EXHIBIT 10.2

 

--------------------------------------------------------------------------------

 

SYPRIS SOLUTIONS, INC.

 

$55,000,000

Aggregate Principal Amount

Senior Notes

 

$7,500,000 4.73% Senior Notes, Series A

Due June 30, 2009

 

$27,500,000 5.35% Senior Notes, Series B

Due June 30, 2011

 

$20,000,000 5.78% Senior Notes, Series C

Due June 30, 2014

 

--------------------------------------------------------------------------------

 

NOTE PURCHASE AGREEMENT

 

--------------------------------------------------------------------------------

 

Dated as of June 1, 2004

 

--------------------------------------------------------------------------------

 

Series A PPN: 871655 A* 7

Series B PPN: 871655 A@ 5

Series C PPN: 871655 A# 3

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

Section

--------------------------------------------------------------------------------

             Page

--------------------------------------------------------------------------------

1.

   AUTHORIZATION OF NOTES    1

2.

   SALE AND PURCHASE OF NOTES.    1

3.

   CLOSINGS.    2

4.

   CONDITIONS TO CLOSING    2      4.1.    Representations and Warranties    2  
   4.2.    Performance; No Default    2      4.3.    Compliance Certificates   
2      4.4.    Opinions of Counsel    3      4.5.    Purchase Permitted By
Applicable Law, etc    3      4.6.    Sale of Other Notes    3      4.7.   
Payment of Special Counsel Fees    3      4.8.    Private Placement Numbers    3
     4.9.    Changes in Corporate Structure    3      4.10.    Subsidiary
Guaranty.    4      4.11.    Consummation of Acquisition.    4      4.12.   
Proceedings and Documents.    4

5.

   REPRESENTATIONS AND WARRANTIES OF THE COMPANY    4      5.1.    Organization;
Power and Authority    4      5.2.    Authorization, etc    4      5.3.   
Disclosure    5      5.4.    Organization and Ownership of Shares of
Subsidiaries    5      5.5.    Financial Statements    5      5.6.    Compliance
with Laws, Other Instruments, etc    6      5.7.    Governmental Authorizations,
etc.    6      5.8.    Litigation; Observance of Statutes and Orders    6     
5.9.    Taxes    6      5.10.    Title to Property; Leases    7      5.11.   
Licenses, Permits, etc    7      5.12.    Compliance with ERISA    8      5.13.
   Private Offering by the Company    8      5.14.    Use of Proceeds; Margin
Regulations    8      5.15.    Existing Debt; Future Liens    8      5.16.   
Foreign Assets Control Regulations, Anti-Terrorism Order, etc    9      5.17.   
Status under Certain Statutes    9      5.18.    Environmental Matters    9     
5.19.    Solvency of Subsidiary Guarantors    9

6.

   REPRESENTATIONS OF THE PURCHASERS.    9      6.1.    Purchase for Investment
   9      6.2.    Source of Funds    10

7.

   INFORMATION AS TO COMPANY    11      7.1.    Financial and Business
Information.    11      7.2.    Officer’s Certificate    13      7.3.   
Inspection    13

--------------------------------------------------------------------------------

8.

   PREPAYMENT OF THE NOTES.    13      8.1.    No Scheduled Prepayments    13  
   8.2.    Optional Prepayments with Make-Whole Amount    13      8.3.   
Mandatory Offer to Prepay Upon Change of Control    14      8.4.    Allocation
of Partial Prepayments    15      8.5.    Maturity; Surrender, etc    15     
8.6.    Purchase of Notes    15      8.7.    Make-Whole Amount    15

9.

   AFFIRMATIVE COVENANTS    17      9.1.    Compliance with Law    17      9.2.
   Insurance    17      9.3.    Maintenance of Properties    17      9.4.   
Payment of Taxes    17      9.5.    Corporate Existence, etc    17      9.6.   
Pari Passu Ranking    18

10.

   NEGATIVE COVENANTS    18      10.1.    Consolidated Net Debt.    18     
10.2.    Adjusted Consolidated Net Worth    18      10.3.    Priority Debt    18
     10.4.    Liens.    18      10.5.    Sale of Assets.    19      10.6.   
Mergers, Consolidations, etc.    20      10.7.    Subsidiary Guaranty    21     
10.8.    Nature of Business.    21      10.9.    Transactions with Affiliates   
21

11.

   EVENTS OF DEFAULT    21

12.

   REMEDIES ON DEFAULT, ETC    23      12.1.    Acceleration    23      12.2.   
Other Remedies    24      12.3.    Rescission    24      12.4.    No Waivers or
Election of Remedies, Expenses, etc    24

13.

   REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES    24      13.1.   
Registration of Notes    24      13.2.    Transfer and Exchange of Notes    24  
   13.3.    Replacement of Notes    25

14.

   PAYMENTS ON NOTES.    25      14.1.    Place of Payment    25      14.2.   
Home Office Payment    25

15.

   EXPENSES, ETC    26      15.1.    Transaction Expenses    26      15.2.   
Survival    26

16.

   SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT    26

17.

   AMENDMENT AND WAIVER    26      17.1.    Requirements    26      17.2.   
Solicitation of Holders of Notes    27      17.3.    Binding Effect, etc    27

--------------------------------------------------------------------------------

     17.4        Notes held by Company, etc    27

18.

   NOTICES    27

19.

   REPRODUCTION OF DOCUMENTS    28

20.

   CONFIDENTIAL INFORMATION    28

21.

   SUBSTITUTION OF PURCHASER    29

22.

   RELEASE OF SUBSIDIARY GUARANTOR    29

23.

   MISCELLANEOUS    29      23.1.    Successors and Assigns    29      23.2.   
Payments Due on Non-Business Days    29      23.3.    Severability    29     
23.4.    Construction    30      23.5.    Counterparts    30      23.6.   
Governing Law    30      23.7.    Submission to Jurisdiction    30      23.8.   
Waiver of Jury Trial    30

--------------------------------------------------------------------------------

SCHEDULE A

   —      Information Relating to Purchasers

SCHEDULE B

   —      Defined Terms

SCHEDULE B-1

   —      Existing Investments

SCHEDULE 5.3

   —      Disclosure Materials

SCHEDULE 5.4

   —      Subsidiaries and Ownership of Subsidiary Stock

SCHEDULE 5.5

   —      Financial Statements

SCHEDULE 5.11

   —      Licenses, Permits, etc.

SCHEDULE 5.14

   —      Use of Proceeds

SCHEDULE 5.15

   —      Existing Debt

SCHEDULE 10.4

   —      Liens

EXHIBIT 1(a)

   —      Form of Series A Senior Note

EXHIBIT 1(b)

   —      Form of Series B Senior Note

EXHIBIT 1(c)

   —      Form of Series C Senior Note

EXHIBIT 1(d)

   —      Form of Subsidiary Guaranty

EXHIBIT 4.4(a)

   —      Form of Opinion of Special Counsel for the Company and the Subsidiary
Guarantors

EXHIBIT 4.4(b)

   —      Form of Opinion of General Counsel of the Company

EXHIBIT 4.4(c)

   —      Form of Opinion of Special Counsel for the Purchasers

--------------------------------------------------------------------------------

SYPRIS SOLUTIONS, INC.

101 Bullitt Lane, Suite 450

Louisville, Kentucky 40222

(502) 329-2000

Fax: (502) 329-2050

 

$55,000,000

Aggregate Principal Amount

Senior Notes

 

$7,500,000 4.73% Senior Notes, Series A, due June 30, 2009

$27,500,000 5.35% Senior Notes, Series B, due June 30, 2011

$20,000,000 5.78% Senior Notes, Series C, due June 30, 2014

 

Dated as of June 1, 2004

 

TO EACH OF THE PURCHASERS LISTED IN

THE ATTACHED SCHEDULE A:

 

Ladies and Gentlemen:

 

SYPRIS SOLUTIONS, INC., a Delaware corporation (the “Company”), agrees with you
as follows:

 

1. AUTHORIZATION OF NOTES.

 

The Company has authorized the issue and sale of $55,000,000 aggregate principal
amount of Senior Notes, consisting of $7,500,000 4.73% Senior Notes, Series A,
due June 30, 2009 (the “Series A Notes”), $27,500,000 5.35% Senior Notes, Series
B, due June 30, 2011 (the “Series B Notes”) and $20,000,000 5.78% Senior Notes,
Series C, due June 30, 2014 (the “Series C Notes” and collectively with the
Series A Notes and Series B Notes, the “Notes”, such term to include any such
Notes issued in substitution therefor pursuant to Section 13 of this Agreement).
The Notes shall be substantially in the form set out in Exhibits 1(a), 1(b) or
1(c), as appropriate, with such changes therefrom, if any, as may be approved by
you, the Other Purchasers and the Company. Certain capitalized terms used in
this Agreement are defined in Schedule B; references to a “Schedule” or an
“Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached
to this Agreement. Subject to Section 22, the Notes will be guaranteed by any
Subsidiary that is or in the future becomes a guarantor of, or otherwise becomes
obligated in respect of, any Debt to banks under the Credit Agreement
(individually, a “Subsidiary Guarantor” and collectively, the “Subsidiary
Guarantors”) pursuant to a guaranty in substantially the form of Exhibit 1(d)
(the “Subsidiary Guaranty”). The Notes will be unsecured and will rank pari
passu with the Company’s Debt to banks under the Credit Agreement and with all
other senior unsecured Debt of the Company.

 

2. SALE AND PURCHASE OF NOTES.

 

Subject to the terms and conditions of this Agreement, the Company will issue
and sell to you and each of the other purchasers named in Schedule A (the “Other
Purchasers”), and you and the Other Purchasers will purchase from the Company,
at the Closings provided for in Section 3, Notes in the principal amount and
series specified opposite your names in Schedule A at the purchase price of 100%
of the principal amount thereof. Your obligation hereunder and the obligations
of the Other Purchasers are several and not joint obligations and you shall have
no obligation and no liability to any Person for the performance or
non-performance by any Other Purchaser hereunder.

 

1

--------------------------------------------------------------------------------

3. CLOSINGS.

 

The sale and purchase of the Notes to be purchased by you and the Other
Purchasers shall occur at the offices of Gardner Carton & Douglas LLP, 191 North
Wacker Drive, Suite 3700, Chicago, Illinois 60606-1698, at 9:00 a.m., Chicago
time, at closings on June 10, 2004 (the “First Closing”), on August 19, 2004
(the “Second Closing”) and on a Business Day on or prior to September 30, 2004
as agreed upon by the Company and the purchasers that are scheduled to purchase
Notes at such Closing (the “Third Closing” and, together with the First Closing
and the Second Closing, the “Closings”). The date or time of any Closing may be
changed to such other Business Day as may be agreed upon by the Company and the
purchasers that are scheduled to purchase Notes at such Closing. At the Closing
applicable to your purchase the Company will deliver to you the Notes to be
purchased by you in the form of a single Note (or such greater number of Notes
in denominations of at least $100,000 as you may request) dated the date of such
Closing and registered in your name (or in the name of your nominee), against
delivery by you to the Company or its order of immediately available funds in
the amount of the purchase price therefor by wire transfer of immediately
available funds for the account of the Company to account number 615694528
(Sypris Solutions Operating Account) at Bank One, N.A., 416 W. Jefferson Street,
Louisville, Kentucky, 40202, Attention: Elvia Schuler (502-566-2849), ABA
routing number 083000137. If at such Closing the Company shall fail to tender
such Notes to you as provided above in this Section 3, or any of the conditions
specified in Section 4 shall not have been fulfilled to your satisfaction, you
shall, at your election, be relieved of all further obligations under this
Agreement, without thereby waiving any rights you may have by reason of such
failure or such nonfulfillment.

 

The Company and the Purchasers scheduled to purchase Notes at the Third Closing
agree, if the conditions set forth in Section 4.11 have been fulfilled on or
before the date of the Second Closing, to use their reasonable efforts to cause
the Third Closing to occur on the date of the Second Closing.

 

4. CONDITIONS TO CLOSING.

 

The Company’s obligation to issue and sell the Notes to be purchased and paid
for by the Purchasers that are scheduled to purchase Notes at the Third Closing
is subject to the fulfillment, prior to or at such Closing, of the condition set
forth in Section 4.11.

 

Your obligation to purchase and pay for the Notes to be sold to you at the
Closing applicable to your purchase is subject to the fulfillment to your
satisfaction, prior to or at such Closing, of the following conditions:

 

4.1. Representations and Warranties.

 

The representations and warranties of the Company in this Agreement shall be
correct when made and at the time of such Closing.

 

4.2. Performance; No Default.

 

The Company shall have performed and complied with all agreements and conditions
contained in this Agreement required to be performed or complied with by it
prior to or at such Closing and after giving effect to the issue and sale of the
Notes (and the application of the proceeds thereof as contemplated by Section
5.14) no Default or Event of Default shall have occurred and be continuing.

 

4.3. Compliance Certificates.

 

(a) Officer’s Certificate. The Company shall have delivered to you an Officer’s
Certificate, dated the date of such Closing, certifying that the conditions
specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.

 

(b) Secretary’s Certificate. Each of the Company and each Subsidiary Guarantor
shall have delivered to you a certificate of its Secretary or an Assistant
Secretary certifying as to the resolutions attached thereto and other corporate
proceedings relating to the authorization, execution and delivery of the Notes
and the Agreement or the Subsidiary Guaranty, as the case may be.

 

2

--------------------------------------------------------------------------------

4.4. Opinions of Counsel.

 

You shall have received opinions in form and substance satisfactory to you,
dated the date of such Closing (a) from Wyatt, Tarrant & Combs, LLP special
counsel for the Company and the Subsidiary Guarantors, covering the matters set
forth in Exhibit 4.4(a) and covering such other matters incident to the
transactions contemplated hereby as you or your counsel may reasonably request
(and the Company instructs its counsel to deliver such opinion to you), (b) from
John McGeeney, General Counsel of the Company, covering the matters set forth in
Exhibit 4.4(b) and covering such other matters incident to the transactions
contemplated hereby as you or your counsel my reasonably request (and the
Company instructs its counsel to deliver such opinion to you), and (c) from
Gardner Carton & Douglas LLP, your special counsel in connection with such
transactions, substantially in the form set forth in Exhibit 4.4(c) and covering
such other matters incident to such transactions as you may reasonably request.

