EX-10.15






Exhibit 10.15




INVESTMENT AND RECAPITALIZATION AGREEMENT




dated as of July 14, 2006




among




THE O’GARA GROUP, INC.,




WALNUT INVESTMENT PARTNERS, L.P.,




WALNUT PRIVATE EQUITY FUND, L.P.,




WALNUT HOLDINGS O’GARA LLC,




HAUSER 43, LLC,




PMR, LLC,




THE THOMAS M. O’GARA FAMILY TRUST,




and




KURT M. CAMPBELL










 



 







TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	 
	ARTICLE I DEFINED TERMS
	 	 	2	 
	Section 1.1 Definitions
	 	 	2	 
	Section 1.2 General Provisions
	 	 	6	 
	 
	 	 	 	 
	ARTICLE II RECAPITALIZATION
	 	 	6	 
	Section 2.1 Agreement and Plan of Merger
	 	 	6	 
	Section 2.2 Effective Time of the Merger
	 	 	6	 
	Section 2.3 Effect of the Merger
	 	 	6	 
	Section 2.4 Condition Precedent
	 	 	7	 
	 
	 	 	 	 
	ARTICLE III PURCHASE AND SALE TERMS
	 	 	7	 
	Section 3.1 Purchase and Sale of New Class B Preferred at Closing
	 	 	7	 
	Section 3.2 Payment of Closing Purchase Price for New Class B Preferred
	 	 	7	 
	Section 3.3 Purchase and Sale of Second Tranche New Class B Preferred
	 	 	7	 
	Section 3.4 Payment of Second Tranche Purchase Price for New Class B Preferred
	 	 	8	 
	Section 3.5 T. O’Gara’s Irrevocable Subscription Agreement
	 	 	8	 
	Section 3.6 Transfer Legends and Restrictions
	 	 	8	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COMPANY
	 	 	10	 
	Section 4.1 Corporate Existence
	 	 	10	 
	Section 4.2 Subsidiaries
	 	 	10	 
	Section 4.3 Power and Authority
	 	 	10	 
	Section 4.4 Ownership and Status of Capital Stock
	 	 	11	 
	Section 4.5 Financial Condition
	 	 	12	 
	Section 4.6 Absence of Certain Changes
	 	 	13	 
	Section 4.7 Litigation
	 	 	15	 
	Section 4.8 Licenses; Compliance with Laws, Other Agreements, etc
	 	 	16	 
	Section 4.9 Brokers, etc.
	 	 	17	 
	Section 4.10 Private Sale
	 	 	18	 
	Section 4.11 Projections; Material Facts
	 	 	18	 
	Section 4.12 Minutebooks
	 	 	19	 
	Section 4.13 Employment Contracts, etc.; Certain Material Transactions
	 	 	19	 
	Section 4.14 Banks, Agents, etc.
	 	 	19	 
	Section 4.15 Aggregate Gross Assets
	 	 	20	 
	Section 4.16 Small Business Matters; Regulatory Compliance
	 	 	20	 
	 
	 	 	 	 
	ARTICLE V COVENANTS OF THE COMPANY
	 	 	20	 
	Section 5.1 Accounts and Reports
	 	 	20	 
	Section 5.2 Small Business Administration
	 	 	21	 
	Section 5.3 Use of Proceeds
	 	 	23	 












 



- ii -


	 	 	 	 	 
	 	 	Page
	Section 5.4 Rule 144
	 	 	23	 
	Section 5.5 Future Proprietary Rights Agreements; Other Agreements
	 	 	23	 
	Section 5.6 Liability Insurance; D&O Insurance; Charter Indemnity Provisions
	 	 	24	 
	Section 5.7 Taxes and Assessments
	 	 	24	 
	Section 5.8 Maintenance of Entity
	 	 	25	 
	Section 5.9 Governmental Consents
	 	 	25	 
	Section 5.10 Further Assurances
	 	 	25	 
	Section 5.11 Deal Fees and Expenses
	 	 	25	 
	Section 5.12 Regulation D Filings
	 	 	26	 
	Section 5.13 Preemptive Rights
	 	 	26	 
	Section 5.14 Auditor
	 	 	27	 
	Section 5.15 Board of Directors
	 	 	27	 
	Section 5.16 Key-Man Life Insurance
	 	 	27	 
	Section 5.17 Termination of Covenants
	 	 	28	 
	 
	 	 	 	 
	ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
	 	 	28	 
	Section 6.1 Power and Authority
	 	 	28	 
	Section 6.2 Purchase for Investment
	 	 	28	 
	Section 6.3 Financial Matters
	 	 	28	 
	Section 6.4 Brokers, etc
	 	 	29	 
	 
	 	 	 	 
	ARTICLE VII THE CLOSING AND CLOSING CONDITIONS
	 	 	29	 
	Section 7.1 The Closing
	 	 	29	 
	Section 7.2 Issuance of New Class B Preferred
	 	 	29	 
	Section 7.3 Legal Opinion from Counsel for the Company
	 	 	29	 
	Section 7.4 Merger
	 	 	29	 
	Section 7.5 Certificate of Officer of the Company
	 	 	30	 
	Section 7.6 Execution of Related Documents
	 	 	30	 
	Section 7.7 The Investors Review
	 	 	30	 
	Section 7.8 Performance
	 	 	30	 
	Section 7.9 All Proceedings to Be Satisfactory
	 	 	30	 
	Section 7.10 Supporting Documents
	 	 	30	 
	Section 7.11 Reasonable Satisfaction of the New Class B Investors
	 	 	31	 
	 
	 	 	 	 
	ARTICLE VIII INDEMNIFICATION AND SURVIVAL
	 	 	31	 
	Section 8.1 Indemnification by the Company
	 	 	31	 
	Section 8.2 Indemnification by the Investors
	 	 	32	 
	Section 8.3 Indemnification Notice
	 	 	32	 
	Section 8.4 Survival of Representations and Warranties
	 	 	33	 
	 
	ARTICLE IX MISCELLANEOUS
	 	 	33	 
	Section 9.1 Expenses
	 	 	33	 
	Section 9.2 Remedies Cumulative
	 	 	33	 
	Section 9.3 Brokerage
	 	 	33	 
	Section 9.4 Severability
	 	 	33	 












 



- iii -


	 	 	 	 	 
	 	 	Page
	Section 9.5 Parties in Interest
	 	 	33	 
	Section 9.6 Notices
	 	 	34	 
	Section 9.7 No Waiver
	 	 	35	 
	Section 9.8 Amendments and Waivers
	 	 	35	 
	Section 9.9 Construction
	 	 	35	 
	Section 9.10 Entire Understanding
	 	 	35	 
	Section 9.11 Counterparts
	 	 	36	 
	Section 9.12 Assignment; No Third-Party Beneficiaries
	 	 	36	 
	 
	 	 	 	 
	ARTICLE X TERMINATION
	 	 	36	 
	Section 10.1 Termination
	 	 	36	 
	Section 10.2 Effect of Termination
	 	 	36	 












 



 


     THIS INVESTMENT AND RECAPITALIZATION AGREEMENT (“Agreement”) dated as of the 14th
day of July 2006 is made among THE O’GARA GROUP, INC., an Ohio corporation (the “Company”), WALNUT
INVESTMENT PARTNERS, L.P., a Delaware limited partnership (“WIP”), WALNUT PRIVATE EQUITY FUND,
L.P., a Delaware limited partnership (“WPEF”) (WIP and WPEF collectively, “Walnut”), WALNUT
HOLDINGS O’GARA LLC, an Ohio limited liability company (“WHO”), HAUSER 43, LLC, an Ohio limited
liability company (“Hauser LLC”), PMR, LLC, a Vermont limited liability company (“PMR”), THE THOMAS
M. O’GARA FAMILY TRUST (“T. O’Gara”) and KURT M. CAMPBELL (“Campbell”) (Walnut, WHO, Hauser LLC,
PMR, T. O’Gara and Campbell collectively, the “Investors”; individually, an “Investor”).



PREAMBLE




     A. The Company requires additional equity financing in order to finance certain contemplated
acquisitions described on Schedule 5.3 to this Agreement.



     B. Each of the Investors is willing, on the terms and conditions contained in this Agreement,
to purchase preferred equity in the Company.



     C. As a condition precedent to the obligations of the Investors to acquire such preferred
equity in the Company, the Company shall undertake a recapitalization, to be effected by a merger
of O’Gara Recap Corp., a newly organized Ohio corporation that is a wholly owned subsidiary of the
Company (“Merger Sub”), with and into the Company (the “Merger”), consolidating the Company’s
existing seven (7) series of preferred stock into two (2) classes, the New Class A Preferred and
the New Class B Preferred, and with each class to have several series (the “Recapitalization”).



ARTICLE I

DEFINED TERMS




     Section 1.1 Definitions.



     The following terms, when used in this Agreement, have the following meanings, unless the
context otherwise indicates:



     “‘33 Act” means the Securities Act of 1933, as amended, or any similar federal law then in
force, and the rules and regulations promulgated thereunder.



     “‘34 Act” means the Securities Exchange Act of 1934, as amended, or any similar federal law
then in force, and the rules and regulations promulgated thereunder.



     “Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the
‘34 Act.



     “Best Knowledge” shall mean the actual knowledge of the person or entity.









 



- 3 -


     “Closing” and “Closing Date” mean the consummation of the Company’s issuance and sale, and the
Investors’ purchase, of shares of the New B-1 Series of New Class B Preferred Stock under Section
3.1, 3.3 and 3.5 of this Agreement and the date on which the same occurs or occurred.



     “Commission” means the United States Securities and Exchange Commission.



     “Common Stock” means the common stock, no par value per share, of the Company.



     “Contribution Agreement” means the Contribution Agreement dated May 6, 2005 among the Company
and certain of its shareholders.



     “Disclosure Schedule” means the schedule of exceptions to, and qualifications of, the
warranties and representations of the Company set forth in Article IV hereof.



     “Employee Benefit Plan” means any plan regulated under the Employee Retirement Income Security
Act of 1984, as amended (“ERISA”), and any similar federal law then in force, and the rules and
regulations promulgated thereunder.



     “Executive Management Team” means Thomas M. O’Gara, Wilfred T. O’Gara and Michael J. Lennon.



     “Existing Articles” means the Second Amended and Restated Articles of Incorporation of the
Company in the form attached hereto and incorporated herein as Schedule 4.1-1.



     “Financial Statements” shall mean: (x) the audited financial statements of the Company
existing as of December 31, 2005 (including all schedules and notes thereto), consisting of the
balance sheet at such date and the related statements of income and expenses, retained earnings,
changes in financial position and cash flows for the period then ended; and (y) the unaudited
financial statements of the Company as of May 31, 2006, consisting of the balance sheet at such
date and the related statements of income and expenses, retained earnings, changes in financial
position and cash flows for the five (5) month period then ended. In addition, after the date of
this Agreement, the term “Financial Statements” shall include any and all annual and interim
financial statements thereafter issued by or on behalf of the Company, which shall be consolidated
and consolidating financial statements of the Company and all its Subsidiaries. All interim
financial statements shall exclude footnotes.



     “Financial Statement Date” means the date of the most recent Financial Statements of the
Company.



     “Holder” means each Investor (or its or his successors or permitted assigns) and any other
Person who or that holds either New Class B Preferred acquired under this Agreement or Common Stock
into which New Class B Preferred acquired under this Agreement has been converted.









 



- 4 -


     “Independent Public Accountants” means that firm of independent certified public accountants
selected by the Company’s Board of Directors.



     “Lien” means any mortgage, lien, pledge, security interest, easement, conditional sale or
other title retention agreement or other encumbrance of any kind.



     “Merger” means the merger of Merger Sub with and into the Company in accordance with the
Merger Agreement and the OGCL, pursuant to which the New Articles shall be adopted and the
Recapitalization shall be effected.



     “Merger Agreement” means the Agreement and Plan of Merger between Merger Sub and the Company
in the form attached to this Agreement and incorporated herein as Schedule 2.1.



     “Merger Sub” means O’Gara Recap Corp., an Ohio corporation formed to effect the Merger and the
Recapitalization and a wholly owned subsidiary of the Company.



     “New Articles” means the Third Amended and Restated Articles of Incorporation of the Company
adopted in connection with the Merger and in the form attached hereto and incorporated herein as
Schedule 7.6.2.



     “New Class A Preferred” means the shares of New Class A 3% Cumulative Participating Preferred
Stock in the Company of any series, no par value per share, having the rights, preferences and
privileges set forth in the New Articles.



     “New Class B Preferred” means the shares of New Class B 5% Cumulative Participating Preferred
Stock in the Company of any series, no par value per share, having the rights, preferences and
privileges set forth in the New Articles.



     “OGCL” means the Ohio General Corporation Law, Sections 1701.01 et seq. of the Ohio Revised
Code.



     “Public Offering” means both: (i) the date of the effectiveness of any registration statement
relating to the underwritten distribution of the Company’s Common Stock which is filed by the
Company under the ‘33 Act; and (ii) the process of distributing such Common Stock to the public.



     “Regulations” means the Amended and Restated Regulations of the Company in the form attached
hereto and incorporated herein as Schedule 4.1-2.



     “SBA” means the federal Small Business Administration and any successor regulatory body.



     “Second Tranche Closing” and “Second Tranche Closing Date” mean the consummation of the
Company’s issuance and sale, and the Investors’ purchase, of shares of New Class B Preferred Stock
under Section 3.3 of this Agreement and the date on which the same occurs or occurred.









 



- 5 -


     “Series A Preferred” means the shares of Series A 5% Cumulative Participating Preferred Stock
in the Company, no par value per share, issued in accordance with the Contribution Agreement having
the rights, preferences and privileges set forth in the Existing Articles.



     “Series B Preferred” means the shares of Series B 5% Cumulative Participating Preferred Stock
in the Company, no par value per share, issued in accordance with the Contribution Agreement having
the rights, preferences and privileges set forth in the Existing Articles.



     “Series C Preferred” means the shares of Series C 3% Cumulative Participating Preferred Stock
in the Company, no par value per share, issued in accordance with the Contribution Agreement having
the rights, preferences and privileges set forth in the Existing Articles.



     “Series D Preferred” means the shares of Series D 5% Cumulative Participating Preferred Stock
in the Company, no par value per share and having the rights, preferences and privileges set forth
in the Existing Articles.



     “Series E Preferred” means the shares of Series E 5% Cumulative Participating Preferred Stock
in the Company, no par value per share, having the rights, preferences and privileges set forth in
the Existing Articles.



     “Series F Preferred” means the shares of Series F 5% Cumulative Participating Preferred Stock
in the Company, no par value per share, having the rights, preferences and privileges set forth in
the Existing Articles.



     “Series G Preferred” means the shares of Series G 3% Cumulative Participating Preferred Stock
in the Company, no par value per share, having the rights, preferences and privileges set forth in
the Existing Articles.



     “Shareholders Agreement” shall mean the Second Amended and Restated Shareholders Agreement
dated as of July 14, 2006 among the Company, Walnut, WHO, PMR, Mark J. Hauser (“Hauser”), Hauser
LLC, William J. Motto (“Motto”), T. O’Gara, Wilfred T. O’Gara (“W. O’Gara”), Michael J. Lennon
(“Lennon”), Campbell and all other holders of issued and outstanding capital stock of the Company
from time to time outstanding, all in the form attached hereto and incorporated herein as Schedule
7.6-1.



     “Subsidiary” or “Subsidiaries” of any person means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are at the time directly or
indirectly owned or controlled by such person or one or more Subsidiaries of such person.



     “Walnut Board Member” means any individual who sits on the Company’s Board of Directors at the
designation (whether by written agreement or otherwise) of Walnut. There shall be two (2) Walnut
Board Members, initially Frederic H. Mayerson and James M. Gould.









 



- 6 -


     Section 1.2 General Provisions.



     The masculine form of words includes the feminine and the neuter and vice versa, and, unless
the context otherwise requires, the singular form of words includes the plural and vice versa. The
words “herein,” “hereof,” “hereunder,” and other words of similar import when used in this
Agreement refer to this Agreement as a whole, and not to any particular section or subsection.



ARTICLE II

RECAPITALIZATION




     Section 2.1 Agreement and Plan of Merger.



     Simultaneously with the execution and delivery of this Agreement, Merger Sub and the Company
have executed and delivered the Merger Agreement, a true, complete and correct copy of which is
attached hereto and incorporated herein as Schedule 2.1. The Boards of Directors of each of Merger
Sub and the Company have approved the Merger Agreement and the Merger thereby contemplated. The
Company, as the sole shareholder of Merger Sub, has adopted the Merger Agreement and approved the
Merger, and the Merger Agreement has been submitted to the shareholder of the Company for their
adoption and approval by unanimous written consent, all in accordance with the requirements of the
OGCL. Consent solicitation materials distributed to the Company’s shareholders, copies of which
shall be provided to the Investors, shall also function as notice of a special meeting of the
Company’s shareholders to adopt the Merger Agreement and approve the Merger to be convened if
unanimous shareholder consent cannot be obtained.



     Section 2.2 Effective Time of the Merger.



     Immediately prior to the Closing, if (but only if) the shareholders of the Company have duly
adopted the Merger Agreement and approved the Merger in accordance with the requirements of the
OGCL, whether by unanimous written consent or at a special meeting of shareholders, the Company and
Merger Sub shall cause a certificate of merger (“Certificate of Merger”) to be filed with the Ohio
Secretary of State with immediate effect, thereby effecting the Merger and the Recapitalization.
The time and date when the Certificate of Merger is filed shall be the effective time of the Merger
and of the Recapitalization (the “Effective Time”). After the Effective Time, the New Articles,
together with the Regulations, shall constitute the corporate charter of the Company.



     Section 2.3 Effect of the Merger.



     The Merger shall have the effect set forth in Section 1701.82 of the OGCL. In the Merger,
each share of Series C Preferred and Series G Preferred outstanding immediately prior to the
Effective Time shall be converted, by virtue of the Merger and without the need for any action on
the part of the holder thereof, into one (1) share of the New A-1 Series of the New Class A
Preferred, all as provided in the Merger Agreement. In the Merger, each share of Series A
Preferred, Series B Preferred, Series D Preferred, Series E Preferred and Series F Preferred









 



- 7 -



outstanding immediately prior to the Effective Time shall be converted, by virtue of the
Merger and without the need for any action on the part of the holder thereof, into one (1) share of
a Series of New Class B Preferred, all as provided in the Merger Agreement.



     Section 2.4 Condition Precedent.



     The occurrence of the Merger in accordance with the provisions of this Article II shall be a
condition precedent to the obligation of the Investors hereunder to purchase shares of New Class B
Preferred.



ARTICLE III

PURCHASE AND SALE TERMS




     Section 3.1 Purchase and Sale of New Class B Preferred at Closing. 



     Subject to the terms and conditions of this Agreement, at the Closing, the Company shall issue
and sell to each of the Investors, and each of the Investors shall, severally and not jointly and
severally, purchase from the Company, that number of shares of the New B-1 Series of New Class B
Preferred set forth opposite the name of such Investor on Schedule 3.1 attached hereto for the
purchase price set forth opposite that Investor’s name on Schedule 3.1. An aggregate of Forty
Thousand Four Hundred Seventy Three (40,473) shares of the New B-1 Series of New Class B Preferred
(collectively, the “Closing Shares”) shall be issued to the Investors at the Closing for an
aggregate purchase price of Four Million Eight Hundred Ten Thousand One Hundred Eighteen and 60/100
Dollars ($4,810,118.60) (the “Closing Purchase Price”). No Investor shall be liable for the
failure of any other Investor to comply with its purchase obligations under this Section 3.1.



     Section 3.2 Payment of Closing Purchase Price for New Class B Preferred. 



     At the Closing, each Investor shall pay its portion of the Closing Purchase Price for the
shares of New Class B Preferred to be acquired by such Investor under Section 3.1 by wire transfer
of immediately available funds to an account designated in writing by the Company.



     Section 3.3 Purchase and Sale of Second Tranche New Class B Preferred. 



     Subject to the terms and conditions of this Agreement, if the Company is not then in default
under this Agreement and on a date to be determined by the Company’s Board of Directors, taking
into account the proximity of the closing of an acquisition described on Schedule 5.3 hereof (it
being understood that Executive Management Team shall use their best knowledge and fair and
reasonable efforts to assure that the date be no more than five (5) days prior to the scheduled
date for closing such acquisition), on at least ten (10) days prior written notice to the Investors
(the “Second Tranche Closing”), the Company shall issue and sell to each of the Investors (other
than T. O’Gara), and each of the Investors (other than T. O’Gara) shall, severally and not jointly
and severally, purchase from the Company, that number of shares of the New B-1 Series of New Class
B Preferred set forth opposite the name of such Investor on Schedule 3.3 attached hereto for the
purchase price set forth opposite that Investor’s name on









 



- 8 -



Schedule 3.3. An aggregate of Thirty Six Thousand Twelve (36,012) shares of the New B-1
Series of New Class B Preferred (collectively, the “Second Tranche Shares”) shall be issued to the
Investors (other than T. O’Gara) at the Second Tranche Closing for an aggregate purchase price of
Four Million Two Hundred Seventy Nine Thousand Nine Hundred Thirty Nine and 60/100 Dollars
($4,279,939.60) (the “Second Tranche Purchase Price”). No Investor shall be liable for the failure
of any other Investor to comply with its purchase obligations under this Section 3.3.



     Section 3.4 Payment of Second Tranche Purchase Price for New Class B Preferred. 



     At the Second Tranche Closing, each Investor (other than T. O’Gara) shall pay its portion of
the Second Tranche Purchase Price for the shares of New Class B Preferred to be acquired by such
Investor under Section 3.3 by wire transfer of immediately available funds to an account designated
in writing by the Company.



     Section 3.5 T. O’Gara’s Irrevocable Subscription Agreement. Simultaneously with the
execution and delivery of this Agreement, T. O’Gara will execute and deliver the Irrevocable
Subscription Agreement in the form attached hereto as Schedule 3.5 (“Irrevocable Subscription
Agreement”). Pursuant to that Irrevocable Subscription Agreement, T. O’Gara shall be obligated to
acquire Four Thousand Two Hundred Seven (4,207) shares of the New B-1 Series of New Class B
Preferred for a purchase price of Five Hundred Thousand Dollars ($500,000) on October 15, 2006 and
a further Five Thousand Four Hundred Twenty Seven (5,427) shares of the New B-1 Series of New Class
B Preferred for a purchase price of Six Hundred Forty Five Thousand Dollars ($645,000) on December
31, 2006. In the event of any conflict between the terms of this Agreement and the terms of the
Irrevocable Subscription Agreement, the terms of the Irrevocable Subscription Agreement shall
prevail and govern.



     Section 3.6 Transfer Legends and Restrictions. 



     The transfer of the shares of New Class B Preferred purchased hereunder by the Investors,
whether Closing Shares or Second Tranche Shares or shares acquired by T. O’Gara pursuant to the
Irrevocable Subscription Agreement (collectively, “Shares”) will be restricted in accordance with
the terms hereof and of the Shareholders Agreement. Each certificate evidencing the shares of New
Class B Preferred, including any certificate issued to any transferee thereof, shall be imprinted
with legends in substantially the following form (unless otherwise permitted under this Section 3.6
or unless such shares of New Class B Preferred shall have been effectively registered and sold
under the ‘33 Act and applicable state securities laws):




“THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. THEY MAY NOT BE OFFERED OR TRANSFERRED BY SALE, ASSIGNMENT, PLEDGE OR
OTHERWISE UNLESS: (I) A REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933 IS IN EFFECT; OR (II) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, WHICH OPINION
IS REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT









 



- 9 -



SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933. TRANSFER OF THE
SECURITIES IS FURTHER RESTRICTED AS PROVIDED IN THE SECOND AMENDED AND RESTATED SHAREHOLDERS
AGREEMENT DATED AS OF JULY 14, 2006, A COPY OF WHICH IS AVAILABLE AT THE COMPANY’S OFFICES.”



     Each Holder of Shares by acceptance thereof agrees, so long as any legend described in this
Section shall remain on the certificates evidencing the Shares, as the case may be, prior to any
transfer of any of the same (except for a transfer effected pursuant to an effective registration
statement under the ‘33 Act or in compliance with Rule 144 or Rule 144A thereunder), to give
written notice to the Company of such Holder’s intention to effect such transfer and agrees to
comply in all material respects with the provisions of this Section 3.6. Such notice, if required,
shall describe the proposed method of transfer of the Shares in question. Upon receipt by the
Company of such notice, if required, and if in the opinion of counsel to such Holder, which opinion
shall be reasonably satisfactory to the Company, the proposed transfer may be effected without
registration under the ‘33 Act in compliance with Section 4(2) or Rules 144 or 144A thereunder and
under applicable state securities laws, then the proposed transfer may be effected; provided,
however, that in the case of any Holder which is a partnership, no such opinion of counsel shall be
necessary for a transfer by such partnership to a partner of such partnership, or a retired partner
of such partnership who retires after the date such partnership became a Holder, or the estate of
any such partner or retired partner, if the transferee agrees in writing to be subject to the terms
of this Section 3.6 to the same extent as if such transferee were originally a signatory to this
Agreement. Upon receipt by the Company of such opinion and of such agreement by the transferee to
be bound by this Section 3.6, the Holder of such Shares shall thereupon be entitled to transfer the
same in accordance with the terms of the notice (if any) delivered by such Holder to the Company.
Each certificate, if any, evidencing the Shares, as the case may be, issued upon any such transfer
shall bear the legend set forth in this Section 3.6. Upon the written request of a Holder of the
Shares, the Company shall remove the foregoing legend from the certificates evidencing such Shares,
as the case may be, and issue to such Holder new certificates therefor, free of any transfer legend
if, with such request, the Company shall have received an opinion of counsel selected by the
Holder, such opinion to be reasonably satisfactory to the Company, to the effect that any transfers
by said Holder of such Shares may be made to the public without compliance with either Section 5 of
the ‘33 Act or Rule 144 thereunder and applicable state securities laws. In no event will such
legend be removed if such opinion is based upon the “private offering” exemption of Section 4(2) of
the ‘33 Act.



     Notwithstanding the foregoing, in the event of a conflict between the provisions of this
Section 3.6 and the provisions of Sections 5.2(c) or 5.2(d) hereof, the provisions of Sections
5.2(c) or 5.2(d) shall prevail and control. Nothing in this Section 3.6 shall be deemed to be in
derogation of, or to be excepted from, the restrictions on transfer set forth in the Shareholders
Agreement.









 



- 10 -


ARTICLE IV

REPRESENTATIONS AND WARRANTIES WITH

RESPECT TO THE COMPANY




     Except as set forth in the Disclosure Schedule furnished pursuant to this Agreement, the
Company represents and warrants to the Investors (and each of them), at and as of the date hereof
and also at and as of the Closing and as of the Second Tranche Closing that:



     Section 4.1 Corporate Existence. 



     The Company is a corporation organized, validly existing and in good standing under the laws
of the State of Ohio. The Company has all requisite power and authority to conduct its business
and to own its properties as now conducted and owned and as proposed to be conducted and owned.
Schedule 4.1-1 attached hereto sets forth a true, complete and correct copy of the Existing
Articles. Schedule 4.1-2 attached hereto sets forth a true, complete and correct copy of the
Regulations. The Company is qualified to do business as a foreign corporation in all jurisdictions
in which the nature of its properties and business requires such qualification and in which the
failure to be so qualified would materially adversely affect the business, assets, liabilities,
prospects or financial or other condition of the Company and its Subsidiaries, taken as a whole.



     Section 4.2 Subsidiaries.



     Section 4.2 of the Disclosure Schedule sets forth a list of all Subsidiaries of the Company.
Each Subsidiary is a corporation duly organized, validly existing and in good standing (or the
local law equivalent) under the laws of its jurisdiction of incorporation as stated on the said
Section 4.2 of the Disclosure Schedule; has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business, as now being conducted, and is duly
qualified and in good standing (or the local law equivalent) as a foreign corporation in all
jurisdictions in which it is required to be so qualified, except where the failure to be so
qualified and in good standing would materially adversely affect the business assets, liabilities,
prospects or financial or other condition of the Company and its Subsidiaries, taken as a whole.
Each Subsidiary is wholly owned by the Company and no person other than the Company has any
“phantom equity” or similar rights or interests in any of the Subsidiaries.



     Section 4.3 Power and Authority. 



     The Company has all requisite power and authority, and has taken all required corporate and
other action necessary (including shareholder approval) to permit it, to own and hold properties to
carry on its business, to execute and deliver this Agreement, to enter into the Merger Agreement,
to consummate the Merger, to issue and sell shares of the New B-1 Series of the New Class B
Preferred as herein provided, and otherwise to carry out the terms of this Agreement and all other
documents, instruments, or transactions required to be executed, delivered or performed by the
Company by this Agreement. None of such actions will violate any provision of the Company’s
Existing Articles, New Articles or Regulations or result in the









 



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breach of or constitute a default under any agreement or instrument to which the Company is a
party or by which it is bound or result in the creation or imposition of any material lien, claim
or encumbrance on any Company asset. This Agreement has been duly executed and delivered by the
Company and (assuming the due authorization, execution and delivery hereof by the Investors)
constitutes the valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms. No event has occurred and no condition exists that would constitute a
violation of this Agreement. The issuance of shares of New B-1 Series of New Class B Preferred
hereunder does not give any person rights to terminate any material agreements with the Company or
otherwise to exercise material rights against the Company.



     Section 4.4 Ownership and Status of Capital Stock. 



          (a) Section 4.4 of the Disclosure Schedule is a capitalization table that sets forth the
capital stock that the Company is authorized to issue, has issued, is obligated to issue under
Sections 3.3 and 3.5 hereof, has outstanding, has reserved for issuance upon conversion of the New
Class A Preferred and New Class B Preferred into Common Stock and has reserved for issuance upon
the exercise of outstanding options or warrants. All outstanding shares of Common Stock, New Class
A Preferred and New Class B Preferred are, and upon issuance and payment therefor in accordance
with the terms of this Agreement, all of the outstanding shares of New Class B Preferred to be
issued under this Agreement will be, duly authorized, validly issued, fully paid and
non-assessable. Upon conversion of any shares of the New B-1 Series of New Class B Preferred
issued hereunder, the shares of Common Stock issuable in connection therewith will be duly
authorized, validly issued, fully paid and non-assessable. All outstanding shares of capital stock
of the Company have been issued in full compliance with applicable laws. No shares of Common
Stock, New Class A Preferred or New Class B Preferred are held in the Company’s treasury. The
Common Stock, the New Class A Preferred and the New Class B Preferred are not and will not be
entitled to cumulative voting rights, preemptive rights, anti-dilution rights and so-called
registration rights under the ‘33 Act, except as otherwise provided in this Agreement, the
Shareholders Agreement and the New Articles. The Common Stock, the New Class A Preferred and New
Class B Preferred have the preferences, voting powers, qualifications and special or relative
rights or privileges set forth in this Agreement, the Shareholders Agreement and the New Articles.




