Company
SEC Documents”). Except as set forth on Schedule 4.6, the Company SEC Documents,
including without limitation all financial statements and schedules included in
the Company SEC Documents, at the time filed or, in the case of any Company SEC
Document amended or superseded by a filing prior to the date of this Agreement,
then on the date of such amending or superseding filing, and, in the case of
registration statements and proxy statements, on the dates of effectiveness and
the dates of mailing, respectively, (i) did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, and (ii) complied in
all material respects with the applicable requirements of the Exchange Act and
the Securities Act, as applicable.
          4.7 Securities Laws. In reliance on the investment representations
contained in Sections 3.3 and 3.4, the offer, issuance, sale and delivery of the
Notes and the Conversion Shares, as provided in this Agreement, are exempt from
the registration requirements of the Securities Act and all applicable state
securities laws, and are otherwise in compliance with such laws. Neither Company
nor any Person acting on its behalf has taken or will take any action
(including, without limitation, any offering of any securities of Company under
circumstances which would require the integration of such offering with the
offering of the Notes or the Conversion Shares under the Securities Act and the
rules and regulations of the SEC thereunder) which would reasonably be expected
to subject the offering, issuance or sale of the Notes or the Conversion Shares,
to the registration requirements of Section 5 of the Securities Act.
          4.8 Taxes. Except as set forth on Schedule 4.8 or as would not
reasonably be expected to cause a Material Adverse Effect, all federal, state,
local and foreign tax returns, reports and statements required to be filed by
Company and its Subsidiaries have been timely filed with the appropriate
Governmental Authority and all such returns, reports and statements are true,
correct and complete in all material respects. All Charges and other impositions
due and payable for the periods covered by such returns, reports and statements
have been paid prior to the date on which any fine, penalty, interest or late
charge may be added thereto for nonpayment thereof, or any such fine, penalty,
interest, late charge or loss has been paid or is being contested in good faith
by appropriate proceedings. Proper and accurate amounts have been withheld by
Company and its Subsidiaries from its employees for all periods in material
compliance with the tax, social security and unemployment withholding provisions
of applicable federal, state, local and foreign law and such withholdings have
been timely paid to the respective governmental agencies.
          4.9 No Litigation. Except as set forth on Schedule 4.9, no action,
claim or proceeding is now pending or, to the knowledge of Company or its
Subsidiaries, threatened against Company or any of its Subsidiaries, at law, in
equity or otherwise, before any court, board, commission, agency or
instrumentality of any federal, state, or

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local government or of any agency or subdivision thereof, or before any
arbitrator or panel of arbitrators that has had or would reasonably be expected
to cause a Material Adverse Effect.
          4.10 Patents, Trademarks, Copyrights and Licenses. Company and each of
its Subsidiaries owns or otherwise has sufficient rights in all licenses,
patents, patent applications, copyrights, service marks, trademarks and
registrations and applications for registration thereof, and trade names
necessary to continue to conduct its business as heretofore conducted by it and
now being conducted by it.
          4.11 No Material Adverse Effect. Since December 31, 2006, there have
not been any events, changes, occurrences or state of facts that, individually
or in the aggregate, have had or would reasonably be expected to have a Material
Adverse Effect, except for matters disclosed prior to the date hereof in
Company’s public filings pursuant to the Exchange Act, matters disclosed on
Schedule 4.11, and matters disclosed prior to the date hereof in writing by
Company to Purchasers.
5. COVENANTS
          5.1 Affirmative Covenants. Company covenants and agrees that from and
after the date hereof (except as otherwise provided herein, or unless the
Required Purchasers have given their prior written consent) until this Agreement
has terminated and so long as any Note is outstanding:
          (a) Financial and Business Information.
               (i) Monthly Information. Commencing with the month ending
February 29, 2008, Company will deliver to the Collateral Agent on behalf of
Purchasers who are Affiliates of Tontine and to each other Purchaser as soon as
practicable after the end of each month, but in any event within 30 days
thereafter: (A) an unaudited consolidated balance sheet of Company and its
Subsidiaries, if any, at the end of such month and (B) unaudited consolidated
statements of income, retained earnings and cash flows of Company and its
Subsidiaries, if any, for such month and for the portion of such year ending
with such month.
               (ii) Quarterly Information. Company will deliver to the
Collateral Agent on behalf of Purchasers who are Affiliates of Tontine and to
each other Purchaser as soon as practicable after the end of each of the first
three quarterly fiscal periods in each Fiscal Year of Company, but in any event
within 45 days thereafter, (A) an unaudited consolidated balance sheet of
Company and its Subsidiaries, if any, as at the end of such quarter, and
(B) unaudited consolidated statements of income, retained earnings and cash
flows of Company and its Subsidiaries, if any, for such quarter and (in the case
of the second and third quarters) for the portion of the fiscal year ending with
such quarter, setting forth in comparative form in each case the projected
consolidated figures for such period and the actual consolidated figures for the
comparable period of the prior fiscal year. Such statements shall be
(1) prepared in accordance with GAAP

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consistently applied, except that such statements are subject to normal and
recurring year-end adjustments and do not include notes, (2) in reasonable
detail and (3) certified by the principal financial or accounting officer of
Company.
               (iii) Annual Information. Company will deliver to the Collateral
Agent on behalf of Purchasers who are Affiliates of Tontine and to each other
Purchaser as soon as practicable after the end of each Fiscal Year of Company,
but in any event within 90 days thereafter, or, with respect to the Fiscal Year
ending December 31, 2007, within 120 days thereafter, (A) an audited
consolidated balance sheet of Company and its Subsidiaries, if any, as at the
end of such year, and (B) audited consolidated statements of income, retained
earnings and cash flows of Company and its Subsidiaries, if any, for such year;
setting forth in each case in comparative form the figures for the previous
year. Such statements shall be (1) prepared in accordance with GAAP consistently
applied, (2) in reasonable detail and (3) accompanied by an opinion from KPMG
LLP, Company’s independent registered public accounting firm or such other firm
of independent certified public accountants of recognized national standing
selected by Company and reasonably acceptable Purchasers.
               (iv) Filings. Company will deliver to the Collateral Agent on
behalf of Purchasers who are Affiliates of Tontine and to each other Purchaser,
promptly upon their becoming available, one copy of each report, notice or proxy
statement sent by Company to its stockholders generally, and of each regular or
periodic report (pursuant to the Exchange Act) and any registration statement,
prospectus or other writing (other than transmittal letters) (including, without
limitation, by electronic means) pursuant to the Securities Act filed by Company
with (i) the SEC or (ii) any securities exchange on which shares of Common Stock
of Company are listed.
               (v) Projections. Company will deliver to the Collateral Agent on
behalf of Purchasers who are Affiliates of Tontine and to each other Purchaser
within 15 days prior to the beginning of each Fiscal Year:
                    (A) projected consolidating and consolidated balance sheets
of Company and its Subsidiaries for such Fiscal Year, on a monthly basis (to the
extent available);
                    (B) projected consolidating and consolidated cash flow
statements of Company and its Subsidiaries including summary details of cash
disbursements, for such Fiscal Year, on a monthly basis;
                    (C) projected consolidating and consolidated income
statements of Company and its Subsidiaries for such Fiscal Year, on a monthly
basis; and
                    (D) projected five-year plan of Company and its Subsidiaries
for the five-year period commencing with such Fiscal Year, to the extent such
plan is prepared;

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               (vi) in each case, approved by the Board of Directors of Company,
together with appropriate supporting details.
               (vii) Additional Information. Company will, and will cause WRI
to, deliver to the Collateral Agent on behalf of Purchasers who are Affiliates
of Tontine and to each other Purchaser all financial and written reports
delivered to the lenders under the First Interstate Bank Loan Documents.
          (b) Communication with Accountants. Company authorizes the Collateral
Agent and each Purchaser to communicate directly with its independent certified
public accountants and tax advisors and authorizes those accountants to disclose
to the Collateral Agent or such Purchaser any and all financial statements and
other supporting financial documents and schedules including copies of any
management letter with respect to the business, financial condition and other
affairs of Company and any of its Subsidiaries.
          (c) Tax Compliance. Company shall pay all transfer, excise or similar
taxes (not including income or franchise taxes) in connection with the issuance,
sale, delivery or transfer by Company to Purchasers of the Notes and the Common
Stock issuable upon conversion thereof, and shall indemnify and save each
Purchaser harmless without limitation as to time against any and all liabilities
with respect to such taxes. Company shall not be responsible for any income
taxes in connection with the transfer of the Notes or such Common Stock by the
holder thereof. The obligations of Company under this Section 5.1(c) shall
survive the payment, prepayment or redemption of the Notes and the termination
of this Agreement.
          (d) Insurance. Company shall maintain insurance covering, without
limitation, fire, theft, burglary, public liability, property damage, product
liability, workers’ compensation, directors’ and officers’ insurance and
insurance on all property and assets material to the operation of the business,
all in amounts customary for the industry. Company shall pay all insurance
premiums payable by them.
          (e) Compliance with Law. Company shall comply with all laws, including
ERISA and Environmental Laws, applicable to it, except where the failure to
comply would not be reasonably likely to result in a Material Adverse Effect.
          (f) Maintenance of Existence and Conduct of Business. Company shall:
(i) do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence, and its rights and franchises; (ii) at
all times maintain, preserve and protect all of its patents, trademarks and
trade names, and preserve all the remainder of its material assets necessary for
the conduct of its business and keep the same in good repair, working order and
condition (taking into consideration ordinary wear and tear) and from time to
time make, or cause to be made, all needful and proper repairs, renewals and
replacements, betterments and improvements thereto consistent with industry
practices and (iii) continue to conduct business solely in its existing lines of
business and businesses related thereto in a manner consistent with past
business practices.