 

4.5. Purchase Permitted By Applicable Law, etc.

 

On the date of such Closing your purchase of Notes shall (i) be permitted by the
laws and regulations of each jurisdiction to which you are subject, without
recourse to provisions (such as Section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (ii) not violate any
applicable law or regulation (including, without limitation, Regulation U, T or
X of the Board of Governors of the Federal Reserve System) and (iii) not subject
you to any tax, penalty or liability under or pursuant to any applicable law or
regulation, which law or regulation was not in effect on the date hereof. If
requested by you, you shall have received an Officer’s Certificate certifying as
to such matters of fact as you may reasonably specify to enable you to determine
whether such purchase is so permitted.

 

4.6. Sale of Other Notes.

 

Contemporaneously with or prior to each Closing the Company shall sell or shall
have sold to the Other Purchasers and the Other Purchasers shall purchase or
shall have purchased the Notes to be purchased by them as specified in Schedule
A at such Closing or any prior Closing.

 

4.7. Payment of Special Counsel Fees.

 

Without limiting the provisions of Section 15.1, the Company shall have paid on
or before such Closing the reasonable fees, charges and disbursements of your
special counsel referred to in Section 4.4 to the extent reflected in a
statement of such counsel rendered to the Company at least one Business Day
prior to such Closing.

 

4.8. Private Placement Numbers.

 

A Private Placement Number issued by Standard & Poor’s CUSIP Service Bureau (in
cooperation with the Securities Valuation Office of the National Association of
Insurance Commissioners) shall have been obtained for each series of Notes by
Gardner Carton & Douglas for the Notes.

 

4.9. Changes in Corporate Structure.

 

The Company shall not have changed its jurisdiction of incorporation or been a
party to any merger or consolidation and shall not have succeeded to all or any
substantial part of the liabilities of any other entity, at any time following
the date of the most recent financial statements referred to in Schedule 5.5.

 

3

--------------------------------------------------------------------------------

4.10. Subsidiary Guaranty.

 

Each Subsidiary Guarantor shall have executed and delivered the Subsidiary
Guaranty in favor of you and the Other Purchasers.

 

4.11. Consummation of Acquisition.

 

As a condition to the Third Closing, at or prior to such Closing, the Company
shall have consummated the acquisition of certain assets of Dana Corporation
located in Toluca, Mexico, or shall have entered into a binding agreement to
acquire such assets that specifies a closing date not more than 30 days after
the date of execution of such agreement, provided that (unless the Company and
the Purchasers scheduled to purchase Notes at the Third Closing otherwise agree)
if such specified closing date is not on or before October 30, 2004, the
Purchasers scheduled to purchase Notes at the Third Closing shall have no
obligation to purchase any Notes at such Closing.

 

4.12. Proceedings and Documents.

 

All corporate and other proceedings in connection with the transactions
contemplated by this Agreement and all documents and instruments incident to
such transactions shall be satisfactory to you and your special counsel, and you
and your special counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may reasonably
request.

 

5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents and warrants to you that:

 

5.1. Organization; Power and Authority.

 

The Company is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company has the corporate power and authority to own or hold
under lease the properties it purports to own or hold under lease, to transact
the business it transacts and proposes to transact, to execute and deliver this
Agreement and the Notes and to perform the provisions hereof and thereof.

 

5.2. Authorization, etc.

 

This Agreement and the Notes have been duly authorized by all necessary
corporate action on the part of the Company, and this Agreement constitutes, and
upon execution and delivery thereof each Note will constitute, a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors’ rights generally and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

 

The Subsidiary Guaranty has been duly authorized by all necessary corporate
action on the part of each Subsidiary Guarantor and upon execution and delivery
thereof will constitute the legal, valid and binding obligation of each
Subsidiary Guarantor, enforceable against each Subsidiary Guarantor in
accordance with its terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting the enforcement of creditors’ rights
generally and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

 

4

--------------------------------------------------------------------------------

5.3. Disclosure.

 

The Company, through its agents, LaSalle Debt Capital Markets and SunTrust
Capital Markets, Inc., has delivered to you and each Other Purchaser a copy of a
Private Placement Memorandum, dated April 2004 (the “Memorandum”), relating to
the transactions contemplated hereby. Except as disclosed in Schedule 5.3, this
Agreement, the Memorandum, the documents, certificates or other writings
identified in Schedule 5.3 and the financial statements listed in Schedule 5.5,
taken as a whole, do not contain any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made. Except as
disclosed in the Memorandum or as expressly described in Schedule 5.3, or in one
of the documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since December 31, 2003, there has
been no change in the financial condition, operations, business or properties of
the Company or any of its Subsidiaries except changes that individually or in
the aggregate would not reasonably be expected to have a Material Adverse
Effect.

 

5.4. Organization and Ownership of Shares of Subsidiaries.

 

(a) Schedule 5.4 is (except as noted therein) a complete and correct list of the
Company’s Subsidiaries, showing, as to each Subsidiary, the correct name
thereof, the jurisdiction of its organization, and the percentage of shares of
each class of its capital stock or similar equity interests outstanding owned by
the Company and each other Subsidiary.

 

(b) All of the outstanding shares of capital stock or similar equity interests
of each Subsidiary shown in Schedule 5.4 as being owned by the Company and its
Subsidiaries have been validly issued, are fully paid and nonassessable and are
owned by the Company or another Subsidiary free and clear of any Lien (except as
otherwise disclosed in Schedule 5.4).

 

(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other legal
entity duly organized, validly existing and in good standing under the laws of
its jurisdiction of organization, and is duly qualified as a foreign corporation
or other legal entity and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Each such
Subsidiary has the corporate or other power and authority to own or hold under
lease the properties it purports to own or hold under lease and to transact the
business it transacts and proposes to transact.

 

5.5. Financial Statements.

 

The Company has delivered to you and each Other Purchaser copies of the
financial statements of the Company and its Subsidiaries listed on Schedule 5.5.
All of said financial statements (including in each case the related schedules
and notes) fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).

 

5.6. Compliance with Laws, Other Instruments, etc.

 

The execution, delivery and performance by the Company of this Agreement and the
Notes will not (i) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of the
Company or any Subsidiary under, any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, corporate charter or by-laws, or any other
Material agreement or instrument to which the Company or any Subsidiary is bound
or by which the Company or any Subsidiary or any of their respective properties
may be bound or affected, (ii) conflict with or result in a breach of any of the
terms, conditions or provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to the Company or any
Subsidiary or (iii) violate any provision of any statute or other rule or
regulation of any Governmental Authority applicable to the Company or any
Subsidiary.

 

5

--------------------------------------------------------------------------------

The execution, delivery and performance by each Subsidiary Guarantor of the
Subsidiary Guaranty will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of such Subsidiary Guarantor under any indenture, mortgage, deed of
trust, loan, purchase or credit agreement, lease, corporate charter or by-laws,
or any other Material agreement or instrument to which such Subsidiary Guarantor
is bound or by which such Subsidiary Guarantor or any of its properties may be
bound or affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court,
arbitrator or Governmental Authority applicable to such Subsidiary Guarantor or
(iii) violate any provision of any statute or other rule or regulation of any
Governmental Authority applicable to such Subsidiary Guarantor.

 

5.7. Governmental Authorizations, etc.

 

Except for any filings under federal or state securities laws that have been or,
prior to the date of the First Closing or the Second Closing, as applicable,
will have been made, no consent, approval or authorization of, or registration,
filing or declaration with, any Governmental Authority is required in connection
with the execution, delivery or performance by the Company of this Agreement or
the Notes or the execution, delivery or performance by each Subsidiary Guarantor
of the Subsidiary Guaranty.

 

5.8. Litigation; Observance of Statutes and Orders.

 

(a) There are no actions, suits or proceedings pending or, to the knowledge of
the Company threatened against or affecting the Company or any Subsidiary or any
property of the Company or any Subsidiary in any court or before any arbitrator
of any kind or before or by any Governmental Authority that, individually or in
the aggregate, would reasonably be expected to have a Material Adverse Effect.

 

(b) Neither the Company nor any Subsidiary is in default under any term of any
agreement or instrument to which it is a party or by which it is bound, or any
order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including Environmental Laws and the USA Patriot Act) of any
Governmental Authority, which default or violation, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.

 

5.9. Taxes.

 

The Company and its Subsidiaries have filed all income tax returns that are
required to have been filed in any jurisdiction, and have paid all taxes shown
to be due and payable on such returns and all other taxes and assessments
payable by them, to the extent such taxes and assessments have become due and
payable and before they have become delinquent, except for any taxes and
assessments (i) the amount of which is not individually or in the aggregate
Material or (ii) the amount, applicability or validity of which is currently
being contested in good faith by appropriate proceedings and with respect to
which the Company or a Subsidiary, as the case may be, has established adequate
reserves in accordance with GAAP. The Federal income tax liabilities of the
Company and its Subsidiaries have been determined by the Internal Revenue
Service and paid for all fiscal years up to and including the fiscal year ended
December 31, 1997.

 

5.10. Title to Property; Leases.

 

The Company and its Subsidiaries have good and sufficient title to their
respective Material properties, including all such properties reflected in the
most recent audited balance sheet referred to in Section 5.5 or purported to
have been acquired by the Company or any Subsidiary after said date (except as
sold or otherwise disposed of in the ordinary course of business), in each case
free and clear of Liens prohibited by this Agreement, except for those defects
in title and Liens that, individually or in the aggregate, would not have a
Material Adverse Effect. All Material leases are valid and subsisting and are in
full force and effect in all material respects.

 

6

--------------------------------------------------------------------------------

5.11. Licenses, Permits, etc.

 

Except as disclosed in Schedule 5.11,

 

(a) the Company and its Subsidiaries own or possess all licenses, permits,
franchises, authorizations, patents, copyrights, service marks, trademarks and
trade names, or rights thereto necessary for the conduct of their business
without known conflict with the rights of others;

 

(b) to the best knowledge of the Company, no product of the Company or any
Subsidiary infringes any license, permit, franchise, authorization, patent,
copyright, service mark, trademark, trade name or other right owned by any other
Person; and

 

(c) to the best knowledge of the Company, there is no violation by any Person of
any right of the Company or any Subsidiary with respect to any patent,
copyright, service mark, trademark, trade name or other right owned or used by
the Company or any Subsidiary;

 

except, in each instance, for the lack of ownership or possession, conflicts or
violations that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect.

 

5.12. Compliance with ERISA.

 

(a) The Company and each ERISA Affiliate have operated and administered each
Plan in compliance with all applicable laws except for such instances of
noncompliance as have not resulted in and could not reasonably be expected to
result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate
has incurred any liability pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit plans (as defined
in Section 3 of ERISA), and no event, transaction or condition has occurred or
exists that would reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the imposition of any
Lien on any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other than
such liabilities or Liens as would not be individually or in the aggregate
Material.

 

(b) The present value of the aggregate benefit liabilities under each of the
Plans (other than Multiemployer Plans), determined as of the end of such Plan’s
most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan’s most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities by more than $15,000,000 in the aggregate
for all Plans. The term “benefit liabilities” has the meaning specified in
section 4001 of ERISA and the terms “current value” and “present value” have the
meaning specified in section 3 of ERISA.

 

(c) The Company and its ERISA Affiliates have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that
individually or in the aggregate are Material.

 

(d) The expected postretirement benefit obligation (determined as of the last
day of the Company’s most recently ended fiscal year in accordance with
Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company and its Subsidiaries is not Material.

 

(e) The execution and delivery of this Agreement and the issuance and sale of
the Notes hereunder will not involve any transaction that is subject to the
prohibitions of section 406 of ERISA or in connection with which a tax could be
imposed pursuant to section 4975(c)(1)(A)-(D) of the Code. The representation by
the Company in the first sentence of this Section 5.12(e) is made in reliance
upon and subject to the accuracy of your representation in Section 6.2 as to the
sources of the funds used to pay the purchase price of the Notes to be purchased
by you.

 

7

--------------------------------------------------------------------------------

5.13. Private Offering by the Company.

 

Neither the Company nor anyone acting on its behalf has offered the Notes, the
Subsidiary Guaranty or any similar securities for sale to, or solicited any
offer to buy any of the same from, or otherwise approached or negotiated in
respect thereof with, any person other than you, the Other Purchasers and not
more than 13 other Institutional Investors, each of which has been offered the
Notes and the Subsidiary Guaranty at a private sale for investment. Neither the
Company nor anyone acting on its behalf has taken, or will take, any action that
would subject the issuance or sale of the Notes or the Subsidiary Guaranty to
the registration requirements of Section 5 of the Securities Act.

 

5.14. Use of Proceeds; Margin Regulations.

 

The Company will apply the proceeds of the sale of the Notes to repay Debt of
the Company as set forth in Schedule 5.14 and for general corporate purposes. No
part of the proceeds from the sale of the Notes will be used, directly or
indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation U of the Board of Governors of the Federal Reserve System
(12 CFR 221), or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve the Company in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of said Board (12 CFR 220). Margin stock does not
constitute more than 1% of the value of the consolidated assets of the Company
and its Subsidiaries and the Company does not have any present intention that
margin stock will constitute more than 1% of the value of such assets. As used
in this Section, the terms “margin stock” and “purpose of buying or carrying”
shall have the meanings assigned to them in said Regulation U.