          (b) Except as set forth on Section 4.4 of the Disclosure Schedule or as provided to the
Investors in this Agreement, there are: (x) no outstanding options, offers, warrants, conversion
rights, contracts, or other rights to subscribe for or to purchase from the Company, or contracts
obligating the Company to issue, transfer, or sell (whether formal or informal, written or oral,
firm or contingent), Common Stock, New Class A Preferred and New Class B Preferred or other capital
stock of the Company (whether debt, equity or a combination thereof) or securities convertible into
or exchangeable for Common Stock, New Class A Preferred and New Class B Preferred or other capital
stock or “phantom” stock or similar interests; and (y) no contracts or other understandings
(whether formal or informal, written or oral, firm or contingent) which require or may require the
Company to repurchase any shares of its Common Stock. Other than pursuant to a transaction
contemplated by, and in accordance with, Section 5.3 of the Disclosure Schedule and Section 5.3 of
this Agreement, there is, and










 



- 12 -



immediately upon consummation of the transactions contemplated hereby there will be, no
agreement, with respect to the issuance or sale or voting of any shares of capital stock of the
Company (whether outstanding or issuable upon conversion or exercise of outstanding securities)
except for the offering and sale of shares of New B-1 Series of New Class B Preferred pursuant to
this Agreement and the Irrevocable Subscription Agreement and the applicable provisions of the New
Articles. The Company has no obligation to register any of its presently outstanding securities or
any of its securities which may thereafter be issued under the ‘33 Act.




     Section 4.5 Financial Condition. 



     The Company has furnished to the Investors its Financial Statements, which, together with the
schedules and notes thereto, are complete and correct, have been prepared in accordance with United
States generally accepted accounting principles (“GAAP”), consistently applied, and fairly present
in all material respects the financial condition of the Company as of the dates specified (except
that the interim financial statements do not include footnotes). The Financial Statements are in
accordance with the books and records of the Company (including its predecessor) as of the dates
and for the periods indicated, present fairly in all material respects the financial position,
results of operations, shareholders’ equity and changes in financial position of the Company
(including its predecessor) as of the respective dates and for the respective periods indicated and
have been prepared in accordance with GAAP applied on a consistent basis (except as described in
such statements, notes thereto and schedules) (except that the interim financial statements do not
include footnotes).




     Section 4.5.1 Absence of Undisclosed Liabilities. 




     The Company and its Subsidiaries have no material liabilities, matured or unmatured,
fixed or contingent, which are not fully reflected or provided for on the balance sheet of
the Company as of the date hereof attached hereto as Exhibit 4.5.1, or any material loss
contingency (as defined in Statement of Financial Accounting Standards No. 5), whether or
not required by GAAP to be shown on the balance sheets, except: (i) obligations to perform
under commitments incurred in the ordinary course of business after the date hereof; (ii)
liabilities disclosed in the Financial Statements; and (iii) other liabilities as set forth
in Section 4.5.1 of the Disclosure Schedule.




     Section 4.5.2 Taxes. 




     The Company (including its predecessor) has accurately completed and filed or will file
within the time prescribed by law (including extensions of time approved by the appropriate
taxing authority) all tax returns and reports required to be filed with the Internal Revenue
Service, the State of Ohio other states or governmental subdivisions and all foreign
countries and has paid, or made adequate provision in the Financial Statements for the
payment of, all taxes, interest, penalties, assessments or deficiencies shown to be due (or,
to the Best Knowledge of the Company, claimed by such authority or jurisdiction to be due)
on or in respect of such tax returns and reports. To the Best Knowledge of the Company: (a)
there are no other federal, Ohio or other state, county, municipal or foreign









 



- 13 -



taxes that are due and payable by the Company that have not been so paid; (b) there are
no other federal, state, county, municipal or foreign tax returns or reports that are
required to be filed which have not been so filed; and (c) there are no unpaid assessment
for additional taxes for any fiscal period or any basis thereof. The Company’s (including
the predecessor’s) federal or state income tax returns have never been audited. Proper and
accurate amounts have been withheld by the Company from its employees and the employees of
its Subsidiaries for all periods in compliance with the tax, social security and any
employment withholding provisions of applicable federal and state law. Proper and accurate,
in all material respects, federal and state returns have been filed by the Company for all
periods for which returns were due with respect to employee income tax withholding, social
security and unemployment taxes, and the amounts shown thereon to be due and payable have
been paid in full or provision therefor included on the books of the Company in accordance
with and to the extent required by GAAP.



     Section 4.6 Absence of Certain Changes. 



     Except as set forth in Section 4.6 of the Disclosure Schedule, since December 31, 2005, there
has not been:




               (a) any material adverse change in the business, assets, liabilities, condition
or prospects of the Company (including its predecessor) and its Subsidiaries from
that shown by the Financial Statements as of December 31, 2005;




               (b) any damage, destruction or loss of any of the properties or assets of the
Company or any of its Subsidiaries (whether or not covered by insurance) materially
adversely affecting the business, assets, liabilities, prospects or financial or
other condition of the Company and its Subsidiaries, taken as a whole;




               (c) any dividend or other distribution in respect of any of the Company’s
capital stock (including the capital stock of its predecessor) paid, declared or set
aside or any direct or indirect redemption, purchase or other acquisition of any of
such capital stock by the Company;




               (d) any labor dispute, or any other event, development, or condition, of any
character, or threat of the same, materially adversely affecting the business or
prospects of the Company and its Subsidiaries, taken as a whole;




               (e) any material asset or property of the Company or any of its Subsidiaries
made subject to a Lien of any kind;




               (f) any material liability or obligation of any nature whatsoever (contingent
or otherwise) incurred by the Company or any of its Subsidiaries, other than current
liabilities or obligations incurred in the ordinary course of business;









 



- 14 -



               (g) any waiver of any valuable right of the Company or any of its Subsidiaries,
or the cancellation of any material debt or claim held by the Company or any of its
Subsidiaries;




               (h) any issuance of any capital stock or other securities (including options,
warrants or rights) of the Company or of any of its Subsidiaries or any agreements
or commitments respecting the same;




               (i) any sale, license, assignment or other transfer of any material tangible or
intangible assets of the Company or any of its Subsidiaries except in the ordinary
course of business consistent with past practice;




               (j) any loan by the Company to any officer, director, employee or shareholder
of the Company or any agreement or commitment therefor;




               (k) any increase, direct or indirect, in the compensation paid or payable to
any officer or director of the Company or any of its Subsidiaries not in the
ordinary course of business consistent with past practice;




               (l) any wage or salary increase applicable to any group or classification of
employees generally (other than in the ordinary course of business consistent with
past practice and in connection with the general salary plan of the Company);




               (m) any cancellation or compromise by the Company or any of its Subsidiaries of
any debt or claim, except in the ordinary course of business and consistent with
past practice;




               (n) any waiver or release by the Company or any of its Subsidiaries of any
rights of material value;




               (o) any transfer or grant by the Company or any of its Subsidiaries of any
material rights under any concessions, leases, licenses, agreements, patents,
inventions, trademarks, trade names, servicemarks or copyrights or with respect to
any know-how not in the ordinary course of business consistent with past practice;




               (p) any material transaction, contract or commitment by the Company or any of
its Subsidiaries, except contracts listed, or which pursuant to the terms hereof are
not required to be listed, on Section 4.6 of the Disclosure Schedule hereto, and
except this Agreement and the transactions contemplated hereby; or




               (q) any change by the Company in accounting methods or practices.









 



- 15 -


     Section 4.7 Litigation. 



     There are no suits, proceedings (including arbitration proceedings) or investigations
(including any audit proceedings by any governmental agency with jurisdiction over governmental
procurements or contracts) pending or, to the Best Knowledge of the Executive Management Team,
threatened against or affecting the Company or any of its Subsidiaries or any shareholder, director
or officer of the Company or any of its Subsidiaries that could have a material adverse effect on
the business, assets, liabilities, prospects or financial or other condition of the Company and its
Subsidiaries, taken as a whole, or the ability of any shareholder, director or officer to
participate in the affairs of the Company or that concern the transactions contemplated by the
Agreement. The foregoing includes, without limiting its generality, actions pending or, to the
Best Knowledge of the Executive Management Team, threatened (or any basis therefor known to the
Company) involving the prior employment of any employees or currently contemplated prospective
employees of the Company or any of its Subsidiaries or their use, in connection with the business
of the Company or any of its Subsidiaries, of any information or techniques which might be alleged
to be proprietary to their former employer(s).




     Section 4.7.1 Conflict of Interests. 




     Neither the Company nor, to the Best Knowledge of the Executive Management Team, any of
its Subsidiaries nor, to the Best Knowledge of the Executive Management Team, any officer,
employee, agent or any other person acting on behalf of the Company or any of its
Subsidiaries has, directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course of business)
to any customer, supplier, employee or agent of a customer or supplier, or official or
employee of any governmental agency or instrumentality of any government (domestic or
foreign) or other Person who was, is, or may be in of a position to help or hinder the
business of the Company or any of its Subsidiaries (or assist in connection with any actual
or proposed transaction) that: (a) might subject the Company or any of its Subsidiaries to
any damage or penalty in any civil, criminal or governmental litigation or proceeding; (b)
if not given in the past, might have had a material adverse effect on the assets, business,
operations or prospects of the Company or any of its Subsidiaries; or (c) if not continued
in the future, might materially adversely affect the business, assets, liabilities
operations or prospects of the Company or any of its Subsidiaries.




     Section 4.7.2 Other Relationships. 




     Except as set forth in Section 4.7.2 of the Disclosure Schedule, to the Best Knowledge
of the Executive Management Team, the shareholders, directors and officers of the Company
have no interest (other than as non-controlling holders of securities of a publicly traded
company), either directly or indirectly, in any entity, including without limitation, any
corporation, partnership, joint venture, limited liability company, proprietorship, firm,
person, licensee, business or association (whether as an employee,









 



- 16 -



officer, member, manager, director, shareholder, agent, independent contractor,
security holder, creditor, consultant, or otherwise) that presently: (i) engages in any
activity which is the same, similar to or competitive with any activity or business in which
the Company or any of its Subsidiaries is now engaged; (ii) is a supplier of, customer of,
creditor of, or has an existing contractual relationship with the Company or any of its
Subsidiaries; or (iii) has any direct or indirect interest in any asset or property used by
the Company or any property, real or personal, tangible or intangible, that is necessary or
desirable for the conduct of the business of the Company or any of its Subsidiaries. Except
as set forth in Section 4.7.2 of the Disclosure Schedule, no current or former shareholder,
director, officer or employee of the Company or any of its Subsidiaries nor any Affiliate of
any such person, is at present, or since the inception of the Company’s predecessor has
been, directly or indirectly through his or her affiliation with any other person or entity,
a party to any transaction (other than as an employee or consultant) with the Company or any
of its Subsidiaries providing for the furnishing of services by, or rental of real or
personal property from, or otherwise requiring cash payments to any such person.



     Section 4.8 Licenses; Compliance with Laws, Other Agreements, etc. 



     The Company and each of its Subsidiaries possess all franchises, permits, licenses and other
rights that are necessary for the conduct of its business, all such franchises, permits, licenses
and other rights are in good standing and in full force and effect, and, to the Best Knowledge of
the Company, there is no basis for the denial or non-renewal in the future of such rights,
franchises, permits, licenses and other rights. The Company and each of its Subsidiaries are in
full compliance with all such franchises, permits, licenses and other rights. Neither the Company
nor any of its Subsidiaries is in violation of any order or decree of any court, or of the
provisions of any contract or agreement to which it is a party or by which it may be bound, or of
any law, order, or regulation of any governmental authority, and neither this Agreement nor the
transactions contemplated hereby will result in any such violation.




     Section 4.8.1 Intellectual Property Rights and Government Approvals. 




     Included in Section 4.8.1 of the Disclosure Schedule is a true and complete list of all
patents, trademarks, service marks, trade names, copyrights (which have been filed with the
federal copyright authorities) and rights or licenses to use the same, and any and all
applications therefor, presently owned or held by the Company or any of its Subsidiaries.
Such patents, trademarks, service marks, trade names, copyrights and rights or licenses to
use the same, and any and all applications therefor, as well as all trade secrets and
similar proprietary information owned or held by the Company or any of its Subsidiaries, are
all that are required to enable the Company or any of its Subsidiaries to conduct its
business as now conducted, and the Company and each of its Subsidiaries believe that they
either now own, have the right to use, possesses or will be able to obtain possession of or
develop, and (with respect to its trade secrets and similar proprietary information) have
provided adequate safeguards and security for the protection of, all such rights which it
will require to conduct their business as proposed to be conducted. Neither the Company nor
any of its Subsidiaries nor any member of the Executive









 



- 17 -



Management Team has received any formal or informal notice of infringement or other
complaint that the Company’s or any Subsidiary’s operations traverse or infringe rights
under patents, trademarks, service marks, trade names, trade secrets, copyrights or licenses
or any other proprietary rights of others, nor do the Company or any of its Subsidiaries or
members of the Executive Management Team have any reason to believe that there has been any
such infringement. To the Executive Management Team’s Best Knowledge, no person affiliated
with the Company or any of its Subsidiaries has wrongfully employed any trade secrets or any
confidential information or documentation proprietary to any former employer, and no person
affiliated with the Company or any of its Subsidiaries has violated any confidential
relationship which such person may have had with any third party. To the Executive
Management Team’s Best Knowledge, the Company and each of its Subsidiaries has and will have
full right and authority to utilize the processes, systems and techniques presently employed
by it in the design, development and manufacture of its present products and all of its
other present or presently contemplated products and all rights to any processes, systems
and techniques developed by any employee or consultant of the Company or any of its
Subsidiaries have been and will be duly and validly assigned to the Company or the
applicable Subsidiary. To the Best Knowledge of the Executive Management Team, no
royalties, honorariums or fees are or will be payable by the Company or any of its
Subsidiaries to other persons by reason of the ownership or use by the Company or any of its
Subsidiaries of said patents, trademarks, service marks, trade names, trade secrets,
copyrights or rights or licenses to use the same or similar proprietary information, or any
and all applications therefor. The Company and each of its Subsidiaries has all material
governmental approvals, authorizations, consents, licenses and permits necessary or required
to conduct its business as currently conducted or as proposed to be conducted.




     Section 4.8.2 Government Approvals. 




     Except as set forth in Section 4.8.2 of the Disclosure Schedule, no authorization,
consent, approval, license, qualification or formal exemption from, nor any filing,
declaration or registration with, any court, governmental agency, regulatory authority or
political subdivision thereof, any securities exchange or any other Person, is required in
connection with the execution, delivery or performance by the Company of this Agreement or
the business of the Company in order to consummate the transactions contemplated in this
Agreement. All such material authorizations, consents, approvals, licenses, qualifications,
exemptions, filings, declarations and registrations have been obtained or made, as the case
may be, and are in full force and effect and are not the subject of any pending or, to the
Best Knowledge of the Executive Management Team, threatened attack by appeal or direct
proceeding or otherwise.



     Section 4.9 Brokers, etc. 



     Other than the “deal fee” payable by the Company to Walnut pursuant to Section 5.11 of this
Agreement and the fees set forth on Section 4.9 of the Disclosure Schedule, Company has not dealt
with any broker, finder, or other similar person in connection with the offer or sale of









 



- 18 -



shares of the New B-1 Series of New Class B Preferred and the transactions contemplated in
this Agreement. The Company is not under any obligation to pay any broker’s fee, finder’s fee or
commission in connection with such transactions other than the “deal fee” required to be paid under
Section 5.11 hereof and the fees set forth on Section 4.9 of the Disclosure Schedule.



     Section 4.10 Private Sale. 



     The Company has not, either directly or through any agent, offered any securities to or
solicited any offers to acquire any securities from, or otherwise approached, negotiated, or
communicated in respect of any securities with, any person in such a manner as to require that the
offer or sale of such securities (including but not limited to the New Class B Preferred be
registered pursuant to the provisions of Section 5 of the ‘33 Act and the rules and regulations of
the Commission thereunder or the securities laws of any state and neither the Company nor anyone
acting on its behalf will take any action prior to the Closing that would cause any such
registration to be required (including, without limitation, any offer, issuance or sale of any
security of the Company under circumstances which might require the integration of such security
with the New Class B Preferred under the ‘33 Act or the rules and regulations of the Commission
thereunder) which might subject the offering, issuance or sale of the New B-1 Series of New Class B
Preferred to the registration provisions of the ‘33 Act. The issuance of the shares of New B-1
Series of New Class B Preferred hereunder, and the issuance of shares of Common Stock issuable upon
the conversion of the New Class B Preferred are exempt from registration under the ‘33 Act. The
Company has complied with all federal and state securities and blue sky laws in all issuances and
purchases of capital stock prior to the date hereof and has not violated any applicable law in
making such issuances and purchases of its capital stock prior to the date hereof. Any notices
required to be filed under federal and state securities and blue sky laws prior to or subsequent to
the Closing shall be filed on a timely basis prior to or as so required. Neither the Company nor
any person authorized or employed by the Company as agent, broker, dealer or otherwise in
connection with the offering or sale of the New Class B Preferred has offered the same or any such
securities for sale to, or solicited any offers to buy the same from, or otherwise approached or
negotiated with respect thereto with, any person or persons other than the Investors and not more
than a limited number of other financially sophisticated investors.



     Section 4.11 Projections; Material Facts. 



     In connection with the transactions contemplated by this Agreement, the Company has furnished
to Walnut certain projected budgets, financial statements and forecasts. The Company represents
and warrants that such projected budgets, financial statements and forecasts were prepared by the
Company in good faith based on assumptions the Company believes to be reasonable and otherwise
based on the Company’s Best Knowledge, information and belief. No representation or warranty by
the Company contained in this Agreement or any other written statement, information, material or
certificate furnished or to be furnished to Walnut pursuant hereto or in connection with the
transactions contemplated hereby by the Company contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained therein or herein not
misleading, when all are taken together as a whole (it









 



- 19 -



being understood that, in the event of any inconsistency between this Agreement and any other
writings, this Agreement shall control). To the Executive Management Team’s Best Knowledge, there
is no information or fact which has or would have a material adverse effect on the business,
assets, liabilities, condition or prospects of the Company and its Subsidiaries, taken as a whole,
that has not been disclosed to the Investors.



     Section 4.12 Minutebooks. 



     The minute books of the Company (including its predecessor) contain a complete summary of all
meetings of shareholders and/or directors since the time of formation and accurately reflect all
transactions referred to in such minutes.



     Section 4.13 Employment Contracts, etc.; Certain Material Transactions. 



     Except as set forth in Section 4.13 of the Disclosure Schedule: (i) the Company and its
Subsidiaries are not a party to any employment or deferred compensation agreements; (ii) the
Company and its Subsidiaries do not have any bonus, incentive or profit-sharing plans; (iii) the
Company and its Subsidiaries do not have any Employee Benefit Plans or other pension, retirement or
similar plans or obligations, whether funded or unfunded, of a legally binding nature or in the
nature of informal understandings; and (iv) there are no existing material arrangements or proposed
material transactions between the Company or any of its Subsidiaries and any officer or director or
holder of more than ten percent (10%) of the capital stock of the Company. The Company and its
Subsidiaries are not a party to any collective bargaining agreement and, to the Executive
Management Team’s Best Knowledge, no organizational efforts are currently being made with respect
to any of such employees. To the Best Knowledge of the Executive Management Team, none of the
members of the Executive Management Team or any other key employees of the Company or any of its
Subsidiaries have any plans to terminate their respective relationships with the Company. Section
4.13 of the Disclosure Schedule hereto sets forth the name (and, where applicable, the title) of
each person employed by the Company or any of its Subsidiaries as of May 31, 2006, whose total
compensation (inclusive of salary and bonuses) for the fiscal year beginning January 1, 2006 exceed
Eighty Thousand Dollars ($80,000) as well as the specific amount paid during or accrued in respect
of such fiscal year to or for the account of each such person: (i) as basic salary; and (ii) as
bonus and other compensation.



     Section 4.14 Banks, Agents, etc. 



     Section 4.14 of the Disclosure Schedule hereto contains a complete and correct list setting
forth the name of: (i) each bank in which the Company or any of its Subsidiaries has an account,
safe deposit box or borrowing privilege and the names of all persons authorized to draw thereon, to
have access thereto or to borrow thereupon, as the case may be; and (ii) each agent to whom the
Company or any of its Subsidiaries has granted a written power of attorney or similar authority to
act on its behalf.









 



- 20 -


     Section 4.15 Aggregate Gross Assets.



     The aggregate gross assets of the Company (including its predecessor), including for purposes
of this Section 4.15 the aggregate gross assets of all of the Company’s Subsidiaries, have not at
any time exceeded Fifty Million Dollars ($50,000,000) and, after giving effect to the transactions
contemplated by this Agreement, will not exceed Fifty Million Dollars ($50,000,000).



     Section 4.16 Small Business Matters; Regulatory Compliance.



     The Company and its Subsidiaries are classified in the North American Industry Classification
System under codes 334511, 333314 and 54171. The information set forth in the Small Business
Administration Forms 480, 652 and Part A of Form 1031 (the “SBA Forms”) regarding the Company is
accurate and complete. The proceeds from the sale and issuance of shares of the New B-1 Series of
New Class B Preferred hereunder shall be used for expansion of the Company’s business, general
working capital and other enterprise purposes and otherwise as certified on the SBA Forms. Copies
of such forms have been completed by the Company and delivered to Walnut prior to the date hereof
along with a list of: (A) the name of each of the Company’s directors as of the date hereof; (B)
the name and title of each of the Company’s officers as of the date thereof; and (C) after giving
effect to the transactions contemplated by this Agreement, the name of each beneficial and record
owner of capital stock of the Company setting forth the number of shares and class of capital stock
held. The Company does not presently engage in any activities, nor will the Company use directly
or indirectly the proceeds from the sale and issuance of shares of the New B-1 Series of New Class
B Preferred hereunder for any purpose for which a Small Business Investment Company is prohibited
from providing funds under Title 13, Code of Federal Regulations §107.720.



ARTICLE V

COVENANTS OF THE COMPANY




     Section 5.1 Accounts and Reports. 



     Until a Public Offering occurs and so long as twenty five percent (25%) of the Shares of New
Class B Preferred issued under this Agreement remain outstanding (as adjusted for stock splits,
stock combinations and the like and including any shares of Common Stock held by the Investors into
which the New Class B Preferred may be converted), the Company shall furnish any Investor who or
that (together with its or his Affiliates) owns ten percent (10%) of the outstanding capital stock
of the Company with copies of the following certificates, filings and reports:




               (a) Annual Reports. As soon as available, and in any event within one
hundred twenty (120) days after the end of each fiscal year, audited Financial
Statements of the Company.




               (b) Monthly Financial Statements. Within thirty (30) days after the
end of each month, beginning with August 2006, copies of the Company’s

















 





- 21 -





unaudited statements of income and cash flow and unaudited consolidated balance
sheet as of the end of such month together with comparisons to budget and forecast
and to corresponding periods in prior years, which shall be prepared in accordance
with GAAP consistently applied and so certified by the Company’s principal financial
officer.




               (c) Certifications. All Financial Statements referred to in Section
5.1(a) above shall be certified by the Company’s Independent Public Accountants and
shall be presented in form comparative to the similar period of the preceding year.
If for any period the Company has any Subsidiary or Subsidiaries whose accounts are
consolidated with those of the Company, then, in respect of such period, all such
Financial Statements will be the consolidated and consolidating financial statements
of the Company and all such consolidated Subsidiaries.




               (d) Forecast. As soon as available, but in no event later than
December 31 of each year, a budget and forecast for the fiscal year beginning on
January 1 of the next calendar year, including a profit and loss statement,
statement of cash flow and balance sheet, prepared on a monthly basis, and, promptly
after preparation, any revisions thereto, in each case for review by the Investors
and in a format approved by the Board of Directors of the Company.




               (e) Other Information. Upon the reasonable request of an Investor, the
Company will reasonably promptly deliver to Investor other information and data, not
proprietary in nature (in the good-faith judgment of the Company), pertaining to its
business, financial and corporate affairs to the extent that such delivery will not
violate any then applicable laws and any contracts of the Company with third
persons. The Company will permit any person designated by an Investor in writing,
at the expense of that Investor, to visit and inspect any of the properties of the
Company, including its books of account, and to discuss its affairs, finances, and
accounts with the Company’s officers or directors, all at such reasonable times and
upon reasonable notice and as often as that Investor may reasonably request, all in
a manner consistent with the reasonable security and confidentiality needs of the
Company; provided, however, that the Company shall be under no such
obligation: (i) with respect to information deemed in good faith by the Board of
Directors of the Company to be proprietary; or (ii) if the Company’s Board of
Directors reasonably believes such visit, inspection, or discussion would violate
applicable laws or any contract with third persons. Nothing in this Section 5.1
shall be deemed to limit, or to be in derogation of, any Investor’s inspection
rights under Section 1701.37 of the Ohio General Corporation Law.



     Section 5.2 Small Business Administration.




               (a) On an ongoing basis on and after the Closing Date, for so long as Walnut
beneficially owns shares of New Class B Preferred or Common Stock in









 



- 22 -



the Company, the Company will use reasonable efforts to complete any forms and
provide any non-confidential information that may be reasonably required by the
Small Business Administration (“SBA”) in connection with the transactions
contemplated by this Agreement.




               (b) In addition to any other rights granted hereunder, the Company shall grant
Walnut and the SBA access to the Company’s books and records for the purpose of
verifying the use of such proceeds in verifying the certification made by the
Company and the SBA Forms delivered by the Company prior to the Closing and for the
purpose of determining whether the principal business activities of the Company
continue to constitute “eligible business activities” (within the meaning of the SBA
Regulations).




               (c) Upon the occurrence of a transaction or series of transactions that
constitutes a Regulatory Violation (as defined below) where the representatives of
Walnut on the Company’s Board of Directors opposed (in Board votes) the transaction
or series of transactions and warned the Company that a Regulatory Violation might
occur, in addition to any other rights or remedies to which it may be entitled
(whether under this Agreement, the Shareholders Agreement, the New Articles or
otherwise), Walnut shall have the right, to the extent required under the SBA
Regulations, to demand in writing that the Company shall cure such Regulatory
Violation, and if such Regulatory Violation cannot be cured in a timely manner, to
repurchase all of the outstanding New Class B Preferred owned by Walnut at a price
equal to the purchase price paid for such securities hereunder plus all declared and
unpaid dividends or distributions thereon by delivering written notice of such
demand to the Company. The Company shall pay, to the extent permitted by law, the
purchase price for such New Class B Preferred by a cashier’s or certified check or
by wire transfer of immediately available federal funds to Walnut within ninety (90)
days after the Company’s receipt of the demand notice and, upon such payment, Walnut
shall deliver the certificates or other instruments evidencing the New Class B
Preferred being repurchased by the Company duly endorsed for transfer or accompanied
by duly executed forms of assignment free of any liens or adverse claims. For
purposes of this Agreement, “Regulatory Violation” means a change in the principal
business activity of the Company and any “ineligible business activity” (within the
meaning of Title 13, Code of Federal Regulations §107.720).




               (d) In the event that Walnut reasonably determines that it has a Regulatory
Problem (as defined below), Walnut shall have the right to transfer its New Class B
Preferred to an accredited investor (as defined in the regulations promulgated under
the ‘33 Act), without regard to any restriction on transfer set forth in this
Agreement, the Shareholders Agreement or the New Articles (provided that the
transferee agrees to become a party to the Shareholders Agreement), and the Company
shall take all reasonable actions as are required by Walnut in order to: (i)
effectuate and facilitate any transfer by Walnut of any New









 



- 23 -



Class B Preferred then held by Walnut to any such person; (ii) permit Walnut
(or any of its Affiliates) to exchange all or any portion of any voting security
then held by it on a share-for-share basis for share of a non-voting security of the
Company, which non-voting security shall be identical in all respects to the voting
security exchanged for it, except that it shall be non-voting and shall be
convertible into a voting security on such terms as are reasonably requested by
Walnut in light of regulatory considerations then prevailing; (iii) continue and
preserve the respective allocations of the voting interests with respect to the
Company arising out of Walnut’s ownership of voting securities before the transfers
and amendments referred to above (including entering into such additional agreements
as are reasonably requested by Walnut to permit any Persons designated by Walnut to
exercise any voting power that is relinquished by Walnut); and (iv) at the expense
of Walnut, promptly amend this Agreement, the Shareholders Agreement, the Articles
and related agreements and instruments to effectuate and reflect the foregoing. For
purposes of this Agreement, a “Regulatory Problem” means any set of facts or
circumstances wherein it has been asserted by any Governmental Authority (or any
Investor that is an SBIC reasonably believes that there is a substantial risk of
such assertion) that Walnut is not entitled to hold, or exercise any significant
rights with respect to, the New Class B Preferred. Walnut represents and warrants
to the Company that it is not aware of a Regulatory Problem applicable to it as of
the date of this Agreement.



     Section 5.3 Use of Proceeds. 



     The Company shall use the proceeds of the sale of the New Class B Preferred hereunder solely
for the acquisitions described on Schedule 5.3 (which acquisitions are subject to the approval of
the Company’s Board of Directors, the approving majority of which must include both Walnut
Directors), expansion of the Company’s business and general working capital, as set forth in the
SBA Forms.



     Section 5.4 Rule 144. 



     The Investors recognize that the provisions of Rule 144 under the ‘33 Act are not presently
applicable to securities of the Company. The Company covenants that: (a) at all times after the
Company first becomes subject to the reporting requirements of Section 13 or 15(d) of the ‘34 Act,
the Company will comply with the current public information requirements of Rule 144(c)(1) under
the ‘33 Act; and (b) at all such times as Rule 144 is available for use by the Investors, the
Company will furnish the Investors or any Holder upon request with all information within the
possession of the Company required for the preparation and filing of Form 144.



     Section 5.5 Future Proprietary Rights Agreements; Other Agreements.




               (a) Proprietary Information. The Company shall use reasonable
commercial best efforts to: (i) insure that no person employed by the Company or









 



- 24 -



any of its Subsidiaries will wrongfully employ any confidential information or
documentation proprietary to any former employer; (ii) protect, by maintenance of
secrecy to the extent appropriate, all technical and business information developed
by and belonging to the Company or any of its Subsidiaries which has not been
patented; (iii) cause to be patented all technological information developed by and
belonging to the Company or any of its Subsidiaries, which, in the opinion of the
Company or any of its Subsidiaries and its counsel, is patentable and is best
protected by patenting; and (iv) cause each person who becomes an officer of or
consultant to the Company or any of its Subsidiaries to execute an agreement, in
form and substance acceptable to the Investors and their counsel, relating to
matters of nondisclosure.