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          5.2 Negative Covenants. Company covenants and agrees that from and
after the date hereof (except as otherwise provided herein, or unless the
Required Purchasers have given their prior written consent) until this Agreement
has terminated and so long as any Note is outstanding:
          (a) Sales of Assets; Liquidation. Company shall not, and shall not
permit any Subsidiary of Company to, (i) sell, transfer, convey or otherwise
dispose of any of their respective assets or properties, (ii) liquidate,
dissolve or wind up Company, or any of its Subsidiaries, except for transfers to
Company, whether voluntary or involuntary; provided, however, that the foregoing
shall not prohibit (i) the sale of inventory and other assets in the ordinary
course of business, (ii) the sale of surplus or obsolete equipment and fixtures
(iii) transfers resulting from any casualty or condemnation of assets or
properties or (iv) sales involving assets with a value not greater than
$5,000,000 as to which the net proceeds are either (x) reinvested in Company’s
or, if sold by a Subsidiary, such Subsidiary’s or Company’s existing or related
lines of business or (y) applied to repay Indebtedness, within 180 days after
such sale.
          (b) Transactions with Affiliates. Company shall not and shall not
permit any Subsidiary of Company to enter into or be a party to any transaction
with any Affiliate of Company or such Subsidiary, except (i) transactions
expressly permitted hereby, (ii) transactions in the ordinary course of and
pursuant to the reasonable requirements of Company’s or such Subsidiary’s
business and upon fair and reasonable terms that are fully disclosed to
Purchaser and are no less favorable to Company or such Subsidiary than would be
obtained in a comparable arm’s-length transaction with a Person not an Affiliate
of Company or such Subsidiary, (iii) transactions between Company and its
wholly-owned Subsidiaries or between such Subsidiaries and (iv) payment of
compensation to employees and directors’ fees.
          (c) Restricted Payments. Company shall not and shall not permit any
Subsidiary of Company to make any Restricted Payments nor shall Company permit
any Subsidiary to make such payments with respect to Company’s Stock.
          (d) Permitted Acquisitions or Investments. Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly in any
transaction or related series of transactions, acquire or invest in, whether for
cash, debt, Stock, or other property or assets or by guaranty of any obligation,
any assets or business of any Person other than (i) acquisitions of assets in
the ordinary course of business of Company, (ii) acquisitions by Company or
wholly-owned Subsidiaries of Company from Company or any such wholly-owned
Subsidiary or investments therein, (iii) acquisitions involving an aggregate
purchase price of not more than $2,000,000, but not to exceed $5,000,000 in any
Fiscal Year, (iv) investments in Cash Equivalents or (vi) investments in certain
restricted cash accounts, cash collateral accounts and trust accounts required
pursuant to agreements to which Company or any Subsidiary are party, so long as
such investments are consistent with the provisions of such agreements. Company
shall not, and shall not permit any of its Subsidiaries to, invest in any Person
if, after giving effect thereto, such Person would be an Affiliate, but not a
Subsidiary, of Company.

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          (e) Mergers and Subsidiaries. Neither Company nor any Subsidiaries of
Company shall directly or indirectly, by operation of law or otherwise, merge
with, consolidate with, or otherwise combine with any Person, nor shall Company
create any Subsidiary, other than (i) the creation of wholly-owned Subsidiaries
or (ii) mergers of wholly-owned Subsidiaries of Company into Company or any
other of its wholly-owned Subsidiaries.
          5.3 WRI Covenants. Company shall cause WRI to comply with each and
every covenant under the headings “Affirmative Covenants” and “Negative
Covenants” contained in the First Interstate Business Loan Agreement by and
between WRI and First Interstate Bank dated October 29, 2007 (the “First
Interstate Loan Agreement”) as in effect as of the date hereof without giving
affect to any amendments, waivers or modifications thereto.
          5.4 American Stock Exchange Approval. Company shall use best efforts
to cause the listing application with respect to the Conversion Shares to be
approved by the American Stock Exchange and to have the Conversion Shares
authorized for listing on the American Stock Exchange.
6. CONDITIONS PRECEDENT
          6.1 Conditions Precedent. The obligation of each Purchaser to purchase
the Notes pursuant to Section 2.1 hereof, is subject to the condition that the
Collateral Agent and each such Purchaser shall have received, on the Closing
Date, the following, each dated the Closing Date unless otherwise indicated, in
form and substance satisfactory to each Purchaser:
          (a) Favorable opinions of (i) WilmerHale, counsel to the Credit
Parties, substantially in the form attached hereto as Exhibit C-1 and
(ii) Morris W. Kegley, Company’s general counsel, substantially in the form
attached hereto as Exhibit C-2, it being understood that to the extent that such
opinions shall rely upon any other opinion of counsel, each such other opinion
shall be in form and substance reasonably satisfactory to each Purchaser and
shall provide that each Purchaser may rely thereon.
          (b) Resolutions of the board of directors of each Credit Party,
certified by the Secretary or Assistant Secretary of each such Credit Party, as
of the Closing Date, to be duly adopted and in full force and effect on such
date, authorizing (i) the consummation of each of the transactions contemplated
by the Transaction Documents to which such Credit Party is a party, and
(ii) specific officers to execute and deliver this Agreement and each other
Transaction Document to which such Credit Party is a party.
          (c) Governmental certificates, dated the most recent practicable date
prior to the Closing Date, showing that each Credit Party is organized and in
good standing in their respective states of formation and are qualified as
foreign corporations and in good standing in the jurisdiction of its principal
place of business.

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          (d) A copy of the certificate of incorporation and all amendments
thereto of each Credit Party, certified as of a recent date by the Secretary of
State of the respective state of formation, and copies of each Credit Party’s
by-laws, certified by the Secretary or Assistant Secretary of the relevant
Credit Party as true and correct as of the Closing Date.
          (e) The Notes duly executed by Company.
          (f) The Guaranty duly executed by WRI.
          (g) The Security Agreement duly executed by WRI.
          (h) The Pledge Agreement executed by Company and WRI.
          (i) The Consent duly executed by each Credit Party and First
Interstate Bank.
          (j) The Registration Rights Agreement duly executed by the parties
thereto.
          (k) Certificates of the Secretary or an Assistant Secretary of each
Credit Party, dated the Closing Date, as to the incumbency and signatures of the
officers of such Credit Party executing this Agreement, the Notes, the Security
Agreement, the Pledge Agreement, the Guaranty, Consent and each other
Transaction Document to which it is a party and any other certificate or other
document to be delivered pursuant hereto or thereto, together with evidence of
the incumbency of such Secretary or Assistant Secretary.
          (l) Certificate of the President or Chief Executive Officer of each
Credit Party, dated the Closing Date, stating that all of the representations
and warranties of such Credit Party contained herein or in the other Transaction
Documents are true and correct in all material respects at and as of the Closing
Date as if made on such date (except for representations and warranties made as
of a specified date, which shall be true and correct in all material respects as
of such specified date) and that no breach of any covenant contained in
Section 5 has occurred or would result from the Closing hereunder.
          (m) Such documents or agreements duly executed by each Credit Party as
any Purchaser through the Collateral Agent may request with respect to the
perfection of its security interests granted under the Loan Documents (including
financing statements under the UCC, patent, trademark and copyright security
agreements suitable for filing with the Patent and Trademark Office or the
Copyright Office, as the case may be, and other applicable documents under the
laws of any jurisdiction with respect to the perfection of Liens created by the
Pledge Agreement or the Security Agreement).