 

5.15. Existing Debt; Future Liens.

 

(a) Except as described therein, Schedule 5.15 sets forth a complete and correct
list of all outstanding Debt of the Company and its Subsidiaries as of March 31,
2004, since which date there has been no Material change in the amounts,
interest rates, sinking funds, installment payments or maturities of the Debt of
the Company or its Subsidiaries. Neither the Company nor any Subsidiary is in
default and no waiver of default is currently in effect, in the payment of any
principal or interest on any Debt of the Company or any Subsidiary and no event
or condition exists with respect to any Debt of the Company or any Subsidiary
that would permit (or that with notice or the lapse of time, or both, would
permit) one or more Persons to cause such Debt to become due and payable before
its stated maturity or before its regularly scheduled dates of payment.

 

(b) Except as disclosed in Schedule 5.15, neither the Company nor any Subsidiary
has agreed or consented to cause or permit in the future (upon the happening of
a contingency or otherwise) any of its property, whether now owned or hereafter
acquired, to be subject to a Lien not permitted by Section 10.4.

 

5.16. Foreign Assets Control Regulations, Anti-Terrorism Order, etc.

 

Neither the sale of the Notes by the Company hereunder nor its use of the
proceeds thereof will violate (a) the Trading with the Enemy Act, as amended,
(b) any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto, (c) the Anti-Terrorism Order or
(d) the United States Foreign Corrupt Practices Act of 1997, as amended. Without
limiting the foregoing, neither the Company nor any Subsidiary (i) is a blocked
person described in Section 1 of the Anti-Terrorism Order or (ii) engages in any
dealings or transactions, or is otherwise associated, with any such person.

 

8

--------------------------------------------------------------------------------

5.17. Status under Certain Statutes.

 

Neither the Company nor any Subsidiary is subject to regulation under the
Investment Company Act of 1940, as amended, the Public Utility Holding Company
Act of 1935, as amended, the ICC Termination Act, as amended, or the Federal
Power Act, as amended.

 

5.18. Environmental Matters.

 

Neither the Company nor any Subsidiary has knowledge of any claim or has
received any notice of any claim, and to the knowledge of the Company no
proceeding has been instituted raising any claim against the Company or any
Subsidiary or any of their respective real properties now or formerly owned,
leased or operated by any of them or other assets, alleging any damage to the
environment or violation of any Environmental Laws, except, in each case, such
as would not, individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.

 

(a) Neither the Company nor any Subsidiary has knowledge of any facts which
would give rise to any claim, public or private, of violation of Environmental
Laws or damage to the environment emanating from, occurring on or in any way
related to real properties now or formerly owned, leased or operated by any of
them or to other assets or their use, except, in each case, such as would not,
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect;

 

(b) Neither the Company nor any Subsidiary has stored any Hazardous Materials on
real properties now or formerly owned, leased or operated by any of them and has
not disposed of any Hazardous Materials in a manner contrary to any
Environmental Laws in each case in any manner that would, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect; and

 

(c) All buildings on all real properties now owned, leased or operated by the
Company or any Subsidiary are in compliance with applicable Environmental Laws,
except where failure to comply would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.

 

5.19. Solvency of Subsidiary Guarantors.

 

After giving effect to the transactions contemplated herein, (i) the present
fair salable value of the assets of each Subsidiary Guarantor is in excess of
the amount that will be required to pay its probable liability on its existing
debts as said debts become absolute and matured, (ii) each Subsidiary Guarantor
has received reasonably equivalent value for executing and delivering the
Subsidiary Guaranty, (iii) the property remaining in the hands of each
Subsidiary Guarantor is not an unreasonably small capital, and (iv) each
Subsidiary Guarantor is able to pay its debts as they mature.

 

6. REPRESENTATIONS OF THE PURCHASERS.

 

6.1. Purchase for Investment.

 

You represent that you are purchasing the Notes for your own account or for one
or more separate accounts maintained by you or for the account of one or more
pension or trust funds and not with a view to the distribution thereof, provided
that the disposition of your or their property shall at all times be within your
or their control. You understand that the Notes have not been registered under
the Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration is
available, except under circumstances where neither such registration nor such
an exemption is required by law, and that the Company is not required to
register the Notes. You represent that you are an “accredited investor” within
the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 of Regulation D
under the Securities Act.

 

9

--------------------------------------------------------------------------------

6.2. Source of Funds.

 

You represent that at least one of the following statements is an accurate
representation as to each source of funds (a “Source”) to be used by you to pay
the purchase price of the Notes to be purchased by you hereunder:

 

(a) the Source is an “insurance company general account” (as the term is defined
in the United States Department of Labor’s Prohibited Transaction Exemption
(“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by
the annual statement for life insurance companies approved by the National
Association of Insurance Commissioners (the “NAIC Annual Statement”)) for the
general account contract(s) held by or on behalf of any employee benefit plan
together with the amount of the reserves and liabilities for the general account
contract(s) held by or on behalf of any other employee benefit plans maintained
by the same employer (or affiliate thereof as defined in PTE 95-60) or by the
same employee organization in the general account do not exceed 10% of the total
reserves and liabilities of the general account (exclusive of separate account
liabilities) plus surplus as set forth in the NAIC Annual Statement filed with
such Purchaser’s state of domicile; or

 

(b) the Source is a separate account that is maintained solely in connection
with such Purchaser’s fixed contractual obligations under which the amounts
payable, or credited, to any employee benefit plan (or its related trust) that
has any interest in such separate account (or to any participant or beneficiary
of such plan (including any annuitant)) are not affected in any manner by the
investment performance of the separate account; or

 

(c) the Source is either (i) an insurance company pooled separate account,
within the meaning of PTE 90-1 (issued January 29, 1990), or (ii) a bank
collective investment fund, within the meaning of PTE 91-38 (issued July 12,
1991) and, except as you have disclosed to the Company in writing pursuant to
this paragraph (c), no employee benefit plan or group of plans maintained by the
same employer or employee organization beneficially owns more than 10% of all
assets allocated to such pooled separate account or collective investment fund;
or

 

(d) the Source constitutes assets of an “investment fund” (within the meaning of
Part V of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified professional
asset manager” or “QPAM” (within the meaning of Part V of the QPAM Exemption),
no employee benefit plan’s assets that are included in such investment fund,
when combined with the assets of all other employee benefit plans established or
maintained by the same employer or by an affiliate (within the meaning of
Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client assets
managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption
are satisfied, neither the QPAM nor a person controlling or controlled by the
QPAM (applying the definition of “control” in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity of
such QPAM and (ii) the names of all employee benefit plans whose assets are
included in such investment fund have been disclosed to the Company in writing
pursuant to this clause (d); or

 

(e) the Source constitutes assets of a “plan(s)” (within the meaning of Section
IV of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager”
or “INHAM” (within the meaning of Part IV of the INHAM exemption), the
conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied,
neither the INHAM nor a person controlling or controlled by the INHAM (applying
the definition of “control” in Section IV(h) of the INHAM Exemption) owns a 5%
or more interest in the Company and (i) the identity of such INHAM and (ii) the
name(s) of the employee benefit plan(s) whose assets constitute the Source have
been disclosed to the Company in writing pursuant to this clause (e); or

 

(f) the Source is a governmental plan; or

 

10

--------------------------------------------------------------------------------

(g) the Source is one or more employee benefit plans, or a separate account or
trust fund comprised of one or more employee benefit plans, each of which has
been identified to the Company in writing pursuant to this paragraph (g); or

 

(h) the Source does not include assets of any employee benefit plan, other than
a plan exempt from the coverage of ERISA.

 

As used in this Section 6.2, the terms “employee benefit plan”, “governmental
plan” and “separate account” shall have the respective meanings assigned to such
terms in Section 3 of ERISA.

 

7. INFORMATION AS TO COMPANY.

 

7.1. Financial and Business Information.

 

The Company will deliver to each holder of Notes that is an Institutional
Investor:

 

(a) Quarterly Statements — within 60 days (or such other shorter period within
which Quarterly Reports on Form 10-Q are required to be timely filed with the
Securities and Exchange Commission, including any extension permitted by Rule
12b-25 of the Exchange Act) after the end of each quarterly fiscal period in
each fiscal year of the Company (other than the last quarterly fiscal period of
each such fiscal year), duplicate copies of,

 

(i) a consolidated balance sheet of the Company and its Subsidiaries as at the
end of such quarter,

 

(ii) consolidated statements of income and changes in stockholders’ equity of
the Company and its Subsidiaries for such quarter and (in the case of the second
and third quarters) for the portion of the fiscal year ending with such quarter,
and

 

(iii) consolidated statements of cash flows of the Company and its Subsidiaries
for such quarter or (in the case of the second and third quarters) for the
portion of the fiscal year ending with such quarter,

 

setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments, provided that delivery within the time period specified above of
copies of the Company’s Quarterly Report on Form 10-Q prepared in compliance
with the requirements therefor and filed with the Securities and Exchange
Commission shall be deemed to satisfy the requirements of this Section 7.1(a);

 

(b) Annual Statements — within 105 days (or such other shorter period within
which Annual Reports on Form 10-K are required to be timely filed with the
Securities and Exchange Commission, including any extension permitted by Rule
12b-25 of the Exchange Act) after the end of each fiscal year of the Company,
duplicate copies of,

 

(i) a consolidated balance sheet of the Company and its Subsidiaries, as at the
end of such year, and

 

(ii) consolidated statements of income, changes in stockholders’ equity and cash
flows of the Company and its Subsidiaries for such year,

 

11

--------------------------------------------------------------------------------

setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by an opinion thereon of independent certified public accountants of
recognized national standing, which opinion shall state that such financial
statements present fairly, in all material respects, the financial position of
the companies being reported upon and their results of operations and cash flows
and have been prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the circumstances, provided that
the delivery within the time period specified above of the Company’s Annual
Report on Form 10-K for such fiscal year (together with the Company’s annual
report to stockholders, if any, prepared pursuant to Rule 14a-3 under the
Exchange Act) prepared in accordance with the requirements therefor and filed
with the Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.1(b);

 

(c) SEC and Other Reports — promptly upon their becoming available, one copy of
(i) each financial statement, report, notice or proxy statement sent by the
Company or any Subsidiary to public securities holders generally, and (ii) each
regular or periodic report, each registration statement (other than a
Registration Statement on Form S-8) that shall have become effective (without
exhibits except as expressly requested by such holder), and each prospectus and
all amendments thereto filed by the Company or any Subsidiary with the
Securities and Exchange Commission;

 

(d) Notice of Default or Event of Default — promptly, and in any event within
five Business Days after a Responsible Officer becoming aware of the existence
of any Default or Event of Default, a written notice specifying the nature and
period of existence thereof and what action the Company is taking or proposes to
take with respect thereto;

 

(e) ERISA Matters — promptly, and in any event within five days after a
Responsible Officer becoming aware of any of the following, a written notice
setting forth the nature thereof and the action, if any, that the Company or an
ERISA Affiliate proposes to take with respect thereto:

 

(i) with respect to any Plan, any reportable event, as defined in section
4043(c) of ERISA and the regulations thereunder, for which notice thereof has
not been waived pursuant to such regulations as in effect on the date hereof; or

 

(ii) the taking by the PBGC of steps to institute, or the threatening by the
PBGC of the institution of, proceedings under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by the PBGC with respect to such
Multiemployer Plan; or

 

(iii) any event, transaction or condition that could result in the incurrence of
any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to employee
benefit plans, or in the imposition of any Lien on any of the rights, properties
or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of
ERISA or such penalty or excise tax provisions, if such liability or Lien, taken
together with any other such liabilities or Liens then existing, would
reasonably be expected to have a Material Adverse Effect; and

 

(f) Requested Information — with reasonable promptness, such other data and
information relating to the business, operations, affairs, financial condition,
assets or properties of the Company or any Subsidiary or relating to the ability
of the Company to perform its obligations hereunder and under the Notes as from
time to time may be reasonably requested by any such holder of Notes.

 

12

--------------------------------------------------------------------------------

7.2. Officer’s Certificate.

 

Each set of financial statements delivered to a holder of Notes pursuant to
Section 7.1(a) or Section 7.1(b) shall be accompanied by a certificate of a
Senior Financial Officer setting forth:

 

(a) Covenant Compliance — the information (including detailed calculations)
required in order to establish whether the Company was in compliance with the
requirements of Section 10.1 through Section 10.7, inclusive, during the
quarterly or annual period covered by the statements then being furnished
(including with respect to each such Section, where applicable, the calculations
of the maximum or minimum amount, ratio or percentage, as the case may be,
permissible under the terms of such Sections, and the calculation of the amount,
ratio or percentage then in existence); and

 

(b) Event of Default — a statement that such officer has reviewed the relevant
terms hereof and has made, or caused to be made, under his or her supervision, a
review of the transactions and conditions of the Company and its Subsidiaries
from the beginning of the quarterly or annual period covered by the statements
then being furnished to the date of the certificate and that such review shall
not have disclosed the existence during such period of any condition or event
that constitutes a Default or an Event of Default or, if any such condition or
event existed or exists (including any such event or condition resulting from
the failure of the Company or any Subsidiary to comply with any Environmental
Law), specifying the nature and period of existence thereof and what action the
Company shall have taken or proposes to take with respect thereto.

 

7.3. Inspection.

 

The Company shall permit the representatives of each holder of Notes that is an
Institutional Investor:

 

(a) No Default — if no Default or Event of Default then exists, at the expense
of such holder and upon reasonable prior notice to the Company, to visit the
principal executive office of the Company, to discuss the affairs, finances and
accounts of the Company and its Subsidiaries with the Company’s officers, and,
with the consent of the Company (which consent will not be unreasonably
withheld) to visit the other offices and properties of the Company and each
Subsidiary, all at such reasonable times and as often as may be reasonably
requested in writing; and

 

(b) Default — if a Default or Event of Default then exists, at the expense of
the Company, to visit and inspect any of the offices or properties of the
Company or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances, and accounts with their respective
officers and independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such times and as often as may be
requested.