               (b) Licenses and Trademarks. The Company shall use reasonable
commercial efforts to own, possess and maintain all patents, trademarks, service
marks, trade names, copyrights and licenses necessary or useful in the conduct of
its business and the business of the Company and its Subsidiaries.




               (c) Other Agreements. The members of the Executive Management Team
shall, as of the date of this Agreement, have entered into agreements for the
benefit of the Investors relating to matters of corporate opportunities and a
limited non-competition covenant, all in the form attached hereto and incorporated
herein as Schedule 5.5.



     Section 5.6 Liability Insurance; D&O Insurance; Charter Indemnity Provisions.




     The Company will maintain in full force and effect a policy or policies of standard
comprehensive general liability insurance and a directors and officers liability insurance policy,
each underwritten by a reputable and financially stable U.S. insurance company insuring the
Company’s properties and business and officers and directors against such losses and risks, and in
such amounts, as are adequate for its business and as are customarily carried by entities of
similar size engaged in the same or similar business. Such policies shall include property loss
insurance policies, with extended coverage, sufficient in amount to allow the replacement of any of
its tangible properties which might be damaged or destroyed by the risks or perils normally covered
by such policies. The Company’s Board of Directors, including Walnut’s Board Members and the Board
observers designated by Walnut shall be covered by the directors’ and officers’ insurance policy.
Pursuant to provisions in the Company’s New Articles and/or Regulations (which provisions shall be
in form and substance acceptable to the Investors and their counsel), the Company shall also
indemnify the members of the Company’s Board of Directors and advance expenses to such persons to
the fullest extent permitted by applicable law.



     Section 5.7 Taxes and Assessments. 



     The Company will pay and discharge before the same become delinquent and before penalties
accrue thereon, all taxes, assessments and governmental charges upon or against the Company or any
of its Subsidiaries, or any of their respective properties, and all other material









 



- 25 -



liabilities at any time existing, except to the extent and so long as: (a) the same are being
contested in good faith and by appropriate proceedings in such manner as not to cause any material
adverse effect upon the financial condition of the Company or the loss of any right of redemption
from any sale thereunder; and (b) the Company shall have set aside on its books adequate reserves
with respect thereto.



     Section 5.8 Maintenance of Entity. 



     The Company will preserve, renew and keep, and shall cause each of its Subsidiaries to
preserve, renew and keep, in full force and effect, its corporate existence, qualification in
requisite jurisdictions and rights and privileges necessary or desirable in the normal conduct of
its business.



     Section 5.9 Governmental Consents. 



     The Company will obtain, and shall cause each of its Subsidiaries to obtain, all consents,
approvals, licenses and permits required by federal, state, local and foreign law to carry on its
business.



     Section 5.10 Further Assurances. 



     The Company will cure promptly any defects in the creation and issuance of the shares of New
Class B Preferred, in the Merger or in the execution and delivery of this Agreement. The Company,
at its expense, will promptly execute and deliver promptly to the Investors upon request all such
other and further reasonable documents, agreements and instruments in compliance with or pursuant
to its covenants and agreements herein, and will make any recordings, file any notices, and obtain
any consents as may be reasonably necessary, or appropriate in connection therewith.



     Section 5.11 Deal Fees and Expenses. 



     The Company agrees to pay Walnut, at the Closing and at the Second Tranche Closing, a deal fee
equal to Two percent (2.00%) of the amount invested by Walnut in the Shares of New Class B
Preferred at the Closing or the Second Tranche Closing, as the case may be, which “deal fee” shall
be used to cover expenses associated with the SBIC status of Walnut. The Company shall also pay,
at the Closing, the out-of-pocket fees and expenses of Walnut, including the fees of Keating
Muething & Klekamp PLL, counsel to the Investors, in an amount not to exceed, in the aggregate,
Twenty Thousand Dollars ($20,000). The Investors acknowledge that partners of Keating Muething &
Klekamp PLL have direct and indirect economic investment interests in the Company and waive any
conflict that may be deemed to arise from such interests. The Company and the Executive Management
Team shall indemnify Walnut from and against any claims by third-party brokers, finders and others
arising out of the transactions contemplated by this Agreement.









 



- 26 -


     Section 5.12 Regulation D Filings. 



     The Company will file on a timely basis all notices of sale required to be filed with the
Commission pursuant to Regulation D under the ‘33 Act with respect to the transactions contemplated
by this Agreement and simultaneously furnish copies of each report of sale to the Investors.



     Section 5.13 Preemptive Rights. 




               (a) The Company hereby grants to the Investors a right of first refusal to
purchase, on a pro rata basis, all or any part of New Securities (as defined below)
which the Company may, from time to time, propose to sell and issue subject to the
terms and conditions set forth below. Each Investor’s pro rata share, for purposes
of this Section 5.13, shall equal a fraction, the numerator of which is the number
of shares of Common Stock then held by that Investor or issuable upon conversion of
New Class B Preferred then held by that Investor or upon the exercise of any other
convertible securities, options, rights, or warrants then held by that Investor, and
the denominator of which is the total number of shares of Common Stock then
outstanding plus the number of shares of Common Stock issuable upon
conversion or exercise of then outstanding New Class A Preferred, New Class B
Preferred, and other convertible securities, options, rights or warrants
(i.e., calculated on a fully-diluted basis, taking into account all
management options, whether now existing or proposed).




               (b) “New Securities” shall mean any capital stock of the Company
whether now authorized or not and rights, options or warrants to purchase capital
stock, and securities of any type whatsoever which are, or may become, convertible
into capital stock; provided, however, that the term “New Securities” does not
include: (i) the New Class B Preferred issuable pursuant to this Agreement or the
New Class A Preferred to be issued in connection with the acquisitions set forth on
Schedule 5.3, or the shares of Common Stock issuable upon conversion of such shares
of New Class A Preferred or of New Class B Preferred; (ii) securities offered to
the public pursuant to a Public Offering; (iii) securities issued as a result of any
stock split, stock dividend or reclassification of Common Stock, distributable on a
pro rata basis to all holders of Common Stock; or (iv) securities issued in
connection with the exercise of warrants or options listed on Section 4.4 of the
Disclosure Schedule; or (v) securities issued in connection with any of the
Company’s stock option plans pursuant to resolutions adopted by the unanimous vote
of the Board of Directors, including both directors designated by Walnut; or (vi)
securities issued in connection with acquisitions by the Company.




               (c) If the Company intends to issue New Securities, it shall give the Investors
written notice of such intention, describing the type of New Securities to be
issued, the price thereof and the general terms upon which the Company









 



- 27 -



proposes to effect such issuance. The Investors shall have thirty (30) days
from the date of any such notice to agree to purchase all or part of its pro rata
share of such New Securities for the price and upon the general terms and conditions
specified in the Company’s notice by giving written notice to the Company stating
the quantity of New Securities to be so purchased.




               (d) If any Investor fails to exercise the foregoing right of first refusal with
respect to any New Securities within such thirty (30)-day period, the Company may
within one hundred eighty (180) days thereafter sell any or all of such New
Securities not agreed to be purchased by the Investors, at a price and upon general
terms no more favorable to the purchasers thereof than specified in the notice given
to the Investors pursuant to paragraph (c) above. In the event the Company has not
sold such New Securities within such one hundred eighty (180)-day period, the
Company shall not thereafter issue or sell any New Securities without first offering
such New Securities to the Investors in the manner provided above.



     The holders of the New Class A Preferred shall have comparable preemptive rights under and
pursuant to the Company’s New Articles. In the event of any conflict (including any conflict as to
scope) between the Company’s New Articles and the provisions of this Section 5.13, the provisions
of the Company’s New Articles shall govern and prevail. A party having preemptive rights under
multiple documents may avail itself, himself or herself of such preemptive rights under one (1)
(but not more than one (1)) such document.



     Section 5.14 Auditor. 



     The Company shall retain a firm of certified public accountants of established national or
regional reputation to serve as the Company’s Independent Public Accountants and to audit the
Company’s books and records at least annually.



     Section 5.15 Board of Directors.



     The Company shall have a seven (7) member Board of Directors, the composition of which shall
be as set forth in the Shareholders Agreement and the New Articles.



     Section 5.16 Key-Man Life Insurance. 



     Walnut shall have the right to acquire additional life insurance up to Four Million Dollars
($4,000,000) in policy amount, of which Walnut shall be the beneficiary and at Walnut’s sole cost
and expense, on the lives of the members of the Executive Management Team and on the lives of the
members of key managers of the Subsidiaries (“Subsidiary Key Persons”). The members of the
Executive Management Team and the Subsidiary Key Persons shall fully cooperate in obtaining such
insurance.









 



- 28 -


     Section 5.17 Termination of Covenants. 



     The covenants of the Company contained in this Article V shall terminate, and be of no further
force or effect, upon the effective date of a Public Offering that generates gross proceeds to the
Company of not less than Twenty Five Million Dollars ($25,000,000).



ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF THE INVESTORS




     Each Investor, severally and not jointly and severally, represents and warrants to the Company
at and of the date hereof and also at and as of the Closing that:



     Section 6.1 Power and Authority. 



     Such has full power and authority and has taken all required corporate, partnership or other
action necessary to permit it to execute and deliver this Agreement, and all other documents or
instruments required by this Agreement, and to carry out the terms of this Agreement and of all
such other documents or instruments.



     Section 6.2 Purchase for Investment. 



     Such Investor is purchasing the New Class B Preferred and any Common Stock into which such New
Class B Preferred may be converted for investment, for its own account and not with a view to
distribution thereof, except for transfers permitted hereunder. Such Investor understands that the
New Class B Preferred and any Common Stock received upon conversion of the New Class B Preferred
must be held indefinitely unless it is registered under the ‘33 Act or an exemption from such
registration becomes available, and that the New Class B Preferred and any Common Stock received
upon conversion thereof may only be transferred as provided in this Agreement and in the
Shareholders Agreement.



     Section 6.3 Financial Matters. 



     Such Investor represents and warrants to the Company that it understands that the purchase of
the New Class B Preferred, as the case may be, involves substantial risk and that its financial
condition and investments are such that it is in a financial position to hold the New Class B
Preferred, as the case may be, for an indefinite period of time and to bear the economic risk of,
and withstand a complete loss of, such New Class B Preferred, as the case may be. In addition, by
virtue of its expertise, the advice available to it and previous investment experience, such
Investor has extensive knowledge and experience in financial and business matters, investments,
securities and private placements and the capability to evaluate the merits and risks of the
transactions contemplated by this Agreement. Such Investor represents that it is an “accredited
investor” as that term is defined in Regulation D promulgated under the ‘33 Act.



     During the negotiation of the transactions contemplated herein, such Investor and its
representatives have been afforded full and free access to corporate books, financial statements,
records, contracts, documents, and other information concerning the Company and to its offices









 



- 29 -



and facilities, have been afforded an opportunity to ask such questions of the Company’s
officers and employees concerning the Company’s business, operations, financial condition, assets,
liabilities and other relevant matters as they have deemed necessary or desirable, and have been
given all such information as has been requested, in order to evaluate the merits and risks of the
prospective investment contemplated herein.



     Section 6.4 Brokers, etc. 



     Except as set forth on Exhibit 6.4, such Investor has dealt with no broker, finder, commission
agent, or other similar person in connection with the offer or sale of the New Class B Preferred
and the transactions contemplated by this Agreement, and is under no obligation to pay any broker’s
fee, finder’s fee, or commission in connection with such transactions.



ARTICLE VII

THE CLOSING AND CLOSING CONDITIONS




     Section 7.1 The Closing. 



     Except as otherwise set forth herein, the purchase and sale of the New Class B Preferred at
the Closing shall take place at the offices of Keating Muething & Klekamp PLL, One East Fourth
Street, Suite 1400, Cincinnati, Ohio 45202. The Closing shall occur on August 21, 2006, or such
other date not later than August 21, 2006, as the Company and by majority in interest of the
Investors may designate.



     The obligation of the Investors to purchase the shares of New Class B Preferred to be
purchased by the Investors at the Closing and at the Second Tranche Closing, as applicable shall be
subject to satisfaction of the following conditions at and as of the Closing and at the Second
Tranche Closing, as applicable:



     Section 7.2 Issuance of New Class B Preferred. 



     The Company shall have duly issued and delivered certificates to the Investors for the shares
of New Class B Preferred purchased by the Investors as provided in Sections 3.1, 3.3 and 3.5, as
applicable.



     Section 7.3 Legal Opinion from Counsel for the Company. 



     There shall be made available to the Investors the written opinion of Taft, Stettinius &
Hollister LLP, counsel for the Company, in substantially the form attached as Schedule 7.3.



     Section 7.4 Merger.



     The Merger shall have been consummated in accordance with the provisions hereof, of the Merger
Agreement and of the OGCL.









 



- 30 -


     Section 7.5 Certificate of Officer of the Company. 




          The Company shall have delivered to the Investors a certificate of its chief executive
and chief financial officers, or alternatives therefor satisfactory to counsel for the
Investors, dated the date of the Closing or the Second Tranche Closing, as applicable, to
the effect that the representations and warranties of the Company are true at and as of the
Closing or the Second Tranche Closing, as applicable, as if made at and as of the Closing or
the Second Tranche Closing, as applicable, and that each of the conditions in this Article
VII has been satisfied.



     Section 7.6 Execution of Related Documents. 



     The Company, the Investors and all other Company shareholders shall have duly authorized and
executed the Shareholders Agreement in the form set forth as Schedule 7.6-1 hereto. The
shareholders of the Company shall have, by adopting the Merger Agreement and approving the Merger,
adopted the New Articles, which shall be in the form attached hereto as Schedule 7.6-2.



     Section 7.7 The Investors Review. 



     Prior to the Closing, the Investors shall have completed their review of, and shall be
satisfied with their conclusions regarding, the Company’s markets, business and projected
operations.



     Section 7.8 Performance. 



     The Company shall have performed and complied with all agreements and conditions contained
herein required to be performed or complied with by it prior to or at the Closing Date, and the
Company shall have certified to such effect to the Investors in writing.



     Section 7.9 All Proceedings to Be Satisfactory. 



     All corporate and other proceedings to be taken by the Company in connection with the
transactions contemplated hereby and all documents incident thereto shall be satisfactory in form
and substance to a majority in interest of the Investors and their counsel, and the Investors and
said counsel shall have received all such counterpart originals or certified or other copies of
such documents as they may reasonably request.



     Section 7.10 Supporting Documents. 



     On or prior to the Closing Date the Investors and their counsel shall have received copies of
the following supporting documents:




               (a) a copy of the New Articles certified by the Secretary of State of the State
of Ohio;









 



- 31 -



               (b) a certificate of said Secretary dated as of a recent date as to the due
organization and good standing of the Company and listing all documents of the
Company on file with said Secretary;




               (c) a certificate of the Secretary or comparable representative of the Company,
dated the Closing Date and certifying: (1) that attached thereto are true and
complete copies of the New Articles and Regulations of the Company as in effect on
the date of such certification; (2) that attached thereto is a true, correct and
complete copy of resolutions adopted by the Board of Directors of the Company
authorizing the execution, delivery and performance of this Agreement, the
Shareholders Agreement, the issuance, sale, and delivery of the New Class B
Preferred and of the issuance, sale and delivery of shares of Common Stock upon
conversion of the New Class B Preferred, and that all such resolutions are still in
full force and effect and are all the resolutions adopted in connection with the
transactions contemplated by this Agreement; (3) that the New Articles of the
Company have not been amended since the date of the last amendment referred to in
the certificate delivered pursuant to clause (b) above; and (4) the incumbency and
specimen signature of each officer of the Company executing this Agreement, the
Shareholders Agreement, the certificate or certificates representing the New Class B
Preferred and any certificate or instrument furnished pursuant hereto, and a
certification by another officer of the Company as to the incumbency and signature
of the officer signing the certificate referred to in this paragraph (c); and




               (d) such additional supporting documents and other information with respect to
the operations and affairs of the Company as a majority in interest of the Investors
and their counsel may reasonably request.




     All such documents shall be satisfactory in form and substance to the New Class B
Investors and their counsel.



     Section 7.11 Reasonable Satisfaction of the New Class B Investors. 



     All instruments applicable to the issuance and sale of the New Class B Preferred and all
proceedings taken in connection with the transactions contemplated by this Agreement, shall be
reasonably satisfactory to a majority in interest of the Investors.



ARTICLE VIII

INDEMNIFICATION AND SURVIVAL




     Section 8.1 Indemnification by the Company. Notwithstanding anything in this
Agreement to the contrary, but subject to the other provisions of this Article VIII, the Company
shall indemnify, defend, and hold the Investors (and each of them), the Investors’ respective
directors, partners, officers and Affiliates, and each of such partners’ and Affiliates’ officers,
directors, partners, employees, representatives and Affiliates, (collectively, the “Investor
Indemnitees”) harmless from and against, and shall reimburse them for, any and all demands,









 



- 32 -



claims, losses, liabilities, damages, costs, and expenses whatsoever (including, without
limitation, any fines, penalties, reasonable fees and disbursements of counsel incurred by Investor
Indemnitees in investigating or defending any of the foregoing, and other reasonable expenses
incurred investigating or defending any of the foregoing or enforcing this Agreement) (individually
a “Loss” and collectively “Losses”) sustained or incurred by an Investor Indemnitee
resulting from or arising in connection with: (a) any material inaccuracy in or breach of any of
the representations or warranties of the Company set forth in this Agreement or the Schedules or
Exhibits hereto or in the documents delivered to the Investors pursuant hereto; or (b) any breach
by the Company of any of its covenants, obligations, or agreements contained herein or in the New
Articles, or the Shareholders Agreement, in each case whether or not such Loss results from a third
party claim.



     Section 8.2 Indemnification by the Investors. Notwithstanding anything in this
Agreement to the contrary, but subject to the other provisions of this Article VIII, the Investors,
severally and not jointly and severally, shall indemnify, defend, and hold the Company and its
officers, directors, employees, representatives and Affiliates, and each of the Company’s
Affiliates’ officers, directors, employees, partners, representatives and Affiliates (collectively,
the “Company Indemnitees”) harmless from and against, and shall reimburse them for, any and
all Losses sustained or incurred by a Company Indemnitee resulting or arising from: (a) any
material inaccuracy in or breach of any of such Investor’s representations or warranties set forth
in this Agreement; or (b) any breach of any covenant, obligation or agreement of such Investor
contained in this Agreement, or the Shareholders Agreement, in each case whether or not such Loss
results from a third party claim.



     Section 8.3 Indemnification Notice. In the event that: (i) an event occurs which
gives a Person a right to indemnification hereunder; or (ii) any third party claim is asserted
against a Person with respect to which such Person is entitled to indemnification hereunder, such
Person (the “Indemnified Party”) shall, within sixty (60) days of the later of the
occurrence of the event giving rise to the claim or the date that the indemnified party learned of
such claim (provided, however, that if a claim arises by virtue of litigation, then in no event
less than ten (10) days prior to the date in which an appearance or answer is due, whichever is
earlier), notify the Person obligated to indemnify it (the “Indemnifying Party”) of such
claim by delivery of a written notice describing the claim and indicating the basis for
indemnification hereunder. The Indemnifying Party shall have the right, upon written notice to the
Indemnified Party within ten (10) days after receipt from the Indemnified Party of notice of such
claim, to conduct at its expenses the defense against such claim in its own name, or if necessary
in the name of the Indemnified Party. In the event that the Indemnifying Party fails to give such
notice, it shall be deemed to have elected not to conduct the defense of the subject claim, and in
such event the Indemnified Party shall have the right to conduct such defense and, only with the
prior consent of the Indemnifying Party which shall not be unreasonably withheld, to compromise and
settle the claim. In the event that the Indemnifying Party does elect to conduct the defense of
the subject claim, the Indemnified Party shall cooperate with and make available to the
Indemnifying Party such assistance and materials as may be reasonably requested by it, all at the
expense of the Indemnifying Party and the Indemnified Party shall have the right at its expense to
participate in the defense, provided that the Indemnified Party will have the right to compromise
and settle the claim only with the









 



- 33 -



prior written consent of the Indemnifying Party. Any settlement to which the Indemnifying
Party shall have consented in writing shall conclusively be deemed to be an obligation with respect
to which the Indemnified Party is entitled to indemnification hereunder.



     Section 8.4 Survival of Representations and Warranties. The representations and
warranties made by the parties in or pursuant to this Agreement or in any document delivered
pursuant hereto shall be deemed to have been made as of the Closing Date. The representations and
warranties of the parties will survive the Closing until the third anniversary of the Closing Date.
The covenants of the parties shall survive the Closing for the periods indicated in this Agreement
or, if not so indicated, indefinitely.



ARTICLE IX

MISCELLANEOUS




     Section 9.1 Expenses. 



     Except as herein provided, the Company and the Investors will each bear their own expenses in
connection with this Agreement.



     Section 9.2 Remedies Cumulative. 



     Except as herein provided, the remedies provided herein shall be cumulative and shall not
preclude assertion by any party hereto of any other rights or the seeking of any other remedies
against the other party hereto.



     Section 9.3 Brokerage. 



     Each party hereto will indemnify and hold harmless the others against and in respect of any
claim for brokerage or other commission relative to this Agreement or to the transaction
contemplated hereby, based in any way on agreements, arrangements or understandings made or claimed
to have been made by such party with any third party.



     Section 9.4 Severability. 



     Whenever possible, each provision of this Agreement shall be interpreted in such a manner as
to be effective and valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provisions shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.



     Section 9.5 Parties in Interest. 



     All covenants and agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective legal representatives, successors and
assigns of the parties hereto whether so expressed or not.









 



- 34 -


     Section 9.6 Notices. 



     Notices required under this Agreement shall be deemed to have been adequately given if
delivered in person or sent by certified mail, return receipt requested, to the recipient at its
address set forth below or such other address as such party may from time to time designate in
writing.



	 	 	 	 	 
	 

	 	The Company:
	 	The O’Gara Group, Inc.

7570 East Kemper Road, Suite 460

Cincinnati, OH 45249

Phone 513-489-1898

Fax 513-489-1898

Attention: Wilfred T. O’Gara
	 
	 	 	 	 
	 

	 	with a required copy

(which shall not constitute

notice) to:
	 	


Abram S. Gordon, Esq.

7570 East Kemper Road, Suite 460

Cincinnati, OH 45249

	 
	 	 	 	 
	 

	 	Walnut and WHO:
	 	Walnut Investment Partners, L.P.

Walnut Private Equity Fund, L.P.

Walnut Holdings O’Gara LLC

c/o The Walnut Group

312 Walnut Street, Suite 1151

Cincinnati, Ohio 45202

Phone 513-651-3300

Fax 513-651-1084

Attention: James M. Gould

	 
	 	 	 	 
	 

	 	with a required copy

(which shall not constitute

notice) to:
	 	


Keating Muething & Klekamp PLL

One East Fourth Street

Suite 1400

Cincinnati, Ohio 45202

Phone 513-579-6468

Fax 513-579-6578

Attention: Edward E. Steiner, Esq.












 



- 35 -


	 	 	 	 	 
	 

	 	Hauser LLC:
	 	Hauser 43, LLC

c/o The Hauser Group

8260 Northcreek Drive

Suite 200

Cincinnati, Ohio 45236

Phone 513-936-7373
	 
	 	 	 	 
	 

	 	PMR:
	 	P.O. Box 1508

4919 Main Street

Waitsfield, Vermont 06573
	 
	 	 	 	 
	 

	 	T. O’Gara:
	 	Thomas M. O’Gara

7570 East Kemper Road, Suite 460

Cincinnati, OH 45249

	 
	 	 	 	 
	 

	 	Campbell:
	 	Kurt M. Campbell

7570 East Kemper Road, Suite 460

Cincinnati, OH 45249







     Section 9.7 No Waiver.



     No failure to exercise and no delay in exercising any right, power or privilege granted under
this Agreement shall operate as a waiver of such right, power or privilege. No single or partial
exercise of any right, power or privilege granted under this Agreement shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.



     Section 9.8 Amendments and Waivers. 



     Except as otherwise herein provided, this Agreement may be modified or amended only by a
writing signed by the Company and by each of the Investors.



     Section 9.9 Construction. 



     This Agreement shall be governed by and construed in accordance with the procedural and
substantive laws of the State of Ohio without regard for its conflicts-of-laws rules. The Company
agrees that it may be served with process in the State of Ohio and any action for breach of this
Agreement, or to interpret the provisions of this Agreement, prosecuted against it in the courts of
that State or in the federal courts located in the State of Ohio.



     Section 9.10 Entire Understanding. 



     This Agreement expresses the entire understanding of the parties and supersedes all prior and
contemporaneous agreements and undertakings of the parties with respect to the subject matter of
this Agreement.









 



- 36 -


     Section 9.11 Counterparts. 



     This Agreement may be executed in one or more counterparts, each of which shall be deemed to
be an original but all of which taken together shall constitute one agreement.



     Section 9.12 Assignment; No Third-Party Beneficiaries.




               (a) This Agreement and the rights hereunder shall not be assignable or
transferable by the Investors or the Company except, in the case of the Investors,
in accordance with the restrictions on transfer set out in the New Articles and in
the Shareholders Agreement or, in the case of the Company, by operation of law in
connection with a merger, consolidation or sale of substantially all the assets of
the Company without the prior written consent of the other parties hereto. Subject
to the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties hereto and their respective successors
and assigns. The assignment by the Investors on a nonexclusive basis of any rights
under this Agreement to any such transferee shall not affect or diminish the rights
or obligations of the Investors under this Agreement and in no event shall any
assignment relieve the Investors of their obligations hereunder.




               (b) Except as provided in Section 9.12, this Agreement is for the sole benefit
of the parties hereto and their permitted assigns and nothing herein expressed or
implied shall give or be construed to give to any Person, other than the parties
hereto and such assigns, any legal or equitable rights hereunder.



ARTICLE X

TERMINATION




     Section 10.1 Termination. 



     This Agreement may be terminated at any time prior to the Closing:




               (a) by mutual consent of a majority in interest of the Investors and the
Company;




               (b) by the Company or by a majority in interest of the Investors if the initial
Closing shall not have occurred by August 21, 2006; provided that the failure to
consummate the transactions contemplated hereby is not a result of the failure by
the party so electing to terminate this Agreement to perform any of its obligations
hereunder.



     Section 10.2 Effect of Termination. 



     If this Agreement shall be terminated pursuant to Section 10.1, all obligations,
representations and warranties of the parties hereto under the Agreement shall terminate and









 



- 37 -



there shall be no liability, except for any breach of this Agreement prior to such
termination, of any party to another party.



(Remainder of page intentionally blank; signature page follows)










 



- 38 -




     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year
first above written.



	 	 	 	 	 	 	 
	 	 	THE O’GARA GROUP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Wilfred T. O’Gara	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Wilfred T. O’Gara
	 	 
	 

	 	 	 	Title: President
	 	 






	 	 	 	 	 	 	 	 	 
	 	 	WALNUT INVESTMENT PARTNERS, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Walnut Investments Holding Company, LLC, Its	 	 
	 	 	 	 	General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	 /s/ James M. Gould	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: James M. Gould
	 	 
	 

	 	 	 	 	 	Title: Managing General Partner
	 	 






	 	 	 	 	 	 	 	 	 
	 	 	WALNUT PRIVATE EQUITY FUND, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Walnut Private Equity Fund G.P., LLC,	 	 
	 	 	 	 	Its General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:
	 	/s/ James M. Gould	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Name: James M. Gould
	 	 
	 

	 	 	 	 	 	Title: Managing General Partner
	 	 






	 	 	 	 	 	 	 
	 	 	WALNUT HOLDINGS O’GARA LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ James M. Gould	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: James M. Gould
	 	 
	 

	 	 	 	Title: Managing Member
	 	 
	 
	 	 	 	 	 	 
	 	 	THE THOMAS M. O’GARA FAMILY TRUST	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Thomas M. O’Gara	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Thomas M. O’Gara, Trustee
	 	 












 



- 39 -


	 	 	 	 	 	 	 
	 	 	PMR, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ William Parker	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: William Parker
	 	 
	 

	 	 	 	Title: Manager
	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Kurt M. Campbell	 	 
	 	 	 	 	 
	 	 	KURT M. CAMPBELL	 	 












 



- 40 -


	 	 	 	 	 	 	 
	 	 	HAUSER 43, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Mark J. Hauser	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Mark J. Hauser
	 	 
	 

	 	 	 	Title: Manager
	 	 












 





Schedule 2.1




Merger Agreement




     See attached.



 









 





AGREEMENT AND PLAN OF MERGER




     THIS AGREEMENT AND PLAN OF MERGER (“Merger Agreement”) is made as of the 14th day
of July 2006 between THE O’GARA GROUP, INC., an Ohio corporation (“O’Gara”), and O’GARA RECAP
CORP., an Ohio corporation and wholly owned subsidiary of O’Gara (“ORC”).



R E C I T A L S:




     WHEREAS, the respective Boards of Directors of O’Gara and ORC (hereinafter sometimes
collectively referred to as the “Constituent Corporations”) have approved the merger of ORC with
and into O’Gara upon the terms and conditions set forth herein (the “Merger”).



     WHEREAS, O’Gara, as the sole shareholder of ORC, has approved the Merger and adopted this
Merger Agreement.



     WHEREAS, this Merger Agreement will be submitted to the shareholders of O’Gara for their
adoption and for approval of the Merger, all in accordance with Sections 1701.78 and 1701.80 of the
Ohio Revised Code.



     WHEREAS, the consummation of the Merger is a condition precedent to the obligations of certain
investors to invest in preferred equity securities of O’Gara, all as contemplated by the Investment
and Recapitalization Agreement dated as of July 14, 2006 among O’Gara and those investors
(“Recapitalization Agreement”).



     NOW, THEREFORE, in accordance with Ohio Revised Code Section 1701.80, in consideration of the
mutual covenants, agreements and conditions set forth herein, do hereby prescribe the following
terms and conditions of the Merger and the manner of effectuating the same:



ARTICLE 1.

THE MERGER




     1.1 On the Effective Date (as hereinafter defined), ORC shall be merged with and into O’Gara,
which shall be the corporation surviving the Merger (the “Surviving Corporation”) and which shall
continue in its corporate existence under the laws of the State of Ohio under the name “The O’Gara
Group, Inc.” The location of the principal office in Ohio of the Surviving Corporation is 7570
East Kemper Road, Suite 460, Cincinnati, Ohio 45249.