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          (n) Evidence of payment or arrangements for payment by the Credit
Parties of all applicable recording taxes, fees, charges, costs and expenses
required for the recording of the Security Documents.
          (o) All consents and approvals of Governmental Authorities and all
material consents and approvals of third parties required in connection with the
transactions contemplated by the Transaction Documents shall have been obtained
and shall be in effect, and there shall be no governmental or judicial action,
actual or threatened, that has or would have, singly or in the aggregate, a
reasonable likelihood of restraining, preventing or imposing burdensome
conditions on the transactions contemplated by the Transaction Documents.
          (p) Such other certificates, documents, agreements and information
respecting any Credit Party as any Purchaser through the Collateral Agent may
reasonably request.
          6.2 Additional Conditions. The obligation of each Purchaser to
purchase the Notes pursuant to Section 2.1 is subject to the additional
conditions precedent that as of the Closing Date:
          (a) There shall be no litigation, public or private, or administrative
proceedings, governmental investigation or other legal or regulatory
developments, actual or threatened, with respect to any of the transactions
contemplated by the Transaction Documents, that, singly or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect (except as
set forth on Schedule 4.9), or could materially and adversely affect the ability
of the Credit Parties to fully and timely perform their respective obligations
under the Transaction Documents, or the ability of the parties to consummate the
financings contemplated hereby or the other transactions contemplated by the
Transaction Documents. No judgment, injunction, decree or other legal restraint
shall prohibit, or have the effect of rendering unachievable, the consummation
of the transactions contemplated by this Agreement or any other Transaction
Document.
          (b) As of the Closing Date, none of the following events shall have
occurred and be continuing: (A) trading in the Common Stock shall have been
suspended by the Commission or the American Stock Exchange or trading in
securities generally on the American Stock Exchange, the New York Stock Exchange
or the Nasdaq National Market shall have been suspended or limited or minimum
prices shall have been established on either such exchange or the Nasdaq
National Market, (B) a banking moratorium shall have been declared either by
U.S. federal or New York State authorities, or (C) there shall have occurred any
material new outbreak or material escalation of hostilities, declaration by the
United States of a national emergency or war or other calamity or crisis which
has a material adverse effect on the U.S. financial markets.
          (c) Company shall have amended the Amended and Restated Rights
Agreement, dated as of February 7, 2003, between Company and EquiServe Trust

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Company, N.A., as amended by the First Amendment to Amended and Restated Rights
Agreement dated as of May 2, 2007, by executing and delivering an amendment
thereto in the form of Exhibit H hereto.
          (d) Two (2) nominees of Tontine reasonably acceptable to the Board
shall have been elected or appointed to the Board, which Board shall consist of
not more than nine (9) members immediately after giving effect to such
additional two (2) directors.
          (e) Company shall have paid all reasonable fees and expenses of
(i) Tontine’s outside counsel, Weil, Gotshal & Manges LLP, and (ii) all special
local counsel retained in connection with this Agreement and the transactions
contemplated thereby.
          (f) The representations and warranties of Company contained in this
Agreement and in the other Transaction Documents are true and correct in all
material respects at and as of the Closing Date as if made on such date (except
for representations and warranties made as of a specified date, which shall be
true and correct in all material respects as of such specified date) and no
breach of any covenant contained in Section 5 has occurred or would result from
the Closing hereunder.
          (g) Each Credit Party shall be in compliance in all material respects
with all the terms and provisions set forth herein and in each other Loan
Document on its part to be observed or performed, and, no Default shall have
occurred and be continuing.
          (h) The Closing shall have occurred no later than March 15, 2008.
7. ADDITIONAL PURCHASER RIGHTS
          7.1 Director Rights. Company acknowledges and agrees that commencing
on the Closing Date and for so long as Tontine and/or its Affiliates own at
least ten percent (10%) of the outstanding shares of Common Stock (including the
Conversion Shares issuable upon Conversion of the Notes on an as converted
basis), Tontine shall have the right to designate two Persons for election to
the Board who shall be reasonably acceptable to the Board and who shall be
nominated for election to the Board. So long as Tontine and/or its Affiliates
own at least ten percent (10%) of the outstanding shares of Common Stock
(including the Conversion Shares issuable upon Conversion of the Notes on an as
converted basis), the Board shall consist of not more than nine (9) members, and
at such time there is no Preferred Stock outstanding, the Board shall consist of
not more than seven (7) members.
          7.2 Observer Rights. Company further acknowledges and agrees that
commencing on the Closing Date and for so long as Tontine and/or its Affiliates
own at least ten percent (10%) of the outstanding shares of Common Stock
(including the Conversion Shares issuable upon Conversion of the Notes on an as
converted basis), Tontine shall have the right to designate one Person who is
either an employee of Tontine or is otherwise reasonably acceptable to the Board
(the “Designee”) to act as an observer

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to the Board as provided below (“Observer Rights”). During such time as Tontine
has Observer Rights, Company shall invite the Designee to attend any meetings of
the Board and any committees thereof (at the same time directors are invited
thereto) and provide the Designee with such materials (at the same time such
materials are provided to directors) as Company provides to directors in
connection with their service on the Board and any committees thereof, provided
that the Designee need not be permitted to attend (i) any portion of any such
meeting or be provided with any portion of such materials to the extent that so
doing would jeopardize any legal privilege, including the attorney-client
privilege, and to the extent the subject of such meeting or materials is
potentially adverse to Tontine and (ii) any portion of any such meeting attended
only by the members of the Board in executive session. The exercise by Tontine
of Observer Rights is conditioned upon Company’s receipt of a confidentiality
agreement executed by Tontine and the Designee reasonably satisfactory to
Company providing for Tontine’s and the Designee’s preservation of the
confidentiality of any materials provided or information received at any meeting
of the Board or any committee thereof. Company shall promptly reimburse the
Designee for all reasonable expenses incurred in connection with the Designee’s
attendance at such meetings.
          7.3 Rights Offering. If Company at any time shall issue rights to its
holders of Common Stock to purchase additional shares of Common Stock or other
securities of Company, such rights shall also be issued to Purchasers with
respect to the Notes then held by them. The number of rights to be so issued
shall be determined with respect to the number of Conversion Shares as if the
Notes had been converted on the records date for the issuance of such rights.
          7.4 Preemptive Rights.
          (a) In addition to the rights set forth in Section 7.3, and for so
long as Tontine and/or its Affiliates own at least ten percent (10%) of the
outstanding shares of Common Stock (including the Conversion Shares issuable
upon Conversion of the Notes on an as converted basis), if Company at any time
proposes to and does issue shares of Common Stock (or rights, warrants or other
securities convertible into or exchangeable for shares of Common Stock) (any
such securities, the “Offered Securities”), other than Exempt Securities (which
term is defined below), Company shall offer Purchasers the option to acquire, on
the same terms and conditions and at the same price per Offered Security (the
“Issue Price”) offered to the other participants in such offering, up to such
number of Offered Securities so that following the issuance (and conversion or
exercise, if applicable) of such Offered Securities each Purchaser would
maintain the same percentage of ownership of Common Stock (including the number
of Conversion Shares as if the Notes had been converted) such Purchaser held
immediately prior to the issuance of such Offered Securities. Company shall give
written notice to Purchasers of any such issuance as far in advance of the date
of issuance of such Offered Securities (the “Date of Issuance”) as possible, but
in any event no less than ten (10) Business Days in advance of the Date of
Issuance (a “Notice of Issuance”). The Notice of Issuance will describe in
reasonable detail the terms and conditions of the proposed issuance, including
the Issue Price and the maximum number of Offered Securities that each Purchaser
will be entitled

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to purchase on the Date of Issuance. “Exempt Securities” means securities of
Company which are issued (i) as a dividend, stock split or other distribution
payable pro rata to all holders of Common Stock, (ii) to employees, officers,
directors or consultants of Company pursuant to any compensatory plans or
programs approved by Company’s Board of Directors, (iii) in connection with the
conversion of the Preferred Stock or Notes or the conversion or exercise of any
options, warrants or other rights to purchase Common Stock (A) outstanding on
the date hereof or (B) issued in accordance with the foregoing clause (ii) or
(iv) solely in consideration for the acquisition (by merger or otherwise) by
Company or any of its Subsidiaries of assets or equity interests of another
entity approved by Company’s Board of Directors.
          (b) Each Purchaser shall have the option to elect to purchase all or
part of such Purchaser’s portion of the Offered Securities described in a Notice
of Issuance at the Issue Price and on the other terms contained in the Notice of
Issuance by notifying Company in writing (an “Election Notice”) at least three
(3) Business Days prior to the Date of Issuance. Each Election Notice will
indicate the number of units that each Purchaser elects to purchase.
          (c) The failure of any Purchaser to exercise its right to purchase, in
full or in part, Offered Securities under this Section 7.4 in connection with
any one issuance of Offered Securities by Company will not, in any manner, waive
or otherwise impair the rights of such Purchaser to purchase such Purchaser’s
share of Offered Securities in connection with any other proposed issuance of
Offered Securities to which this Section 7.4 is applicable.
          (d) Notwithstanding anything contained in this Section 7.4 to the
contrary, Company may at any time, regardless of whether an Election Notice has
been given, prior to the Date of Issuance abandon an offering as to which it has
given a Notice of Issuance, in which case Purchasers shall have no further right
or obligation to purchase Offered Securities described in such Notice of
Issuance.
8. CONVERSION
          8.1 Conversion of Notes.
          (a) Subject to the provisions for adjustment hereinafter set forth,
each Note shall be convertible, in whole or in part, at any time and from time
to time, at the option of the holder thereof (a “Conversion”), up to the
outstanding principal amount (including any additions to the original principal
amount resulting from any interest previously paid in kind by Company) of the
Note held by such Purchaser at the time of such conversion into a number of
fully paid and nonassessable shares of Common Stock equal to the quotient
obtained by dividing (A) the principal amount of the Note to be converted
(including all accrued and unpaid interest) by (B) the Conversion Price (as
hereinafter defined); provided that if such calculation results in the aggregate
number of shares of Common Stock to be issued in connection with all such
Conversions hereunder to exceed 19.9% of the number of shares of Common Stock
outstanding immediately