 

8. PREPAYMENT OF THE NOTES.

 

8.1. No Scheduled Prepayments.

 

No regularly scheduled prepayments are due on the Notes prior to their stated
maturity.

 

8.2. Optional Prepayments with Make-Whole Amount.

 

The Company may, at its option, upon notice as provided below, prepay at any
time all, or from time to time any part of, the Notes of any series in an amount
not less than $2,000,000 in the aggregate in the case of a partial prepayment,
at 100% of the principal amount so prepaid, together with interest accrued to
the date of prepayment, plus the Make-Whole Amount determined for the prepayment
date with respect to such principal

 

13

--------------------------------------------------------------------------------

amount. The Company will give each holder of Notes of the series to be prepaid
written notice of each optional prepayment under this Section 8.2 not less than
30 days and not more than 60 days prior to the date fixed for such prepayment.
Each such notice shall specify such date, the aggregate principal amount of the
Notes of such series to be prepaid on such date, the principal amount of each
Note of such series held by such holder to be prepaid (determined in accordance
with Section 8.4), and the interest to be paid on the prepayment date with
respect to such principal amount being prepaid, and shall be accompanied by a
certificate of a Senior Financial Officer as to the estimated Make-Whole Amount
due in connection with such prepayment (calculated as if the date of such notice
were the date of the prepayment), setting forth the details of such computation.
Two Business Days prior to such prepayment, the Company shall deliver to each
holder of Notes of the series to be prepaid a certificate of a Senior Financial
Officer specifying the calculation of such Make-Whole Amount as of the specified
prepayment date.

 

8.3. Mandatory Offer to Prepay Upon Change of Control.

 

(a) Notice of Change of Control or Control Event — The Company will, within 15
Business Days after any Responsible Officer has knowledge of the occurrence of
any Change of Control or Control Event, give notice of such Change of Control or
Control Event to each holder of Notes unless notice in respect of such Change of
Control (or the Change of Control contemplated by such Control Event) shall have
been given pursuant to subparagraph (b) of this Section 8.3. If a Change of
Control has occurred, such notice shall contain and constitute an offer to
prepay Notes as described in paragraph (c) of this Section 8.3 and shall be
accompanied by the certificate described in paragraph (g) of this Section 8.3.

 

(b) Condition to Company Action — The Company will not take any action that
consummates or finalizes a Change of Control unless (i) at least 15 Business
Days prior to such action it shall have given to each holder of Notes written
notice containing and constituting an offer to prepay Notes accompanied by the
certificate described in paragraph (g) of this Section 8.3, and (ii) subject to
the provisions of paragraph (d) below, contemporaneously with such action, it
prepays all Notes required to be prepaid in accordance with this Section 8.3.

 

(c) Offer to Prepay Notes — The offer to prepay Notes contemplated by paragraphs
(a) and (b) of this Section 8.3 shall be an offer to prepay, in accordance with
and subject to this Section 8.3, all, but not less than all, of the Notes held
by each holder (in this case only, “holder” in respect of any Note registered in
the name of a nominee for a disclosed beneficial owner shall mean such
beneficial owner) on a date specified in such offer (the “Proposed Prepayment
Date”). If such Proposed Prepayment Date is in connection with an offer
contemplated by subparagraph (a) of this Section 8.3, such date shall be not
less than 30 days and not more than 60 days after the date of such offer.

 

(d) Acceptance; Rejection — A holder of Notes may accept the offer to prepay
made pursuant to this Section 8.3 by causing a notice of such acceptance to be
delivered to the Company within 10 Business Days of receipt of the offer to
prepay. A failure by a holder of Notes to respond to an offer to prepay made
pursuant to this Section 8.3, or to accept an offer as to all of the Notes held
by the holder, within such time period shall be deemed to constitute rejection
of such offer by such holder.

 

(e) Prepayment — Prepayment of the Notes to be prepaid pursuant to this Section
8.3 shall be at 100% of the principal amount of such Notes, together with
interest on such Notes accrued to the date of prepayment and shall not require
the payment of any Make-Whole Amount. The prepayment shall be made on the
Proposed Prepayment Date except as provided in paragraph (f) of this Section
8.3.

 

(f) Deferral Pending Change of Control — The obligation of the Company to prepay
Notes pursuant to the offers required by paragraphs (a) and (b) and accepted in
accordance with paragraph (d) of this Section 8.3 is subject to the occurrence
of the Change of Control in respect of which such offers and acceptances shall
have been made. In the event that such Change of Control does not occur on or
prior to the Proposed Prepayment Date in respect thereof, the prepayment shall
be deferred until and shall be made on the date on which such Change of Control
occurs. The Company shall keep each holder of Notes reasonably and timely
informed of (i) any such deferral of the date of prepayment, (ii) the date on
which

 

14

--------------------------------------------------------------------------------

such Change of Control and the prepayment are expected to occur, and (iii) any
determination by the Company that efforts to effect such Change of Control have
ceased or been abandoned (in which case the offers and acceptances made pursuant
to this Section 8.3 in respect of such Change of Control shall be deemed
rescinded). Notwithstanding the foregoing, in the event that the prepayment has
not been made within 90 days after such Proposed Prepayment Date by virtue of
the deferral provided for in this Section 8.3(f), the Company shall make a new
offer to prepay in accordance with paragraph (c) of this Section 8.3.

 

(g) Officer’s Certificate — Each offer to prepay the Notes pursuant to this
Section 8.3 shall be accompanied by a certificate, executed by a Senior
Financial Officer of the Company and dated the date of such offer, specifying:
(i) the Proposed Prepayment Date, (ii) that such offer is made pursuant to this
Section 8.3, (iii) the principal amount of each Note offered to be prepaid, (iv)
the interest that would be due on each Note offered to be prepaid, accrued to
the Proposed Prepayment Date, (v) that the conditions of this Section 8.3 have
been fulfilled and (vi) in reasonable detail, the nature and date or proposed
date of the Change of Control.

 

8.4. Allocation of Partial Prepayments.

 

In the case of each partial prepayment of the Notes of a series, the principal
amount of the Notes of such series to be prepaid shall be allocated among all of
the Notes of such series at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof not theretofore
called for prepayment.

 

8.5. Maturity; Surrender, etc.

 

In the case of each prepayment of Notes pursuant to this Section 8, the
principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and canceled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.

 

8.6. Purchase of Notes.

 

The Company will not and will not permit any Affiliate to purchase, redeem,
prepay or otherwise acquire, directly or indirectly, any of the outstanding
Notes of any series except (a) upon the payment or prepayment of the Notes of a
series in accordance with the terms of this Agreement and the Notes or (b)
pursuant to an offer to purchase made by the Company or an Affiliate pro rata to
the holders of all Notes of a series at the time outstanding upon the same terms
and conditions. Any such offer shall provide each holder with sufficient
information to enable it to make an informed decision with respect to such
offer, and shall remain open for at least 20 Business Days. If the holders of
more than 25% of the principal amount of the Notes of a series then outstanding
accept such offer, the Company shall promptly notify the remaining holders of
such fact and the expiration date for the acceptance by holders of Notes of such
series of such offer shall be extended by the number of days necessary to give
each such remaining holder at least 5 Business Days from its receipt of such
notice to accept such offer. The Company will promptly cancel all Notes acquired
by it or any Affiliate pursuant to any payment, prepayment or purchase of Notes
pursuant to any provision of this Agreement and no Notes may be issued in
substitution or exchange for any such Notes.

 

8.7. Make-Whole Amount.

 

The term “Make-Whole Amount” means, with respect to any Note, an amount equal to
the excess, if any, of the Discounted Value of the Remaining Scheduled Payments
with respect to the Called Principal of such Note over the amount of such Called
Principal, provided that the Make-Whole Amount may in no event be less than
zero. For the purposes of determining the Make-Whole Amount, the following terms
have the following meanings:

 

“Called Principal” means, with respect to any Note, the principal of such Note
that is to be prepaid pursuant to Section 8.2 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context requires.

 

15

--------------------------------------------------------------------------------

“Discounted Value” means, with respect to the Called Principal of any Note, the
amount obtained by discounting all Remaining Scheduled Payments with respect to
such Called Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the
Reinvestment Yield with respect to such Called Principal.

 

“Reinvestment Yield” means, with respect to the Called Principal of any Note,
.50% over the yield to maturity implied by (i) the yields reported, as of 10:00
A.M. (New York City time) on the second Business Day preceding the Settlement
Date with respect to such Called Principal, on the display designated as the “PX
Screens” on the Bloomberg Financial Market Service (or such other display as may
replace the PX Screens on Bloomberg Financial Market Service) for actively
traded U.S. Treasury securities having a maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date, or (ii) if such yields
are not reported as of such time or the yields reported as of such time are not
ascertainable, the Treasury Constant Maturity Series Yields reported, for the
latest day for which such yields have been so reported as of the second Business
Day preceding the Settlement Date with respect to such Called Principal, in
Federal Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a constant
maturity equal to the Remaining Average Life of such Called Principal as of such
Settlement Date. Such implied yield will be determined, if necessary, by (a)
converting U.S. Treasury bill quotations to bond-equivalent yields in accordance
with accepted financial practice and (b) interpolating linearly between (1) the
actively traded U.S. Treasury security with the maturity closest to and greater
than the Remaining Average Life and (2) the actively traded U.S. Treasury
security with the maturity closest to and less than the Remaining Average Life.

 

“Remaining Average Life” means, with respect to any Called Principal, the number
of years (calculated to the nearest one-twelfth year) obtained by dividing (i)
such Called Principal into (ii) the sum of the products obtained by multiplying
(a) the principal component of each Remaining Scheduled Payment with respect to
such Called Principal by (b) the number of years (calculated to the nearest
one-twelfth year) that will elapse between the Settlement Date with respect to
such Called Principal and the scheduled due date of such Remaining Scheduled
Payment.

 

“Remaining Scheduled Payments” means, with respect to the Called Principal of
any Note, all payments of such Called Principal and interest thereon that would
be due after the Settlement Date with respect to such Called Principal if no
payment of such Called Principal were made prior to its scheduled due date,
provided that if such Settlement Date is not a date on which interest payments
are due to be made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of interest
accrued to such Settlement Date and required to be paid on such Settlement Date
pursuant to Section 8.2 or 12.1.

 

“Settlement Date” means, with respect to the Called Principal of any Note, the
date on which such Called Principal is to be prepaid pursuant to Section 8.2 or
has become or is declared to be immediately due and payable pursuant to Section
12.1, as the context requires.

 

16

--------------------------------------------------------------------------------

9. AFFIRMATIVE COVENANTS.

 

The Company covenants that so long as any of the Notes are outstanding:

 

9.1. Compliance with Law.

 

The Company will and will cause each of its Subsidiaries to comply with all
laws, ordinances or governmental rules or regulations to which each of them is
subject, including, without limitation, Environmental Laws, and will obtain and
maintain in effect all licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of their respective
properties or to the conduct of their respective businesses, in each case to the
extent necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect
such licenses, certificates, permits, franchises and other governmental
authorizations would not reasonably be expected, individually or in the
aggregate, to have a materially adverse effect on the business, operations,
affairs, financial condition, properties or assets of the Company and its
Subsidiaries taken as a whole.

 

9.2. Insurance.

 

The Company will, and will cause each Subsidiary to, maintain, with financially
sound and reputable insurers, insurance with respect to their respective
properties and businesses against such casualties and contingencies, of such
types, on such terms and in such amounts (including deductibles, co-insurance
and self-insurance, if adequate reserves are maintained with respect thereto) as
is customary in the case of entities of established reputations engaged in the
same or a similar business and similarly situated.

 

9.3. Maintenance of Properties.

 

The Company will and will cause each of its Subsidiaries to maintain and keep,
or cause to be maintained and kept, their respective properties in good repair,
working order and condition (other than ordinary wear and tear), so that the
business carried on in connection therewith may be properly conducted at all
times, provided that this Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any of its
properties if such discontinuance is desirable in the conduct of its business
and the Company has concluded that such discontinuance would not, individually
or in the aggregate, have a materially adverse effect on the business,
operations, affairs, financial condition, properties or assets of the Company
and its Subsidiaries taken as a whole.

 

9.4. Payment of Taxes.

 

The Company will and will cause each of its Subsidiaries to file all income tax
or similar tax returns required to be filed in any jurisdiction and to pay and
discharge all taxes shown to be due and payable on such returns and all other
taxes, assessments, governmental charges, or levies payable by any of them, to
the extent such taxes and assessments have become due and payable and before
they have become delinquent, provided that neither the Company nor any
Subsidiary need pay any such tax or assessment if (i) the amount, applicability
or validity thereof is contested by the Company or such Subsidiary on a timely
basis in good faith and in appropriate proceedings, and the Company or a
Subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of the Company or such Subsidiary or (ii) the nonpayment of all such
taxes and assessments in the aggregate would not reasonably be expected to have
a materially adverse effect on the business, operations, affairs, financial
condition, properties or assets of the Company and its Subsidiaries taken as a
whole.

 

9.5. Corporate Existence, etc.

 

Subject to Sections 10.5 and 10.6, the Company will at all times preserve and
keep in full force and effect its corporate existence. Subject to Sections 10.5
and 10.6, the Company will at all times preserve and keep in full force and
effect the corporate existence of each of its Subsidiaries (unless merged into
the Company or a Subsidiary) and all rights and franchises of the Company and
its Subsidiaries unless, in the good faith judgment of the Company, the
termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise would not, individually or in the
aggregate, have a materially adverse effect on the business, operations,
affairs, financial condition, properties or assets of the Company and its
Subsidiaries taken as a whole.

 

17

--------------------------------------------------------------------------------

9.6. Pari Passu Ranking.

 

The Company’s obligations under this Agreement and under the Notes will, upon
issuance of the Notes, and will continue to, at all times until payment in full
of the Notes, rank at least pari passu, without preference or priority, with all
of the Company’s other outstanding unsecured and unsubordinated obligations,
except for those obligations that are mandatorily afforded priority by operation
of law (and not by contract).