     1.2 A certificate of merger (“Certificate of Merger”) and such supporting documents as may be
required shall be filed as promptly as possible with the Secretary of State of Ohio after the
requisite consent of O’Gara’s shareholders has been received. The close of business on the date on
which the Certificate of Merger is filed shall be the effective date and time of the Merger (the
“Effective Date”).



ARTICLE 2.

CONVERSION AND CANCELLATION OF SHARES




 









 








     2.1 The authorized capital stock of ORC consists of one thousand five hundred (1,500) shares
of common stock, without par value per share, of which one hundred (100) shares are issued,
outstanding and owned by O’Gara.



     2.2 On and as of the Effective Date, each share of capital stock of ORC then issued and
outstanding shall, by virtue of the Merger and without the need for any action on the part of the
holder thereof, be canceled.



     2.3 On and as of the Effective Date, each share of O’Gara’s Series C 3% Cumulative
Participating Preferred Stock and Series G 3% Cumulative Participating Preferred Stock outstanding
immediately prior to the Effective Date shall be converted, by virtue of the Merger and without the
need for any action on the part of the holder thereof, into one (1) share of a series of New Class
A 3% Cumulative Participating Preferred Stock of the Surviving Corporation, the New A-1 Series.



          On and as of the Effective Date, each share of O’Gara’s Series E 5% Cumulative Participating
Preferred Stock and Series F 5% Cumulative Participating Preferred Stock outstanding immediately
prior to the Effective Date shall be converted, by virtue of the Merger and without the need for
any action on the part of the holder thereof, into one (1) share of a series of New Class B 5%
Cumulative Participating Preferred Stock of the Surviving Corporation, the New B-1 Series.



          On and as of the Effective Date, each share of O’Gara’s Series B 5% Cumulative Participating
Preferred Stock outstanding immediately prior to the Effective Date shall be converted, by virtue
of the Merger and without the need for any action on the part of the holder thereof, into one (1)
share of a series of New Class B 5% Cumulative Participating Preferred Stock of the Surviving
Corporation, the New B-2 Series.



          On and as of the Effective Date, each share of O’Gara’s Series A 5% Cumulative Participating
Preferred Stock outstanding immediately prior to the Effective Date shall be converted, by virtue
of the Merger and without the need for any action on the part of the holder thereof, into one (1)
share of a series of New Class B 5% Cumulative Participating Preferred Stock of the Surviving
Corporation, the New B-3 Series.



          On and as of the Effective Date, each share of O’Gara’s Series D 5% Cumulative Participating
Preferred Stock (other than those shares held by Mark J. Hauser) outstanding immediately prior to
the Effective Date shall be converted, by virtue of the Merger and without the need for any action
on the part of the holder thereof, into one (1) share of a series of New Class B 5% Cumulative
Participating Preferred Stock of the Surviving Corporation, the New B-4 Series.



          On and as of the Effective Date, each share of O’Gara’s Series D 5% Cumulative Participating
Preferred Stock held by Mark J. Hauser outstanding immediately prior to the Effective Date shall be
converted, by virtue of the Merger and without the need for any action on the part of the holder
thereof, into one (1) share of a series of New Class B 5% Cumulative Participating Preferred Stock
of the Surviving Corporation, the New B-5 Series.



 









 





          On and as of the Effective Date, each share of O’Gara’s Common Stock outstanding immediately
prior to the Effective Date shall be converted, by operation of the Merger and without the need for
any action on the part of the holder thereof, into one (1) share of Common Stock of the Surviving
Corporation.



          On and as of the Effective Date, each option or other right to require a share of O’Gara’s
Common Stock shall be converted, by operation of the Merger and without the need for any action on
the part of the holder thereof, into an option or other right to acquire, on identical terms, one
(1) share of Common Stock of the Surviving Corporation. The express terms, rights, privileges and
preferences of the Surviving Corporation’s New Class A 3% Cumulative Participating Preferred Stock
and its various series, New Class B 5% Cumulative Participating Preferred Stock and its various
series and Common Stock are set forth in the Third Amended and Restated Articles of Incorporation
(as defined below in Section 3.1). The consolidation of the seven (7) series of preferred stock of
O’Gara into two (2) classes of preferred stock (with multiple series) of the Surviving Corporation
is the “Recapitalization” contemplated by the Recapitalization Agreement.



ARTICLE 3.

LEGAL AND FINANCIAL ASPECTS OF THE MERGER




     3.1 The Second Amended and Restated Articles of Incorporation of O’Gara shall be amended and
restated in, and as a result of, the Merger to be as set forth on Exhibit A attached hereto and
incorporated herein (the “Third Amended and Restated Articles of Incorporation”). The Third
Amended and Restated Articles of Incorporation shall be the articles of incorporation of the
Surviving Corporation. The Amended and Restated Code of Regulations of O’Gara in effect as of the
Effective Date of the Merger provided for herein shall continue to be the Amended and Restated Code
of Regulations of the Surviving Corporation.



     3.2 The directors and officers of O’Gara shall continue to be the directors and officers of
the Surviving Corporation and shall continue in office until the next annual meetings of
shareholders and directors or until their successors are duly qualified and elected.



ARTICLE 4.

EFFECTS OF THE MERGER




     From the Effective Date, the Merger shall have the effects provided by Section 1701.82 of the
Ohio Revised Code. Without limiting the generality of the foregoing, upon the Effective Date:



          (a) The separate existence of the Constituent Corporations, other than the Surviving
Corporation shall cease, except that whenever a conveyance, assignment, transfer, deed, or other
instrument or act is necessary to vest property or rights in the Surviving Corporation, the
officers of the Constituent Corporations shall execute, acknowledge, and deliver such instruments
and do such acts, and for such purposes, the existence of the Constituent Corporations and the
authority of the officers and directors shall continue notwithstanding the Merger.



 









 





          (b) The Surviving Corporation shall possess all assets and property, wherever located, and the
rights, privileges, immunities, powers, franchises, and authority, of a public as well as of a
private nature, of the Constituent Corporations, and all obligations belonging to or due to the
Constituent Corporations all of which shall be vested in the Surviving Corporation without further
act or deed. Title to any real estate or any interest in the real estate vested in the Constituent
Corporations shall not revert or in any way be impaired by reason of the Merger.



          (c) The Surviving Corporation shall be liable for all the obligations of the Constituent
Corporations. Any claim existing, or action or proceeding pending, by or against the Constituent
Corporations, may be prosecuted to judgment, with right of appeal, as if the Merger had not taken
place, or the Surviving Corporation may be substituted in its place.



          (d) All the rights of creditors of the Constituent Corporations shall be preserved unimpaired
and all liens upon the property of the Constituent Corporations shall be preserved unimpaired.



ARTICLE 5.

TERMINATION




     This Merger Agreement may be terminated and the Merger abandoned at any time prior to the
Effective Date, whether before or after approval of the Merger by the shareholders of O’Gara:



     5.1 By mutual consent of the Boards of Directors of the parties.



     5.2 By the Board of Directors of a Constituent Corporation if the shareholders of O’Gara shall
not have approved the Merger and adopted this Merger Agreement by July 31, 2006 or if the Merger
shall not have been consummated on July 31, 2006.



ARTICLE 6.

MISCELLANEOUS




     6.1 This Merger Agreement shall be governed by and interpreted in accordance with the internal
substantive laws of the State of Ohio.



     6.2 This Merger Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which shall together constitute one and the same Agreement.



(Remainder of page intentionally blank; signature page follows.)




 









 








     IN WITNESS WHEREOF, the parties hereunto have caused this Merger Agreement to be executed as
of the date first stated above by their duly authorized officers.



	 	 	 	 	 
	 	THE O’GARA GROUP, INC.

 	 
	 	By:  	/s/ Wilfred T. O’Gara
 	 
	 	 	Name:  	Wilfred T. O’Gara 	 
	 	 	Title:  	President 	 
	 
	 	O’GARA RECAP CORP.

 	 
	 	By:  	/s/ Abram S. Gordon
 	 
	 	 	Name:  	Abram S. Gordon 	 
	 	 	Title:  	Secretary 	 
	 




 









 





Exhibit A




Third Amended and Restated Articles of Incorporation




See Schedule 7.6-2 to the Investment and Recapitalization Agreement of even date herewith.




 









 





Schedule 3.1




Purchase and Sale of New Class B Preferred at Closing




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Allocable Portion of Closing	 
	 	 	Number of Shares	 	 	Purchase Price	 
	Walnut Investment Partners, L.P.
	 	 	4,207	 	 	$	499,991.85	 
	Walnut Private Equity Fund, L.P.
	 	 	12,033	 	 	$	1,430,093.17	 
	Walnut Holdings O’Gara LLC
	 	 	5,217	 	 	$	620,027.93	 
	Hauser 43, LLC
	 	 	14,304	 	 	$	1,699,996.07	 
	PMR, LLC
	 	 	252	 	 	$	29,949.60	 
	Thomas M. O’Gara
	 	 	4,207	 	 	$	499,991.85	 
	Kurt M. Campbell
	 	 	253	 	 	$	30,068.44	 






 









 






Schedule 3.3




Purchase and Sale of Second Tranche New Class B Preferred




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Allocable Portion of Second	 
	 	 	Number of Shares	 	 	Tranche Purchase Price	 
	Walnut Investment Partners, L.P.
	 	 	4,207	 	 	$	499,991.85	 
	Walnut Private Equity Fund, L.P.
	 	 	12,032	 	 	$	1,429,974.32	 
	Walnut Holdings O’Gara LLC
	 	 	5,217	 	 	$	620,027.93	 
	Hauser 43, LLC
	 	 	14,304	 	 	$	1,699,996.07	 
	Kurt M. Campbell
	 	 	252	 	 	$	29,949.60	 






 









 






Schedule 3.5




Form of Irrevocable Subscription Agreement




See attached.




 









 





IRREVOCABLE SUBSCRIPTION AGREEMENT




     THIS IRREVOCABLE SUBSCRIPTION AGREEMENT (the “Subscription Agreement”) is made effective as of
July 14, 2006 between THE THOMAS M. O’GARA FAMILY TRUST (the “Trust”), and THE O’GARA GROUP, INC.,
an Ohio corporation (the “Company”).



I. Subscription and Payment




     A. Subscription. The Trust hereby irrevocably subscribes for and agrees to purchase:
(i) Four Thousand Two Hundred Seven (4,207) shares of the Company’s New B-1 Series of New Class B
5% Cumulative Participating Preferred Stock, no par value per share (“New Class B”), on or before
October 15, 2006 for a purchase price, to be in cash by wire transfer of immediately available
funds, of Five Hundred Thousand Dollars ($500,000.00) (the “October Purchase Price”); and (ii) Five
Thousand Four Hundred Twenty Seven (5,427) shares of New Class B, on or before December 31, 2006
for a purchase price, to be paid in cash by wire transfer of immediately available funds, of Six
Hundred Forty Five Thousand Dollars ($645,000.00) (the “December Purchase Price”; collectively with
the October Purchase Price, the “Purchase Price”). The New Class B required to be purchased by the
Trust under clauses (i) and (ii) of the preceding sentence are collectively referred to as the
“Purchased Shares”. The Company is hereby irrevocably obligated to issue and sell the Purchased
Shares to the Trust for the Purchase Price. Notwithstanding Ohio Revised Code §1701.01(F), the
Trust shall not be a shareholder of the Company as regard the Purchased Shares and shall not have
any of the rights of a holder of such Purchased Shares unless and until such time as the Purchase
Price (or the relevant portion thereof) has been fully paid by the Trust to the Company and the
purchase transactions hereby contemplated have been consummated as to those Purchased Shares.



     B. Irrevocable Subscription; Penalty for Default. The Trust understands that it is
not entitled to cancel, terminate or revoke this subscription or any agreement hereunder and that
it is unconditionally obligated to pay the entire Purchase Price for all the Purchased Shares on
the terms set forth in this Subscription Agreement regardless of any adverse change in the Company
or the Company’s assets, business, financial condition or prospects and regardless of any adverse
change, financial or otherwise, in the Trust. The Company reserves all its rights and remedies, at
law or in equity, against the Trust in the event the Trust fails timely and fully to satisfy its
irrevocable obligation hereunder to purchase the Purchased Shares then required to be purchased on
or before each of October 15, 2006 and December 31, 2006, as applicable, for the applicable
Purchase Price. The Trust acknowledges that the Company shall be entitled to equitable relief,
including specific performance and/or a mandatory injunction, in the event of a default hereunder
by the Trust, all without the need to post bond or other security.



     C. Closing. The closings of the transactions hereby contemplated (the “Closings”)
shall occur on or before October 15, 2006 and December 31, 2006, as applicable, at the offices of
Keating Muething & Klekamp PLL, Suite 1400, One East Fourth Street, Cincinnati, Ohio 45202 or at
such other place as the Trust and the Company may agree. The Trust shall pay the applicable
portion of the Purchase Price to the Company in full at the applicable Closing by means of a wire
transfer of immediately available federal funds. The Company shall deliver to



 









 







the Trust one (1) or more certificates evidencing the Purchased Shares purchased at such Closing.
At each Closing, the Purchased Shares then acquired shall be received by the Trust free and clear
of any pledges, liens, encumbrances or other restrictions other than restrictions on transfer
imposed by federal and state securities laws and by the Second Amended and Restated Shareholders
Agreement among the Company and all its shareholders (the “Shareholders Agreement”) and other than
liens created by the Trust. The Trust, by execution of this instrument, hereby executes and
thereby joins the Shareholders Agreement in its capacity as the holder of the Purchased Shares
effective as of the date of each Closing. The Purchased Shares will be duly authorized, validly
issued, fully paid and non-assessable when delivered by the Company to the Trust against payment of
the Purchase Price. Upon and after (but only upon and after) consummation of the transactions
hereby contemplated, the Trust shall have all the rights and remedies applicable to an “Investor”
that is a holder of New Class B Preferred under the Investment and Recapitalization Agreement dated
as of July___, 2006 among the Company, Walnut Investment Partners, L.P., Walnut Private Equity
Fund, L.P. and certain other investors as well as the rights and remedies of a holder of New Class
B under the Company’s Third Amended and Restated Articles of Incorporation.



II. Articles of Incorporation and Regulations




     The Trust acknowledges that the Trust has received and reviewed a copy of the Company’s Third
Amended and Restated Articles of Incorporation and Amended and Restated Regulations. The Trust
hereby specifically accepts and adopts each and every provision of the said Third Amended and
Restated Articles of Incorporation and Amended and Restated Regulations and agrees to be bound
thereby.



III. The Trust’s Representations and Warranties




     A. Accredited Investor. The Trust certifies, represents and warrants that the Trust
qualifies under the following categories which are checked (please check all that apply):



          � 1. It is a bank, as defined in Section 3(a)(2) of the Securities Act of 1933, as
amended (the “Securities Act”), or a savings and loan association or other institution as defined
in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary
capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of
1934; an insurance company as defined in Section 2(13) of the Securities Act; an investment company
registered under the Investment Company Act of 1940 or a business development company as defined in
Section 2(a)(48) of that act; a Small Business Investment Company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a
plan established and maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for the benefit of employees, if such a
plan has total assets in excess of $5,000,000; an employee benefit plan within the meaning of the
Employee Retirement Income Security Act of 1974 if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of such act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser, or if the employee benefit plan
has total assets in excess of $5,000,000 or, if a self directed plan, with investment decisions
made solely by persons that are accredited investors.



 









 





          � 2. It is a private business development company as defined in Section 202(a)(22) of
the Investment Advisers Act of 1940.



          � 3. It is an organization described in Section 501(c)(3) of the Internal Revenue Code,
a corporation, a Massachusetts or similar business trust, or a partnership not formed for the
specific purpose of acquiring an interest in the Partnership, with total assets in excess of
$5,000,000.



          � 4. It is a director, executive officer, or general partner of the Partnership, or a
director, executive officer, or general partner of the General Partner.



          � 5. It is a natural person who has an individual net worth, or joint net worth with
that person’s spouse which on the date hereof exceeds $1,000,000.



          � 6. It is a natural person who had an individual income in excess of $200,000 in each
of the two most recent years or joint income with that person’s spouse in excess of $300,000 in
each of those years and has a reasonable expectation of reaching the same level in the current
year.



          � 7. It is a trust with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring an interest in the Partnership, whose purchase is directed by a
sophisticated person as described in Rule 506(b)(2)(ii) promulgated under the Securities Act.



          � 8. It is an entity in which all the equity owners are accredited investors, as
described above in paragraphs 1 through 7 above.



          � 9. None of the above paragraphs describe the Trust. The Trust is not an Accredited
Investor and may not invest in the Purchased Shares.



     B. Additional Representations, Warranties, and Acknowledgments. The Trust represents,
warrants and acknowledges as follows:



          1. Power and Authority. (i) It has full power and authority to enter into and perform
this Agreement and the transactions contemplated hereby, (ii) The execution, delivery and
performance by it of this Subscription Agreement and the transactions contemplated hereby and
thereby have been duly authorized by all requisite action of it, and (iii) It was not organized or
formed for the purpose of investing in the Purchased Shares.



          2. Compliance with Laws and Other Instruments. The execution and delivery of this
Subscription Agreement by or on behalf of the Trust and the consummation of the transactions
contemplated hereby do not and will not conflict with or result in any violation of or default
under any provision of any trust agreement or other organizational document of the Trust or any
agreement or other instrument to which the Trust is a party or by which the Trust or any of its
properties is bound, or any permit, franchise, judgment, decree, statute, rule, regulation, or
other law applicable to the Trust or the business or properties of the Trust.



 









 





          3. Investment Intent. The Trust is acquiring the Purchased Shares for its own
account, as principal, for investment and not with a view toward resale or distribution.



          4. Ability to Bear Risk. The Trust is able to bear the economic risk of losing its
entire investment in the Purchased Shares. The Trust’s overall commitment to investments which are
not readily marketable is not disproportionate to the Trust’s net worth, and the Trust’s investment
in the Purchased Shares will not cause such overall commitment to become excessive. The Trust has
such knowledge and experience in financial and business matters that it is capable of evaluating
the risks and merits of an investment in the Purchased Shares.



          5. Domicile. The Trust has its domicile, principal place of business, or principal
office at the address shown below and has no present intention of relocating such domicile,
principal place of business, or principal office to any other state or jurisdiction.



          6. No Registration of Interest. The Trust understands that (i) the Purchased Shares
have not been registered under the Securities Act or any state securities or “Blue Sky” laws
pursuant to exemptions therefrom, (ii) the Company has no obligation or intention to register the
Purchased Shares for resale under any federal or state securities laws (including the filing of
reports or the publication of information required by Rule 144 under the Securities Act) which
would make available any exemption from the registration requirements of such laws, and
(iii) consequently, the Trust may be precluded from selling or otherwise transferring or disposing
of its Purchased Shares or any portion thereof and may therefore have to bear the economic risk of
investment in the Purchased Shares for an indefinite period.



          7. Transfer of Purchased Shares. The Trust agrees and understands that the Trust can
only sell, transfer, assign or otherwise dispose of the Purchased Shares in accordance with the
Shareholders Agreement and will not sell, transfer, assign or otherwise dispose of the Interest or
any interest therein unless and until the Trust complies with all of the requirements set forth in
the Shareholders Agreement.



          8. Access. The Trust acknowledges that all material documents, records and books
pertaining to this investment have, on request, been made available to the Trust, and that the
Company has made available to the Trust, the opportunity to ask questions of, and receive answers
from, the Company concerning the terms and conditions of the offering and to obtain any additional
information, to the extent that the Company possesses such information, or can acquire it without
unreasonable effort or expense, necessary to verify the accuracy of the information given to it or
otherwise to make an informed investment decision.



     C. Effect of Representations. The Trust acknowledges and affirms the representations,
warranties and acknowledgments set forth herein. The Trust understands that the Purchased Shares
are being offered and sold in reliance on specific exemptions from the registration requirements of
Federal and state securities laws and that the Company and controlling persons thereof are relying
upon the truth and accuracy of the representations, warranties, agreements, Acknowledgments, and
understandings set forth herein in order to determine the applicability of such exemptions and the
suitability of the Trust to acquire the



 









 







Purchased Shares, and represents and warrants that the information set forth herein is true
and correct, and will be true and correct in all respects at the Closing. All representations and
warranties of the Trust shall survive the Closing.



IV. Other Provisions




     A. Counterparts. This Subscription Agreement may be executed in any number of
counterparts and by any combination of the parties hereto in separate counterparts, each of which
counterparts shall be an original and all of which taken together shall constitute one and the same
agreement.



     B. Obligation to Update. The Trust will give prompt notice to the Company if any
representation or warranty given by the Trust in this Subscription Agreement ceases to be true.



     C. Entire Agreement. This Subscription Agreement constitutes the entire agreement,
and supersedes all prior agreements or understandings among the parties hereto with respect to, the
subject matter hereof.



     D. Gender, Number, etc. All pronouns used herein shall be deemed to refer to the
masculine, feminine, or neuter gender as the identity of the applicable person may require, and
words using the singular or plural number shall be deemed to include respectively the plural or
singular number as applicable. Unless otherwise specified, all references in this Subscription
Agreement to Articles, Sections, or paragraphs shall refer to provisions of this Subscription
Agreement. As used in this Subscription Agreement, the words “herein”, “hereof”,
“hereto” or derivatives shall refer to this entire Subscription Agreement, and the word
“or” shall mean “and/or”.



     E. Severability. If any provision of this Subscription Agreement, or the application
of such provision to any circumstance, shall be invalid under the applicable law of any
jurisdiction, the remainder of this Subscription Agreement or the application of such provision to
other persons or circumstances or in other jurisdictions shall not be affected thereby.



     F. No Assignment. The Trust may not assign any of its rights or delegate any of its
obligations under this Subscription Agreement without the prior written consent of the Company
given by the unanimous vote of the Company’s Board of Directors.



     G. Verification. The Trust hereby authorizes the Company to verify any of the
information set forth in this Subscription Agreement. The Trust understands that it may be
required to furnish additional information.



     H. Miscellaneous. This Subscription Agreement (a) shall be binding upon the Trust and
the heirs, personal representatives, successors and permitted assigns of the Trust, (b) shall be
governed, construed and enforced in accordance with the laws of the State of Ohio, and (c) shall
survive the Closing.



 









 






THE NEW CLASS B SHARES OFFERED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN
RELIANCE ON EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF SAID ACT AND SUCH LAWS. THE
SERIES F SHARES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE
TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER SAID ACT AND SUCH LAWS PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM AND UNDER THE SECOND AMENDED AND RESTATED SHAREHOLDERS’
AGREEMENT. THE NEW CLASS B SHARES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR
HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.



 









 





     IN WITNESS WHEREOF, the undersigned have hereunto set their respective hands effective as of
the date and year first above written.



	 	 	 	 	 
	 	THE THOMAS M. O’GARA FAMILY TRUST

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	THE O’GARA GROUP, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 




 









 





Schedule 4.1-1




Existing Articles of Incorporation




The Second Amended and Restated Articles of Incorporation of the Company are attached hereto.




 









 





SECOND AMENDED AND RESTATED ARTICLES OF INCORPORATION




OF




THE O’GARA GROUP, INC.




     ARTICLE FIRST: The name of the corporation is: The O’Gara Group, Inc.



     ARTICLE SECOND: Location: City of Cincinnati, County of Hamilton



     Effective Date: upon filing




     ARTICLE THIRD: The nature of the business and the purposes to be conducted and promoted by
the Corporation are to conduct any lawful business, to promote any lawful purpose, and to engage in
any lawful act or activity for which corporations may be organized under the Ohio General
Corporation Law, §§1701.01 et seq., as from time to time in effect.



     ARTICLE FOURTH: PART ONE: (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is One Million Two Hundred Ninety Seven
Thousand (1,297,000) shares, consisting of: (i) Nine Hundred Fifty Six Thousand (956,000) shares of
Common Stock, no par value per share (“Common Stock”); and (ii) Two Hundred Forty One Thousand
(241,000) shares of Preferred Stock no par value per share (“Preferred Stock”), of which One
Hundred Twenty Thousand (120,000) shares are shares of Series A 5% Cumulative Participating
Preferred Stock (“Series A Preferred Stock”), Thirty Five Thousand (35,000) shares are shares of
Series B 5% Cumulative Participating Preferred Stock (“Series B Preferred Stock”), Forty Two
Thousand Five Hundred (42,500) shares are shares of Series C 3% Cumulative Participating Preferred
Stock (“Series C Preferred Stock”), Thirty Five Thousand (35,000) shares are shares of Series D 5%
Cumulative Participating Preferred Stock (“Series D Preferred Stock”) and Eight Thousand Five
Hundred (8,500) shares of Series E 5% Cumulative Participating Preferred Stock (“Series E Preferred
Stock”), Thirty Thousand (30,000) shares of Series F 5% Cumulative Participating Preferred Stock
(“Series F Preferred Stock”) and Seventy Thousand (70,000) shares of Series G 3% Cumulative
Participating Stock (“Series G Preferred Stock”). The express terms and provisions of the
Preferred Stock are as set forth in Part Two of this Article Fourth.



          (b) The Corporation shall from time to time in accordance with the laws of the State of Ohio
increase the authorized amount of its Common Stock if at any time the number of shares of Common
Stock remaining unissued and available for issuance shall not be sufficient to permit the
conversion of the Preferred Stock into Common Stock in accordance with the terms of this
Article Fourth governing such conversion.



          (c) Except as otherwise provided in this Article Fourth, in the Investment Agreement
dated May 17, 2004 (the “2004 Investment Agreement”) between Walnut Investment Partners, L.P.
(“WIP”) and the Corporation, in the Investment Agreement dated as of May 6, 2005 among WIP, Walnut
Private Equity Fund, L.P. (“WPEF”) (WIP and WPEF collectively, “Walnut”), Mark J. Hauser (“Hauser”)
and the Corporation (the “Series D Investment



 









 







Agreement”), in the Irrevocable Subscription Agreement dated as of May 6, 2005 between the
Corporation and The Thomas M. O’Gara Family Trust (“T. O’Gara”) (the “Series E Investment
Agreement”), in the Contribution Agreement dated as of May 9, 2005 among the Corporation, Marsupial
Holdings, Inc., Platypus Holdings, LLC, William P. Parker and Julie P. Parker (the “Series C
Investment Agreement”), or in the Investment Agreement dated as of December 16, 2005 among the
Corporation and certain investors (the “Series F Investment Agreement”), no holder of shares of the
Corporation of any class, now or hereafter authorized, shall have any preferential or preemptive
rights to subscribe for, purchase or receive: (i) any shares of the Corporation of any class, now
or hereafter authorized; or (ii) any options or warrants for such shares; or (iii) any rights to
subscribe for, purchase or receive any securities participating to or exchangeable for such shares,
which may at any time be issued, granted, sold or offered for sale by the Corporation.



PART TWO: Terms of the Preferred Stock.




     1. Certain Definitions. Unless the context otherwise requires, the terms defined in
this Section 1 of Part Two of Article Fourth shall have, for all purposes
of this Part Two of Article Fourth, the meanings herein specified.



          Common Stock. The term “Common Stock” shall mean all shares now or hereafter
authorized of Common Stock of the Corporation and any other stock of the Corporation, howsoever
designated, that has the right (subject always to prior rights of any class or series of Preferred
Stock) to participate in the distribution of the assets and earnings of the Corporation without
limit as to per share amount.



          Conversion Date. The term “Conversion Date” shall have the meaning set forth in
Section 5(d) below.



          Conversion Price. The term “Conversion Price” shall mean the price per share of
Common Stock used to determine the number of shares of Common Stock deliverable upon conversion of
a share of the Preferred Stock, which price, as regards the Series G Preferred, shall initially be
$118.8476 per share, except the shares of Series G Preferred issued as “earn out” or contingent
compensation in connection with acquisitions by the Corporation, as to which the price shall
initially be the fair market value of such shares of Series G Preferred calculated in good faith by
the Corporation’s Board of Directors as of the date of issuance (the “Applicable Series G
Conversion Price”), in each case subject to adjustment in accordance with the provisions of
Section 5 below, and, as regards the Series F Preferred, shall initially be $118.8476 per
share (the “Series F Conversion Price”), subject to adjustment in accordance with the provisions of
Section 5 below, and, as regards the Series E Preferred Stock, shall initially be $118.8476 per
share (the “Series E Conversion Price”), subject to adjustment in accordance with the provisions of
Section 5 below, and, as regards the Series D Preferred Stock, shall initially be $90.1695
per share, except the shares of Series D Preferred Stock initially issued to Hauser, as to which
the price shall initially be $118.8476 (the “Applicable Series D Conversion Price”), in each case
subject to adjustment in accordance with the provisions of Section 5 below, and, as regards
the Series C Preferred Stock, shall initially be $118.8476 per share (the “Series C Conversion
Price”), subject to adjustment in accordance with the provisions of Section 5 below,



 









 







and, as regards the Series B Preferred Stock, shall initially be $74.1867 per share (the
“Series B Conversion Price”), subject to adjustment in accordance with the provisions of
Section 5 below, and, as regards the Series A Preferred Stock, shall initially be $12.0622
per share (the “Series A Conversion Price”), subject to adjustment in accordance with the
provisions of Section 5 below.



          Current Market Price. The term “Current Market Price” shall have the meaning set
forth in Section 5(h) below.



          Dividend Payment Date. The term “Dividend Payment Date” shall have the meaning set
forth in Section 2(a) below.



          Junior Stock. The term “Junior Stock” shall mean, for purposes of Sections 2
and 8 below, the Common Stock and any other class or series of stock of the Corporation not
entitled to receive any dividends in any Dividend Period unless all dividends have been so paid or
declared and set apart for payment and, for purposes of Sections 3 and 8 below, any
class or series of stock of the Corporation not entitled to receive any assets upon the
liquidation, dissolution or winding up of the affairs of the Corporation until the Preferred Stock
shall have received the entire amount to which such stock is entitled upon such liquidation,
dissolution or winding up.



          Subscription Price. The term “Subscription Price” shall, as to the Series G Preferred
Stock, mean $118.8476 per share, except the shares of Series G Preferred issued as “earn out” or
contingent compensation in connection with acquisitions by the Corporation, as to which the
Subscription Price shall be the fair market value of such shares of Series G Preferred calculated
in good faith by the Corporation’s Board of Directors as of the date of issuance (the “Applicable
Series G Subscription Price”), and, as to the Series F Preferred Stock, mean $118.8476 per share
(the “Series F Subscription Price”), and, as to the Series E Preferred Stock, mean $118.8476 per
share (the “Series E Subscription Price”) and, as to the Series D Preferred Stock, mean $90.1695
per share, except the shares of Series D Preferred Stock initially issued to Hauser, as to which
the Subscription Price shall be $118.8476 (the “Applicable Series D Subscription Price”) and, as to
the Series C Preferred Stock, mean $118.8476 per share (the “Series C Subscription Price”) and, as
to the Series B Preferred Stock, mean $74.1867 per share (the “Series B Subscription Price”) and,
as to the Series A Preferred Stock, shall mean $12.0622 per share (the “Series A Subscription
Price”).