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prior to the execution of this Agreement, the principal amount of the Notes
resulting in such excess amounts shall not be converted into Common Stock and
shall instead be paid in cash by Company to such Purchaser at the time of such
Conversion. If the conversion of the Notes by more than one Purchaser at the
same time results in the operation of the proviso in the prior sentence, then
each Purchaser so converting Notes shall receive shares of Common Stock and cash
in proportion to the respective principal amounts of Notes being converted by
each Purchaser, unless otherwise agreed by Purchasers. The Conversion Price
shall initially be $10.00 per share of Common Stock and shall be subject to
further adjustments from time to time pursuant to Section 8.1(f) below (the
“Conversion Price”).
          No fractional shares shall be issued upon the conversion of any Note.
All shares of Common Stock (including fractions thereof) issuable upon
conversion of any Note by such Purchaser shall be aggregated for purposes of
determining whether conversion would result in the issuance of any fractional
share. If, after the aforementioned aggregation, the conversion would result in
the issuance of a fraction of a share of Common Stock, Company shall, in lieu of
issuing any fractional share, pay such Purchaser a sum in cash equal to the
Current Market Price of such fraction on the date of conversion.
          (b) A conversion of any Note may be effected by a Purchaser upon the
surrender to Company at the principal office of Company of the Note to be
converted accompanied by a written notice stating that such Purchaser elects to
convert all or a specified amount of its Notes in accordance with the provisions
of this Section 8.1 and specifying the name or names in which such Purchaser
wishes the certificate or certificates for shares of Common Stock to be issued.
          (c) In case the written notice specifying the name or names in which a
Purchaser wishes the certificate or certificates for shares of Common Stock to
be issued shall specify a name or names other than that of such Purchaser, such
notice shall be accompanied by payment of all transfer taxes payable upon the
issuance of shares of Common Stock in such name or names. Other than such taxes,
Company will pay any and all issue and other taxes (other than taxes based on
income) that may be payable in respect of any issue or delivery of shares of
Common Stock on conversion of the Notes pursuant hereto. As promptly as
practicable, and in any event within five Business Days after the surrender of
each Note and the receipt of such notice relating thereto and, if applicable,
payment of all transfer taxes (or the demonstration to the satisfaction of
Company that such taxes have been paid), Company shall deliver or cause to be
delivered (1) certificate(s) representing the number of validly issued, fully
paid and nonassessable full shares of Common Stock to which each holder of the
Notes being converted shall be entitled and (2) if less than all of principal
amount of each Note evidenced by the surrendered Notes is being converted, in
exchange for each Note surrendered, a new Note, of like tenor, in a principal
amount equal the full principal amount of the Note surrendered less the
principal amount being converted.

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          (d) A conversion shall be deemed to have been made at the close of
business on the date of giving the written notice referred to in the first
sentence of (b) above and of such surrender of the certificate or certificates
representing each Note to be converted so that the rights of the holder thereof
as to the Note being converted shall cease except for the right to receive
shares of Common Stock in accordance herewith, or the right to receive, in
addition to shares of Common Stock, cash in an amount equal to the principal
amount of each Note which could not be converted due to the operation of the
proviso in Section 8.1(a), and the Person entitled to receive the shares of
Common Stock shall be treated for all purposes as having become the record
holder of such shares of Common Stock at such time.
          (e) Company shall at all times reserve, and keep available for
issuance upon the conversion of the Notes, such number of its authorized but
unissued shares of Common Stock as will from time to time be sufficient to
permit the conversion of all of the aggregate outstanding principal balance of
the Notes at the Maturity Date assuming no interest is paid in cash, and shall
take all action required to increase the authorized number of shares of Common
Stock if necessary to permit the conversion of all of the aggregate outstanding
principal balance of the Notes.
          (f) The Conversion Price will be subject to adjustment from time to
time as follows:
               (i) In case Company shall at any time or from time to time after
the Closing Date (A) pay a dividend, or make a distribution, on the outstanding
shares of Common Stock in shares of Common Stock, (B) subdivide the outstanding
shares of Common Stock, (C) combine the outstanding shares of Common Stock into
a smaller number of shares or (D) issue by reclassification of the shares of
Common Stock any shares of capital stock of Company, then, and in each such
case, the Conversion Price in effect immediately prior to such event or the
record date therefor, whichever is earlier, shall be adjusted so that the holder
of any Note thereafter surrendered for conversion shall be entitled to receive
the number of shares of Common Stock or other securities of Company which
Purchaser would have owned or have been entitled to receive after the happening
of any of the events described above, had such Note been surrendered for
conversion immediately prior to the happening of such event or the record date
therefor, whichever is earlier. An adjustment made pursuant to this clause
(i) shall become effective (x) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of shares of Common Stock entitled to receive such dividend or
distribution, or (y) in the case of such subdivision, reclassification or
combination, at the close of business on the day upon which such corporate
action becomes effective. No adjustment shall be made pursuant to this clause
(i) in connection with any transaction to which Section 8.1(g) applies.
               (ii) In case Company shall issue shares of Common Stock (or
rights, warrants or other securities convertible into or exchangeable for shares
of Common Stock), other than pursuant to existing obligations or pursuant to any
existing employee benefit plan after the Closing Date, other than issuances
covered by clause (i)

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above, at a price per share (or having an exercise, conversion or exchange price
per share) less than the Conversion Price as of the date of issuance of such
shares or of such rights, warrants or other convertible or exchangeable
securities, then, and in each such case, the Conversion Price shall be reduced
to such lower price. For the purpose of determining the consideration received
by Company upon any such issue, if the consideration received by Company is
other than cash, its value will be deemed its fair market value, as determined
in good faith by the Board of Directors of Company.
               (iii) An adjustment made pursuant to clause (ii) above shall be
made on the next Business Day following the date on which any such issuance is
made and shall be effective retroactively immediately after the close of
business on such date. No adjustment shall be made pursuant to clause (ii) in
respect of any issuance of shares of Common Stock on or prior to the Closing
Date. For purposes of clause (ii), the aggregate consideration received by
Company in connection with the issuance of shares of Common Stock or of rights,
warrants or other securities exchangeable or convertible into shares of Common
Stock shall be deemed to be equal to the sum of the aggregate offering price of
all such Common Stock and such rights, warrants, or other exchangeable or
convertible securities plus the aggregate amount, if any, receivable upon
exchange or conversion of any such exchangeable or convertible securities into
shares of Common Stock.
               (iv) In case Company shall at any time or from time to time after
the Closing Date declare, order, pay or make a dividend or other distribution
(including, without limitation, any distribution of stock or other securities or
property or rights or warrants to subscribe for securities of Company or any of
its Subsidiaries by way of dividend or spinoff), on its Common Stock, other than
dividends or distributions of shares of Common Stock which are referred to in
clause (i) above and cash dividends paid out of earnings or earned surplus, then
the Conversion Price shall be adjusted so that it shall equal the price
determined by multiplying (A) the applicable Conversion Price on the day
immediately prior to the record date fixed for the determination of stockholders
entitled to receive such dividend or distribution by (B) a fraction, the
numerator of which shall be the Current Market Price per share of Common Stock
at such record date less the amount of such dividend or distribution per share
of Common Stock, and the denominator of which shall be such Current Market Price
per share of Common Stock. No adjustment shall be made pursuant to this clause
(iv) in connection with any transaction to which Section 7.3, 8.1(f)(ii) or
8.1(g) applies.
               (v) For purposes of this Section 8.1(f), the number of shares of
Common Stock at any time outstanding shall not include any shares of Common
Stock then owned or held by or for the account of Company or any of its
Subsidiaries.
               (vi) If Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to stockholders
thereof legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment in the number of shares of Common
Stock issuable upon exercise of the right