 

10. NEGATIVE COVENANTS.

 

The Company covenants that so long as any of the Notes are outstanding:

 

10.1. Consolidated Net Debt.

 

The Company will not permit the ratio of Consolidated Net Debt to Consolidated
EBITDA (for the Company’s then most recently completed four fiscal quarters) to
be greater than 3.0 to 1.0 as of the last day of any fiscal quarter. If, during
the period for which Consolidated EBITDA is being calculated, the Company or a
Subsidiary has (i) acquired one or more Persons (or the assets thereof) or (ii)
disposed of one or more Subsidiaries (or substantially all of the assets
thereof), Consolidated EBITDA shall be calculated on a pro forma basis
(including adjustments to reflect consolidation savings) as if all of such
acquisitions and all such dispositions had occurred on the first day of such
period.

 

10.2. Adjusted Consolidated Net Worth.

 

The Company will not permit Adjusted Consolidated Net Worth as of the last day
of any fiscal quarter to be less than $109,000,000 plus the cumulative sum of
25% of Consolidated Net Income (but only if a positive number) for each fiscal
quarter ending after December 31, 2003.

 

10.3. Priority Debt.

 

The Company will not permit Priority Debt to exceed 15% of Consolidated Total
Capitalization as of the last day of any fiscal quarter of the Company.

 

10.4. Liens.

 

The Company will not, and will not permit any Subsidiary to, permit to exist,
create, assume or incur, directly or indirectly, any Lien on its properties or
assets, whether now owned or hereafter acquired, unless the Notes are equally
and ratably secured by a Lien on the same property and assets pursuant to an
agreement reasonably acceptable to the Required Holders, except:

 

(a) Liens for taxes, assessments or governmental charges not then due and
delinquent or the nonpayment of which is permitted by Section 9.4;

 

(b) Liens incidental to the conduct of business or the ownership of properties
and assets (including landlords’, lessors’, carriers’, operators’,
warehousemen’s, mechanics’, materialmen’s and other similar Liens) and Liens to
secure the performance of bids, tenders, leases or trade contracts, or to secure
statutory obligations (including obligations under workers compensation,
unemployment insurance and other social security legislation), surety or appeal
bonds or other Liens of like general nature incurred in the ordinary course of
business and not in connection with the borrowing of money;

 

(c) any attachment or judgment Lien, unless the judgment it secures has not,
within 60 days after the entry thereof, been discharged or execution thereof
stayed pending appeal, or has not been discharged within 60 days after the
expiration of any such stay;

 

(d) Liens securing Debt of a Subsidiary owed to the Company or to a Wholly Owned
Subsidiary;

 

18

--------------------------------------------------------------------------------

(e) Liens existing on property or assets of the Company or any Subsidiary as of
the date of this Agreement that are described in Schedule 10.4;

 

(f) encumbrances in the nature of leases, subleases, zoning restrictions,
easements, rights of way, minor survey exceptions and other rights and
restrictions of record on the use of real property and defects in title arising
or incurred in the ordinary course of business, which, individually and in the
aggregate, do not materially detract from the value of such property or assets
subject thereto or materially impair the use of the property or assets subject
thereto by the Company or such Subsidiary;

 

(g) Liens (i) existing on property at the time of its acquisition by the Company
or a Subsidiary and not created in contemplation thereof, whether or not the
Debt secured by such Lien is assumed by the Company or a Subsidiary; or (ii) on
property created contemporaneously with its acquisition or within 365 days of
the acquisition or completion of construction or development thereof to secure
or provide for all or a portion of the purchase price or cost of the
acquisition, construction or development of such property after the date of the
First Closing; or (iii) existing on property of a Person at the time such Person
is merged or consolidated with, or becomes a Subsidiary of, or substantially all
of its assets are acquired by, the Company or a Subsidiary and not created in
contemplation thereof; provided that in the case of clauses (i), (ii) and (iii)
such Liens do not extend to additional property of the Company or any Subsidiary
(other than property that is an improvement to or is acquired for specific use
in connection with the subject property) and that the aggregate principal amount
of Debt secured by each such Lien does not exceed the lesser of (y) the cost of
acquisition or construction or (z) fair market value of the property subject
thereto (as determined in good faith by one or more officers of the Company to
whom authority to enter into the transaction has been delegated by the board of
directors);

 

(h) Liens resulting from extensions, renewals or replacements of Liens permitted
by paragraphs (e) and (g), provided that (i) there is no increase in the
principal amount or decrease in maturity of the Debt secured thereby at the time
of such extension, renewal or replacement, (ii) any new Lien attaches only to
the same property theretofore subject to such earlier Lien and (iii) immediately
after such extension, renewal or replacement no Default or Event of Default
would exist; and

 

(i) Liens securing Debt not otherwise permitted by paragraphs (a) through (h) of
this Section 10.4, provided that Priority Debt shall not exceed 15% of
Consolidated Total Capitalization as of the last day of any fiscal quarter of
the Company.

 

10.5. Sale of Assets.

 

Except as permitted by Section 10.6, the Company will not, and will not permit
any Subsidiary to, sell, lease, transfer or otherwise dispose of, including by
way of merger (collectively a “Disposition”), any assets, including capital
stock of Subsidiaries, in one or a series of transactions, to any Person, other
than:

 

(a) Dispositions in the ordinary course of business;

 

(b) Dispositions by a Subsidiary to the Company or a Wholly Owned Subsidiary,
provided that Dispositions by a Subsidiary Guarantor shall be made only to
another Subsidiary Guarantor; or

 

(c) Dispositions not otherwise permitted by clauses (a) or (b) of this Section
10.5, provided that (i) the aggregate net book value of all assets so disposed
of in any twelve-month period pursuant to this Section 10.5(c) does not exceed
15% of Consolidated Total Assets as of the last day of then most recently ended
fiscal quarter and (ii) after giving effect to such transaction, no Default or
Event of Default shall exist.

 

Notwithstanding the foregoing, the Company may, or may permit a Subsidiary to,
make a Disposition and the assets subject to such Disposition shall not be
subject to or included in the foregoing limitation and computation contained in
clause (c) of the preceding sentence to the extent that the net proceeds from
such Disposition are within 365 days

 

19

--------------------------------------------------------------------------------

of such Disposition (A) reinvested in productive assets to be used in the
existing business of the Company or a Subsidiary, or (B) applied to the payment
or prepayment of the Notes or any other outstanding Debt of the Company or any
Subsidiary ranking pari passu with or senior to the Notes (other than Debt owing
to the Company, any Subsidiary or any Affiliate or in respect of any revolving
credit or similar credit facility providing the Company or any Subsidiary with
the right to obtain loans or other extensions of credit from time to time,
except to the extent that in connection with such payment of Debt the
availability of credit under such credit facility is permanently reduced by an
amount not less than the amount of such proceeds applied to the payment of such
Debt). For purposes of foregoing clause (B), the Company shall offer to prepay
(not less than 30 or more than 60 days following such offer) the Notes on a pro
rata basis with such other Debt at a price of 100% of the principal amount of
the Notes to be prepaid (without any Make-Whole Amount) together with interest
accrued to the date of prepayment; provided that if any holder of the Notes
declines such offer, the proceeds that would have been paid to such holder shall
be offered pro rata to the other holders of the Notes that have accepted the
offer. A failure by a holder of Notes to respond in writing not later than 10
Business Days prior to the proposed prepayment date to an offer to prepay made
pursuant to this Section 10.5 shall be deemed to constitute a rejection of such
offer by such holder.

 

10.6. Mergers, Consolidations, etc.

 

The Company will not, and will not permit any Subsidiary to, consolidate with or
merge with any other Person or convey, transfer, sell or lease all or
substantially all of its assets in a single transaction or series of
transactions to any Person except that:

 

(a) the Company may consolidate or merge with any other Person or convey,
transfer, sell or lease all or substantially all of its assets in a single
transaction or series of transactions to any Person, provided that:

 

(i) the successor formed by such consolidation or the survivor of such merger or
the Person that acquires by conveyance, transfer, sale or lease all or
substantially all of the assets of the Company as an entirety, as the case may
be, is a solvent Person organized and existing under the laws of the United
States or any state thereof (including the District of Columbia), and, if the
Company is not such Person, (A) shall have executed and delivered to each holder
of any Notes its assumption of the due and punctual performance and observance
of each covenant and condition of this Agreement and the Notes and (B) shall
have caused to be delivered to each holder of any Notes an opinion of nationally
recognized independent counsel or other independent counsel reasonably
satisfactory to the Required Holders, to the effect that all agreements or
instruments effecting such assumption are enforceable in accordance with their
terms and comply with the terms hereof; and

 

(ii) after giving effect to such transaction, no Default or Event of Default
shall exist; and

 

(b) provided that immediately before and after giving effect thereto, there
shall exist no Default or Event of Default:

 

(i) any Subsidiary Guarantor may (x) merge into the Company (provided that the
Company is the surviving corporation) or another Subsidiary Guarantor or (y)
sell, transfer or lease all or any part of its assets to the Company or another
Subsidiary Guarantor, or (z) merge or consolidate with, or sell, transfer or
lease all or substantially all of its assets to, any Person in a transaction (1)
that is permitted by Section 10.5, or (2) as a result of which, such Person
becomes a Wholly Owned Subsidiary and executes and delivers to each holder of
any Notes its assumption of the due and punctual performance and observance of
each covenant and condition of the Subsidiary Guaranty, together with the
certificate and opinion referred to in Section 10.7(b) and (c); and

 

20

--------------------------------------------------------------------------------

(ii) any Subsidiary that is not a Subsidiary Guarantor may (x) merge into the
Company (provided that the Company is the surviving corporation) or a Wholly
Owned Subsidiary or (y) sell, transfer or lease all or any part of its assets to
the Company or a Wholly Owned Subsidiary, or (z) merge or consolidate with, or
sell, transfer or lease all or substantially all of its assets to, any Person in
a transaction that is permitted by Section 10.5 or, as a result of which, such
Person becomes a Wholly Owned Subsidiary.

 

No such conveyance, transfer, sale or lease of all or substantially all of the
assets of the Company shall have the effect of releasing the Company or any
successor corporation that shall theretofore have become such in the manner
prescribed in this Section 10.6 from its liability under this Agreement or the
Notes.

 

10.7. Subsidiary Guaranty.

 

The Company will not permit any Subsidiary to become a guarantor or obligor of
Debt owed to banks under the Credit Agreement unless such Subsidiary is, or
within 10 days becomes, a party to the Subsidiary Guaranty and, as a part
thereof, delivers to each of the holders:

 

(a) a copy of an executed joinder to the Subsidiary Guaranty;

 

(b) a certificate signed by a Responsible Officer of the Company confirming the
accuracy of the representations and warranties in Sections 5.2, 5.6, 5.7 and
5.19, with respect to such Subsidiary and the Subsidiary Guaranty, as
applicable; and

 

(c) an opinion of counsel (who may be counsel for the Company) reasonably
satisfactory to the Required Holders addressed to each holder of the Notes to
the effect that the Subsidiary Guaranty of such Person has been duly authorized,
executed and delivered and that the Subsidiary Guaranty constitutes the legal,
valid and binding contract and agreement of such Person enforceable in
accordance with its terms, except as an enforcement of such terms may be limited
by bankruptcy, insolvency, fraudulent conveyance and similar laws affecting the
enforcement of creditors’ rights generally and by general equitable principles.

 

10.8. Nature of Business.

 

The Company will not, and will not permit any Subsidiary to, engage in any
business if, as a result, the general nature of the business in which the
Company and its Subsidiaries, taken as a whole, would then be engaged would be
substantially changed from the general nature of the business in which the
Company and its Subsidiaries, taken as a whole, are engaged on the date of this
Agreement as described in the Memorandum.

 

10.9. Transactions with Affiliates.

 

The Company will not, and will not permit any Subsidiary to, enter into directly
or indirectly any Material transaction or Material group of related transactions
(including the purchase, lease, sale or exchange of properties of any kind or
the rendering of any service) with any Affiliate (other than the Company or
another Subsidiary), except pursuant to the reasonable requirements of the
Company’s or such Subsidiary’s business and upon fair and reasonable terms no
less favorable to the Company or such Subsidiary than would be obtainable in a
comparable arm’s-length transaction with a Person not an Affiliate.