          Subsidiary. The term “Subsidiary” shall mean any corporation, limited liability
company or other entity of which shares of stock or other equity securities possessing at least a
majority of the general voting power electing the board of directors or other governing body are,
at the time as of which any determination in being made, owned by the Corporation, whether directly
or indirectly through one or more Subsidiaries.



     2. Dividends.



          (a) The holders of Series A Preferred Stock, Series B Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock and Series F Preferred Stock shall be entitled to receive, out of
funds legally available for that purpose, dividends at the rate of five percent (5%)



 









 







of the Subscription Price applicable to such Preferred Stock (i.e., the Series A
Subscription Price, the Series B Subscription Price, the Applicable Series D Subscription Price,
the Series E Subscription Price or the Series F Subscription Price, as the case may be) per annum,
and no more. The holders of Series C Preferred Stock and Series G Preferred Stock shall be
entitled to receive, out of funds legally available for that purpose, dividends at the rate of
three percent (3%) of the Series C Subscription Price or the Applicable Series G Subscription
Price, as the case may be, per annum, and no more. The entitlement of the Series A Preferred
Stock, the Series B Preferred Stock, the Series C Preferred Stock, the Series D Preferred Stock,
the Series E Preferred Stock, the Series F Preferred Stock and the Series G Preferred Stock to such
dividends shall be pro rata and on a parity. Such dividends shall be cumulative (cumulating from
the date of issuance of such shares of Preferred Stock on a day-to-day basis on the basis of a
360-day year), shall be compounded annually and shall be payable in arrears upon the occurrence of
a Liquidation Event (as defined in Section 3 of Part Two of this Article
Fourth (such date being herein referred to as the “Dividend Payment Date”). Dividends shall be
paid to the holders of record of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, the Series F Preferred Stock
and the Series G Preferred Stock as their names appear on the share register of the Corporation on
the corresponding record date for the distribution.



          (b) If, on any Dividend Payment Date, the holders of the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, the
Series F Preferred Stock and the Series G Preferred Stock shall not have received the full
dividends provided for in the other provisions of this Section 2, then such dividends shall
cumulate, whether or not earned or declared, with additional dividends thereon until such dividends
shall be paid. Unpaid dividends shall cumulate on a day-to-day basis and shall be computed on the
basis of a 360-day year.



          (c) So long as any shares of Preferred Stock shall be outstanding, without the written consent
of the holders of not less than a majority of the shares of Series A Preferred Stock, Series C
Preferred Stock, Series E Preferred Stock and Series F Preferred Stock then outstanding, voting
together as a single class, and the written consent of the holders of not less than a majority of
the shares of Series B Preferred Stock, Series D Preferred Stock and Series F Preferred Stock then
outstanding, voting together as a single class, neither the Corporation nor any Subsidiary or
affiliate of the Corporation shall: (i) declare or pay on any Junior Stock any dividend whatsoever,
whether in cash, property or otherwise; or (ii) except as set forth in Section 3 of
Part Two of this Article Fourth, make any distribution on any Junior Stock, or
purchase or redeem any Junior Stock, or pay or make available any monies for a sinking fund for the
purchase or redemption of any Junior Stock.



     3. Distributions Upon Liquidation, Dissolution or Winding Up.



          (a) In the event of any voluntary or involuntary liquidation, dissolution or other winding up
of the affairs of the Corporation (together with all other transactions deemed under this
Section 3 to be a Liquidation Event, collectively “Liquidation Events”), the holders of the
Preferred Stock (the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock and Series G



 









 







Preferred Stock being on a parity as to any such entitlements) shall be entitled: (i) first, to be
paid the Subscription Price of all outstanding shares of Preferred Stock (as appropriately adjusted
for any stock dividend, stock subdivision or split-up, combination or similar event affecting the
Preferred Stock or the Common Stock), with the Series A Preferred Stock being entitled to be paid
the Series A Subscription Price, with the Series B Preferred Stock being entitled to be paid the
Series B Subscription Price, with the Series C Preferred Stock being entitled to be paid the Series
C Subscription Price, with the Series D Preferred Stock being entitled to be paid the Applicable
Series D Subscription Price, with the Series E Preferred Stock being entitled to be paid the Series
E Subscription Price, with the Series F Preferred Stock being entitled to be paid the Series F
Subscription Price and with the Series G Preferred Stock being entitled to be paid the Applicable
Series G Subscription Price as of the date of such Liquidation Event; plus (ii) second, any accrued
and unpaid dividends thereon to such date; plus (iii) third, to be paid an amount equal to the
product of: (x) the balance of the proceeds of the Liquidation Event; and (y) the fully-diluted
ownership percentage (excluding out-of-the-money options and warrants) represented by the Preferred
Stock, treating the Preferred Stock on an “as-converted” basis. If and after payment shall have
been made in full to the holders of the Preferred Stock of all amounts to which such holders shall
be entitled, the remaining assets and funds of the Corporation shall be distributed among the
holders of Junior Stock, according to their respective shares and priorities. If, upon any such
liquidation, dissolution or other winding up of the affairs of the Corporation, the net assets of
the Corporation distributable among the holders of all outstanding shares of the Preferred Stock
shall be insufficient to permit the payment in full to such holder of the preferential amounts to
which they are entitled, then the entire net assets of the Corporation shall be distributed among
the holders of the Preferred Stock ratably in proportion to the full amounts to which they would
otherwise be respectively entitled.



          (b) Each of the following events shall be deemed to be a “Liquidation Event” for purposes of
this Section 3: (i) the acquisition of the Corporation, or of a controlling equity
interest in the Corporation, by another party or entity or group of affiliated parties by means of
any transaction or series of related transactions (including, without limitation, any stock
acquisition or transfer, any issuance of stock by the Corporation, a reorganization, merger,
consolidation or mandatory share exchange), other than a transaction or series of related
transactions in which the holders of the voting securities of the Corporation outstanding
immediately prior to such transaction or the first of the series of related transactions continue
to retain (either by such voting securities remaining outstanding or by such voting securities
being converted into voting securities of the surviving or resulting entity) at least fifty percent
(50%) of the total voting power represented by the voting securities of the Corporation or such
surviving or resulting entity outstanding immediately after such transaction or the last of the
series of related transactions; or (ii) a sale, lease or other conveyance of all or substantially
all of the assets of the Corporation in one (1) transaction or in a series of related transactions.



     4. Redemption by the Corporation. For so long as any shares of Series B Preferred
Stock, Series D Preferred Stock or Series F Preferred Stock remain outstanding, none of the Series
A Preferred Stock, Series C Preferred Stock, Series E Preferred Stock or Series G Preferred Stock
shall be redeemed, in whole or in part, and neither the Corporation nor any affiliate or Subsidiary
of the Corporation shall purchase or otherwise acquire any shares of Series A Preferred Stock,
Series C Preferred Stock, Series E Preferred Stock or Series G Preferred



 









 







Stock prior to the date on which all of the shares of the Series B Preferred Stock, Series D
Preferred Stock and Series F Preferred Stock shall have been redeemed. Walnut, the initial holder
of the Series B Preferred Stock and the initial holder of a majority of the Series D Preferred
Stock, has stated its desire to exit its investment in the Series B Preferred Stock, Series D
Preferred Stock and Series F Preferred Stock at a point in the future, preferably on or around May
31, 2009. The Corporation acknowledges this desire and will assist Walnut in the sale of its
Series B Preferred Stock, Series D Preferred Stock and Series F Preferred Stock provided that such
sale does not harm the holders of the Series A Preferred, Series C Preferred Stock, Series E
Preferred Stock, Series G Preferred Stock or Common Stock and does not violate any covenants of the
Corporation in any Corporation debt instruments that may be in place at such time.



     5. Conversion Rights. The Preferred Stock shall be convertible into Common Stock as
follows:



          (a) Optional Conversion. Subject to and upon compliance with the provisions of this
Section 5, the holder of any shares of Preferred Stock shall have the right at such
holder’s option, at any time or from time to time, to convert any of such shares of Preferred Stock
into fully paid and nonassessable shares of Common Stock at the Conversion Price applicable to such
Preferred Stock (i.e., the Series A Conversion Price, the Series B Conversion Price, the
Series C Conversion Price, the Applicable Series D Conversion Price, the Series E Conversion Price,
the Series F Conversion Price or the Applicable Series G Conversion Price as the case may be) in
effect on the Conversion Date (as hereinafter defined) upon the terms hereinafter set forth.



          (b) Automatic Conversion. Each outstanding share of Preferred Stock shall
automatically be converted, without any further act of the Corporation or its stockholders, into
fully paid and nonassessable shares of Common Stock at the Conversion Price for such Preferred
Stock then in effect upon the closing of an underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, covering the offering and sale
of the Common Stock for the account of the Corporation in which the gross proceeds to the
Corporation are equal to or in excess of Twenty Five Million Dollars ($25,000,000) (“Qualified
Public Offering”).



          (c) Conversion Price. Each share of Preferred Stock shall be converted into a number
of shares of Common Stock determined by dividing (i) the Subscription Price, by (ii) the Conversion
Price in effect on the Conversion Date. The Series A Conversion Price at which shares of Common
Stock shall initially be issuable upon conversion of the shares of Series A Preferred Stock shall
be $12.0622 per share. The Series B Conversion Price at which shares of Common Stock shall
initially be issuable upon conversion of the shares of Series B Preferred Stock shall be $74.1867
per share. The Series C Conversion Price at which shares of Common Stock shall initially be
issuable upon conversion of the shares of Series C Preferred Stock shall be $118.8476 per share.
The Applicable Series D Conversion Price at which shares of Common Stock shall initially be
issuable upon conversion of the shares of Series D Preferred Stock shall be $90.1695 per share,
except the shares of Series D Preferred Stock initially issued to Hauser, as to which the
Applicable Series D Conversion Price shall initially be $118.8476. The Series E Conversion Price
at which shares of Common Stock shall initially be issuable upon conversion of the shares of Series
E Preferred Stock shall be $118.8476 per share. The Series F Conversion



 









 







Price at which shares of Common Stock shall initially be issuable upon conversion of the shares of
Series F Preferred Stock shall be $118.8476 per share. The Applicable Series G Conversion Price at
which shares of Common Stock shall initially be issuable upon conversion of the shares of Series G
Preferred Stock shall be $118.8476 per share, except the shares of Series G Preferred issued as
“earn out” or contingent compensation in connection with acquisitions by the Corporation, as to
which the Applicable Series G Conversion Price shall initially be the fair market value of such
shares of Series G Preferred calculated in good faith by the Corporation’s Board of Directors as of
the date of issuance. The Series A Conversion Price, the Series B Conversion Price, the Series C
Conversion Price, the Applicable Series D Conversion Price, the Series E Conversion Price, the
Series F Conversion Price and the Applicable Series G Conversion Price shall each be subject to
adjustment as set forth in subsection (f) below. No payment or adjustment shall be made for any
dividends on the Common Stock issuable upon such conversion. Upon any such conversion, the holders
of Preferred Stock shall also be entitled to payment, in cash, of all accrued but unpaid dividends
on shares of Preferred Stock.



          (d) Mechanics of Conversion. The holder of any shares of Preferred Stock may exercise
the conversion right specified in subsection (a) above by surrendering to the Corporation or any
transfer agent of the Corporation the certificate or certificates for the share to be converted,
accompanied by written notice specifying the number of shares to be converted. Upon the occurrence
of the event specified in subsection (b) above, the outstanding shares of Preferred Stock shall be
converted automatically without any further action by the holders of such shares and whether or not
the certificates representing such shares are surrendered to the Corporation or its transfer
agent; provided that the Corporation shall not be obligated to issue to any such holder
certificates evidencing the shares of Common Stock issuable upon such conversion unless
certificates evidencing the shares of Preferred Stock are either delivered to the Corporation or
any transfer agent of the Corporation. Conversion shall be deemed to have been effected on the
date when delivery of notice of an election to convert and certificates for shares is made or on
the date of the occurrence of the event specified in subsection (b) above, as the case may be, and
such date is referred to herein as the “Conversion Date.” Subject to the provisions of subsection
(f)(vii) below, as promptly as practicable thereafter (and after surrender of the certificate or
certificates representing shares of Preferred Stock to the Corporation or any transfer agent of the
Corporation in the case of conversions pursuant to subsection (b) above), the Corporation shall
issue and deliver to or upon the written order of such holder a certificate or check or cash with
respect to any fractional interest in a share of Common Stock as provided in subsection (e) below.
Subject to the provisions of subsection (f)(vii) below, the person in whose name the certificate or
certificates for Common Stock are to be issued shall be deemed to have become a holder of record of
such Common Stock on the applicable Conversion Date. Upon conversion of only a portion of the
number of shares covered by a certificate representing shares of Preferred Stock surrendered for
conversion (in the case of conversion pursuant to subsection (a) above), the Corporation shall
issue and deliver to or upon the written order of the holder of the certificate so surrendered for
conversion, at the expense of the Corporation, a new certificate covering the number of shares of
Preferred Stock representing the unconverted portion of the certificate so surrendered.



          (e) Fractional Shares. No fractional shares of Common Stock or scrip shall be issued
upon conversion of shares of Preferred Stock. If more than one (1) share of Preferred



 









 







Stock shall be surrendered for conversion at any one (1) time by the same holder, the number of
full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the
aggregate number of shares of Preferred Stock so surrendered. Instead of any fractional shares of
Common Stock which would otherwise be issuable upon conversion of any shares of Preferred Stock,
the Corporation shall pay a cash adjustment in respect of such fractional interest in an amount
equal to that fractional interest of the then Current Market Price.



          (f) Conversion Price Adjustments. The Series A Conversion Price, the Series B
Conversion Price, the Series C Conversion Price, the Applicable Series D Conversion Price, the
Series E Conversion Price, the Series F Conversion Price and the Applicable Series G Conversion
Price shall each be subject to adjustment from time to time as follows:



               (i) Common Stock Issued at Less Than the Conversion Price. If the Corporation shall
issue any Common Stock other than Excluded Stock (as hereinafter defined) without consideration or
for a consideration per share less than the applicable Conversion Price (i.e., the Series A
Conversion Price, the Series B Conversion Price, the Series C Conversion Price, the Applicable
Series D Conversion Price, the Series E Conversion Price, the Series F Conversion Price or the
Applicable Series G Conversion Price, as the case may be) in effect immediately prior to such
issuance, the applicable Conversion Price in effect immediately prior to each such issuance shall
immediately (except as provided below) be reduced to the per share price of the shares issued in
that issuance, which shall be determined by dividing the aggregate consideration received by the
Corporation for the shares issued in that issuance by the aggregate number of shares so issued in
that issuance.



                    For the purposes of any adjustment of the applicable Conversion Price pursuant to clause
(i), the following provisions shall be applicable:



                    (A) Cash. In the case of the issuance of Common Stock for cash, the amount of the
consideration received by the Corporation shall be deemed to be the amount of the cash proceeds
received by the Corporation for such Common Stock before deducting therefrom any discounts,
commissions, taxes or other expenses allowed, paid or incurred by the Corporation for any
underwriting or otherwise in connection with the issuance and sale thereof.



                    (B) Consideration Other Than Cash. In the case of the issuance of Common Stock
(otherwise than upon the conversion of shares of capital stock or other securities of the
Corporation) for a consideration in whole or in part other than cash, including securities acquired
in exchange therefor (other than securities by their terms so exchangeable), the consideration
other than cash shall be deemed to be fair value thereof as determined by the Board of Directors,
irrespective of any accounting treatment; provided that such fair value as determined by
the Board of Directors shall not exceed the aggregate Current Market Price of the shares of Common
Stock being issued as of the date the Board of Directors authorizes the issuance of such shares.



                    (C) Options and Convertible Securities. In the case of the issuance of: (i) options,
warrants or other rights to purchase or acquire Common Stock (whether



 









 







or not at the time exercisable); (ii) securities by their terms convertible into or exchangeable
for Common Stock (whether or not at the time so convertible or exchangeable); or options, warrants
or rights to purchase such Participating or exchangeable securities (whether or not at the time
exercisable):



                         (1) the aggregate maximum number of shares of Common Stock deliverable upon exercise of such
options, warrants or other rights to purchase or acquire Common Stock shall be deemed to have been
issued at the time such options, warrants or rights were issued and for a consideration equal to
the consideration (determined in the manner provided in subclauses (A) and (B) above), if any,
received by the Corporation upon the issuance of such options, warrants or rights plus the minimum
purchase price provided in such options, warrants or rights for the Common Stock covered thereby;



                         (2) the aggregate maximum number of shares of Common Stock deliverable upon conversion of or
in exchange for any such convertible or exchangeable securities or upon the exercise of options,
warrants or other rights to purchase or acquire such convertible or exchangeable securities and the
subsequent conversion or exchange thereof, shall be deemed to have been issued at the time such
securities were issued or such options, warrants or rights were issued and for a consideration
equal to the consideration, if any, received by the Corporation for any such securities and related
options, warrants or rights (excluding any cash received on account of accrued interest or accrued
dividends), plus the additional consideration (determined in the manner provided in subclauses (A)
and (B) above), if any, to be received by the Corporation upon the conversion or exchange of such
securities or upon the exercise of any related options, warrants or rights to purchase or acquire
such convertible or exchangeable securities and the subsequent conversion or exchange thereof;



                         (3) on any change in the number of shares of Common Stock deliverable upon exercise of any
such options, warrants or rights or conversion or exchange of such convertible or exchangeable
securities or any change in the consideration to be received by the Corporation upon such exercise,
conversion or exchange, including, but not limited to, a change resulting from the anti-dilution
provisions thereof, the applicable Conversion Price as then in effect shall forthwith be readjusted
to such Conversion Price as would have been obtained had an adjustment been made upon the issuance
of such options, warrants or rights not exercised prior to such change or of such convertible or
exchangeable securities not converted or exchanged prior to such change, upon the basis of such
change;



                         (4) on the expiration or cancellation of any such options, warrants or rights or the
termination of the right to convert or exchange such convertible or exchangeable securities, if the
applicable Conversion Price shall have been adjusted upon the issuance thereof, that Conversion
Price shall forthwith be readjusted to such Conversion Price as would have been obtained had an
adjustment been made upon the issuance of such options, warrants, rights or such convertible or
exchangeable securities on the basis of the issuance of only the number of shares of Common Stock
actually issued upon the exercise of such options, warrants or rights or upon the conversion of
exchange of such Participating or exchangeable securities; and



 









 





                         (5) if the applicable Conversion Price shall have been adjusted upon the issuance of any such
options, warrants, rights or convertible or exchangeable securities, no further adjustment of the
Conversion Price shall be made for that actual issuance of Common Stock upon the exercise,
conversion or exchange thereof;


provided, however, that no increase in the applicable Conversion Price shall be made pursuant to
subclauses (1) or (2) of this subclause (C).




               (ii) Excluded Stock. “Excluded Stock” shall mean: (A) shares of Common Stock issued
or reserved for issuance by the Corporation as a stock dividend payable in shares of Common Stock,
or upon any subdivision or split-up of the outstanding shares of Common Stock or Preferred Stock,
(B) shares of Common Stock issued or reserved for issuance by the Corporation upon conversion of
shares of Preferred Stock; and (C) shares of Common Stock to be issued to employees, consultants
and advisors of the Corporation, whether pursuant to options, warrants or other rights, together
with any such shares that are repurchased by the Corporation and reissued to any such employee,
consultant or advisor, but only to the extent that such issuances are authorized pursuant to
resolutions adopted by unanimous vote of the Board of Directors, including both directors
designated by Walnut, and, if required, the Corporation’s shareholders.



               (iii) Stock Dividends, Subdivisions, Reclassifications or Combinations. If the
Corporation shall: (A) declare a dividend or make a distribution on its Common Stock in shares of
its Common Stock; (B) subdivide or reclassify the outstanding shares of Common Stock into a greater
number of shares; or (C) combine or reclassify the outstanding Common Stock into a smaller number
of shares, the Conversion Price in effect at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination or reclassification shall be
proportionately adjusted so that the holder of any shares of Preferred Stock surrendered for
conversion after such date shall be entitled to receive the number of shares of Common Stock which
he would have owned or been entitled to receive had such Preferred Stock been converted immediately
prior to such date. Successive adjustments in the applicable Conversion Price shall be made
whenever any event specified above shall occur.



               (iv) Other Distributions. In case the Corporation shall fix a record date for the
making of a distribution to all holders of shares of its Common Stock: (A) of shares of any class
other than its Common Stock; or (B) of evidence of indebtedness of the Corporation or any
Subsidiary; or (C) of assets (excluding cash dividends or distributions, and dividends or
distributions referred to in subsection (f)(iii) above); or (D) of rights or warrants (excluding
those referred to in subsection (f)(i) above), in each such case the applicable Conversion Price in
effect immediately prior thereto shall be reduced immediately thereafter to the price determined by
dividing: (1) an amount equal to the difference resulting from: (a) the number of shares of Common
Stock outstanding on such record date multiplied by the applicable Conversion Price per share on
such record date, less (b) the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive) of said shares or evidences of indebtedness or assets or rights
or warrants to be so distributed, by: (2) the number of shares of Common Stock outstanding on such
record date. Such adjustment shall be made successively whenever such a record date is fixed. In
the event that such distribution is not so made, the applicable



 









 







Conversion Price then in effect shall be readjusted, effective as of the date when the Board of
Directors determines not to distribute such shares, evidences of indebtedness, assets, rights or
warrants, as the case may be, to that Conversion Price which would then be in effect if such record
date had not been fixed.



               (v) Consolidation, Merger, Sale, Lease and Conveyance. In case of any consolidation
with or merger of the Corporation with or into another corporation, or in case of any sale, lease
or conveyance to another corporation of the assets of the corporation as an entirety or
substantially as an entirety, each share of Preferred Stock shall after the date of such
consolidation, merger, sale, lease or conveyance be convertible into the number of shares of stock
or other securities or property (including cash) to which the Common Stock issuable (at the time of
such consolidation, merger, sale, lease or conveyance) upon conversion of such share of Preferred
Stock would have been entitled upon such consolidation, merger, sale, lease or conveyance; and in
any such case, if necessary the provisions set forth herein with respect to the rights and interest
thereafter of the holders of the shares of Preferred Stock shall be appropriately adjusted so as to
be applicable, as nearly as may reasonably be, to any shares of stock or other securities or
property thereafter deliverable on the conversion of the shares of Preferred Stock.



               (vi) Rounding of Calculations; Minimum Adjustment. All calculations under this
subsection (f) shall be made to the nearest cent ($0.01) or to the nearest one hundredth
(1/100th) of a share, as the case may be. Any provision of this Section 5 to
the contrary notwithstanding, no adjustment in the applicable Conversion Price shall be made if the
amount of such adjustment would be less than five cents ($0.05), but any such amount shall be
carried forward and an adjustment with respect thereto shall be made at the time of and together
with any subsequent adjustment which, together with such amount and any other amount or amounts so
carried forward, shall aggregate five cents ($0.05) or more.



               (vii) Timing of Issuance of Additional Common Stock Upon Certain Adjustments. In any
case in which the provisions of this subsection (f) shall require that an adjustment shall become
effective immediately after a record date for an event, the Corporation may defer until the
occurrence of such event: (A) issuing to the holder of any share of Preferred Stock converted after
such record date and before the occurrence of such event the additional shares of Common Stock
issuable upon such conversion by reason of the adjustment required by such event over and above the
shares of Common Stock issuable upon such conversion before giving effect to such adjustment; and
(B) paying to such holder any amount of cash in lieu of a fractional share of Common Stock pursuant
to subsection (e) above; provided that the Corporation upon request shall deliver to such holder a
due bill or other appropriate instrument evidencing such holder’s right to receive such additional
shares, and such cash, upon the occurrence of the event requiring such adjustment.



          (g) No Impairment. The Corporation shall not, by amendment, restatement or
modification of this Part Two of Article Fourth or any other provisions of these
Amended and Restated Articles of Incorporation or any provisions of its Amended and Restated
Regulations or through any reorganization, transfer of assets, merger, consolidation, mandatory
share exchange, issue or sale of securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed or performed hereunder by the
Corporation but



 









 







shall at all times in good faith assist in the carrying out of all of the provisions of this
Section 5 and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the holders of Preferred Stock against dilution or impairment.



          (h) Current Market Price. The Current Market Price at any date shall mean, in the
event the Common Stock is publicly traded, the average of the daily closing prices per share of
Common Stock for thirty (30) consecutive trading days ending no more than fifteen (15) business
days before such date (as adjusted for any stock dividend, split, combination or reclassification
that took effect during such thirty (30) business day period). The closing price for each day
shall be the last reported sale price regular way or in case no such reported sale takes place on
such day, the average of the last closing bid and asked prices regular way, in either case on the
principal national securities exchange on which the Common Stock is listed or admitted to trading
or if not listed or admitted to trading on any national securities exchange, the closing sale price
for such day reported by NASDAQ, if the Common Stock is traded over-the-counter and quoted in the
National Market System or if the Common Stock is so traded, but not so quoted, the average of the
closing reported bid and asked prices of the Common Stock as reported by NASDAQ or any comparable
system or if the Common Stock is not listed on NASDAQ or any comparable system, the average of the
closing bid and asked prices as furnished by two members of the National Association of Securities
Dealers, Inc. selected from time to time by the Corporation for that purpose. If the Common Stock
is not traded in such manner that the quotations referred to above are available for the period
required hereunder, the Current Market Price per share of Common Stock shall be deemed to be the
fair value as determined by the Board of Directors, irrespective of any accounting treatment.



          (i) Statement Regarding Adjustments. Whenever the applicable Conversion Price shall
be adjusted as provided in subsection (f) above, the Corporation shall forthwith file, at the
office of any transfer agent for the Preferred Stock and at the principal office of the
Corporation, a statement showing in detail the facts requiring such adjustment and the Conversion
Price that shall be in effect after such adjustment, and the Corporation shall also cause a copy of
such statement to be sent by mail, first class postage prepaid, to each holder of shares of
Preferred Stock at its address appearing on the Corporation’s records. Each such statement shall
be signed by the Corporation’s chief financial officer or its independent public accountants, if
applicable. Where appropriate, such copy may be given in advance and may be included as part of a
notice required to be mailed under the provisions of subsection (j) below.



          (j) Notice to Holders. In the event the Corporation shall propose to take any action
of the type described in clause (i) (but only if the action of the type described in clause (i)
would result in an adjustment in the applicable Conversion Price), (iii), (iv) or (v) of subsection
(f) above, the Corporation shall give notice to each holder of shares of Preferred Stock, in the
manner set forth in subsection (h) above, which notice shall specify the record date, if any, with
respect to any such action and the approximate date on which such action is to take place. Such
notice shall also set forth such facts with respect thereto as shall be reasonably necessary to
indicate the effect of such action (to the extent such effect may be known at the date of such
notice) on the applicable Conversion Price and the number, kind or class of shares or other
securities or property which shall be deliverable upon conversion of shares of Preferred Stock. In
the case of any action which would require the fixing of a record date, such notice shall be



 









 







given at least ten (10) days prior to the date so fixed, and in case of all other action, such
notice shall be given at least fifteen (15) days prior to the taking of such proposed action.
Failure to give such notice, or any defect therein, shall not affect the legality or validity of
any such action.



          (k) Treasury Stock. For the purposes of this Section 5, the sale or other
disposition of any Common Stock theretofore held in the Corporation’s treasury shall be deemed to
be an issuance thereof.



          (l) Costs. The Corporation shall pay all documentary, stamp, transfer or other
transactional taxes attributable to the issuance or delivery of shares of Common Stock upon
conversion of any shares of Preferred Stock; provided, that the Corporation shall not be
required to pay any taxes which may be payable in respect of any transfer involved in the issuance
or delivery of any certificate for such shares in a name other than that of the holder of the
shares of Preferred Stock in respect of which such shares are being issued.



          (m) Reservation of Shares. The Corporation shall reserve at all times so long as any
shares of Preferred Stock remain outstanding, free from preemptive rights, out of its treasury
stock (if applicable) or its authorized but unissued shares of Common Stock, or both, solely for
the purpose of effecting the conversion of the shares of Preferred Stock, sufficient shares of
Common Stock to provide for the conversion of all outstanding shares of Preferred Stock.



          (n) Approvals. If any shares of Common Stock to be reserved for the purpose of
conversion of shares of Preferred Stock require registration with or approval of any governmental
authority under any Federal or state law before such shares may be validly issued or delivered upon
conversion, then the Corporation will in good faith and as expeditiously as possible endeavor to
secure such registration or approval, as the case may be. If, and so long as, any Common Stock
into which the shares of Preferred Stock are then convertible is listed on any national securities
exchange, the Corporation will, if permitted by the rules of such exchange, list and keep listed on
such exchange, upon official notice of issuance, all shares of such Common Stock issuable upon
conversion.



          (o) Valid Issuance. All shares of Common Stock which may be issued upon conversion of
the shares of Preferred Stock will upon issuance by the Corporation be duly and validly issued,
fully paid and nonassessable and free from all taxes, liens and charges with respect to the
issuance thereof, and the Corporation shall take no action which will cause a contrary result
(including without limitation, any action which would cause the applicable Conversion Price to be
less than the par value, if any, of the Common Stock).



     6. Voting Rights.



          (a) In addition to the special voting rights provided in subsections (b), (c), (d), (e) and
(f) below and by applicable law, and except for the election of directors, which shall be governed
by the Amended and Restated Shareholders Agreement dated as of December 16, 2005, as in effect from
time to time (the “2005 Shareholders Agreement”), the holders of shares of Preferred Stock shall be
entitled to vote upon all matters upon which holders of the Common



 









 







Stock have the right to vote. The holders of the Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series F Preferred Stock and Series G Preferred Stock shall be
entitled to the number of votes equal to the sum of largest number of full shares of Common Stock
into which such shares of Preferred Stock could be converted pursuant to the provisions of
Section 5 hereof at the record date for the determination of the stockholders entitled to
vote on such matters, or if no such record date is established, at the date such vote is taken or
any written consent of stockholders is solicited, such votes to be counted together with all other
shares of capital stock having general voting powers and not separately as a class. The holders of
the Series A Preferred Stock and Series E Preferred Stock shall be entitled to one thousand (1,000)
votes for each such share of Series A Preferred Stock, Series E Preferred Stock and Series F
Preferred Stock held by them (except in or with respect to the election of directors, which shall
be governed by the 2005 Shareholders Agreement, the approval of incentive compensation for members
of the Corporation’s senior management and any matters reserved for class votes (including matters
where the Series B Preferred Stock, Series D Preferred Stock and Series F Preferred Stock vote
together as a single class) or as to which holders of Preferred Stock enjoy protective provisions).
In all cases where the holders of shares of Preferred Stock have the right to vote separately as a
class, such holders shall be entitled to one (1) vote for each such share held by them
respectively.