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of conversion granted by this Section 8.1(f) or in the Conversion Price then in
effect shall be required by reason of the taking of such record.
               (vii) Anything in this Section 8.1(f) to the contrary
notwithstanding, Company shall not be required to give effect to any adjustment
in the Conversion Price unless and until the net effect of one or more
adjustments (each of which shall be carried forward), determined as above
provided, shall have resulted in a change of the Conversion Price by at least
one cent, and when the cumulative net effect of more than one adjustment so
determined shall be to change the Conversion Price by at least one cent, such
change in Conversion Price shall thereupon be given effect.
               (viii) If any option or warrant expires or is cancelled without
having been exercised, then, for the purposes of the adjustments set forth
above, such option or warrant shall have been deemed not to have been issued and
the Conversion Price shall be adjusted accordingly. No holder of Common Stock
which was previously issued upon conversion of a Note shall have any obligation
to redeem or cancel any such shares of Common Stock as a result of the operation
of this clause (viii).
          (g) In case of any reorganization of capital, reclassification of
capital stock (other than a reclassification of capital subject to
Section 8.1(f)(i)), consolidation or merger with or into another corporation, or
sale, transfer or disposition of all or substantially all the property, assets
or business of Company to another corporation (any one or more of such events
being an “Organic Change”), the Notes then outstanding, shall thereafter be
convertible into, in lieu of the Common Stock issuable upon such conversion
prior to consummation of such Organic Change, the kind and amount of shares of
stock and other securities and property receivable (including cash) upon the
consummation of such Organic Change by a holder of that number of shares of
Common Stock into which such Notes were convertible immediately prior to such
Organic Change (including, on a pro rata basis, the cash, securities or property
received by holders of Common Stock in any tender or exchange offer that is a
step in such Organic Change). In case securities or property other than Common
Stock shall be issuable or deliverable upon conversion as aforesaid, then all
references in this Section 8.1(g) shall be deemed to apply, so far as
appropriate and nearly as may be, to such other securities or property.
          (h) In case at any time or from time to time Company shall pay any
stock dividend or make any other non-cash distribution to the holders of its
Common Stock, or shall offer for subscription pro rata to the holders of its
Common Stock any additional shares of stock of any class or any other right, or
there shall be any capital reorganization or reclassification of the Common
Stock of Company or consolidation or merger of Company with or into another
corporation, or any sale or conveyance to another corporation of the property of
Company as an entirety or substantially as an entirety, or there shall be a
voluntary or involuntary dissolution, liquidation or winding up of Company,
then, in any one or more of said cases, Company shall use reasonable best
efforts to give at least 20 days’ prior written notice to the registered holder
of the Notes at the addresses of each as shown on the books of Company as of the
date on which (i) the books of Company shall close or a record shall be taken
for such stock dividend,

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distribution or subscription rights or (ii) such non-bankruptcy reorganization,
reclassification, consolidation, merger, sale or conveyance, dissolution,
liquidation or winding up shall take place, as the case may be, provided that in
the case of any Organic Change to which Section 8.1(g) applies Company shall use
reasonable best efforts to give at least 30 days’ prior written notice as
aforesaid. Such notice shall also specify the date as of which the holders of
the Common Stock of record shall participate in such dividend, distribution or
subscription rights or shall be entitled to exchange their Common Stock for
securities or other property deliverable upon such non-bankruptcy
reorganization, reclassification, consolidation, merger, sale or conveyance or
participate in such dissolution, liquidation or winding up, as the case may be.
Failure to give such notice shall not invalidate any action so taken.
          (i) Upon any adjustment of the Conversion Price then in effect and any
increase or decrease in the number of shares of Common Stock issuable upon the
operation of the conversion set forth in this Section 8.1, then, and in each
such case, Company shall promptly deliver to each holder of the Notes, a
certificate signed by the President or a Vice President and by the Treasurer or
an Assistant Treasurer or the Secretary or an Assistant Secretary of Company
setting forth in reasonable detail the event requiring the adjustment and the
method by which such adjustment was calculated and specifying the Conversion
Price then in effect following such adjustment and the increased or decreased
number of shares issuable upon the conversion granted by this Section 8.1, and
shall set forth in reasonable detail the method of calculation of each and a
brief statement of the facts requiring such adjustment.
9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
          9.1 Events of Default. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an “Event
of Default” hereunder and under the Notes:
          (a) Company shall fail to make any payment of principal of, or
interest on or any other amount owing in respect of, the Notes, or any of the
other Obligations when due and payable or declared due and payable, including
pursuant to Section 2.4 or 2.5 hereof, which, other than principal or interest,
shall have remained unremedied for a period of three (3) Business Days.
          (b) Company shall fail or neglect to perform, keep or observe any of
the provisions of Section 5.2 hereof.
          (c) Company shall fail or neglect to perform, keep or observe any
other provision of this Agreement or of any of the other Loan Documents, and the
same shall remain unremedied for a period of twenty (20) days after the earlier
of knowledge thereof by Company or the receipt of written notice of any such
failure from the Required Purchasers.

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          (d) A default shall occur under any other agreement, document or
instrument to which Company or any Subsidiary is a party or by which Company or
any of its Subsidiaries or any of their property is bound, and such default
(i) involves the failure to make any payment (whether of principal, interest or
otherwise) due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) in respect of any Indebtedness of Company or
any of its Subsidiaries in an aggregate amount exceeding $3,000,000, (ii) causes
(or permits any holder of such Indebtedness or a trustee to cause) such
Indebtedness or a portion thereof in an aggregate amount exceeding $3,000,000,
to become due prior to its stated maturity or prior to its regularly scheduled
dates of payment.
          (e) An event of default has occurred and is continuing under the First
Interstate Loan Documents.
          (f) Any representation or warranty herein or in any Loan Document or
in any written statement pursuant thereto or hereto, report, financial statement
or certificate made or delivered to the Collateral Agent or any Purchaser by
Company pursuant hereto or thereto shall be untrue or incorrect in any material
respect, as of the date when made.
          (g) Any assets with a value, individually or in the aggregate, in
excess of $250,000 of Company or any of its Subsidiaries shall be attached,
seized, levied upon or subjected to a writ or distress warrant, or come within
the possession of any receiver, trustee, custodian or assignee for the benefit
of creditors of Company or any of its Subsidiaries and shall remain unstayed or
undismissed for sixty (60) consecutive days; or Company or any of its
Subsidiaries shall have concealed, removed or permitted to be concealed or
removed, any part of its property, with intent to hinder, delay or defraud its
creditors or any of them or made or suffered a transfer of any of its property
or the incurring of an obligation which is fraudulent under any bankruptcy,
fraudulent conveyance or other similar law.
          (h) A case or proceeding shall have been commenced against Company or
any of its Subsidiaries in a court having competent jurisdiction seeking a
decree or order in respect of Company or any of its Subsidiaries (i) under title
11 of the United States Code, as now constituted or hereafter amended, or any
other applicable federal, state or foreign bankruptcy or other similar law, (ii)
appointing a custodian, receiver, liquidator, assignee, trustee or sequestrator
(or similar official) of Company or any of its Subsidiaries or of any
substantial part of its or their properties, or (iii) ordering the winding-up or
liquidation of the affairs of Company or any of its Subsidiaries and such case
or proceeding shall remain undismissed or unstayed for sixty (60) consecutive
days or such court shall enter a decree or order granting the relief sought in
such case or proceeding.
          (i) Company or any of its Subsidiaries shall (i) file a petition
seeking relief under title 11 of the United States Code, as now constituted or
hereafter amended, or any other applicable federal, state or foreign bankruptcy
or other similar law, (ii) consent to the institution of proceedings thereunder
or to the filing of any such