 

11. EVENTS OF DEFAULT.

 

An “Event of Default” shall exist if any of the following conditions or events
shall occur and be continuing:

 

(a) the Company defaults in the payment of any principal or Make-Whole Amount,
if any, on any Note when the same becomes due and payable, whether at maturity
or at a date fixed for prepayment or by declaration or otherwise; or

 

21

--------------------------------------------------------------------------------

(b) the Company defaults in the payment of any interest on any Note for more
than five Business Days after the same becomes due and payable; or

 

(c) the Company defaults in the performance of or compliance with any term
contained in Section 7.1(d) or Sections 10.1 through 10.9; or

 

(d) the Company defaults in the performance of or compliance with any term
contained herein (other than those referred to in paragraphs (a), (b) and (c) of
this Section 11) and such default is not remedied within 30 days after the
earlier of (i) a Responsible Officer obtaining actual knowledge of such default
and (ii) the Company receiving written notice of such default from any holder of
a Note (any such written notice to be identified as a “notice of default” and to
refer specifically to this paragraph (d) of Section 11); or

 

(e) any representation or warranty made in writing by or on behalf of the
Company or any Subsidiary Guarantor or by any officer of the Company or any
Subsidiary Guarantor in this Agreement, the Subsidiary Guaranty or in any
writing furnished in connection with the transactions contemplated hereby or
thereby proves to have been false or incorrect in any material respect on the
date as of which made; or

 

(f) (i) the Company or any Significant Subsidiary is in default (as principal or
as guarantor or other surety) in the payment of any principal of or premium or
make-whole amount or interest on any Debt that is outstanding in an aggregate
principal amount of at least $15,000,000 beyond any period of grace provided
with respect thereto, or (ii) the Company or any Significant Subsidiary is in
default in the performance of or compliance with any term of any evidence of any
Debt that is outstanding in an aggregate principal amount of at least
$15,000,000 or of any mortgage, indenture or other agreement relating thereto or
any other condition exists, and as a consequence of such default or condition
such Debt has become, or has been declared, due and payable before its stated
maturity or before its regularly scheduled dates of payment; or

 

(g) the Company or any Significant Subsidiary (i) is generally not paying, or
admits in writing its inability to pay, its debts as they become due, (ii)
files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or

 

(h) a court or governmental authority of competent jurisdiction enters an order
appointing, without consent by the Company or any Significant Subsidiary, a
custodian, receiver, trustee or other officer with similar powers with respect
to it or with respect to any substantial part of its property, or constituting
an order for relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any Significant Subsidiary, or any
such petition shall be filed against the Company or any Significant Subsidiary
and such petition shall not be dismissed within 60 days; or

 

(i) a final judgment or judgments for the payment of money aggregating in excess
of $15,000,000 are rendered against one or more of the Company and its
Significant Subsidiaries, which judgments are not, within 60 days after entry
thereof, bonded, discharged or stayed pending appeal, or are not discharged
within 60 days after the expiration of such stay; or

 

(j) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA
or the Code for any plan year or part thereof or a waiver of such standards or
extension of any amortization period is sought or granted under section 412 of
the Code, (ii) a notice of intent to terminate any Plan shall have been or is

 

22

--------------------------------------------------------------------------------

reasonably expected to be filed with the PBGC or the PBGC shall have instituted
proceedings under ERISA section 4042 to terminate or appoint a trustee to
administer any Plan or the PBGC shall have notified the Company or any ERISA
Affiliate that a Plan may become a subject of any such proceedings, (iii) the
aggregate “amount of unfunded benefit liabilities” (within the meaning of
section 4001(a)(18) of ERISA) under all Plans determined in accordance with
Title IV of ERISA, shall exceed $15,000,000, (iv) the Company or any ERISA
Affiliate shall have incurred or is reasonably expected to incur any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans, (v) the Company or any ERISA
Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or any
Subsidiary establishes or amends any employee welfare benefit plan that provides
post-employment welfare benefits in a manner that would increase the liability
of the Company or any Subsidiary thereunder; and any such event or events
described in clauses (i) through (vi) above, either individually or together
with any other such event or events, would reasonably be expected to have a
Material Adverse Effect; or

 

(k) the Subsidiary Guaranty ceases to be in full force and effect, except as
provided in Section 22, or is declared to be null and void in whole or in
material part by a court or other governmental or regulatory authority having
jurisdiction or the validity or enforceability thereof shall be contested by the
Company or any Subsidiary Guarantor or any of them renounces any of the same or
denies that it has any or further liability thereunder.

 

As used in Section 11(j), the terms “employee benefit plan” and “employee
welfare benefit plan” shall have the respective meanings assigned to such terms
in section 3 of ERISA.

 

12. REMEDIES ON DEFAULT, ETC.

 

12.1. Acceleration.

 

(a) If an Event of Default with respect to the Company described in paragraph
(g) or (h) of Section 11 (other than an Event of Default described in clause (i)
of paragraph (g) or described in clause (vi) of paragraph (g) by virtue of the
fact that such clause encompasses clause (i) of paragraph (g)) has occurred, all
the Notes then outstanding shall automatically become immediately due and
payable.

 

(b) If any other Event of Default has occurred and is continuing, holders of a
majority or more in principal amount of the Notes at the time outstanding may at
any time at its or their option, by notice or notices to the Company, declare
all the Notes then outstanding to be immediately due and payable.

 

(c) If any Event of Default described in paragraph (a) or (b) of Section 11 has
occurred and is continuing, any holder or holders of Notes at the time
outstanding affected by such Event of Default may at any time, at its or their
option, by notice or notices to the Company, declare all the Notes held by it or
them to be immediately due and payable.

 

Upon any Notes becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Notes will forthwith mature and the entire
unpaid principal amount of such Notes, plus (x) all accrued and unpaid interest
thereon and (y) the Make-Whole Amount determined in respect of such principal
amount (to the full extent permitted by applicable law), shall all be
immediately due and payable, in each and every case without presentment, demand,
protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.

 

23

--------------------------------------------------------------------------------

12.2. Other Remedies.

 

If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.

 

12.3. Rescission.

 

At any time after any Notes have been declared due and payable pursuant to
clause (b) or (c) of Section 12.1, the holders of a majority in principal amount
of the Notes then outstanding, by written notice to the Company, may rescind and
annul any such declaration and its consequences if (a) the Company has paid all
overdue interest on the Notes, all principal of and Make-Whole Amount, if any,
on any Notes that are due and payable and are unpaid other than by reason of
such declaration, and all interest on such overdue principal and Make-Whole
Amount, if any, and (to the extent permitted by applicable law) any overdue
interest in respect of the Notes, at the Default Rate, (b) all Events of Default
and Defaults, other than non-payment of amounts that have become due solely by
reason of such declaration, have been cured or have been waived pursuant to
Section 17, and (c) no judgment or decree has been entered for the payment of
any monies due pursuant hereto or to the Notes. No rescission and annulment
under this Section 12.3 will extend to or affect any subsequent Event of Default
or Default or impair any right consequent thereon.

 

12.4. No Waivers or Election of Remedies, Expenses, etc.

 

No course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder’s rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under Section 15, the Company
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in any
enforcement or collection under this Section 12, including reasonable attorneys’
fees, expenses and disbursements.

 

13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.

 

13.1. Registration of Notes.

 

The Company shall keep at its principal executive office a register for the
registration and registration of transfers of Notes. The name and address of
each holder of one or more Notes, each transfer thereof and the name and address
of each transferee of one or more Notes shall be registered in such register.
Prior to due presentment for registration of transfer, the Person in whose name
any Note shall be registered shall be deemed and treated as the owner and holder
thereof for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any holder of a
Note that is an Institutional Investor, promptly upon request therefor, a
complete and correct copy of the names and addresses of all registered holders
of Notes.

 

13.2. Transfer and Exchange of Notes.

 

Upon surrender of any Note at the principal executive office of the Company for
registration of transfer or exchange (and in the case of a surrender for
registration of transfer, duly endorsed or accompanied by a written instrument
of transfer duly executed by the registered holder of such Note or his attorney
duly authorized in writing and accompanied by the address for notices of each
transferee of such Note or part thereof), the Company shall execute and deliver
within five Business Days, at the Company’s expense (except as provided below),
one or more new Notes (as requested by the holder thereof) of the same series in
exchange therefor, in an aggregate

 

24

--------------------------------------------------------------------------------

principal amount equal to the unpaid principal amount of the surrendered Note.
Each such new Note shall be payable to such Person as such holder may request
and shall be substantially in the form of Exhibit 1(a), 1(b) or 1(c), as
appropriate. Each such new Note shall be dated and bear interest from the date
to which interest shall have been paid on the surrendered Note or dated the date
of the surrendered Note if no interest shall have been paid thereon. The Company
may require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $100,000, provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $100,000. Any transferee,
by its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representations and agreements set forth in
Section 6.

 

13.3. Replacement of Notes.

 

Upon receipt by the Company of evidence reasonably satisfactory to it of the
ownership of and the loss, theft, destruction or mutilation of any Note (which
evidence shall be, in the case of an Institutional Investor, notice from such
Institutional Investor of such ownership and such loss, theft, destruction or
mutilation), and

 

(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original Purchaser or any other Institutional Investor, such Person’s
own unsecured agreement of indemnity shall be deemed to be satisfactory), or

 

(b) in the case of mutilation, upon surrender and cancellation thereof,

 

the Company at its own expense shall execute and deliver within five Business
Days, in lieu thereof, a new Note of the same series, dated and bearing interest
from the date to which interest shall have been paid on such lost, stolen,
destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or
mutilated Note if no interest shall have been paid thereon.

 

14. PAYMENTS ON NOTES.

 

14.1. Place of Payment.

 

Subject to Section 14.2, payments of principal, Make-Whole Amount, if any, and
interest becoming due and payable on the Notes shall be made in Chicago,
Illinois at the principal office of LaSalle Bank National Association in such
jurisdiction. The Company may at any time, by notice to each holder of a Note,
change the place of payment of the Notes so long as such place of payment shall
be either the principal office of the Company in such jurisdiction or the
principal office of a bank or trust company in such jurisdiction.

 

14.2. Home Office Payment.

 

So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of such Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section 14.1. Prior to any sale or other disposition
of any Note held by you or your nominee you will, at your election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in exchange
for a new Note or Notes pursuant to Section 13.2. The Company will afford the
benefits of this Section 14.2 to any Institutional Investor that is the direct
or indirect transferee of any Note purchased by you under this Agreement and
that has made the same agreement relating to such Note as you have made in this
Section 14.2.

 

25

--------------------------------------------------------------------------------

15. EXPENSES, ETC.

 

15.1. Transaction Expenses.

 

Whether or not the transactions contemplated hereby or by the Subsidiary
Guaranty are consummated, the Company will pay all costs and expenses (including
reasonable attorneys’ fees of a special counsel and, if reasonably required,
local or other counsel) incurred by you and each Other Purchaser or holder of a
Note in connection with such transactions and in connection with any amendments,
waivers or consents under or in respect of this Agreement, the Notes or the
Subsidiary Guaranty (whether or not such amendment, waiver or consent becomes
effective), including: (a) the costs and expenses incurred in enforcing or
defending (or determining whether or how to enforce or defend) any rights under
this Agreement, the Notes or the Subsidiary Guaranty, or in responding to any
subpoena or other legal process or informal investigative demand issued in
connection with this Agreement, the Notes or the Subsidiary Guaranty, or by
reason of being a holder of any Note, (b) the costs and expenses, including
financial advisors’ fees, incurred in connection with the insolvency or
bankruptcy of the Company or any Subsidiary or in connection with any work-out
or restructuring of the transactions contemplated hereby, by the Notes and by
the Subsidiary Guaranty, and (c) the costs and expenses incurred in connection
with (i) a merger, consolidation or similar transaction, (ii) the delivery of a
Subsidiary Guaranty pursuant to Section 10.7 or (iii) the release of a
Subsidiary Guarantor pursuant to Section 22. The Company will pay, and will save
you and each other holder of a Note harmless from, all claims in respect of any
fees, costs or expenses if any, of brokers and finders (other than those
retained by you).

 

15.2. Survival.

 

The obligations of the Company under this Section 15 will survive the payment or
transfer of any Note, the enforcement, amendment or waiver of any provision of
this Agreement or the Notes, and the termination of this Agreement.

 

16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.

 

All representations and warranties contained herein shall survive the execution
and delivery of this Agreement and the Notes, the purchase or transfer by you of
any Note or portion thereof or interest therein and the payment of any Note, and
may be relied upon by any subsequent holder of a Note, regardless of any
investigation made at any time by or on behalf of you or any other holder of a
Note. All statements contained in any certificate or other instrument delivered
by or on behalf of the Company pursuant to this Agreement shall be deemed
representations and warranties of the Company under this Agreement. Subject to
the preceding sentence, this Agreement and the Notes embody the entire agreement
and understanding between you and the Company and supersede all prior agreements
and understandings relating to the subject matter hereof.

 

17. AMENDMENT AND WAIVER.

 

17.1. Requirements.

 

This Agreement, the Notes and the Subsidiary Guaranty may be amended, and the
observance of any term hereof or of the Notes may be waived (either
retroactively or prospectively), with (and only with) the written consent of the
Company and the Required Holders, except that (a) no amendment or waiver of any
of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term
(as it is used therein), will be effective as to you unless consented to by you
in writing, and (b) no such amendment or waiver may, without the written consent
of the holder of each Note at the time outstanding affected thereby, (i) subject
to the provisions of Section 12 relating to acceleration or rescission, change
the amount or time of any prepayment or payment of principal of, or reduce the
rate or change the time of payment or method of computation of interest or of
the Make-Whole Amount on, the Notes, (ii) change the percentage of the principal
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or
20.

 

26

--------------------------------------------------------------------------------

17.2. Solicitation of Holders of Notes.

 

(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 17 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.

 

(b) Payment. The Company will not directly or indirectly pay or cause to be paid
any remuneration, whether by way of supplemental or additional interest, fee or
otherwise, or grant any security, to any holder of Notes as consideration for or
as an inducement to the entering into by any holder of Notes or any waiver or
amendment of any of the terms and provisions hereof unless such remuneration is
concurrently paid, or security is concurrently granted, on the same terms,
ratably to each holder of Notes then outstanding even if such holder did not
consent to such waiver or amendment.

 

(c) Consent in Contemplation of Transfer. Any consent made pursuant to this
Section 17 by a holder of Notes that has transferred or has agreed to transfer
its Notes to the Company, any Subsidiary or any Affiliate of the Company and has
provided or has agreed to provide such written consent as a condition to such
transfer shall be void and of no force or effect except solely as to such
holder, and any amendments effected or waivers granted or to be effected or
granted that would not have been or would not be so effected or granted but for
such consent (and the consents of other holders of Notes that were acquired
under the same or similar conditions) shall be void and of no force or effect
except solely as to such holder.

 

17.3. Binding Effect, etc.

 

Any amendment or waiver consented to as provided in this Section 17 applies
equally to all holders of Notes and is binding upon them and upon each future
holder of any Note and upon the Company without regard to whether such Note has
been marked to indicate such amendment or waiver. No such amendment or waiver
will extend to or affect any obligation, covenant, agreement, Default or Event
of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
“this Agreement” or “the Agreement” and references thereto shall mean this Note
Purchase Agreement as it may from time to time be amended or supplemented.

 

17.4. Notes held by Company, etc.

 

Solely for the purpose of determining whether the holders of the requisite
percentage of the aggregate principal amount of Notes then outstanding approved
or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.