          (b) Without the consent of the holders of at least a majority of the shares of Series A
Preferred Stock then outstanding, given in writing or by vote at a meeting of stockholders called
for such purpose and voting as a separate class, the Corporation will not:



               (i) Alter or change the rights, preferences or privileges of the Series A Preferred Stock;



               (ii) Increase or decrease the authorized number of shares of Series A Preferred Stock;



               (iii) Create (by reclassification or otherwise) any new class or series of capital stock
having rights, preferences or privileges on a par with or senior to the Series A Preferred Stock;



               (iv) Materially change the nature of the Corporation’s business (which shall not include any
expansion of the Corporation or its acquisition of related or strategic businesses);



               (v) Amend or restate the Corporation’s Second Amended and Restated Articles of Incorporation,
Amended and Restated Regulations or other charter documents (including any amendment or restatement
effected by merger, consolidation, mandatory share exchange or otherwise) in a manner that
adversely affects the rights of the holders of the Series A Preferred Stock;



               (vi) Sell or otherwise convey all or substantially all the assets of the Corporation or sell
or issue shares of capital stock of the Corporation representing fifty percent


 









 







(50%) or more of the capital stock of the Corporation or enter into any consolidation or merger,
mandatory share exchange or conversion transaction;



               (vii) Initiate the voluntary dissolution or winding-up or reorganization of the Corporation;



               (viii) Enter into any agreement, directly or indirectly, with officers, employees,
stockholders or directors of the Corporation, other than employment agreements, compensation
arrangements, stock options or other service related transactions that are approved by the Board of
Directors; or



               (ix) Enter into any agreements, directly or indirectly, with any person to issue any capital
stock of the Corporation in return for goods or services provided by such person.



          (c) Without the prior consent of the holders of at least a majority in interest of the
then-outstanding shares of Series B Preferred Stock, given in writing or by vote at a meeting of
stockholders called for such purpose and voting as a separate class, the Corporation shall not:



               (i) Alter or change the rights, preferences or privileges of the Series B Preferred Stock;



               (ii) Increase or decrease the authorized number of shares of Series B Preferred Stock;



               (iii) Create (by reclassification or otherwise) any new class or series of capital stock
having rights, preferences or privileges on a par with or senior to the Series B Preferred Stock;



               (iv) Materially change the nature of the Corporation’s business (which shall not include any
expansion of the Corporation or its acquisition of related or strategic businesses);



               (v) Amend or restate the Corporation’s Second Amended and Restated Articles of Incorporation,
Amended and Restated Regulations or other charter documents (including any amendment or restatement
effected by merger, consolidation, mandatory share exchange or otherwise) in a manner that
adversely affects the rights of the holders of the Series B Preferred Stock;



               (vi) Sell or otherwise convey all or substantially all the assets of the Corporation or sell
or issue shares of capital stock of the Corporation representing fifty percent (50%) or more of the
capital stock of the Corporation or enter into any consolidation or merger, mandatory share
exchange or conversion transaction;



               (vii) Initiate the voluntary dissolution or winding-up or reorganization of the Corporation;



 









 





               (viii) Enter into any agreement, directly or indirectly, with officers, employees,
stockholders or directors of the Corporation, other than employment agreements, compensation
arrangements, stock options or other service related transactions that are approved by the Board of
Directors (with the consent of both directors designed by Walnut); or



               (ix) Enter into any agreements, directly or indirectly, with any person to issue any capital
stock of the Corporation in return for goods or services provided by such person.



          (d) Without the consent of the holders of at least a majority of the shares of Series C
Preferred Stock then outstanding, given in writing or by vote at a meeting of stockholders called
for such purpose and voting as a separate class, the Corporation will not:



               (i) Alter or change the rights, preferences or privileges of the Series C Preferred Stock;



               (ii) Increase or decrease the authorized number of shares of Series C Preferred Stock;



               (iii) Create (by reclassification or otherwise) any new class or series of capital stock
having rights, preferences or privileges on a par with or senior to the Series C Preferred Stock;
or



               (iv) Materially change the nature of the Corporation’s business (which shall not include any
expansion of the Corporation or its acquisition of related or strategic businesses);



               (v) Amend or restate the Corporation’s Second Amended and Restated Articles of Incorporation,
Amended and Restated Regulations or other charter documents (including any amendment or restatement
effected by merger, consolidation, mandatory share exchange or otherwise) in a manner that
adversely affects the rights of the holders of the Series C Preferred Stock; or



               (vi) Sell or otherwise convey all or substantially all the assets of the Corporation or sell
or issue shares of the Corporation representing fifty percent (50%) or more of the capital stock of
the Corporation or enter into any consolidation or merger, mandatory share exchange or conversion
transaction.



          (e) Without the prior consent of the holders of at least a majority in interest of the
then-outstanding shares of Series D Preferred Stock, given in writing or by vote at a meeting of
stockholders called for such purpose and voting as a separate class, the Corporation shall not:




               (i) Alter or change the rights, preferences or privileges of the Series D Preferred Stock;



 









 





               (ii) Increase or decrease the authorized number of shares of Series D Preferred Stock;



               (iii) Create (by reclassification or otherwise) any new class or series of capital stock
having rights, preferences or privileges on a par with or senior to the Series D Preferred Stock;



               (iv) Materially change the nature of the Corporation’s business (which shall not include any
expansion of the Corporation or its acquisition of related or strategic businesses);



               (v) Amend or restate the Corporation’s Second Amended and Restated Articles of Incorporation,
Amended and Restated Regulations or other charter documents (including any amendment or restatement
effected by merger, consolidation, mandatory share exchange or otherwise) in a manner that
adversely affects the rights of the holders of the Series D Preferred Stock;



               (vi) Sell or otherwise convey all or substantially all the assets of the Corporation or sell
or issue shares of capital stock of the Corporation representing fifty percent (50%) or more of the
capital stock of the Corporation or enter into any consolidation or merger, mandatory share
exchange or conversion transaction;



               (vii) Initiate the voluntary dissolution or winding-up or reorganization of the Corporation;



               (viii) Enter into any agreement, directly or indirectly, with officers, employees,
stockholders or directors of the Corporation, other than employment agreements, compensation
arrangements, stock options or other service related transactions that are approved by the Board of
Directors (with the consent of both directors designated by Walnut); or



               (ix) Enter into any agreements, directly or indirectly, with any person to issue any capital
stock of the Corporation in return for goods or services provided by such person.



          (f) If (but only if) the Thomas M. O’Gara Family Trust (the “O’Gara Trust”) acquires the
shares of Series E Preferred pursuant to the Irrevocable Subscription Agreement dated as of May 6,
2005, for so long as the majority of the shares of Series E Preferred issued to Campbell and to the
O’Gara Trust (or of the shares of Common Stock held by Campbell and the O’Gara Trust into which
such shares of Series E Preferred may be converted) are outstanding, approval of a majority in
interest of the then-outstanding shares of Series E Preferred (or of the Common Stock held by
Campbell and the O’Gara Trust into which the Series E Preferred shall have been converted) will be
required for the following actions:




               (i) Alter or change the rights, preferences or privileges of the Series E Preferred Stock;



 









 





               (ii) Increase or decrease the authorized number of shares of Series E Preferred Stock;



               (iii) Create (by reclassification or otherwise) any new class or series of capital stock
having rights, preferences or privileges on a par with or senior to the Series E Preferred Stock;



               (iv) Materially change the nature of the Corporation’s business (which shall not include any
expansion of the Corporation or its acquisition of related or strategic businesses);



               (v) Amend or restate the Corporation’s Second Amended and Restated Articles of Incorporation,
Amended and Restated Regulations or other charter documents (including any amendment or restatement
effected by merger, consolidation, mandatory share exchange or otherwise) in a manner that
adversely affects the rights of the holders of the Series E Preferred Stock;



               (vi) Sell or otherwise convey all or substantially all the assets of the Corporation or sell
or issue shares of capital stock of the Corporation representing fifty percent (50%) or more of the
capital stock of the Corporation or enter into any consolidation or merger, mandatory share
exchange or conversion transaction;



               (vii) Initiate the voluntary dissolution or winding-up or reorganization of the Corporation;



               (viii) Enter into any agreement, directly or indirectly, with officers, employees,
stockholders or directors of the Corporation, other than employment agreements, compensation
arrangements, stock options or other service related transactions that are approved by the Board of
Directors; or



               (ix) Enter into any agreements, directly or indirectly, with any person to issue any capital
stock of the Corporation in return for goods or services provided by such person.



          (g) Without the prior consent of the holders of at least a majority in interest of the
then-outstanding shares of Series F Preferred Stock, given in writing or by vote at a meeting of
stockholders called for such purpose and voting as a separate class, the Corporation shall not:




               (i) Alter or change the rights, preferences or privileges of the Series F Preferred Stock;



               (ii) Increase or decrease the authorized number of shares of Series F Preferred Stock;



 









 





               (iii) Create (by reclassification or otherwise) any new class or series of capital stock
having rights, preferences or privileges on a par with or senior to the Series F Preferred Stock;



               (iv) Materially change the nature of the Corporation’s business (which shall not include any
expansion of the Corporation or its acquisition of related or strategic businesses);



               (v) Amend or restate the Corporation’s Second Amended and Restated Articles of Incorporation,
Amended and Restated Regulations or other charter documents (including any amendment or restatement
effected by merger, consolidation, mandatory share exchange or otherwise) in a manner that
adversely affects the rights of the holders of the Series F Preferred Stock;



               (vi) Sell or otherwise convey all or substantially all the assets of the Corporation or sell
or issue shares of capital stock of the Corporation representing fifty percent (50%) or more of the
capital stock of the Corporation or enter into any consolidation or merger, mandatory share
exchange or conversion transaction;



               (vii) Initiate the voluntary dissolution or winding-up or reorganization of the Corporation;



               (viii) Enter into any agreement, directly or indirectly, with officers, employees,
stockholders or directors of the Corporation, other than employment agreements, compensation
arrangements, stock options or other service related transactions that are approved by the Board of
Directors (with the consent of both directors designated by Walnut); or



               (ix) Enter into any agreements, directly or indirectly, with any person to issue any capital
stock of the Corporation in return for goods or services provided by such person.



          (h) Without the prior consent of the holders of at least a majority in interest of the
then-outstanding shares of Series G Preferred Stock, given in writing or by vote at a meeting of
stockholders called for such purpose and voting as a separate class, the Corporation shall not:




               (i) Alter or change the rights, preferences or privileges of the Series G Preferred Stock;



               (ii) Increase or decrease the authorized number of shares of Series G Preferred Stock;



               (iii) Create (by reclassification or otherwise) any new class or series of capital stock
having rights, preferences or privileges on a par with or senior to the Series G Preferred Stock;



 









 





               (iv) Materially change the nature of the Corporation’s business (which shall not include any
expansion of the Corporation or its acquisition of related or strategic businesses);



               (v) Amend or restate the Corporation’s Second Amended and Restated Articles of Incorporation,
Amended and Restated Regulations or other charter documents (including any amendment or restatement
effected by merger, consolidation, mandatory share exchange or otherwise) in a manner that
adversely affects the rights of the holders of the Series G Preferred Stock; or



               (vi) Sell or otherwise convey all or substantially all the assets of the Corporation or sell
or issue shares of capital stock of the Corporation representing fifty percent (50%) or more of the
capital stock of the Corporation or enter into any consolidation or merger, mandatory share
exchange or conversion transaction.



     7. Preemptive Rights.



          (a) The Corporation hereby grants to each holder of Preferred Stock a right of first refusal
to purchase, on a pro rata basis, all or any part of New Securities (as defined below) which the
Corporation may, from time to time, propose to sell and issue subject to the terms and conditions
set forth below. Each such holder’s pro rata share, for purposes of this Section 7, shall
equal a fraction, the numerator of which is the number of shares of Common Stock then held by such
holder of Preferred Stock or issuable upon conversion of the Preferred Stock then held by such
holder or upon the exercise of any other Participating securities, options, rights or warrants then
held by such holder, and the denominator of which is the total number of shares of Common Stock
then outstanding plus the number of shares of Common Stock issuable upon conversion or
exercise of then outstanding Series A Preferred Stock, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G
Preferred Stock, other participating securities, options, rights or warrants (i.e.,
calculated on a fully-diluted basis).



          (b) “New Securities” shall mean any capital stock of the Corporation whether now
authorized or not and rights, options or warrants to purchase capital stock, and securities of any
type whatsoever which are or may become, Participating into capital stock; provided,
however, that the term “New Securities” does not include: (i) the Common Stock, Series A Preferred,
Series B Preferred and Series C Preferred issued pursuant to the Series C Investment Agreement;
(ii) the Series D Preferred Stock and Series E Preferred Stock issued pursuant to the Series D
Investment Agreement or the shares of Common Stock issuable upon conversion of such shares of
Series D Preferred Stock or Series E Preferred Stock; (iii) the Series E Preferred Stock issuable
to the O’Gara Trust pursuant to the Series E Investment Agreement or the shares of Common Stock
issuable upon conversion of such shares of Series E Preferred Stock; (iv) the Series F Preferred
issued pursuant to the Investment Agreement dated as of December 16, 2005 (the “Series F Investment
Agreement”) or the shares of Common Stock issuable upon conversion of such shares of Series F
Preferred; (v) the Series G Preferred issued in connection with the Acquisitions (as defined in the
Series F Investment Agreement), if the Acquisitions have received the requisite approvals under the
Series F Investment Agreement or the shares of



 









 







Common Stock issuable upon conversion of such shares of Series G Preferred; (vi) securities offered
to the public pursuant to a Qualified Public Offering; (vii) securities issued as a result of any
stock split, stock dividend or reclassification of Common Stock, distributable on a pro rata basis
to all holders of Common Stock; or (viii) securities issued in connection with the exercise of
warrants or options listed on Section 3.5 of the Disclosure Schedule to the Series F Investment
Agreement; or (ix) securities issued in connection with any of the Company’s stock option plans
pursuant to resolutions adopted by unanimous vote of the Board of Directors, including both
directors designated by Walnut; and (x) securities issued in connection with acquisitions of other
businesses by the Company.



          (c) If the Corporation intends to issue New Securities, it shall give each holder of Preferred
Stock written notice of such intention, describing the type of New Securities to be issued, the
price thereof and the general terms upon which the Corporation proposes to effect such issuance.
Each holder of Preferred Stock shall have thirty (30) days from the date of any such notice to
agree to purchase all or part of its, her or his pro rata share of such New Securities for the
price and upon the general terms and conditions specified in the Corporation’s notice by giving
written notice to the Corporation stating the quantity of New Securities to be so purchased. Each
holder of Preferred Stock shall have a right of over allotment such that if any other holder of
Preferred Stock fails to exercise his, her or its right hereunder to purchase his, her or its total
pro rata portion of New Securities, the other holders of Preferred Stock may purchase such portion
on a pro rata basis, by giving written notice to the Corporation within five (5) days from the date
that the Corporation provides written notice to the other Investors of the amount of New Securities
with respect to which such non-purchasing holder of Preferred Stock has failed to exercise its, her
or his right hereunder.


If any holder of Preferred Stock fails to exercise the foregoing right of first refusal with
respect to any New Securities within such thirty (30)-day period (or the additional five (5)-day
period provided for overallotments), the Corporation may within one hundred eighty (180) days
thereafter sell any or all of such New Securities not agreed to be purchased by the holders of
Preferred Stock, at a price and upon general terms no more favorable to the purchasers thereof than
specified in the notice given to each holder of Preferred Stock pursuant to paragraph (c) above.
In the event the Corporation has not sold such New Securities within such one hundred eighty
(180)-day period, the Corporation shall not thereafter issue or sell any New Securities without
first offering such New Securities to the holders of Preferred Stock in the manner provided in this
Section 7.




     8. Exclusion of Other Rights. Except as may otherwise be required by law, the shares
of Preferred Stock shall not have any preferences or relative, participating, optional or other
special rights, other than those specifically set forth herein (as amended from time to time).



     9. Headings of Subdivisions. The headings of the various subdivisions hereof are for
convenience of reference only and shall not affect the interpretation of any of the provisions
hereof.



     10. Severability of Provisions. If any right, preference or limitation of the
Preferred Stock set forth herein (as amended from time to time) is invalid, unlawful or incapable
of being



 









 







enforced by reason of any rule of law or public policy, all other rights, preferences and
limitations set forth herein (as so amended) which can be given effect without the invalid,
unlawful or unenforceable right, preference or limitation shall, nevertheless, remain in full force
and effect, and no right, preference or limitation herein set forth shall be deemed dependent upon
any other such right, preference or limitation unless so expressed herein.



     11. Status of Reacquired Shares. Shares of Preferred Stock which have been issued and
reacquired in any manner shall (upon compliance with any applicable provisions of the laws of the
State of Ohio) have the status of authorized and unissued shares of Preferred Stock issuable in
series undesignated as to series and may be redesignated and reissued.



     ARTICLE FIFTH: The Corporation is to have perpetual existence.



     ARTICLE SIXTH: Except as provided in this Article Sixth, any of the provisions of
these Second Amended and Restated Articles of Incorporation may be amended, altered, or repealed,
and other provisions authorized by the laws of the State of Ohio at the time in force may be added
or inserted as prescribed by said laws, and all rights at any time conferred upon the stockholders
of the Corporation by these Second Amended and Restated Articles of Incorporation are granted
subject to the provisions of this Article Sixth. Notwithstanding any other provision of
these Amended and Restated Articles of Incorporation to the contrary, this Article Sixth
may not be amended, altered or repealed (including any amendment, alteration or repeal effected by
merger or consolidation) without each of: (x) the affirmative vote of a majority in interest of the
then-outstanding Series A Preferred Stock, Series C Preferred Stock, Series E Preferred Stock and
Series G Preferred Stock, voting together as a single class; and (y) the affirmative vote of a
majority in interest of the then-outstanding Series B Preferred Stock, Series D Preferred Stock and
Series F Preferred Stock, voting together as a single class. Part Two of Article
Fourth of these Second Amended and Restated Articles of Incorporation may not be amended,
altered or repealed (including any amendment, alteration or repeal effected by merger,
consolidation or mandatory share exchange) without the affirmative vote of a majority in interest
of the then-outstanding Series A Preferred Stock and Series E Preferred Stock, voting together as a
single class. Part Two of Article Fourth of these Second Amended and Restated
Articles of Incorporation may not be amended, altered or repealed (including any amendment,
alteration or repeal effected by merger, consolidation or mandatory share exchange) without the
affirmative vote of a majority in interest of the then-outstanding Series B Preferred Stock, Series
D Preferred Stock and Series F Preferred Stock, voting together as a separate class. Section
6(d) of Part Two of Article Fourth of these Second Amended and Restated
Articles of Incorporation may not be amended, altered or repealed (including any amendment,
alteration or repeal effected by merger, consolidation or mandatory share exchange) without the
affirmative vote of a majority in interest of the then-outstanding Series C Preferred Stock.
Section 6(h) of Part Two of Article Fourth of these Second Amended and
Restated Articles of Incorporation may not be amended, altered or repealed (including any
amendment, alteration or repeal effected by merger, consolidation or mandatory share exchange)
without the affirmative vote of a majority in interest of the then-outstanding Series G Preferred
Stock.



 









 





     ARTICLE SEVENTH: This Corporation, through its Board of Directors, shall have the right and
power to purchase any of its outstanding shares at such price and upon such terms as may be agreed
upon between the Corporation and any selling shareholder.



     ARTICLE EIGHTH: No shareholder shall have the right to vote cumulatively in the election of
directors.



     ARTICLE NINTH: These Second Restated and Amended Articles of Incorporation take the place of
and supersede the existing Restated and Amended Articles of Incorporation of the Corporation as
heretofore amended and/or restated.



 









 





Schedule 4.1-2




Code of Regulations




     The Amended and Restated Code of Regulations of the Company are attached hereto.



 









 





AMENDED AND RESTATED REGULATIONS

OF

THE O’GARA GROUP, INC.

(the “Corporation”)




ARTICLE I.

SHAREHOLDERS’ MEETINGS




     Section 1. Place. All meetings of shareholders shall be held either at the principal
office of the Corporation or at any other place within or without the State of Ohio.



     Section 2. Annual Meetings. The annual meeting of the Corporation’s shareholders shall
be held in the afternoon on the 1st day in April of each year if not a legal holiday, then if a
legal holiday, then at the same time of the next succeeding day not a legal holiday. In the event
that such annual meeting is omitted by oversight or otherwise on the date herein provided for, the
shareholders shall cause a meeting in lieu thereof to be held as soon thereafter as is convenient,
and any business transacted or elections held at such meeting shall be as valid as if transacted or
held at the annual meeting.



     Section 3. Special Meetings. Special meetings of the shareholders of the Corporation
may be held on any date, other than a legal holiday, when called as provided by law. Any holder or
holders of more than ten percent (10%) of the outstanding capital stock of the Corporation
(calculated on an “as-converted” basis), shall have the right to call a special meeting of the
shareholders.



     Section 4. Notice of Meetings. Written notice of all shareholders’ meetings, stating
the time and place, and in case of special meetings, the objects thereof, shall be given to each
shareholder of record entitled to notice of such meeting by mailing the notice to such
shareholder’s address as it appears on the records of the Corporation not less than seven (7) nor
more than sixty (60) days before the date of the meeting.



     Section 5. Action of Shareholders Without Meeting. Any action which may be authorized
or taken at a meeting of the shareholders of the Corporation may be authorized without a meeting by
a unanimous written consent of such shareholders pursuant to Section 1701.54, Ohio Revised Code.



ARTICLE II.

DIRECTORS




     Section 1. Election, Number and Term. The election of directors shall take place at
the annual meeting of shareholders or at a special meeting called for that purpose. The number of
directors and the rights and obligations of the shareholders to nominate and elect the directors
are as set forth in the Amended and Restated Shareholders Agreement dated as of May 6, 2005, as
amended or modified in accordance with its terms (the “Shareholders Agreement”).



 









 





     Section 2. Meetings. Meetings of the Board of Directors shall be held at the principal
office of the Corporation, or at such other place within or without the State of Ohio as may be
determined by the Board. At least two (2) days notice of such meetings shall be given to each
director, unless the Board of Directors has fixed a regular time and place for such meetings, in
which case no noticed shall be required for meetings held at such time and place. Meetings may be
called by the Chairman of the Board of Directors, the Chief Executive Officer, the President, a
Vice President or by any two directors upon the giving of notice as herein required. Notice of any
Director’s meeting may be waived by any director either before or after such meeting. A director’s
presence at any meeting shall be deemed to constitute a waiver of notice on his/her part.



     Section 3. Action of Directors Without a Meeting. Any action which may be authorized
or taken at a meeting of the directors of the Corporation may be authorized without a meeting by
the unanimous written consent of such directors pursuant to Section 1701.54 of the Ohio Revised
Code.



ARTICLE III.

OFFICERS




     Section 1. Officers. The officers of the Corporation shall be a Chairman of the Board
of Directors, a Chief Executive Officer, a President, one or more Vice Presidents, a Secretary, a
Treasurer and such other officers as the Directors may elect.



     Section 2. Election and Term. All officers shall be elected by the Board of Directors
and shall hold office at the will of the Board of Directors. Except as otherwise provided by law,
any person may hold more than one office, provided the duties thereof can be consistently performed
by the same person.



     Section 3. Powers and Duties. The officers of the Corporation shall each have such
powers and duties as generally pertain to their respective offices, subject to such restrictions as
may be determined by the Board of Directors and such further powers and duties as from time to time
may be conferred by the Board of Directors.



ARTICLE IV.

INDEMNIFICATION




     Section 1. General. The Corporation shall, in the case of any person who is or was an
officer or director, and may, in the case of any other person, indemnify and hold harmless, to the
fullest extent not prohibited by the Ohio General Corporation Law, any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, other than an action by or in
the right of the Corporation, by reason of the fact that he is or was a director, officer, employee
or agent of the Corporation or any predecessor, or is or was serving at the request of the
Corporation as a director, trustee, officer, employee or agent of another corporation, domestic or
foreign, nonprofit or for profit, partnership, limited liability company, joint venture, trust or
other enterprise, including service with respect to an employee benefit plan, against expenses,



 









 







including attorneys’ fees, judgments, fines, and amounts paid in settlement, actually and
reasonably incurred by him in connection with such action, suit or proceeding, if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best interests of the
Corporation, and with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the Corporation, and with
respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was
unlawful.



     Section 2. Derivative Actions. The Corporation shall, in the case of any person who is
or was an officer or director, and may, in the case of any other person, indemnify and hold
harmless to the fullest extent not prohibited by the Ohio General Corporation Law, any person who
was or is a party, or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Corporation to procure a judgment in its favor by reason
of the fact that he is or was a director, officer, employee or agent of the Corporation or any
predecessor, or is or was serving at the request of the Corporation as a director, trustee,
officer, employee, or agent of another corporation, domestic or foreign, nonprofit or for profit,
partnership, limited liability company, joint venture, trust, or other enterprise, including
service with respect to an employee benefit plan, against expenses, including attorneys’ fees,
actually and reasonably incurred by him in connection with the defense or settlement of such action
or suit, if he acted in good faith and in a manner he reasonably believed to be in or not opposed
to the best interests of the Corporation, except that no indemnification shall be made in respect
to any claim, issue or matter as to which such person shall have been adjudged to be liable for
negligence or misconduct in the performance of his duty to the Corporation unless, and only to the
extent that, the Hamilton County, Ohio Court of Common Pleas, or the court in which such action or
suit was brought, shall determine upon application that, despite the adjudication of liability, but
in view of all the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the Hamilton County, Ohio Court of Common Pleas or such other court
shall deem proper.



     Section 3. Payment or Advancement of Expenses. To the extent that a director, trustee,
officer, employee or agent has been successful on the merits or otherwise in defense of any action,
suit or proceeding referred to in Sections 1 or 2 of this Article IV, or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses, including attorneys’ fees,
actually and reasonably incurred by him in connection therewith. In addition, with respect to a
director or officer, such expenses, including attorneys’ fees, shall be paid by the Corporation on
a continuing and current basis (and not later than ten (10) business days following receipt by the
Corporation of a request for reimbursement) in advance of the final disposition of such action,
suit or proceeding, upon the Corporation’s receipt of an undertaking by or on behalf of the
director or officer to repay such amount, if (with respect to an officer) it is ultimately
determined that he is not entitled to be indemnified by the Corporation as authorized herein or
(with respect to a director) it is ultimately determined by clear and convincing evidence in a
court of competent jurisdiction that his action or failure to act involved an act or omission



 









 







undertaken with deliberate intent to cause injury to the Corporation or undertaken with
reckless disrespect for the best interest of the Corporation.



     Section 4. Special Procedure to Enforce Rights. If a request for indemnification or
reimbursement is not paid in full by the Corporation within ninety days following the receipt
thereof by the Corporation, the requesting party may at any time thereafter bring suit against the
Corporation to recover the unpaid amount, and, if successful in whole or in part, shall also be
entitled to the expenses of prosecuting such action. It shall be a defense to any such action
(other than an action to enforce a claim for expenses incurred in defending any proceeding in
advance of its final disposition where the required undertaking has been tendered to the
Corporation) that the requesting party has not met the standards of conduct which make it
permissible under the Ohio General Corporation Law for the Corporation to indemnify the requesting
party for the amount claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors, independent legal counsel
or its shareholders) to have made a determination prior to the commencement of such action that
indemnification of the requesting party is proper under the circumstances because he has met the
applicable standard of conduct set forth in the Ohio General Corporation Law, nor an actual
determination by the Corporation (including its Board of Directors, independent legal counsel or
its shareholders) that the requesting party had not met such applicable standard of conduct, shall
be a defense to the action or create a presumption that the requesting party has not met the
applicable standard of conduct.



     Section 5. Rights are Non-Exclusive. The rights conferred on any person by Sections 1,
2, 3 and 4 above shall not be exclusive of any other rights to which such person may be entitled
under any statute, provision of the Corporation’s Amended and Restated Articles of Incorporation or
these Amended and Restated Regulations, agreement, vote of the shareholders or disinterested
Directors, or otherwise. The Corporation shall have the power to give any further indemnity, in
addition to the indemnity offered or authorized under other provisions of this Article IV, to any
person who is or was a director or officer, or is or was serving at the request of the Corporation
as a director, officer, trustee, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, provided such further indemnity is either: (i) authorized,
directed or provided for in the Corporation’s Amended and Restated Articles of Incorporation or any
duly adopted amendment thereof; or (ii) authorized, directed or provided for in any provision of
these Amended and Restated Regulations, or separate agreement or contract of the Corporation which
has been ratified or adopted by a vote of the shareholders of the Corporation, and provided further
that the Corporation shall in no event indemnify any person from or on account of such person’s
conduct which is finally adjudged to have been knowingly fraudulent, deliberately dishonest or
willful misconduct, or if it is finally adjudged by a court of competent jurisdiction considering
the question of indemnification that such payment of indemnification is or would be in violation of
applicable law.



     The Board of Directors, in its discretion, shall have the power on behalf of the Corporation
to indemnify, to the fullest extent not prohibited by the Ohio General Corporation Law, any person,
other than a director or officer, who was or is a party or is threatened to be made a party to any
threatened, pending or completed proceeding, by reason of the fact that he,



 









 







or a person for whom he is the legal representative, is or was an employee or agent of the
Corporation.



     Section 6. Insurance. The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, trustee, officer, employee or agent of
another corporation, domestic or foreign, nonprofit or for profit, partnership, joint venture,
trust or other enterprise, against any liability asserted against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the Corporation would have the
power to indemnify him against such liability under this Article IV.



     Section 7. Consolidation or Merger. As used in this Article IV, references to the
Corporation include all constituent corporations in a consolidation or merger and the new or
surviving corporation, so that any person who is or was a director, officer, employee or agent of
such constituent corporation, or is or was serving at the request of such a constituent corporation
as a director, trustee, officer, employee, or agent of another corporation, domestic or foreign,
nonprofit or for profit, partnership, limited liability company, joint venture, trust or other
enterprise, shall stand in the same position under this Article IV with respect to the new or
surviving corporation as he would if he had served the new or surviving corporation in the same
capacity.