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petition or to the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee or sequestrator (or similar official) of Company
or any of its Subsidiaries or of any substantial part of its properties,
(iii) fail generally to pay its debts as such debts become due, or (iv) take any
corporate action in furtherance of any such action.
          (j) Final judgment or judgments (after the expiration of all times to
appeal therefrom) for the payment of money in excess of $3,000,000 in the
aggregate shall be rendered against Company or any of its Subsidiaries and the
same shall not be (i) fully covered by insurance (subject to standard
deductibles), or (ii) vacated, stayed, bonded, paid or discharged for a period
of thirty (30) days.
          (k) (i) With respect to any Plan, a prohibited transaction within the
meaning of Section 4975 of the IRC or Section 406 of ERISA occurs which would
reasonably be expected to result in direct or indirect liability to Company or
any of its Subsidiaries, (ii) with respect to any Title IV Plan, the filing of a
notice to voluntarily terminate any such plan in a distress termination,
(iii) with respect to any Multiemployer Plan, Company, any of its Subsidiaries
or any ERISA Affiliate shall incur any Withdrawal Liability, (iv) with respect
to any Pension Plan subject to Section 412 of the Code or Section 302 of ERISA,
Company, any of its Subsidiaries or any ERISA Affiliate shall incur an
accumulated funding deficiency or request a funding waiver from the IRS, or
(v) with respect to any Title IV Plan or Multiemployer Plan which has an ERISA
Event not described in clauses (ii) - (iv) hereof, in the reasonable
determination of the Agent there is a reasonable likelihood for termination of
any such plan by the PBGC; provided, however, that the events listed in clauses
(i) — (v) hereof shall constitute Events of Default only if the liability,
deficiency or waiver request of Company, any of its Subsidiaries or any ERISA
Affiliate, exceeds $3,000,000 in any case set forth in (i) — (v) above, or
exceeds $3,000,000 in the aggregate for all such cases.
          (l) There shall occur any Change of Control.
          9.2 Remedies. If any Event of Default specified in Section 9.1 shall
have occurred and be continuing, the Required Purchasers may, without notice,
declare all Obligations to be forthwith due and payable, whereupon all such
Obligations shall become and be due and payable, without presentment, demand,
protest or further notice of any kind, all of which are expressly waived by
Borrower; provided, however, that upon the occurrence of an Event of Default
specified in Section 9.1(h) or (i) hereof with respect to any Credit Party, such
Obligations shall become due and payable without declaration, notice or demand
by the Required Purchasers.
          The Collateral Agent or the Required Purchasers may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Event of Default as it shall deem advisable in its best interests,
including any action (or the failure to act) pursuant to the Loan Documents.
Failure by the Collateral Agent or the Required Purchasers to exercise any
remedy shall not constitute a waiver of the right to exercise the same at any
other time. In the event that any action is taken by any Person in

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response to an Event of Default, including the exercise of rights or the pursuit
of remedies by the Collateral Agent or the Required Purchasers, the Collateral
Agent or the Required Purchaser, as relevant, may, by a writing delivered to
Company, withdraw such pursuit of remedies, dismiss the specified Event(s) of
Default and waive compliance by Company with any provisions of this Agreement,
provided that no such withdrawal, dismissal or waiver may adversely and
disproportionately affect any Note as compared to the effect on the Notes held
by any other Purchaser, without the prior written consent of such Purchaser
whose Notes are adversely and disproportionately affected.
          9.3 Waivers by Company. Except as otherwise provided for in this
Agreement and applicable law, Company waives (i) presentment, demand and protest
and notice of presentment, dishonor notice of intent to accelerate and notice of
acceleration, (ii) all rights to notice and a hearing prior to the Collateral
Agent taking possession or control of, or to the Collateral Agent’s replevy,
attachment or levy upon, the Collateral or any bond or security which might be
required by any court prior to allowing the Collateral Agent to exercise any of
its remedies, and (iii) the benefit of all valuation, appraisal and exemption
laws. Company acknowledges that it has been advised by counsel of its choice
with respect to this Agreement, the other Loan Documents and the transactions
evidenced by this Agreement and the other Loan Documents.
          9.4 Right of Set-Off. Upon the occurrence and during the continuance
of any Event of Default, each Purchaser is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Purchaser to
or for the credit or the account of Company against any and all of the
obligations of Company now or hereafter existing under this Agreement and the
Notes held by such Purchaser irrespective of whether or not such Purchaser shall
have made any demand under this Agreement or the Notes and although such
obligations may be unmatured. Each Purchaser agrees promptly to notify Company
after any such set-off and application made by such Purchaser; provided,
however, that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Purchaser under this Section
are in addition to other rights and remedies (including, without limitation,
other rights of set-off) which such Purchaser may have.
          9.5 Appointment of the Collateral Agent. The Notes shall be entitled
to the benefits of certain security to be held by Tontine Capital Associates,
L.P., or its successor, as collateral agent for Purchasers (the “Collateral
Agent”) pursuant to the terms of this Agreement and the other Loan Documents.
Each Purchaser hereby designates and appoints the Collateral Agent as the agent
of such Purchaser under the Loan Documents and each such Purchaser irrevocably
authorizes the Collateral Agent, in such capacity, to take such action on its
behalf under the provisions of the Loan Documents and to exercise such powers
and perform such duties as are expressly delegated to the Collateral Agent by
the terms of the Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in the Loan Documents, the Collateral Agent shall not have any

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duties, obligations or responsibilities, except those expressly set forth
therein, or any fiduciary relationship with any Purchasers, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into the Loan Documents or otherwise exist against the Collateral Agent.
Without limiting the generality of the foregoing, the Collateral Agent is hereby
expressly authorized to execute any and all documents (including releases) with
respect to the Collateral (as defined in the Security Agreement and the Pledge
Agreement) and the rights of Purchasers with respect thereto, as contemplated by
and in accordance with the provisions of the Loan Documents. The Collateral
Agent may execute any of its duties under the Loan Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Collateral Agent shall not
be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
10. INDEMNIFICATION
          Company agrees to indemnify and hold harmless the Collateral Agent,
each Purchaser and its respective Affiliates and their respective officers,
directors and employees from and against any losses, liabilities, obligations,
damages, penalties, actions, proceedings, judgments, suits, claims, costs, fees,
expenses and disbursements (including, without limitation, reasonable attorneys’
fees and disbursements) of any kind (“Losses”) which are imposed upon, incurred
by or asserted against the Collateral Agent, Purchaser or such other indemnified
Persons as a result of the Collateral Agent or such Purchaser having entered
into this Agreement or any of the other Loan Documents or relating to or arising
out of any untrue representation, breach of warranty or failure to perform any
covenants or agreement by Company contained herein or in any certificate or
document delivered pursuant hereto or arising out of any Environmental Law
applicable to Company or its Subsidiaries or otherwise relating to or arising
out of the transactions contemplated hereby; provided, however, that Company
shall not be liable for such indemnification to such indemnified Person to the
extent that any such Losses result from such indemnified Person’s gross
negligence or willful misconduct.
11. MISCELLANEOUS
          11.1 Complete Agreement; Modification of Agreement; Sale of Interest.
(a) The Transaction Documents constitute the complete agreement between the
parties with respect to the subject matter hereof and thereof, supercede any
previous agreement or understanding between them relating hereto or thereto and
may not be modified, altered or amended except as provided therein, or in the
case of the Loan Documents by an agreement in writing signed by Company and
Purchasers in accordance with Section 11.1(d) hereof. Company may not sell,
assign or transfer any of the Loan Documents or any portion thereof, including,
without limitation, Company’s rights, title, interests, remedies, powers and
duties hereunder or thereunder.

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          (b) In the event a Purchaser assigns or otherwise transfers all or any
part of the Notes, Company shall, upon the request of such Purchaser issue new
Notes to effectuate such assignment or transfer.
          (c) Each Purchaser may sell, assign, transfer or negotiate to (i) one
or more of its Affiliates, other lenders, commercial banks, insurance companies,
other financial institutions or (ii) any other Person acceptable to Company, all
or a portion of its rights and obligations under the Notes and the other Loan
Documents held by such Purchaser and this Agreement; provided, however, that
acceptance of such assignment by any assignee shall constitute the agreement of
such assignee to be bound by the terms of this Agreement applicable to such
Purchaser; provided further that the rights of Tontine set forth in Section 7.1
and 7.2 may not be transferred or assigned other than to Affiliates of Tontine;
and provided further, no Purchaser may (except to its Affiliates) sell, assign,
transfer or dispose of, whether through the sale of participations, assignment,
transfer or other disposition or otherwise, less than $1,000,000 principal
amount of Notes. From and after the effective date of such an assignment,
(x) the assignees thereunder shall, in addition to the rights and obligations
hereunder held by it immediately prior to such effective date, have the rights
and obligations hereunder that have been assigned to it pursuant to such
assignment and (y) the assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such assignment,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an assignment and acceptance covering all or the remaining
portion of an assignor’s rights and obligations under this Agreement, such
assignor shall cease to be a party hereto).
          (d) No amendment or waiver of any provision of this Agreement, the
Notes or any other Transaction Document, nor consent to any departure by Company
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Company and the Required Purchasers, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no amendment, waiver or consent
shall, unless in writing and signed by each holder of a Note affected thereby do
any of the following: (i) subject such holder to any additional obligations,
(ii) reduce the principal of, or interest on, the Notes or other amounts payable
hereunder or release or discharge Company from its obligations to make such
payments, (iii) postpone any date fixed for any payment of principal of, or
interest on, the Notes or other amounts payable hereunder, (iv) change the
aggregate unpaid principal amount of the Notes, or the number of holders
thereof, which shall be required for such holders or any of them to take any
action hereunder, (v) increase the Conversion Price or (vi) amend this
Section 11.1(d).
          11.2 Fees and Expenses. Company shall pay all reasonable out-of-pocket
expenses of the Collateral Agent and each Purchaser in connection with the
preparation of the Transaction Documents and the transactions contemplated
thereby, including the reasonable fees and expenses of one counsel to the
Collateral Agent and Purchasers collectively and, if reasonably requested by the
Collateral Agent or Purchasers, one local counsel in each jurisdiction in which
collateral is located; provided