 

18. NOTICES.

 

All notices and communications provided for hereunder shall be in writing and
sent (a) by telecopy if the sender on the same day sends a confirming copy of
such notice by a recognized overnight delivery service (charges prepaid), or (b)
by registered or certified mail with return receipt requested (postage prepaid),
or (c) by a recognized overnight delivery service (with charges prepaid). Any
such notice must be sent:

 

(i) if to you or your nominee, to you or it at the address specified for such
communications in Schedule A, or at such other address as you or it shall have
specified to the Company in writing,

 

27

--------------------------------------------------------------------------------

(ii) if to any other holder of any Note, to such holder at such address as such
other holder shall have specified to the Company in writing, or

 

(iii) if to the Company or any Subsidiary Guarantor, to the Company at its
address set forth at the beginning hereof to the attention of the Chief
Financial Officer, or at such other address as the Company shall have specified
to the holder of each Note in writing.

 

Notices under this Section 18 will be deemed given only when actually received.

 

19. REPRODUCTION OF DOCUMENTS.

 

This Agreement and all documents relating thereto, including (a) consents,
waivers and modifications that may hereafter be executed, (b) documents received
by you at a Closing (except the Notes themselves), and (c) financial statements,
certificates and other information previously or hereafter furnished to you, may
be reproduced by you by any photographic, photostatic, microfilm, microcard,
miniature photographic or other similar process and you may destroy any original
document so reproduced. The Company agrees and stipulates that, to the extent
permitted by applicable law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence. This Section 19 shall not prohibit the
Company or any other holder of Notes from contesting any such reproduction to
the same extent that it could contest the original, or from introducing evidence
to demonstrate the inaccuracy of any such reproduction.

 

20. CONFIDENTIAL INFORMATION.

 

For the purposes of this Section 20, “Confidential Information” means
information delivered or disclosed to you with respect to the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by you as
being confidential information of the Company or such Subsidiary, provided that
such term does not include information that (a) was publicly known or otherwise
known to you prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by you or any Person acting on your
behalf, (c) otherwise becomes known to you other than through disclosure by the
Company or any Subsidiary, or (d) constitutes financial statements delivered to
you under Section 7.1 that are otherwise publicly available. You will maintain
the confidentiality of such Confidential Information in accordance with
procedures adopted by you in good faith to protect confidential information of
third parties delivered to you, provided that you may deliver or disclose
Confidential Information to (i) your directors, trustees, officers, employees,
agents, attorneys and affiliates (to the extent such disclosure reasonably
relates to the administration of the investment represented by your Notes), (ii)
your financial advisors and other professional advisors whose duties require
them to hold confidential the Confidential Information substantially in
accordance with the terms of this Section 20, (iii) any other holder of any
Note, (iv) any Institutional Investor to which you sell or offer to sell such
Note or any part thereof or any participation therein (if such Person has agreed
in writing prior to its receipt of such Confidential Information to be bound by
the provisions of this Section 20), (v) any Person from which you offer to
purchase any security of the Company (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 20), (vi) any federal or state regulatory authority having
jurisdiction over you, (vii) the National Association of Insurance Commissioners
or any similar organization, or any nationally recognized rating agency that
requires access to information about your investment portfolio or (viii) 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 you, (x) in response to any subpoena or other legal process, (y)
in connection with any litigation to which you are a party or (z) if an Event of
Default has occurred and is continuing, to the extent you may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under your 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 20 as though it were a party to this Agreement. On reasonable request by
the 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 the Company
embodying the provisions of this Section 20.

 

28

--------------------------------------------------------------------------------

21. SUBSTITUTION OF PURCHASER.

 

You shall have the right to substitute any one of your Affiliates as the
purchaser of the Notes that you have agreed to purchase hereunder, by written
notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate’s agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word “you” is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word “you” is used in this Agreement (other than in this Section
21), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.

 

22. RELEASE OF SUBSIDIARY GUARANTOR.

 

You and each subsequent holder of a Note agree to release any Subsidiary
Guarantor from the Subsidiary Guaranty upon written request of the Company if
(i) such Subsidiary Guarantor ceases to be such as a result of a Disposition
permitted by Sections 10.5 or 10.6 or (ii) such Subsidiary Guarantor has been
or, concurrently with the release by the holders of Notes, will be released as
guarantor, or ceases to be an obligor, under and in respect of the Credit
Agreement and any other Debt guaranteed by such Subsidiary or as to which such
Subsidiary is obligated; provided, however, that you and each subsequent holder
will not be required to release a Subsidiary Guarantor from the Subsidiary
Guaranty under the circumstances contemplated by clause (ii), if (A) immediately
before or after giving effect to such release there shall exist a Default or
Event of Default, (B) such release is part of a plan of financing that
contemplates such Subsidiary Guarantor guaranteeing, or being directly or
indirectly obligated for, any other Debt of the Company, or (C) any fee or other
consideration is paid or given to any holder of Debt in connection with such
release, and each holder of a Note does not receive equivalent consideration on
a pro rata basis. Your obligation to release a Subsidiary Guarantor from the
Subsidiary Guaranty is conditioned upon your prior receipt of a certificate from
a Senior Financial Officer of the Company stating that none of the circumstances
described in clauses (A), (B) and (C) above are true.

 

23. MISCELLANEOUS.

 

23.1. Successors and Assigns.

 

All covenants and other agreements contained in this Agreement by or on behalf
of any of the parties hereto bind and inure to the benefit of their respective
successors and assigns (including any subsequent holder of a Note) whether so
expressed or not.

 

23.2. Payments Due on Non-Business Days.

 

Anything in this Agreement or the Notes to the contrary notwithstanding, any
payment of principal of or Make-Whole Amount or interest on any Note that is due
on a date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation of
the interest payable on such next succeeding Business Day.

 

23.3. Severability.

 

Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.

 

29

--------------------------------------------------------------------------------

23.4. Construction.

 

Each covenant contained herein shall be construed (absent express provision to
the contrary) as being independent of each other covenant contained herein, so
that compliance with any one covenant shall not (absent such an express contrary
provision) be deemed to excuse compliance with any other covenant. Where any
provision herein refers to action to be taken by any Person, or which such
Person is prohibited from taking, such provision shall be applicable whether
such action is taken directly or indirectly by such Person.

 

23.5. Counterparts.

 

This Agreement may be executed in any number of counterparts, each of which
shall be an original but all of which together shall constitute one instrument.
Each counterpart may consist of a number of copies hereof, each signed by less
than all, but together signed by all, of the parties hereto.

 

23.6. Governing Law.

 

This Agreement shall be construed and enforced in accordance with, and the
rights of the parties shall be governed by, the law of the State of Illinois
excluding choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State.

 

23.7. Submission to Jurisdiction.

 

Any litigation based hereon, or arising out of, under or in connection with this
Agreement or the Notes may be brought and maintained in the courts of the State
of Illinois or in the United States District Court for the Northern District of
Illinois. The Company expressly and irrevocably submits to the jurisdiction of
the courts of the State of Illinois and of the United States District Court for
the Northern District of Illinois for the purpose of any such litigation as set
forth above. The Company further irrevocably consents to the service of process
by registered mail, postage prepaid, to the address specified in Section 18 or
by personal service within or without the State of Illinois. The Company
expressly and irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of venue of any such
litigation brought in any such court referred to above and any claim that any
such litigation has been brought in an inconvenient forum.

 

23.8. Waiver of Jury Trial.

 

The Company waives any right to a trial by jury in any action or proceeding to
enforce or defend any rights under this Agreement or the Notes or under any
amendment, instrument, document or Agreement delivered or that may in the future
be delivered in connection herewith and agrees that any such action or
proceeding shall be tried before a court and not before a jury.

 

*    *    *    *    *

 

30

--------------------------------------------------------------------------------

If you are in agreement with the foregoing, please sign the form of agreement on
the accompanying counterpart of this Agreement and return it to the Company,
whereupon the foregoing shall become a binding agreement between you and the
Company.

 

Very truly yours,

SYPRIS SOLUTIONS, INC.

By:

 

/s/ David D. Johnson

--------------------------------------------------------------------------------

Name:

 

David D. Johnson

Title:

 

Vice President and CFO

 

31

--------------------------------------------------------------------------------

The foregoing is agreed to as of the date thereof.

 

THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA

By:

 

/s/ Ellen I. Whitaker

--------------------------------------------------------------------------------

Name:

 

Ellen I. Whitaker

Title:

 

Director, Fixed Income Investments

 

CONNECTICUT GENERAL LIFE INSURANCE COMPANY

By: CIGNA Investments, Inc. (authorized agent)

   

By:

 

/s/ David M. Cass

--------------------------------------------------------------------------------

   

Name:

 

David M. Cass

   

Title:

 

Managing Director

 

LIFE INSURANCE COMPANY OF NORTH AMERICA

By: CIGNA Investments, Inc. (authorized agent)

   

By:

 

/s/ David M. Cass

--------------------------------------------------------------------------------

   

Name:

 

David M. Cass

   

Title:

 

Managing Director

 

JEFFERSON PILOT FINANCIAL INSURANCE COMPANY

By:

 

/s/ James E. McDonald, Jr.

--------------------------------------------------------------------------------

Name:

 

JamesE.McDonald,Jr.

Title:

 

Vice President

JEFFERSON-PILOT LIFE INSURANCE COMPANY

By:

 

/s/ James E. McDonald, Jr.

--------------------------------------------------------------------------------

Name:

 

JamesE.McDonald,Jr.

Title:

 

Vice President

JEFFERSON PILOT LIFEAMERICA INSURANCE COMPANY

By:

 

/s/ James E. McDonald, Jr.

--------------------------------------------------------------------------------

Name:

 

James E. McDonald, Jr.

Title:

 

Vice President

 

32

--------------------------------------------------------------------------------

SCHEDULE B

 

DEFINED TERMS

 

As used herein, the following terms have the respective meanings set forth below
or set forth in the Section hereof following such term:

 

“Adjusted Consolidated Net Worth” means, as of any date, consolidated
stockholders’ equity of the Company and its Subsidiaries on such date, less (a)
minority interests in Subsidiaries and (b) the amount by which outstanding
Restricted Investments on such date exceed 10% of consolidated stockholders’
equity of the Company and its Subsidiaries on such date determined on a
consolidated basis in accordance with GAAP.

 

“Affiliate” means, at any time, and with respect to any Person, any other Person
that at such time directly or indirectly through one or more intermediaries
Controls, or is Controlled by, or is under common Control with, such first
Person. As used in this definition, “Control” means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise. Unless the context otherwise clearly requires, any
reference to an “Affiliate” is a reference to an Affiliate of the Company.

 

“Anti-Terrorism Order” means Executive Order 13224 of September 23, 2001
Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)).

 

“Business Day” means (a) for the purposes of Section 8.7 only, any day other
than a Saturday, a Sunday or a day on which commercial banks in New York City
are required or authorized to be closed, and (b) for the purposes of any other
provision of this Agreement, any day other than a Saturday, a Sunday or a day on
which commercial banks in Chicago, Illinois, New York City or Louisville,
Kentucky are required or authorized to be closed.

 

“Capital Lease” means, at any time, a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.

 

“Change of Control” means the acquisition, directly or indirectly, through
purchase or otherwise by any Person, or group of Persons acting in concert,
other than Robert E. Gill, Jeffrey T. Gill or R. Scott Gill, members of their
immediate family and their lineal descendants, or trusts or any other entity
created for their benefit, in one or more transactions, of beneficial ownership
or control of securities representing more than 50% of the voting power of the
Company’s Voting Stock (including the agreement to act in concert by any such
group of Persons who beneficially own or control securities representing more
than 50% of the voting power of the Company’s Voting Stock).

 

“Closings” is defined in Section 3.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time,
and the rules and regulations promulgated thereunder from time to time.

 

“Company” means Sypris Solutions, Inc., a Delaware corporation.

 

“Confidential Information” is defined in Section 20.

 

“Consolidated Debt” means, as of any date, outstanding Debt of the Company and
its Subsidiaries as of such date, determined on a consolidated basis in
accordance with GAAP.

 

“Consolidated EBITDA” means, for any period, the sum of Consolidated Net Income
for such period, plus, to the extent deducted in determining such Consolidated
Net Income, (i) federal, state, local and foreign

 

33

--------------------------------------------------------------------------------

income, value added and similar taxes, (ii) Consolidated Interest Expense, (iii)
depreciation and amortization expense and (iv) other non-cash expenses, in each
case determined on a consolidated basis in accordance with GAAP.

 

“Consolidated Interest Expense” means, for any period, the consolidated interest
expense of the Company and its Subsidiaries for such period determined in
accordance with GAAP.

 

“Consolidated Net Debt” means, as of any date, outstanding Debt of the Company
and its Subsidiaries as of such date less cash and cash equivalents of the
Company and its Subsidiaries as of such date, each as determined on a
consolidated basis in accordance with GAAP.

 

“Consolidated Net Income” means, for any period, the net income or loss of the
Company and its Subsidiaries for such period determined on a consolidated basis
in accordance with GAAP.

 

“Consolidated Total Assets” means, as of any date, the assets and properties of
the Company and its Subsidiaries as of such date, determined on a consolidated
basis in accordance with GAAP.

 

“Consolidated Total Capitalization” means, as of any date, the sum of
Consolidated Debt and Adjusted Consolidated Net Worth as of such date.

 

“Control Event” means:

 

(a) the execution by the Company or any of its Subsidiaries or Affiliates of any
agreement with respect to any proposed transaction or event or series of
transactions or events that, individually or in the aggregate, may reasonably be
expected to result in a Change of Control, or

 

(b) the execution of any written agreement that, when fully performed by the
parties thereto, would result in a Change of Control.