     Section 8. Contract Rights. The provisions of this Article IV shall be deemed to be a
contract between the Corporation and each director, officer, employee or agent of the Corporation
who serves in such capacity at any time while this Article is in effect, and any repeal or
modification thereof shall not affect any rights or obligations then existing with respect to any
state of facts then or theretofore existing or any proceeding theretofore brought based in whole or
in part on any such state of facts.



ARTICLE V.

SHARES




     Section 1. Certificates. Every shareholder shall be entitled to a certificate or
certificates for its, his or her shares of the Corporation in such form as may be prescribed by the
Board of Directors, duly numbered and setting forth the number and kind of shares. Such
certificates shall be signed as permitted by law.



     Section 2. Transfer. Subject to the provisions and restrictions set forth in the
Shareholders Agreement, Shares may be transferred by delivery of the certificate accompanied either
by an assignment in writing on the back of the certificate or by a written power of attorney to
sell, assign, and transfer the same on the books of the Corporation, signed by the person appearing
by the certificate to be the owner of the shares represented thereby an shall be transferable on
the books of the Corporation upon surrender thereof so assigned or endorsed. The person registered
on the books of the Corporation as the owner of any shares shall be entitled to all the rights of
ownership with respect to such shares.



 









 





     Section 3. Lost Certificates. The Board of Directors may order a new certificate or
certificates of shares to be issued in place of any certificate or certificates alleged to have
been lost or destroyed upon such terms as the Board of Directors may prescribe.



     Section 4. Closing of Transfer Books. The transfer books of the corporation may be
closed by order of the Board of Directors for a period not exceeding sixty (60) days prior to any
meeting of the shareholders. In lieu of closing the transfer books, the Board of Directors may fix
a day not more than sixty (60) days prior to the day of holding any meeting of Shareholders as the
day as of which shareholders entitled to notice of and to vote at such meeting shall be determined;
and only shareholders of record on such day shall be entitled to notice of or to vote at such
meeting.



ARTICLE VI.

SEAL




     The Corporation shall have no seal unless and until the Board of Directors adopts a seal and
in such form as the Board of Directors may designate or approve.



ARTICLE VII.

AMENDMENTS




     These Amended and Restated Regulations of the Corporation may be amended, added to, or
repealed by vote or written consent of the holders of two thirds of the issued and outstanding
voting shares of the Corporation, subject to the limitations and required consent provisions of the
Corporation’s Amended and Restated Articles of Incorporation.



 









 





Schedule 4.2




Company Subsidiaries




The Subsidiaries of the Company are:




     1. STS Holding Company — an Ohio corporation



     2. Diffraction, Ltd. — a Vermont corporation



     3. O’Gara Safety & Security Institute, Inc. — an Ohio corporation



     4. O’Gara-Tracor, Inc. — an Ohio corporation


Sensor Technology Systems, Inc. (f/k/a Specialized Technical Services, Inc.), an Ohio corporation,
is a wholly owned subsidiary of STS Holding Company



Sensor Technology Systems Ltd, a UK corporation, is a wholly owned subsidiary of Sensor Technology
Systems, Inc.



The Company is in the process of developing a bonus plan for the Company’s founding members, which
shall be subject to approval by the Company’s Board of Directors, whereby such members will receive
a cash bonus at such time as the Company undergoes a liquidation event.




 









 








Schedule 4.4




Ownership and Status of Capital Stock




(a) See attached capitalization table.




(b) For a listing of outstanding options, see attached capitalization table.




     Members of the Company’s Board of Advisors have been promised an annual grant of stock options
for Common Stock in the Company.



     $500,000 worth of options for Common Stock in the Company will be granted to employees of
Diffraction, Ltd. pursuant to a side letter dated May 9, 2005, a portion of which have been
granted.



     The Company is in the process of developing a bonus plan for the Company’s founding members,
which shall be subject to approval by the Company’s Board of Directors, whereby such members will
receive a cash bonus at such time as the Company undergoes a liquidation event.



     Under the Merger Agreement between O’Gara-Tracor, Inc. and Tracor, Inc., the Company has an
obligation to provide shares of the Company’s stock to the shareholders of Tracor, Inc. based on an
earn-out formula set forth in the Merger Agreement.



     Under the Asset Purchase Agreement between O’Gara Safety & Security Institute, Inc. and VIR
Rally, LLC, the Company has an obligation to provide shares of the Company’s stock to the
shareholders of Tracor, Inc. based on an earn-out formula set forth in the Asset Purchase
Agreement.



 









 





Schedule 4.5.1




Undisclosed Liabilities




None




 









 





Schedule 4.6




Absence of Certain Changes



(a)



None



(b)



None



(c)



None



(d)



None



(e)



All of the Company and the Subsidiaries assets that were acquired since December 31, 2005 have been
made subject to a blanket lien by KeyBank, NA pursuant to the Company’s lending facility.



(f)



None



(g)



None



(h)



The Company issued Series G Preferred in connection with the following transactions:





	 	1.	 	The acquisition of substantially all of the assets of VIR Rally, LLC, a Virginia
limited liability company, by O’Gara Safety & Security Institute, Inc. (a wholly owned
subsidiary of the Company); and
	 
	 	2.	 	The merger by and between Tracor, Inc., a Montana corporation, with and into
O’Gara-Tracor, Inc. (a wholly owned subsidiary of the Company).




 









 






	 	3.	 	[The acquisition of substantially all of the assets of Dynamic Labyrinth, a sole
proprietorship owned by Calvin Odell Frye by O’Gara Safety & Security Institute, Inc.]




Shares and options have been issued since December 31, 2004 as disclosed on the capitalization
table attached to Section 4.4.



(i)



None



(j)



None



(k)



None



(l)



None



(m)



None



(n)



None



(o)



None



(p)



The Company has entered acquisition discussions with several entities, including, but not limited
to: (1) Homeland Defense Solutions, (2) 3S, (3) TPS Armoring.



(q)



None




 









 








Schedule 4.7.2




Other Relationships




The Company




None




Diffraction



Lease by and between Diffraction and Platypus Holdings LLC at 49 Fiddler’s Green, Waitsfield, VT
05673. Platypus Holdings LLC is owned by Bill and Julie Parker, the Series E shareholders of the
Company.



At will leasehold, triple net, from the Bill and Julie Parker at 4919 Main Street, Waitsfield, VT
05673, at a rate of $1,000 per month plus all utilities and CAM expenses.



Diffraction leases certain business equipment from Platypus Holdings LLC which is located at the 49
Fiddler’s Green location. There is no charge for the lease of the equipment, but Diffraction is
responsible for all maintenance expenses, and Platypus and its affiliates have the right to use the
equipment, so long as such use does not interfere with any reasonably necessary use of the
equipment by Diffraction. Any termination of the lease arrangement by either Diffraction or
Platypus requires 6 months prior written notice, which may be waived by the party receiving the
notice.



Master equipment lease between Diffraction and Platypus Holdings LLC dated March 1, 2004.




O’Gara Safety & Security Institute, Inc.(“OSSI”)



Lease and Operating Agreement between OSSI, VIR Rally, LLC and Blue Chip Racing Resorts, LLC (which
is under common control with VIR Rally, LLC).




 









 








Schedule 4.8.1




Intellectual Property Rights




The Company, O’Gara-Tracor, Inc. and STS Holding Company




Patents – None

Trademarks – None

Service Marks – None

Trade Names – None

Copyrights – None

Licenses – None




Sensor Technology Systems, Inc.




Patents – None

Trademarks – None

Service Marks – None

Trade Names – None

Copyrights – None



Licenses – License Agreement with Night Vision Corporation and STS, dated August 28, 1995, as
amended by Amendment 2 to License Agreement effective July 1, 2002, for sublicense under Patent No.
4,653,879 entitled “Compact See-Through Night Vision Goggles” issued March 31, 1987 and Patent No.
5,079,416 entitled “Compact See-Through Night Vision Goggles” issued January 7, 1992.




Diffraction




Patent Filings



(1) “Target Assignment Projectile” Provisional Patent Application No. 60/506,333 filed September
27, 2003 and US Patent Application No. 10/483,753 filed September 27, 2004.



(2) “Selective Emitting Flare Nanosensors” Provisional Patent Application No. 60/506,334 filed
September 27, 2003 and US Patent Application No. 10/483,754 filed September 27, 2004.



(3) “Covert Night Vision System” Provisional Patent Application filed September 24, 2003 and
“Illumination Filter and Imaging System and Method” US Patent Application Filed September 23, 2004
NVL Docket 3302 -Classified-




Assignments and Licenses



Assignment to Diffraction LTD from the US government of the “Illumination Filter and Imaging System
and Method”.




 









 








Data Rights Reserved per Federal Acquisition Regulations



Subject to FAR 252.227-7017 Identification and Assertion of Use, Release, or Disclosure
Restrictions



Contracting Organization: National Center for the Study of Counterterrorism and Cybercrime

Contract Number: DIF03-01 (Subcontract of Prime Contract USZA26-03-D-1006)



Projects with Data Rights Restrictions are listed here — the statements of work (SOWs) exist as the
invention disclosure for each of these projects.




	 	 	 	 	 	 	 
	Project Name	 	Project Title	 	Task Order Number
	 
	TAP	 	Target Assignment Projectile
	 	 	001	 
	SEF	 	Selective Emitting Flare
	 	 	002	 
	NES	 	Nanoflake Explosive Sensor
	 	 	003	 
	BBS	 	B-Band Suite
	 	 	004	 
	BBS	 	B-Band Suite Follow-on
	 	 	005	 
	FBE	 	Filter Beacon Engineering
	 	 	“  “	 
	IRB	 	Infrared Beacon Engineering
	 	 	“  “	 
	HHI	 	Hand Held Imager
	 	 	“  “	 
	MFE	 	Monocle Fusion Engineering
	 	 	“  “	 
	PSM	 	Personnel Signature Management
	 	 	006	 






O’Gara Safety & Security Institute, Inc.




Patents – None

Service Marks – None

Trade Names – None

Copyrights – None

Licenses – None




Trademarks:



     1. SSI – Registration 78/599,064 issued 3/31/05



     2. SAFETY & SECURITY INSTITUTE – Registration 78/599,059 issued 3/31/05



 









 





Schedule 4.8.2




Government Approvals




None




 









 





Schedule 4.9




Brokers




None




 









 





Schedule 4.13




Employment Contracts




(i)




The Company




Employment Agreement with Michael J. Lennon dated April, 2004.




Diffraction




Employment Agreement with William P. Parker dated May 9, 2005.




	 	 	 	 	 	 	 
	Name	 	Date of Hire	 	Agreement Date	 	Renewed Agreement Date
	Shaun Abraham
	 	11/1/1995	 	11/1/1995	 	4/18/2005
	Harvey Allard
	 	7/9/1997	 	4/29/2005	 	 
	Ardis Beauchemin
	 	9/30/1998	 	1/18/2005	 	 
	Nicholas Bracket
	 	11/5/2001	 	11/5/2001	 	12/24/2004
	Robert DeSorbo
	 	10/6/2003	 	12/1/2003	 	12/23/2004
	John Gallagher
	 	11/15/1994	 	11/16/1994	 	12/24/2004
	Marc Hammond
	 	1/21/2004	 	1/23/2004	 	12/24/2004
	Joseph Hernandez
	 	4/9/2001	 	4/9/2001	 	12/24/2004
	Andrew Johnson
	 	11/14/1994	 	11/14/1994	 	8/3/1999
	Karine Johannesen
	 	11/1/2004	 	11/1/2004	 	4/19/2005
	Robert Kogut
	 	8/31/2000	 	8/21/2000	 	8/31/2000
	Dulcie Languerand
	 	2/7/2005	 	2/7/2005	 	 
	Lance Lalibert
	 	11/9/2005	 	11/9/2005	 	 
	Bonnie MacBrien
	 	5/20/2004	 	4/18/2005	 	 
	Sig Olsacher
	 	3/29/2004	 	12/22/2004	 	 
	Asah Rowles
	 	9/14/2004	 	9/20/2004	 	 
	Paul Vichi
	 	9/12/2005	 	9/15/2005	 	 






O’Gara-Tracor, Inc.




     1. Employment Agreement with Brett T. Beaman dated January 3, 2006



     2. Employment Agreement with Richard T. Holman-Vlcek dated January 3, 2006



(ii) and (iii)




The Company and its subsidiaries (other than Diffraction) have the following plans:




 









 






	 	1.	 	STS 401(k) Plan effective January 1, 1996, as amended and restated effective January 1,
2002
	 
	 	2.	 	Medical Insurance through Anthem
	 
	 	3.	 	Dental Insurance through Superior Dental Care, Inc.
	 
	 	4.	 	Group Life Insurance through Anthem Life
	 
	 	5.	 	Long Term Disability Insurance through Jefferson Pilot Financial Company
	 
	 	6.	 	Short Term Disability Insurance through Jefferson Pilot Financial Company
	 
	 	7.	 	Education Reimbursement Plan
	 
	 	8.	 	Scholarships for two STS employees’ children in an amount of $5,000 per year per
individual. One individual is in their final year of school and one has an additional year
of school remaining.
	 
	 	9.	 	Cafeteria Plan
	 
	 	10.	 	The Company is in the process of developing a plan, which shall be subject to approval
by the Company’s Board of Directors and by a majority in interest of the then-outstanding
Series B Preferred, Series D Preferred and Series F Preferred, voting together as a single
class, whereby certain of the holders of Series A Preferred will receive a cash bonus at
such time as the Company undergoes a liquidation event.
	 
	 	11.	 	Discretionary Bonus Plan.





Diffraction has the additional following plans:





	 	1.	 	Diffraction sponsors a Savings Incentive Match Plan for Employees of Small Employers
(SIMPLE) IRA plan which is available to all staff. 50/50 match up to 3% of salary.
	 
	 	2.	 	Diffraction has a medical insurance plan with Blue Cross/Blue Shield of Vermont
available to all staff. In general, Diffraction pays 50% of the employee’s premium and 50%
of the annual deductible. With respect to the Parent Shareholders, Diffraction funds
(through a Health Spending Account) 100% of the premium and an additional amount equal to
100% of the annual deductible.
	 
	 	3.	 	$500,000 worth of options in the Company will be granted to employees of Diffraction,
Ltd pursuant to a side letter dated May 9, 2005.
	 
	 	4.	 	Discretionary Bonus Plan.




 









 











(iv)



None, other than those listed on Section 4.7.2 of this Disclosure Schedule



The following employees of the Company and/or its affiliates have a base salary in excess of
$80,000:




	 	 	 	 	 	 	 
	Employee	 	Job Title	 	Salary
	Bill O’Gara
	 	President, CEO – The Company	 	$	255,000.00	 
	Bill Parker
	 	CEO – Diffraction
	 	$	245,000.00	 
	 
	 	CTO – The Company	 	 	 	 
	Michael Lennon
	 	President – STS
	 	$	180,000.00	 
	 
	 	COO – The Company	 	 	 	 
	Thomas Ellison
	 	Sales – The Company	 	$	175,000	 
	Steve Ratterman
	 	CFO – The Company	 	$	160,000.00	 
	Andrew Murray
	 	General Manager – STS Europe	 	$	130,000.00	 
	Edgar Arnaldo
	 	Sales – The Company	 	$	125,000	 
	Shaun Abraham
	 	VP of Science – Diffraction	 	$	100,000.00	 
	Brett T. Beaman
	 	Executive Director – O’Gara-Tracor, Inc.	 	$	100,000	 
	Richard T. Holman-Vlcek
	 	Executive Director – O’Gara-Tracor, Inc.	 	$	100,000	 
	Robert Kogut
	 	VP of Engineering - Diffraction	 	$	85,000.00	 







 









 






Schedule 4.14




Banks




Bank Accounts




	 	 	 	 	 
	Financial Institution	 	Type of Account	 	Authorized Drawer
	STS Key Bank

	 	Checking
	 	Michael Lennon

Doris Anderson

Steve Ratterman
	 
	 	 	 	 
	The Company Key Bank

	 	Checking
	 	Wilfred T. O’Gara

Michael Lennon

Doris Anderson

Steve Ratterman
	 
	 	 	 	 
	Diffraction Key Bank

	 	Checking
	 	Bill Parker

Steve Ratterman

Ardis Beauchemin

Bill O’Gara
	 
	 	 	 	 
	O’Gara-Tracor

	 	Checking
	 	Steve Ratterman
	 
	 	 	 	 
	OSSI

	 	Checking
	 	Steve Ratterman

Penny Coates






[Note: The Company is in negotiations to move its banking relationship to U.S. Bank, NA]




Powers of Attorney




None




 









 





Schedule 5.3




Contemplated Acquisitions




     1. Homeland Defense Solutions



     2. 3S



     3. TPS Armoring



 









 





Schedule 5.5




Other Agreements



The form agreement relating to matters of corporate opportunities and limited non-competition is
attached.




 









 








AGREEMENT




     To induce Walnut Investment Partners, L.P., a Delaware limited partnership (“Walnut”), to
enter into and to consummate the transactions contemplated by the Investment Agreement dated as of
May 17, 2004 between Walnut and The O’Gara Group, Inc., an Ohio corporation (the “Company”), the
undersigned hereby covenants and agrees, for the benefit of Walnut and the Company, that as long
as: (A) Walnut is an investor in the Company; and (not or) (B) the undersigned and [Wilfred
T. O’Gara / Thomas M. O’Gara] beneficially own the controlling voting equity interest in the
Company or (not and) the undersigned is an officer of the Company, the undersigned: (x)
will present to the Board of Directors of the Company for their consideration all defense industry
and security business investment opportunities of which the undersigned becomes aware; and (y) will
not compete with the Company in the night vision goggle business or in any other defense industry
or security business activities in which the Company or any subsidiary of the Company is then
engaged.



     The undersigned agrees that this Agreement is ancillary to the sale of an interest in a
business and is entitled to the rule of liberal judicial enforcement applicable to restrictive
covenants in such context. The undersigned further acknowledges and agrees that Walnut and the
Company would be injured in a manner not adequately compensated by money damages in the event of a
breach or threatened breach of this Agreement and therefore agrees that, in the event of such
breach or threatened breach, Walnut and the Company shall be entitled, without limiting its rights
or remedies under law, to a temporary restraining order, a preliminary injunction and other
equitable relief, all without the need to post bond or other security. The undersigned further
acknowledges and agrees that enforcement of this Agreement is not unreasonably restrictive of his
rights and that such enforcement is reasonably necessary for the protection of Walnut’s and the
Company’s business interests. The undersigned, Walnut and the Company hereby instruct any court
that may find any provision of the above non-competition covenant to be unenforceable because it is
overbroad or in violation of public policy to modify the covenant to the minimum extent needed to
permit enforcement thereof.



     THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL SUBSTANTIVE
LAWS OF THE STATE OF OHIO WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. The undersigned agrees
that any controversy, claim or dispute arising out of or relating to the terms and conditions of
this non-competition covenant may be determined by litigation initiated in a federal or state court
having a situs in the City of Cincinnati, Ohio. The undersigned consents to the jurisdiction of
the courts in Hamilton County, Ohio for this purpose. The prevailing party shall be entitled to
all costs including reasonable attorney’s fees and expenses resulting from such dispute or
controversy.



 









 





     IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed as of the
14th day of May, 2004.



	 	 	 	 	 
	 

	 	 

[Name of Executive Management Team Member]
	 	 






 









 






Schedule 7.3




Form of Legal Opinion




The form of legal opinion of Taft, Stettinius & Hollister LLP is attached hereto.




 









 





[Taft, Stettinius & Hollister LLP Letterhead]




July 14, 2006




Walnut Investment Partners, L.P.

Walnut Private Equity Fund, L.P.

312 Walnut St.

Cincinnati, Ohio 45202




     Re: Investment in The O’Gara Group, Inc.



Ladies and Gentlemen:




     We have served as counsel to The O’Gara Group, Inc., an Ohio corporation (the
“Company”) in connection with the purchase of shares of stock in the Company by Walnut
Investment Partners, L.P., Walnut Private Equity Fund, L.P., Walnut Holdings O’Gara, LLC, Hauser 43
LLC, A. David Davis, Jared A. Davis, PMR, LLC, The Thomas M. O’Gara Family Trust and Kurt M.
Campbell (the “Investors”) as provided in the Investment and Recapitalization Agreement,
dated as of July 14, 2006, by and between the Investors and the Company (“Investment
Agreement”). This opinion is being delivered to you pursuant to Section 7.3 of the Investment
Agreement.



     In this capacity, we have reviewed originals or copies, certified or otherwise identified to
our satisfaction, of the following documents:



     (a) The Articles of Incorporation of the Company (“Articles”), as amended and
supplemented through the date hereof and including the Third Amendment and Restatement of the
Company’s Articles to be filed with the Ohio Secretary of State (the “OSOS”) on the date
hereof in connection with the merger of O’Gara Recap Corp. with an into the Company.



     (b) The Amended and Restated Regulations of the Company, as in effect on the date hereof.



     (c) The Investment Agreement.



     (d) Certified resolutions of the Board of Directors of the Company relating to the Investment
Agreement, the Merger Agreement between O’Gara Recap Corp. and the Company and the Second Amended
and Restated Shareholders Agreement (collectively, the “Transaction Documents”) and the
transactions contemplated thereby.



     (e) A short-form Good Standing Certificate for the Company, dated a recent date, issued by the
OSOS.



 









 





     (f) A Certificate of Officers of the Company, dated the date hereof, as to certain factual
matters (the “Certificate”). A copy of the executed Certificate is attached to this
opinion.



     (g) Such other documents as we have considered necessary or appropriate to the rendering of
the opinion expressed below.



     In our examination of the aforesaid documents, we have assumed, without independent
investigation (the “Assumptions”):



     (a) the genuineness of all signatures;



     (b) the legal capacity of all individuals who have executed any of the Transaction Documents;



     (c) the authenticity of all documents submitted to us as originals;



     (d) the conformity to authentic originals of all documents submitted to us as copies;



     (e) the accuracy and completeness of all public records and certificates reviewed by us;



     (f) the truth and completeness of all representations and warranties made by the Company, the
Investors and the other parties in the Transaction Documents;



     (g) the completeness of all documents submitted to us and the lack of any undisclosed
modifications, waivers or amendments to any agreements or other documents examined by us;



     (h) that all parties to the Transaction Documents other than the Company have complied with
all applicable federal and state laws, rules and regulations in connection with the Transaction
Documents and the transactions contemplated thereby;



     (i) that each party to the Transaction Documents other than the Company that is not an natural
person is qualified and authorized to do business in every jurisdiction in which such qualification
and authorization are required to enable it to enter into and perform its obligation under the
Transaction Documents;



     (j) that the Transaction Documents have been duly and validly authorized, executed, and
delivered by all parties thereto other than to the Company (as to which we have not made such
assumption);



     (k) that the Transaction Documents constitute the valid, binding and enforceable obligations
of all parties thereto other than the Company (as to which we have not made such assumption);



     (l) that either (a) all material terms and conditions of the relationship between the Company
and the Investors are correctly and completely reflected in the Transaction Documents



 









 







or (b) nothing in any agreement between any Investor and the Company that we have not reviewed
modifies the material terms and conditions of the relationship between Investors and the Company;



     (m) the conduct of the parties to the transaction contemplated by the Transaction Documents
(the “Transaction”) complies with any applicable requirement of good faith, fair dealing,
conscionability and commercial reasonableness;



     (n) no misrepresentations between the parties to the Transaction Documents have been made that
would cause the Transaction Documents to be invalid or unenforceable, in whole or in part; and



     (o) no mutual mistake of fact or misunderstanding, fraud, duress or undue influence has
occurred in connection with the Transaction.



     As to any facts material to this opinion, we have relied solely upon the Certificate and the
representations and warranties of the Company and the Investors set forth in the Transaction
Documents and have not independently verified the matters stated therein.



     Based upon the Assumptions, and subject to the Qualifications hereinafter set forth, we are of
the opinion that:



     1. The Company is a corporation organized, validly existing, and in good standing under the
laws of the State of Ohio. The Company has all requisite power and authority to conduct its
business and to own its properties as now conducted and owned and to execute and deliver and carry
out and perform its obligations under the Investment Agreement.



     2. The execution and delivery by the Company of the Investment Agreement will not: (i) violate
any provision of the Company’s Articles (after giving effect to the amendment and restatement
thereof pursuant to the Merger Agreement) or Amended and Restated Regulations, (ii) to our
knowledge, result in the breach of or constitute a default under any material agreement or
instrument to which the Company is a party or by which it is bound, or (iii) result in the creation
or imposition of any material lien, claim, or encumbrance on any Company asset.



     3. The Company has authorized and duly executed the Investment Agreement. The Investment
Agreement constitutes the valid and binding obligation of the Company, enforceable against the
Company in accordance with its respective provisions.



     The foregoing opinions are further qualified as follows (the “Qualifications”):



     (A) We have made no investigation and we express no opinion as to the laws of any jurisdiction
other than the laws of the State of Ohio and the federal laws of the United States of America.



 









 





     (B) This opinion concerns only the effect of the laws (excluding the principles of conflict of
laws) of the State of Ohio and the federal laws of the United States of America as currently in
effect. We assume no obligation to update or supplement this opinion if any applicable laws change
after the date hereof or if any facts or circumstances come to our attention after the date hereof
that might change this opinion.



     (C) We express no opinion as to the enforceability of (1) self-help or other non-judicial
remedies, (2) provisions requiring indemnification, or (3) provisions requiring the payment of
legal fees.



     (D) The enforceability of the Transaction Documents may be (i) limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or conveyance, preferential transfer,
and similar laws affecting the enforceability of creditors’ rights generally; (ii) subject to the
rights, claims and defenses of lessors, account debtors or other parties to leases or other
contracts to which the Company is a party; (iii) subject to the qualification that certain
provisions therein may be unenforceable in whole or in part (but inclusion of such provisions does
not invalidate such documents in their entirety); and (iv) subject to public policy and general
principles of equity (regardless of whether such enforceability is considered in a proceeding in
equity or at law). Such principles of equity are of general application, and in applying such
principles a court, among other things, might require marshalling of liens, or decline to enforce
or order performance of a covenant or allow acceleration of indebtedness or realization upon any
security for the payment of such indebtedness, by reason of the failure to perform such a covenant
or a violation of such documents to the extent that the court determines that performance of such
covenant or such violation is not material to the repayment of such indebtedness. Such principles
applied by a court might also limit the enforceability of covenants relating to specific
performance, injunctive relief or self-help without appropriate judicial process and include a
requirement that the Investor act with reasonableness, good faith and fair dealing, and might be
applied, among other situations, to any provisions purporting to authorize conclusive
determinations by the Investor.



     (E) We express no opinion on the enforceability of any provisions (i) permitting waivers,
amendments or modifications of the Transaction Documents only if in writing, or (ii) stating that
the provisions of the Transaction Documents are severable.



     (F) We express no opinion on the enforceability of any the provisions of the Transaction
Documents regarding waiver of jury trial or which provide for jurisdiction of the courts of any
particular jurisdiction.



     (G) The provisions regarding the remedies available on default as set forth in the Transaction
Documents are subject to certain procedural requirements which affect and may restrict rights and
remedies stated to be available.



     (H) The words “to our knowledge” and “known to us” used herein means the current actual
knowledge of the lawyers within our firm who have represented the Company in connection with the
Transaction Documents, without independent verification, except for our



 









 







review of the documents referred to herein. Such terms do not include matters with respect to
which such lawyers could be deemed to have constructive knowledge.



     (I) With respect to our opinion expressed in paragraph 1, we have relied solely upon the Good
Standing Certificate referred to above of the OSOS to the effect that the Company is duly qualified
and in good standing under the laws of the State of Ohio.



     (J) We express no opinion as to the standards of commercial reasonableness and good faith that
may apply to the transactions contemplated by the Transaction Documents.



     (K) We have no knowledge of the Company’s financial circumstances or of the details of the
transactions contemplated by the Transaction Documents, except insofar as such details are set
forth in the documents we have reviewed. Consequently, we express no opinion as to matters
governed by federal or state securities laws (including the anti-fraud provisions thereof).



     (L) We express no opinion as to any provisions purporting to waive rights or defenses,
authorize a party to act as attorney-in-fact for another party, disclaim liability or fiduciary
responsibility, or preclude oral modification or waiver, or modification or waiver by conduct or
course of dealing, of provisions of the Transaction Documents.



     This opinion is based on existing facts, statutes, rules, regulations and judicial rulings,
and is subject to changes therein. We do not, however, undertake to advise you as to future
changes which affect this opinion.



     The opinion expressed in this letter is solely for the use of the Investors in connection with
the transactions contemplated by the Transaction Documents. This opinion may not be relied on by,
nor may copies hereof be delivered to, any other person or in any other connection without our
prior written approval. This opinion is limited to the matters set forth herein. No other opinion
should be inferred beyond the matters expressly stated. We are qualified to practice law in the
State of Ohio. We do not purport to express any opinion herein concerning any law other than the
laws of the State of Ohio and the federal laws of the United States of America.



Very truly yours,




TAFT, STETTINIUS & HOLLISTER LLP




 









 





Section 7.6-1




Form of Shareholders Agreement




The form of Second Amended and Restated Shareholders Agreement of the Company is attached hereto.




 









 





SECOND AMENDED AND RESTATED

SHAREHOLDERS AGREEMENT

among

THE O’GARA GROUP, INC.

and

THE SHAREHOLDERS OF

THE O’GARA GROUP, INC.

 




DATED AS OF: JULY 14, 2006




 









 





SECOND AMENDED AND RESTATED

SHAREHOLDERS AGREEMENT




     THIS SECOND AMENDED AND RESTATED SHAREHOLDERS AGREEMENT dated as of July 14, 2006 (this
“Agreement”) is made among THE O’GARA GROUP, INC., an Ohio corporation (the “Company”), WALNUT
INVESTMENT PARTNERS, L.P. a Delaware limited partnership (“WIP”), WALNUT PRIVATE EQUITY FUND, L.P.,
a Delaware limited partnership (“WPEF”) (WIP and WPEF collectively, “Walnut”), WALNUT HOLDINGS
O’GARA LLC, an Ohio limited liability company (“WHO”), MARK J. HAUSER (“Hauser”), HAUSER 43, LLC,
an Ohio limited liability company (“Hauser LLC”), WILLIAM J. MOTTO (“Motto”), PMR, LLC, a Vermont
limited liability company (“PMR”), THE THOMAS M. O’GARA FAMILY TRUST (“T. O’Gara”), WILFRED T.
O’GARA (“W. O’Gara”), MICHAEL J. LENNON (“Lennon”), KURT M. CAMPBELL (“Campbell”) and the other
shareholders of the Company listed on the signature pages hereof. Capitalized terms used herein but
not otherwise defined shall have the meanings respectively ascribed thereto in the Recapitalization
Agreement (as hereinafter defined).