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that in the event of a conflict of interest between the Collateral Agent and any
Purchaser or between Purchasers, Company shall pay all reasonable out-of-pocket
fees and expenses of such additional counsel as may be necessary. If, at any
time or times, regardless of the existence of an Event of Default (except with
respect to paragraph (iii) below, which shall be subject to an Event of Default
having occurred and be continuing), the Collateral Agent and Purchasers shall
employ counsel or other advisors for advice or other representation or shall
incur reasonable legal or other costs and expenses in connection with:
               (i) any amendment, modification or waiver, or consent with
respect to, any of the Loan Documents or advice in connection with the
administration of the loans made pursuant hereto or its rights hereunder or
thereunder;
               (ii) any litigation, contest, dispute, suit, proceeding or action
(whether instituted by the Collateral Agent, Purchaser, Company, any Subsidiary
of Company or any other Person) in any way relating to any of the Transaction
Documents or any other agreements to be executed or delivered in connection
herewith; or
               (iii) any attempt to enforce any rights of a Purchaser against
Company, WRI or any other Person, that may be obligated to such Purchaser by
virtue of any of the Transaction Documents;
then, and in any such event, the reasonable attorneys’ and other parties’ fees
arising from such services, including those of any appellate proceedings, and
all expenses, costs, charges and other fees incurred by such counsel and others
in any way or respect arising in connection with or relating to any of the
events or actions described in this Section shall be payable, on demand, by
Company to the Collateral Agent and each such Purchaser and shall be additional
Obligations under this Agreement and the other Loan Documents; provided,
however, that Company shall not be required to and shall not pay the fees and
expenses of more than one counsel to the Collateral Agent and Purchasers
collectively and, if reasonably requested by the Collateral Agent or Purchasers,
one local counsel in each jurisdiction in which collateral is located unless
there is a conflict of interest between the Collateral Agent and any Purchaser
or between Purchasers, in which case Company shall pay all reasonable
out-of-pocket fees and expenses of such additional counsel as may be necessary.
Without limiting the generality of the foregoing, such expenses, costs, charges
and fees may include: paralegal fees, costs and expenses; accountants’ and
investment bankers’ fees, costs and expenses; court costs and expenses;
photocopying and duplicating expenses; court reporter fees, costs and expenses;
long distance telephone charges; air express charges; telegram charges;
secretarial overtime charges; and expenses for travel, lodging and food paid or
incurred in connection with the performance of such legal services.
          11.3 No Waiver by Purchaser. A Purchaser’s failure, at any time or
times, to require strict performance by Company of any provision of this
Agreement and any of the other Loan Documents shall not waive, affect or
diminish any right of such Purchaser thereafter to demand strict compliance and
performance therewith. Any

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suspension or waiver by a Purchaser of an Event of Default by Company under the
Loan Documents shall not suspend, waive or affect any other Event of Default by
Company under this Agreement and any of the other Loan Documents whether the
same is prior or subsequent thereto and whether of the same or of a different
type. None of the undertakings, agreements, warranties, covenants and
representations of Company contained in this Agreement or any of the other Loan
Documents and no Event of Default by Company under this Agreement and no
defaults by Company under any of the other Loan Documents shall be deemed to
have been suspended or waived by a Purchaser, unless such suspension or waiver
is by an instrument in writing signed by an officer of such Purchaser and the
Required Purchasers and directed to Company specifying such suspension or
waiver.
          11.4 Remedies. Each Purchaser’s rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
which such Purchaser may have under any other agreement, including without
limitation, the Loan Documents, the other Transaction Documents, by operation of
law or otherwise.
          11.5 Waiver of Jury Trial. The parties hereto waive all right to trial
by jury in any action or proceeding to enforce or defend any rights under the
Transaction Documents.
          11.6 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
          11.7 Binding Effect; Benefits. This Agreement and the other
Transaction Documents shall be binding upon, and inure to the benefit of, the
successors of Company and each Purchaser and the assigns, transferees and
endorsees of each Purchaser.
          11.8 Conflict of Terms. Except as otherwise provided in this Agreement
or any of the other Loan Documents by specific reference to the applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict with, or inconsistent with, any provision in any of the other Loan
Documents, the provision contained in this Agreement shall govern and control.
          11.9 Governing Law. Except as otherwise expressly provided in any of
the Transaction Documents, in all respects, including all matters of
construction, validity and performance, this Agreement and the Obligations
arising hereunder shall be governed by, and construed and enforced in accordance
with, the laws of the State of New York applicable to contracts made and
performed in such state, without regard to the principles thereof regarding
conflict of laws, and any applicable laws of the United States of America. Each
Purchaser and Company agree to submit to personal jurisdiction and to

40

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waive any objection as to venue in the federal or New York State courts located
in the County of New York, State of New York. Service of process on any
Purchaser or Company in any action arising out of or relating to any of the
Transaction Documents shall be effective if mailed to such party at the address
listed in Section 11.10 hereof. Nothing herein shall preclude a Purchaser or
Company from bringing suit or taking other legal action in any other
jurisdiction.
          11.10 Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by another, or whenever any of the parties desires to give or serve upon
another any such communication with respect to this Agreement, each such notice,
demand, request, consent, approval, declaration or other communication shall be
in writing and either shall be delivered in person with receipt acknowledged or
by registered or certified mail, return receipt requested, postage prepaid, or
by telecopy and confirmed by telecopy answerback addressed as follows:
If to Company:
Westmoreland Coal Company
2 North Cascade Avenue, 14th Floor
Colorado Springs, Colorado 80903
Attn: General Counsel
Telecopy Number: (719) 448-8097
with a copy to:
WilmerHale
1875 Pennsylvania Avenue, NW
Washington, D.C. 20006
Attn: Michael J. Levitin, Esq.
Telecopy Number: (202) 663-6363
If to Purchasers:
c/o Tontine Capital Management, L.L.C.
55 Railroad Avenue
Greenwich, Connecticut 06830
Attn: Joseph V. Lash
Telecopy Number: (203) 769-2010
with copies to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153

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Attn: Ted S. Waksman, Esq.
Telecopy Number: (212) 310-8007
If to the Collateral Agent:
Tontine Capital Associates, L.P.
55 Railroad Avenue
Greenwich, Connecticut 06830
Attn: Jeffrey L. Gendell
Telecopy Number: (203) 769-2010
with copies to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attn: Ted S. Waksman, Esq.
Telecopy Number: (212) 310-8007
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given or served on the date on which personally delivered,
with receipt acknowledged, telecopied and confirmed by telecopy answerback
during normal business hours, or three (3) Business Days after the same shall
have been deposited with the United States mail postage prepaid. Failure or
delay in delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to the Persons designated above to receive
copies shall in no way adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
          11.11 Survival. The representations and warranties of Company in this
Agreement shall survive the execution, delivery and acceptance hereof by the
parties hereto and the closing of the transactions described herein or related
hereto.
          11.12 Section and Other Headings. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
          11.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
          11.14 Publicity. Neither Purchasers nor Company shall issue any press
release or make any public disclosure regarding the transactions contemplated
hereby unless such press release or public disclosure is approved by the other
party in advance.

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Notwithstanding the foregoing, each of the parties hereto may file the text of
this Agreement and the other Loan Documents as exhibits to its filings with the
SEC and may, in documents required to be filed by it with the SEC or other
regulatory bodies, make such statements with respect to the transactions
contemplated hereby as each may be advised by counsel is legally necessary or
advisable, and may make such disclosure as it is advised by its counsel is
required by law, subject to advance consultation with Purchasers.
          11.15 Confidential Information. For the purposes of this Agreement,
“Confidential Information” means information delivered to any Purchaser by or on
behalf of Company or any Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this Agreement, provided that such term
does not include information that (a) was publicly known prior to the time of
such disclosure, (b) subsequently becomes publicly known through no act or
omission by such Purchaser or any person acting on such Purchaser’s behalf, or
(c) otherwise becomes known to such Purchaser other than through disclosure by
Company or any Subsidiary. Each Purchaser will maintain the confidentiality of
such Confidential Information in accordance with procedures adopted by such
Purchaser in good faith to protect confidential information of third parties
delivered to such Purchaser, provided that such Purchaser may deliver or
disclose Confidential Information to (i) its directors, officers, employees,
agents, attorneys, trustees and affiliates (to the extent such disclosure
reasonably relates to the administration of the investment represented by its
Notes or the Common Stock following the conversion thereof), (ii) its financial
advisors and other professional advisors who agree to hold confidential the
Confidential Information substantially in accordance with the terms of this
Section 11.15, (iii) any other holder of any Note, (iv) any federal or state
regulatory authority having jurisdiction over such Purchaser, (v) any nationally
recognized rating agency that requires access to information about such
Purchaser’s investment portfolio, or (vi) any other Person to which such
delivery or disclosure may be necessary or appropriate (w) to effect compliance
with any law, rule, regulation or order applicable to such Purchaser, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which such Purchaser is a party or (z) if an Event of Default has
occurred and is continuing, to the extent such Purchaser may determine such
delivery and disclosure to be necessary or appropriate in the enforcement or for
the protection of the rights and remedies under such Purchaser’s Notes and this
Agreement. Each holder of a Note, by its acceptance of a Note, will be deemed to
have agreed to be bound by and to be entitled to the benefits of this
Section 11.15 as though it were a party to this Agreement. On reasonable request
by Company in connection with the delivery to any holder of a Note of
information required to be delivered to such holder under this Agreement or
requested by such holder (other than a holder that is a party to this Agreement
or its nominee), such holder will enter into an agreement with Company embodying
the provisions of this Section 11.15.
          11.16 Compliance with First Interstate Loan Documents. Any obligation
of Company or any Guarantor in this Agreement that requires delivery of
collateral or other items to, or the possession or control of collateral or
other items with, the Collateral