 

“Credit Agreement” means the 1999 Amended and Restated Loan Agreement dated as
of October 27, 1999 among the Company, the Subsidiaries of the Company named as
guarantors therein, Bank One, Kentucky, NA, as Agent Bank, and the other lenders
party thereto, as amended by the 2000A Amendment to Loan Documents dated as of
November 9, 2000, the 2001A Amendment to Loan Documents dated as of February 15,
2001, the 2002A Amendment to Loan Documents dated as of January 1, 2002, the
2002B Amendment to Loan Documents dated as of July 3, 2002 and the 2003A
Amendment to Loan Documents dated as of October 16, 2003, and as such agreement
may be hereafter amended, modified, restated, supplemented, replaced,
refinanced, increased or reduced from time to time, and any successor credit
agreement or similar facility.

 

“Debt” with respect to any Person means, at any time, without duplication,

 

(a) its liabilities for borrowed money;

 

(b) its liabilities for the deferred purchase price of property acquired by such
Person (excluding accounts payable and other accrued liabilities arising in the
ordinary course of business but including all liabilities created or arising
under any conditional sale or other title retention agreement with respect to
any such property);

 

(c) all liabilities appearing on its balance sheet in accordance with GAAP in
respect of Capital Leases;

 

(d) all liabilities for borrowed money secured by any Lien with respect to any
property owned by such Person (whether or not it has assumed or otherwise become
liable for such liabilities); and

 

(e) any Guaranty of such Person with respect to liabilities of a type described
in any of clauses (a) through (d) hereof.

 

34

--------------------------------------------------------------------------------

“Default” means an event or condition the occurrence or existence of which
would, with the lapse of time or the giving of notice or both, become an Event
of Default.

 

“Default Rate” means that rate of interest that is the greater of (i) 2% per
annum above the rate of interest stated in clause (a) of the first paragraph of
the Notes or (ii) 2% over the rate of interest publicly announced by LaSalle
Bank National Association as its “base” or “prime” rate.

 

“Disposition” is defined in Section 10.5.

 

“Environmental Laws” means any and all federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges to
waste or public systems.

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the rules and regulations promulgated thereunder from
time to time in effect.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated) that
is treated as a single employer together with the Company under section 414 of
the Code.

 

“Event of Default” is defined in Section 11.

 

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

 

“First Closing” is defined in Section 3.

 

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States of America.

 

“Governmental Authority” means

 

(a) the government of

 

(i) the United States of America or any state or other political subdivision
thereof, or

 

(ii) any jurisdiction in which the Company or any Subsidiary conducts all or any
part of its business, or which asserts jurisdiction over any properties of the
Company or any Subsidiary, or

 

(b) any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.

 

“Guaranty” means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including obligations incurred through an
agreement, contingent or otherwise, by such Person:

 

(a) to purchase such indebtedness or obligation or any property constituting
security therefor;

 

(b) to advance or supply funds (i) for the purchase or payment of such
indebtedness or obligation, or (ii) to maintain any working capital or other
balance sheet condition or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase or payment of such
indebtedness or obligation;

 

35

--------------------------------------------------------------------------------

(c) to lease properties or to purchase properties or services primarily for the
purpose of assuring the owner of such indebtedness or obligation of the ability
of any other Person to make payment of the indebtedness or obligation; or

 

(d) otherwise to assure the owner of such indebtedness or obligation against
loss in respect thereof.

 

In any computation of the indebtedness or other liabilities of the obligor under
any Guaranty, the indebtedness or other obligations that are the subject of such
Guaranty shall be assumed to be direct obligations of such obligor.

 

“Hazardous Material” means any and all pollutants, toxic or hazardous wastes or
any other substances that might pose a hazard to health or safety, the removal
of which may be required or the generation, manufacture, refining, production,
processing, treatment, storage, handling, transportation, transfer, use,
disposal, release, discharge, spillage, seepage, or filtration of which is or
shall be, prohibited or penalized by any applicable law (including, asbestos,
urea formaldehyde foam insulation and polychlorinated biphenyls).

 

“holder” means, with respect to any Note, the Person in whose name such Note is
registered in the register maintained by the Company pursuant to Section 13.1.

 

“INHAM Exemption” is defined in Section 6.2(e).

 

“Institutional Investor” means (a) any original purchaser of a Note, (b) any
holder of more than $2,000,000 in aggregate principal amount of the Notes at the
time outstanding, and (c) any bank, trust company, savings and loan association
or other financial institution, any pension plan, any investment company, any
insurance company, any broker or dealer, or any other similar financial
institution or entity, regardless of legal form.

 

“Investments” means all investments made, in cash or by delivery of property,
directly or indirectly, by any Person, in any other Person, whether by
acquisition of shares of capital stock, indebtedness or other obligations or
securities or by loan, Guaranty, advance, capital contribution or otherwise.

 

“Lien” means, with respect to any Person, any mortgage, lien, pledge, charge,
security interest or other encumbrance, or any interest or title of any vendor,
lessor, lender or other secured party to or of such Person under any conditional
sale or other title retention agreement or Capital Lease, upon or with respect
to any property or asset of such Person (including in the case of stock,
stockholder agreements, voting trust agreements and all similar arrangements).

 

“Make-Whole Amount” is defined in Section 8.7.

 

“Material” means material in relation to the business, operations, affairs,
financial condition, assets or properties of the Company and its Subsidiaries
taken as a whole.

 

“Material Adverse Effect” means a material adverse effect on (a) the business,
operations, affairs, financial condition, assets or properties of the Company
and its Subsidiaries taken as a whole, or (b) the ability of the Company to
perform its obligations under this Agreement and the Notes, or (c) the ability
of the Subsidiary Guarantors, taken as a whole, to perform their obligations
under the Subsidiary Guaranty, or (d) the validity or enforceability of this
Agreement, the Notes or the Subsidiary Guaranty.

 

“Memorandum” is defined in Section 5.3.

 

“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term
is defined in section 4001(a)(3) of ERISA).

 

36

--------------------------------------------------------------------------------

“NAIC Annual Statement” is defined in Section 6.2.

 

“Notes” is defined in Section 1.

 

“Officer’s Certificate” means a certificate of a Senior Financial Officer or of
any other officer of the Company whose responsibilities extend to the subject
matter of such certificate.

 

“Other Purchasers” is defined in Section 2.

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in
ERISA or any successor thereto.

 

“Person” means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization, or a government or
agency or political subdivision thereof.

 

“Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA)
that is or, within the preceding five years, has been established or maintained,
or to which contributions are or, within the preceding five years, have been
made or required to be made, by the Company or any ERISA Affiliate or with
respect to which the Company or any ERISA Affiliate may have any liability.

 

“Priority Debt” means, as of any date, the sum (without duplication) of (a)
outstanding unsecured Debt of Subsidiaries other than (i) Debt owed to the
Company or a Wholly Owned Subsidiary, (ii) any Guaranty of any Debt of the
Company by any Subsidiary Guarantor, (iii) Debt of any Subsidiary Guarantor owed
to the lenders under the Credit Agreement, and (iv) Debt of a Person that is
outstanding at the time it becomes a Subsidiary, provided that such Debt was not
incurred in contemplation of such Person becoming a Subsidiary, and (b) Debt of
the Company and its Subsidiaries secured by Liens not otherwise permitted by the
introductory paragraph of Section 10.4 or Sections 10.4(a) through (h).

 

“property” or “properties” means, unless otherwise specifically limited, real or
personal property of any kind, tangible or intangible, choate or inchoate.

 

“Purchaser” means each purchaser listed in Schedule A.

 

“QPAM Exemption” is defined in Section 6.2(d).

 

“Required Holders” means, at any time, the holders of at least a majority in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any of its Affiliates).

 

“Responsible Officer” means any Senior Financial Officer and any other officer
of the Company with responsibility for the administration of the relevant
portion of this agreement.

 

“Restricted Investments” means all Investments of the Company and its
Subsidiaries, other than:

 

(a) property or assets to be used or consumed in the ordinary course of
business;

 

(b) assets arising from the sale of goods or services in the ordinary course of
business;

 

(c) Investments in Subsidiaries or in any Person that, as a result thereof,
becomes a Subsidiary;

 

(d) Investments in common stock of the Company;

 

37

--------------------------------------------------------------------------------

(e) Investments existing as of the date of this Agreement that are listed in the
attached Schedule B-1 and any earnings thereon; and

 

(f) Investments in:

 

(i) obligations, maturing within one year from the date of acquisition, of or
fully guaranteed by the United States of America, or an agency thereof, or
Canada, or any province thereof;

 

(ii) state, or municipal securities having an effective maturity within one year
from the date of acquisition that are rated in one of the top two rating
classifications by at least one nationally recognized rating agency;

 

(iii) certificates of deposit, banker’s acceptances or demand deposits (A)
maturing more than 30 days after but within one year from the date of
acquisition thereof and issued by commercial banks whose long-term unsecured
debt obligations (or the long-term unsecured debt obligations of the bank
holding company owning all of the capital stock of such bank) are rated in one
of the top two rating classifications by at least one nationally recognized
rating agency at the time of making such investment (“Acceptable Bank”), (B)
maturing 30 days or less from the date of issuance thereof, issued by a
commercial bank rated at least investment grade by at least one nationally
recognized rating agency at the time of making such investment or (C) that
constitute the normal operating checking accounts of the Company and its
Subsidiaries;

 

(iv) commercial paper maturing within 270 days from the date of issuance that,
at the time of acquisition, is rated in one of the top two rating
classifications by at least one credit rating agency of recognized national
standing;

 

(v) Repurchase Agreements; and

 

(vi) money market instrument programs that are properly classified as current
assets in accordance with GAAP.

 

As used in this definition of Restricted Investments,

 

“Acceptable Broker-Dealer” means any Person other than a natural person (i) that
is registered as a broker or dealer pursuant to the Exchange Act and (ii) whose
long-term unsecured debt obligations are rated in one of the top two rating
classifications by at least one nationally recognized rating agency.

 

“Repurchase Agreement” means any written agreement

 

(a) that provides for (i) the transfer of one or more United States Governmental
Securities in an aggregate principal amount at least equal to the amount of the
Transfer Price (defined below) to the Company or any of its Subsidiaries from an
Acceptable Bank or an Acceptable Broker-Dealer against a transfer of funds (the
“Transfer Price”) by the Company or such Subsidiary to such Acceptable Bank or
Acceptable Broker-Dealer, and (ii) a simultaneous agreement by the Company or
such Subsidiary, in connection with such transfer of funds, to transfer to such
Acceptable Bank or Acceptable Broker-Dealer the same or substantially similar
United States Governmental Securities for a price not less than the Transfer
Price plus a reasonable return thereon at a date certain not later than 365 days
after such transfer of funds,

 

(b) in respect of which the Company or such Subsidiary has the right, whether by
contract or pursuant to applicable law, to liquidate such agreement upon the
occurrence of any default thereunder, and

 

38

--------------------------------------------------------------------------------

(c) in connection with which the Company or such Subsidiary, or an agent
thereof, shall have taken all action required by applicable law or regulations
to perfect a Lien in such United States Governmental Securities.

 

“United States Governmental Security” means any direct obligation of, or
obligation guaranteed by, the United States of America, or any agency controlled
or supervised by or acting as an instrumentality of the United States of America
pursuant to authority granted by the Congress of the United States of America,
so long as such obligation or guarantee shall have the benefit of the full faith
and credit of the United States of America which shall have been pledged
pursuant to authority granted by the Congress of the United States of America.

 

“Second Closing” is defined in Section 3.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time.

 

“Senior Financial Officer” means the chief financial officer, principal
accounting officer, treasurer or controller of the Company.

 

“Series A Notes” is defined in Section 1.

 

“Series B Notes” is defined in Section 1.

 

“Series C Notes” is defined in Section 1.

 

“Significant Subsidiary” means, as of the date of determination, any Subsidiary
that would at such time account for more than 10% of (i) Consolidated Total
Assets as of the end of the most recently completed fiscal quarter or (ii)
consolidated revenue of the Company and its Subsidiaries for the four fiscal
quarters ending as of the end of the most recently completed fiscal quarter.

 

“Source” is defined in Section 6.2.

 

“Subsidiary” means, as to any Person, any corporation, association or other
business entity in which such Person or one or more of its Subsidiaries owns
sufficient equity or voting interests to enable it or them (as a group)
ordinarily, in the absence of contingencies, to elect a majority of the
directors (or Persons performing similar functions) of such entity, and any
partnership or joint venture if more than a 50% interest in the profits or
capital thereof is owned by such Person or one or more of its Subsidiaries
(unless such partnership can and does ordinarily take major business actions
without the prior approval of such Person or one or more of its Subsidiaries).
Unless the context otherwise clearly requires, any reference to a “Subsidiary”
is a reference to a Subsidiary of the Company.

 

“Subsidiary Guarantor” is defined in Section 1.

 

“Subsidiary Guaranty” is defined in Section 1.

 

“Third Closing” is defined in Section 3.

 

“this Agreement” or “the Agreement” is defined in Section 17.3.

 

“USA Patriot Act” means Public Law 107-56 of the United States of America,
United and Strengthening America by Providing Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT) Act of 2001.

 

39

--------------------------------------------------------------------------------

“Voting Stock” means the capital stock of any class or classes of a corporation,
or equivalent interests in any other Person, having power under ordinary
circumstances to vote for the election of members of the board of directors of
such corporation, or person performing similar functions (irrespective of
whether or not at the time stock of any of the class or classes, or equivalent
interests, shall have or might have special voting power or rights by reason of
the happening of any contingency).

 

“Wholly Owned Subsidiary” means, at any time, any Subsidiary 100% of all of the
equity interests (except directors’ qualifying shares) and voting interests of
which are owned by any one or more of the Company and the Company’s other Wholly
Owned Subsidiaries at such time.

 

40

--------------------------------------------------------------------------------

Certain exhibits and schedules have been omitted because they are not material.
Copies of such omitted exhibits and schedules will be supplementally furnished
to the Commission upon request

 

41