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Agent or any Purchaser shall be deemed complied with and satisfied if such
delivery is made to, or such possession or control is with, the agent or any
lender under the First Interstate Loan Documents, so long as the First
Interstate Loan Agreement is in full force and effect and has not been
terminated in accordance with its terms or otherwise.
          11.17 Termination of Standby Purchase Agreement. The Standby Purchase
Agreement dated as of May 2, 2007 by and between Company and Tontine, as amended
by that certain Amended and Restated First Amendment dated as of July 3, 2007 by
and among the parties thereto, is hereby terminated and of no further force and
effect, other than Section 7(c) thereof which shall continue in full force and
effect.
[Remainder of Page Intentionally Blank]

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          IN WITNESS WHEREOF, Company, the Collateral Agent and each Purchaser
have executed this Agreement as of the day and year first above written.

                          WESTMORELAND COAL COMPANY
as Company    
 
                            By:   /s/ Keith E. Alessi                      
 
          Name:   Keith E. Alessi    
 
          Title:   Chief Executive Officer and President    

                          TONTINE PARTNERS, L.P.
as a Purchaser    
 
                        By:   TONTINE MANAGEMENT, L.L.C.,             its
general partner    
 
                            By:   /s/ Jeffrey L. Gendell                      
 
          Name:   Jeffrey L. Gendell    
 
          Title:   Managing Member    
 
                        TONTINE CAPITAL PARTNERS, L.P.
as a Purchaser    
 
                        By:   TONTINE CAPITAL MANAGEMENT, L.L.C.,            
its general partner    
 
                            By:   /s/ Jeffrey L. Gendell                      
 
          Name:   Jeffrey L. Gendell    
 
          Title:   Managing Member    
 
                        TONTINE CAPITAL ASSOCIATES, L.P.
as the Collateral Agent    
 
                        By:   TONTINE CAPITAL ASSOCIATES GP, L.L.C.,            
its general partner    
 
                            By:   /s/ Jeffrey L. Gendell                      
 
          Name:   Jeffrey L. Gendell    
 
          Title:   Managing Member    

[Signature Page to Note Purchase Agreement]

 

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ANNEX I

          Purchaser   Principal Amount of Notes Tontine Partners, L.P.    
$         7,500,000   Tontine Capital Partners, L.P.     $         7,500,000  
Total     $       15,000,000  

Annex I

 

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Exhibit A
to
Senior Secured Convertible Note Purchase Agreement
[Form of Senior Secured Convertible Note]
          THIS NOTE AND THE COMMON STOCK (THE “COMMON STOCK”) OF WESTMORELAND
COAL COMPANY (THE “COMPANY”) ISSUABLE UPON CONVERSION HEREOF HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), NOR UNDER ANY STATE SECURITIES LAWS, AND MAY NOT BE
PLEDGED, SOLD, ASSIGNED OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS, OTHER THAN IN CONNECTION WITH ANY TRANSFER TO ANY AFFILIATE OF TONTINE,
THE COMPANY RECEIVES AN OPINION OF COUNSEL TO THE COMPANY OR AN OPINION
REASONABLY SATISFACTORY TO THE COMPANY OF COUNSEL TO THE HOLDER THAT SAID
SECURITIES MAY BE PLEDGED, SOLD, ASSIGNED OR TRANSFERRED, AS THE CASE MAY BE,
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
          THIS NOTE IS SUBJECT TO: (1) THE TERMS OF A SENIOR SECURED CONVERTIBLE
NOTE PURCHASE AGREEMENT (AS AMENDED, RESTATED, AMENDED AND RESTATED,
SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO TIME, THE “NOTE AGREEMENT”),
DATED AS OF MARCH 4, 2008, (2) THE TERMS OF A PLEDGE AGREEMENT (AS AMENDED,
RESTATED, AMENDED AND RESTATED, SUPPLEMENTED OR OTHERWISE MODIFIED FROM TIME TO
TIME, THE “PLEDGE AGREEMENT”), DATED AS OF MARCH 4, 2008, AND (3) THE TERMS OF A
SECURITY AGREEMENT (AS AMENDED, RESTATED, AMENDED AND RESTATED, SUPPLEMENTED OR
OTHERWISE MODIFIED FROM TIME TO TIME, THE “SECURITY AGREEMENT”), DATED AS OF
MARCH 4, 2008. THE NOTE AGREEMENT, THE PLEDGE AGREEMENT AND THE SECURITY
AGREEMENT ARE INCORPORATED HEREIN BY REFERENCE. NOTWITHSTANDING ANY CONTRARY
STATEMENT CONTAINED IN THE WITHIN INSTRUMENT, NO PAYMENT ON ACCOUNT OF THE
PRINCIPAL OR INTEREST HEREON SHALL BECOME DUE OR PAID EXCEPT IN ACCORDANCE WITH
THE TERMS OF THE NOTE AGREEMENT.
WESTMORELAND COAL COMPANY
SENIOR SECURED CONVERTIBLE NOTE DUE March 4, 2013
      

$15,000,000   March 4, 2008

          FOR VALUE RECEIVED, the undersigned, Westmoreland Coal Company, a
Delaware corporation (the “Company”), hereby promises to pay to
[                                        ] or its registered assigns (the
“Purchaser”) at [                                        ], on March 4, 2013
(the “Maturity Date”), the principal sum of FIFTEEN MILLION DOLLARS
($15,000,000) as such principal amount may be increased from time to time by
interest paid in kind in accordance with Section 2.4(d) of the Note Agreement
(as defined below) or such lesser principal amount thereof as may remain
outstanding in lawful money of the United States of America in immediately
available

A-1

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Exhibit A
to
Senior Secured Convertible Note Purchase Agreement
[Form of Senior Secured Convertible Note]
funds, and to pay interest from the date hereof on the principal amount hereof
from time to time outstanding, in like funds, at said office, at a rate or rates
per annum and payable on such dates as determined pursuant to the terms of that
certain Senior Secured Convertible Note Purchase Agreement dated as of March 4,
2008 by and among the Company, the Purchaser and the other parties from time to
time party thereto (as amended, restated, amended and restated, supplemented or
otherwise modified from time to time, the “Note Agreement”).
          This note (this “Note”) is one of the series of notes issued pursuant
to the Note Agreement, and is subject in all respects to the provisions thereof;
the Note Agreement, among other things, contains provisions for the acceleration
of the maturity of this Note upon the happening of certain events, conversion of
any amount owing hereunder into certain equity securities of the Company,
restrictions on the transfer hereof and for the amendment or waiver of certain
provisions of the Note Agreement, all upon the terms and conditions therein
specified.
          This Note is entitled to the benefits of a second priority lien on
certain security pursuant to the terms of (i) that certain Pledge Agreement,
dated as of March 4, 2008, by and among the Company, WRI and the Collateral
Agent named therein, as the same may be amended, restated, amended and restated,
supplemented or otherwise modified from time to time, and (ii) that certain
Security Agreement, dated as of March 4, 2008, by and among WRI and the
Collateral Agent named therein, as the same may be amended, restated, amended
and restated, supplemented or otherwise modified from time to time.
          The Company hereby waives diligence, presentment, demand, protest and
notice of any kind whatsoever, other than as expressly required by the Note
Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

A-2

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Exhibit A
to
Senior Secured Convertible Note Purchase Agreement
[Form of Senior Secured Convertible Note]
          This Note shall be construed in accordance with and governed by the
laws of the State of New York without giving effect to principles of conflicts
of laws.

                  WESTMORELAND COAL COMPANY    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

[signature page to [______] note]