R E C I T A L S:




     WHEREAS, the Company and certain of the Shareholders (as hereinafter defined) are party to the
Amended and Restated Shareholders Agreement dated as of December 16, 2005 (the “Existing
Shareholders Agreement”); and,



     WHEREAS, the Company intends to issue and sell shares of New B-1 Series of the New Class B 5%
Participating Cumulative Preferred Stock (“New Class B Preferred”) to Walnut, WHO, Hauser LLC, PMR,
T. O’Gara, and Campbell pursuant to the Investment and Recapitalization Agreement dated July 14,
2006 among the Company, Walnut, WHO, Hauser LLC, PMR, T. O’Gara, and Campbell (the
“Recapitalization Agreement”); and,



     WHEREAS, it is a condition precedent to the obligation of Walnut, WHO, Hauser LLC, PMR, T.
O’Gara, and Campbell to purchase the shares of New B-1 Series of the New Class B Preferred under
the Recapitalization Agreement that the Company and all the Shareholders enter into this Agreement;
and,



     WHEREAS, the parties hereto wish to restrict the transfer of the Shares (as hereinafter
defined) and to provide, among other things, for rights of first refusal, “tag-along” rights,
corporate governance rights and obligations and certain other matters, all on the terms and
conditions contained hereinafter;



     NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements
contained hereinafter, and for other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:



ARTICLE 1.

DEFINITIONS




 









 








     1.1 Definitions. As used in this Agreement, and unless the context requires a
different meaning, the following terms have the meanings indicated:



     “Affiliate” has the meaning ascribed thereto in the Recapitalization Agreement.



     “Amended and Restated Articles of Incorporation” means the Third Amended and Restated
Articles of Incorporation of the Company, as further amended and/or restated from time to time in
accordance with their terms.



     “Board of Directors” means the Board of Directors of the Company.



     “Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks in the City of Cincinnati, Ohio are authorized or required by law or executive
order to close.



     “Capital Stock” means any and all shares, interests, participations or other
equivalents (however designated) of the Company’s capital stock, whether now outstanding or
hereafter issued, including, without limitation, all Common Stock and Preferred Stock and any
rights, warrants or options to purchase the Company’s capital stock.



     “Charter Documents” means the Amended and Restated Articles of Incorporation, the
Amended and Restated Regulations and any other constitutional documents of the Company.



     “Class A Shareholder” means each holder of shares of any Series of New Class A
Preferred.



     “Class B Shareholder” means each holder of shares of any Series of New Class B
Preferred.



     “Contract Date” has the meaning set forth in Section 2.3(e) of this Agreement.



     “Common Stock” means the common stock, no par value per share, of the Company.



     “Company” has the meaning set forth in the recitals to this Agreement.



     “Company Option” has the meaning set forth in Section 2.3(c) of this Agreement.



     “Company Option Period” has the meaning set forth in Section 2.3(c) of this Agreement.



     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.



     “Initial Public Offering” means the sale, in an underwritten registered public
offering, of Common Stock pursuant to an effective registration statement under the Securities Act
that



 









 







results in gross proceeds to the Company of not less than Twenty Five Million Dollars
($25,000,000).



     “IPO Closing Date” means the date upon which the Initial Public Offering closes.



     “Investment Agreement” has the meaning set forth in the recitals to this Agreement.



     “Liquidation Event” has the meaning set forth in Article Fourth, Part Two, Section 3
of the Amended and Restated Articles of Incorporation.



     “New Class A Preferred” means the New Class A 3% Participating Cumulative Preferred
Stock, no par value per share, of the Company and any Series of such Class.



     “New Class B Preferred” means the Class B 5% Participating Cumulative Preferred Stock,
no par value per share, of the Company and any Series of such Class.



     “Non-Selling Shareholder” has the meaning set forth in Section 2.3(a) of this
Agreement.



     “Non-Selling Shareholder Option” has the meaning set forth in Section 2.3(b) of this
Agreement.



     “Non-Selling Shareholder Option Period” has the meaning set forth in Section 2.3(b) of
this Agreement.



     “Offered Price” has the meaning set forth in Section 2.3(a) of this Agreement.



     “Offered Securities” has the meaning set forth in Section 2.3(a) of this Agreement.



     “Offering Notice” has the meaning set forth in Section 2.3(a) of this Agreement.



     “Permitted Transferee” means: (a) for each Shareholder who is an individual, (i) a
member of his or her immediate family, which shall include his or her spouse, children and
grandchildren (“Family Members”); or (ii) a trust, corporation, partnership or limited liability
company, all of the beneficial interests in which shall be held by such Shareholder or one (1) or
more Family Members of such Shareholder; provided, however, that during the period
that any such trust, corporation, partnership or limited liability company holds any right, title
or interest in any Shares, no Person other than such Shareholder or one (1) or more Family Members
of such Shareholder may be or may become beneficiaries, shareholders, limited or general partners
or members thereof; (b) for each Shareholder that is a Trust, any of its Affiliates or any entity
that is owned or controlled by any such Affiliate; and (c) for each Shareholder that is not an
individual, any of its Affiliates.



     “Person” means any individual, firm, corporation, partnership, limited liability
company, trust, incorporated or unincorporated association, joint venture, joint stock company,
government (or an agency or political subdivision thereof) or other entity of any kind and shall
include any successor (by merger or otherwise) of such entity.



 









 





     “Preferred Stock” means the New Class A Preferred and the New Class B Preferred.     



     “Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.



     “Selling Article 3 Shareholder” has the meaning set forth in Section 3.1 of this
Agreement.



     “Selling Shareholder” has the meaning set forth in Section 2.3(a) of this Agreement.



     “Share Equivalents” means any security or obligation which is, by its terms,
convertible into or exchangeable for Common Stock or other securities of the Company, and any
option, warrant or other subscription or purchase right with respect to Common Stock or such other
securities.



     “Shareholders” means the Series B Shareholders, Series A Shareholders, the holders of
Common Stock and any other holder of Capital Stock of the Company; and the term “Shareholder” shall
mean any such Person.



     “Shareholders Meeting” has the meaning set forth in Section 5.1 of this Agreement.



     “Shares” means, with respect to each Shareholder, all Common Stock, any Series of New
Class B Preferred, any Series of New Class A Preferred and Share Equivalents, whether now owned or
hereafter acquired; provided, however, for the purposes of any computation of the
number of Shares pursuant to Sections 2, 3 and 6 all outstanding New Class B Preferred, New Class A
Preferred and Share Equivalents shall be deemed converted, exercised or exchanged as applicable and
the shares of Common Stock issuable upon such conversion, exercise or exchange shall be deemed
outstanding, whether or not such conversion, exercise or exchange has been effected.



     “Tag-Along Notice” has the meaning set forth in Section 3.1 of this Agreement.



     “Tag-Along Offer Price” has the meaning set forth in Section 3.2 of this Agreement.



     “Tag-Along Offered Securities” has the meaning set forth in Section 3.2 of this
Agreement.



     “Tag-Along Rightholder” has the meaning set forth in Section 3.1 of this Agreement.



     “Tag-Along Rightholder Securities” has the meaning set forth in Section 3.1 of this
Agreement.



     “Third Party Purchaser” has the meaning set forth in Section 2.3(a) of this Agreement.



 









 





     “Transaction Documents” means, collectively: (i) this Agreement; (ii) the
Recapitalization Agreement; and (iii) each other document or agreement executed in connection
herewith or therewith.



     “Transfer” means any sale (directly or through an option), assignment, pledge,
hypothecation, encumbrance, disposition, transfer (including, without limitation, a transfer by
will or intestate distribution), gift or attempt to create or grant a security interest in Shares,
whether voluntary, involuntary, by operation of law or otherwise (including, without limitation,
the conversion of Shares in a merger or consolidation or the exchange of Shares in a mandatory
share exchange).



     “Walnut” has the meaning set forth in the recitals to this Agreement.



     “Written Consent” has the meaning set forth in Section 5.1 of this Agreement.



ARTICLE 2.

RESTRICTIONS ON TRANSFERS OF SHARES




     2.1 Restriction on Transfers. No Shareholder shall make or attempt to make any
Transfer of Shares except for Transfers of Shares made in accordance with the provisions of
Articles 2, 3 and 4 and Transfers of Shares which are excepted from the restrictions on Transfer by
operation of Section 2.2. Any Transfer or purported Transfer of Shares by a Shareholder which is
not made in accordance with, or which violates any of, the provisions of Articles 2, 3 and 4, shall
be null and void and have no legal force or effect, and the Company shall not recognize any such
Transfer or recognize the transferee as the holder of such Shares for any purpose.



     2.2 Unrestricted Transfers.



          (a) Notwithstanding any other provision of this Article 2 or of Article 3 of this Agreement,
the following Transfers of Shares shall not be subject to the rights of first refusal contained in
Section 2.3 or the tag-along rights set forth in Article 3 hereof:



               (i)  any Transfer of Shares made in connection with an Initial Public Offering;



               (ii)  any Transfer of Shares to the Company;



               (iii)  any Transfer of Shares by a Shareholder that is an investment partnership to its
partners or to an Affiliate of such investment partnership;



               (iv)  any Transfer of Shares to another Shareholder or another Shareholder’s Permitted
Transferee; or



               (v)  any Transfer of Shares by a Shareholder to a Permitted Transferee.



 









 





          (b) Securities Law Restrictions. Notwithstanding any other provision in this
Agreement, but subject to express written waiver by the Company in the exercise of its good faith
and reasonable judgment, no Shareholder shall Transfer any Shares without the registration of the
Transfer of such Shares under the Securities Act or until the Company shall have received such
legal opinions or other assurances that such Transfer is exempt from the registration requirements
under the Securities Act and applicable state securities laws as the Company in its good faith and
reasonable discretion deems appropriate in light of the facts and circumstances relating to such
proposed Transfer, together with such representations, warranties and indemnifications from the
transferor and the transferee as the Company in its good faith and reasonable discretion deems
appropriate to confirm the accuracy of the facts and circumstances that are the basis for any such
opinion or other assurances and to protect the Company and the other Shareholders from any
liability resulting from any such Transfer.




          (c) Legends. All certificates representing Shares now or hereafter owned by the
Shareholders shall bear the following legend, or a legend to a similar effect:







THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. THEY MAY NOT BE OFFERED OR TRANSFERRED BY SALE, ASSIGNMENT, PLEDGE OR OTHERWISE
UNLESS: (I) A REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933 IS
IN EFFECT; OR (II) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, WHICH OPINION IS
REASONABLY SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933.


In addition, all certificates representing Shares now or hereafter owned by the Shareholders shall
bear the following legend:





TRANSFER OF THE SECURITIES IS FURTHER RESTRICTED AS PROVIDED IN THE SECOND AMENDED AND
RESTATED SHAREHOLDERS AGREEMENT DATED AS OF JULY 14, 2006, A COPY OF WHICH IS AVAILABLE AT
THE COMPANY’S OFFICES.


All certificates evidencing Shares hereafter issued to a Shareholder for any reason or purpose
shall, when issued, bear similar legends.




     2.3 Rights of First Refusal.



          (a) Offering Notice. Subject to Section 2.1, if, at any time prior to the Initial
Public Offering, any holder of Shares wishes to transfer all or any portion of its, his or her
Shares (a “Selling Shareholder”) to any Person other than to a Permitted Transferee (a “Third Party
Purchaser”) and other than in a transaction described above in Section 2.2, such Selling
Shareholder shall offer such Shares first to each holder of Shares other than the Selling
Shareholder (collectively, the “Non-Selling Shareholders”), by sending written notice (an “Offering
Notice”) to the Company and each Non-Selling Shareholder, which shall state: (a) the



 









 







name and address of the proposed purchaser; (b) the number of Shares of Capital Stock proposed
to be transferred (the “Offered Securities”); (c) the proposed purchase price per Share for the
Offered Securities (the “Offer Price”); and (d) the other terms and conditions of such sale. Upon
delivery of the Offering Notice, such offer shall be irrevocable unless and until the rights of
first refusal provided for herein shall have been waived or shall have expired.



          (b) Non-Selling Shareholder Option; Exercise. For a period of thirty (30) days after
the giving of the Offering Notice pursuant to Section 2.3(a) (the “Non-Selling Shareholder Option
Period”), each Non-Selling Shareholder shall have the right (hereby granted by each holder of
Shares of Capital Stock) (the “Non-Selling Shareholder Option”) but not the obligation to purchase
its, his or her pro rata share (based on each Non-Selling Shareholder’s percentage ownership of
Shares of Capital Stock of the Company then outstanding (excepting therefrom the percentage owned
by the Selling Shareholder)) of the Offered Securities at a purchase price equal to the Offer
Price; provided, however, that if the Offer Price is not to be paid in cash, the
Non-Selling Shareholders shall have the right to substitute cash in the amount of the Offer Price
(based on the fair market value of the consideration constituting the Offer Price, as determined in
good faith by a majority of the disinterested members of the Company’s Board of Directors (i.e.,
excluding any Board member(s) who is the Selling Shareholder or who is designated by the Selling
Shareholder)) and upon the other terms and conditions set forth in the Offering Notice. The right
of each Non-Selling Shareholder to purchase the Offered Securities under this Section 2.3 (b) shall
be exercisable by delivering written notice of the exercise thereof, prior to the expiration of the
Non-Selling Shareholder Option Period, to the Selling Shareholder with a copy to the Company. The
failure of any Non-Selling Shareholder to respond within the Non-Selling Shareholder Option Period
to the Selling Shareholder shall be deemed to be a waiver of that Non-Selling Shareholder’s rights
under this Section 2.3(b).



          (c) Company Option; Exercise. If the Non-Selling Shareholders do not elect to purchase
all of the Offered Securities pursuant to Section 2.3(b), then, for a period of thirty (30) days
after the expiration of the Non-Selling Shareholder Option Period pursuant to Section 2.3(b) (the
“Company Option Period”), the Company shall have the right (hereby granted by each holder of Shares
of Capital Stock) (the “Company Option”) but not the obligation to purchase any or all of the
remaining Offered Securities at a purchase price equal to the Offer Price; provided,
however, that if the Offer Price is not to be paid in cash, the Company shall have the right to
substitute cash in the amount of the Offer Price (based on the fair market value of the
consideration constituting the Offer Price, as determined in good faith by a majority of the
disinterested members of the Company’s Board of Directors, including the Walnut Directors (unless
Walnut is the Selling Shareholder) (i.e., excluding any Board member(s) who is the Selling
Shareholder or who is designated by the Selling Shareholder)), and upon the other terms and
conditions set forth in the Offering Notice. The right of the Company to purchase any or all of the
remaining Offered Securities under this Section 2.3(c) shall be exercisable by delivering written
notice of the exercise thereof, prior to the expiration of the thirty (30) day Company Option
Period, to the Selling Shareholder with a copy to all Non-Selling Shareholders, which notice shall
state the number of Offered Securities proposed to be purchased by the Company. The failure of the
Company to respond within such thirty (30) day Company Option Period shall be deemed to be a waiver
of the Company’s rights under this Section 2.3(c).



 









 





          (d) Closing. Subject to Section 2.3(e), the closing of the purchases of Offered
Securities subscribed for by the Non-Selling Shareholders and/or the Company under this Section 2.3
shall be held at the executive offices of the Company at 11:00 a.m., local time, on the
seventy-fifth (75th) day after the giving of the Offering Notice pursuant to Section
2.3(a) or at such other time and place as the parties to the transaction may agree. At such
closing, the Selling Shareholder shall deliver certificates representing the Offered Securities,
duly endorsed for transfer or with executed stock powers attached, and payment of all requisite
transfer taxes, if any. The Offered Securities shall be free and clear of any liens (other than
those arising hereunder and those attributable to actions by the purchasers thereof) and the
Selling Shareholder shall so represent and warrant, and shall further represent and warrant that
it, he or she is the sole beneficial and record owner of such Offered Securities. The Non-Selling
Shareholders and/or the Company, as the case may be, purchasing Offered Securities shall deliver at
the closing payment in full in immediately available funds for the Offered Securities purchased by
it, him or her. At such closing, all of the parties to the transaction shall execute such
additional documents as are otherwise necessary.



          (e) Sale to a Third Party Purchaser. Unless the Non-Selling Shareholders and the
Company elect to purchase all, but not less than all, of the Offered Securities under Sections
2.3(b) and 2.3(c), but in any event subject to Articles 3 and 4 of this Agreement, the Selling
Shareholder may sell all, but not less than all, of the remaining Offered Securities to the Third
Party Purchaser and on the same terms and conditions set forth in the Offering Notice;
provided, however, that such sale is bona fide and made pursuant to a contract
entered into within sixty (60) days after the earlier to occur of: (i) the waiver by all of the
Non-Selling Shareholders and the Company of their options to purchase the Offered Securities; and
(ii) the expiration of the Company Option Period (the “Contract Date”); and provided
further, that such sale shall not be consummated unless and until such Third Party
Purchaser complies with Sections 2.2 and 4.2 hereof. If such sale is not consummated within thirty
(30) days after the Contract Date for any reason, then the restrictions provided for herein shall
again become effective, and no transfer of such Offered Securities may be made thereafter by the
Selling Shareholder without again offering the same to the Non-Selling Shareholders and the Company
in accordance with this Section 2.3.



ARTICLE 3.

TAG-ALONG RIGHTS




     3.1 Tag Along Rights With Respect to Sales of Common Stock. If: (x) any Shareholder
beneficially owning five percent (5%) or more of the issued and outstanding New Class A Preferred
(of all Series, taken together), New Class B Preferred (of all Series, taken together) or Common
Stock, calculated on an as-converted and fully-diluted basis, desires to Transfer not less than ten
percent (10%) of such holder’s New Class A Preferred, New Class B Preferred or Common Stock (a
“Selling Article 3 Shareholder”) to a Third Party Purchaser and other than in a transaction
described above in Section 2.2; and (y) the Non-Selling Shareholders and the Company do not
exercise its, his, her or their options to purchase all of the shares of Capital Stock offered by
the Selling Article 3 Shareholder (the “Tag-Along Offered Securities”) in accordance with Section
2.3, then each of the Class B Shareholders (each, a “Tag-Along Rightholder”), but specifically
excluding the holders of shares of Common Stock or of any other



 









 







Capital Stock, shall have the right (hereby granted by each Shareholder) to “tag-along” on any
such Transfer as set forth in this Section 3.1. Notwithstanding any other provision of this
Agreement to the contrary, no Selling Article 3 Shareholder may consummate any transaction
described in the sentence immediately preceding without complying with the provisions of this
Article 3. Each Selling Article 3 Shareholder shall notify the Company and each Tag-Along
Rightholder of its desire to Transfer such Shares by sending written notice (a “Tag-Along Notice”)
in accordance with Section 3.2. Each Tag-Along Rightholder shall have the right to sell to such
Third Party Purchaser, upon the terms set forth in the Tag-Along Notice, that number of Shares of
Common Stock then held by such Tag-Along Rightholder or which will be held by such Tag-Along
Rightholder immediately after conversion of all or a portion of its New Class B Preferred, in
accordance with the terms thereof (the “Tag-Along Rightholder Securities”) equal to that percentage
of the Tag-Along Offered Securities determined by dividing: (A) the total number of Tag-Along
Rightholder Securities then owned by such Tag-Along Rightholder by (B) the sum of: (x) the total
number of Tag-Along Rightholder Securities then owned by all such Tag-Along Rightholders exercising
their rights pursuant to this Section 3.1; and (y) the total number of shares of New Class A
Preferred, New Class B Preferred and Common Stock (calculated on an as-converted basis, if
applicable) proposed to be sold by the Selling Article 3 Shareholder. Subject to the proviso below,
the Selling Article 3 Shareholder and the Tag-Along Rightholder(s) exercising their rights pursuant
to this Section 3.1 shall effect the sale of the Tag-Along Offered Securities and such Tag-Along
Rightholder Securities respectively, with the number of Tag-Along Offered Securities to be
Transferred to such Third Party Purchaser by the Selling Article 3 Shareholder reduced accordingly;
provided, however, that if the Third Party Purchaser wishes to purchase some but not all of
the total amount of Tag-Along Offered Securities (including the Tag-Along Rightholder Securities
requested to be sold by such Tag-Along Rightholder(s)), then the amount of Tag-Along Offered
Securities and Tag-Along Rightholders Securities to be sold to the Third Party Purchaser shall be
sold in accordance with the ratio of the amount of Tag-Along Offered Securities requested to be
sold by the Selling Article 3 Shareholder and each Tag-Along Rightholder, respectively, to the
total number of Tag-Along Offered Securities and Tag-Along Rightholders Securities requested to be
sold.



     3.2 Notice of Sale. The Selling Article 3 Shareholder shall give notice to each
Tag-Along Rightholder of each proposed sale by it of shares of Capital Stock that gives rise to the
rights of the Tag-Along Rightholders set forth in Section 3.1, at least thirty (30) days prior to
the proposed consummation of such Transfer, setting forth the name of such Selling Article 3
Shareholder, the number of shares of Capital Stock proposed to be transferred (the “Tag-Along
Offered Securities”), the name and address of the proposed Third Party Purchaser, the proposed
amount and form of consideration (the “Tag-Along Offer Price”), the terms and conditions of payment
offered by such Third Party Purchaser, the estimated number of the shares of Capital Stock that
such Tag-Along Rightholder may Transfer to such Third Party Purchaser (determined in accordance
with Section 3.1 and assuming that all Tag-Along Rightholders exercise their rights under this
Section 3.1), and a representation that such Third Party Purchaser has been informed of the
“tag-along” rights provided for in Section 3.1 and has agreed to purchase shares of Capital Stock
in accordance with the terms hereof. The tag-along rights provided by Section 3.1 must be exercised
by any Tag-Along Rightholder wishing to sell its shares of Capital Stock within thirty (30) days
following receipt of the notice required by the preceding sentence, by delivery of a written notice
to the Selling Article 3 Shareholder indicating such Tag-Along



 









 







Rightholder’s wish to exercise its rights and specifying the number of shares of Capital Stock
(up to the maximum number of shares of Capital Stock owned by such Tag-Along Rightholder required
to be purchased by such Third Party Purchaser) it wishes to sell; provided, however, that
any Tag-Along Rightholder may waive its rights under Section 3.1 prior to the expiration of such
thirty (30) day period by giving written notice to the Selling Shareholder, with a copy to the
Company. The failure of a Tag-Along Rightholder to respond within such thirty (30) day period shall
be deemed to be a waiver of such Tag-Along Rightholder’s rights under Section 3.1. If a Third Party
Purchaser fails to purchase shares of Capital Stock from any Tag-Along Rightholder that has
properly exercised its tag-along rights pursuant to Section 3.1, then the Selling Article 3
Shareholder shall not be permitted to consummate the proposed sale of the Tag-Along Offered
Securities, and any such attempted sale or proposed sale shall be null and void ab initio.



ARTICLE 4.

AFTER-ACQUIRED SECURITIES; TRANSFERRED SECURITIES; AGREEMENT TO BE BOUND




     4.1 After-Acquired Securities. All of the provisions of this Agreement shall apply to
all Shares and Share Equivalents now owned or which may be issued or transferred hereafter and
prior to the Initial Public Offering to a Shareholder in consequence of any additional issuance,
purchase, conversion, exercise, exchange or reclassification of any such Shares or Share
equivalents, corporate reorganization, or any other form of recapitalization, consolidation,
merger, share split or share dividend or which are acquired by a Shareholder in any other manner.



     4.2 Agreement to be Bound. The Company covenants that it shall not issue any shares of
Capital Stock or any Share Equivalents (other than options granted pursuant to a Company option
plan approved by unanimous vote of the Board of Directors, including both Walnut Directors), or
register the transfer of any shares of Capital Stock or any Share Equivalents (other than options
granted pursuant to a Company option plan approved by unanimous vote of the Board of Directors,
including both Walnut Directors), to any Person not a party to this Agreement, unless such Person
has agreed in writing to be bound by the terms and conditions of this Agreement pursuant to an
instrument reasonably acceptable to the Company and to the holders of a majority in interest of the
then-issued and outstanding New Class B Preferred and to the holders of a majority in interest of
the issued and outstanding New Class A Preferred and Common Stock, voting together as a single
class. The joinder agreement attached hereto and incorporated herein as Exhibit 4.2 is reasonably
acceptable to the Company and to the holders of a majority in interests of the issued and
outstanding New Class B Preferred and New Class A Preferred, voting together as a single class.
Upon becoming a party to this Agreement, such Person shall be deemed to be, and shall be subject to
the same obligations as, each Shareholder hereunder. Any issuance or transfer of Shares or any
Share Equivalents by the Company in violation of this Section 4.2 shall be null and void ab initio.



ARTICLE 5.

CORPORATE GOVERNANCE




 









 








     5.1 General. From and after the date of this Agreement, each Shareholder shall vote
its, his or her Shares at any regular or special meeting of the members of the Company (a
“Shareholders Meeting”) or in any written consent executed in lieu of such a meeting of the members
(a “Written Consent”), and shall take all other actions necessary, to give effect to the provisions
of this Agreement (including, without limitation, Sections 5.3 and 5.4 hereof) and to ensure that
the Charter Documents do not, at any time hereafter, conflict in any respect with the provisions of
this Agreement. In addition, each Shareholder shall vote its, his or her Shares at any Shareholders
Meeting or act by Written Consent with respect to such Shares, upon any matter submitted for action
by the Company’s shareholders or with respect to which such Shareholder may vote or act by Written
Consent, in conformity with the specific terms and provisions of this Agreement and the Charter
Documents.



     5.2 Shareholder Actions. In order to effectuate the provisions of this Article 5, each
Shareholder: (a) hereby agrees that when any action or vote is required to be taken by such
Shareholder pursuant to this Agreement, such Shareholder shall use its, his or her reasonable best
efforts to call, or cause the appropriate officers and directors of the Company to call, a
Shareholders Meeting, or to execute or cause to be executed a Written Consent to effectuate such
action of the members; (b) shall use its, his or her reasonable best efforts to cause the Board of
Directors to adopt, either at a meeting of the Board of Directors or by unanimous written consent
of the Board of Directors, all the resolutions necessary to effectuate the provisions of this
Agreement; and (c) shall use its, his or her reasonable best efforts to cause the Board of
Directors to cause the Secretary of the Company, or if there be no secretary, such other officer of
the Company as the Board of Directors may appoint to fulfill the duties of Secretary, not to record
any vote or consent contrary to the terms of this Article 5.



     5.3 Election of Directors; Number and Composition. Without limiting the effect of any
provisions of the Amended and Restated Articles of Incorporation giving certain holders of
Preferred Stock representation on the Board of Directors, each Shareholder shall vote its, his or
her Shares at any Shareholders Meeting, or act by Written Consent with respect to such Shares, and
take all other actions necessary to ensure that the number of directors constituting the entire
Board of Directors shall be seven (7). Each Shareholder shall vote its, his or her Shares at any
Shareholders Meeting called for the purpose of filling the positions on the Board of Directors, or
in any Written Consent executed for such purpose, and take all other actions necessary to ensure
the election to the Board of Directors of the following members:



          (i)  two (2) individuals designated by Walnut (the “Walnut Directors”), as long as Walnut or
an Affiliate thereof continues to own at least fifty percent (50%) of the shares of New Class B
Preferred (of all Series, taken together) owned by Walnut as of July 14, 2006 (or of Common Stock
acquired by conversion of such shares of New Class B Preferred). If Walnut or an Affiliate thereof
ceases to own at least fifty percent (50%) of the shares of New Class B Preferred (of all Series,
taken together) owned by Walnut as of July 14, 2006 (or of Common Stock acquired by conversion of
such shares of New Class B Preferred), the two (2) Directors previously designated by Walnut shall
be designated by a majority in interest of the then-outstanding New Class B Preferred of all
Series, voting together as a single class. Initially the two (2) Directors designated pursuant to
this Section 5.3(i) shall be Frederic H. Mayerson and James M. Gould; and



 









 





          (ii)  one (1) individual designated by William P. Parker and Julie P. Parker, as long as
William P. Parker is alive and as long as William P. Parker and Julie P. Parker or Affiliates
thereof own, in the aggregate, at least fifty percent (50%) of the shares of New Class A Preferred
(of all Series, taken together) owned by them as of July 14, 2006 (or of Common Stock acquired by
conversion of the New Class A Preferred). Initially, the Director designated pursuant to this
Section 5.3(ii) shall be William P. Parker; and,



          (iii)  three (3) individuals elected by T. O’Gara and W. O’Gara (the “Management Directors”)
as long as T. O’Gara and W. O’Gara or Affiliates thereof continue to own at least fifty percent
(50%) of the shares of New Class B Preferred (of all Series, taken together) owned by T. O’Gara and
W. O’Gara as of July 14, 2006 (or of Common Stock acquired by conversion of such shares of New
Class B Preferred). If T. O’Gara and W. O’Gara or Affiliates thereof cease to own at least fifty
percent (50%) of the shares of New Class B Preferred (of all Series, taken together) owned by T.
O’Gara and W. O’Gara as of July 14, 2006 (or of Common Stock acquired by conversion of such shares
of New Class B Preferred) the three (3) Directors previously designated by T. O’Gara and W. O’Gara
shall be designated by a majority-in-interest of the then-outstanding New Class B Preferred.
Initially, the three (3) Directors designated pursuant to this Section 5.3(iii) shall be Thomas M.
O’Gara, Wilfred T. O’Gara and Michael J. Lennon; and,



          (iv)  one (1) individual nominated by Thomas M. O’Gara and approved by the holders of a
majority of the then-outstanding shares of New Class B Preferred (such approval not to be
unreasonably withheld). Initially, the Director designated pursuant to this Section 5.3(iv) shall
be Abram S. Gordon.



     5.4 Removal and Replacement of Directors. Each Shareholder shall vote such Shares over
which such Person has voting control, and will take all other necessary or desirable actions within
his, her or its control and consistent with legal duty (whether in his, her or its capacity as a
Shareholder, director, member of a Board committee or officer of the Company or otherwise), and the
Company will take all necessary and desirable actions within its control and consistent with legal
duty, in order to cause:



          (a)  the removal from the Board of Directors (with or without cause) of any representative(s),
at the written request of the Persons entitled to designate such representative(s) under Section
5.3 above, but only upon such written request and under no other circumstances;



          (b)  in the event that any representative designated or elected hereunder for any reason
ceases to serve as a member of the Board of Directors during such representative’s term of office,
the resulting vacancy on the Board of Directors to be filled by a representative designated or
elected as provided in Section 5.3 above by the Persons entitled to designate or elect such
representative(s) under Section 5.3 above; and



          (c)  in the event William P. Parker and Julie P. Parker no longer have the right to designate
a director under Section 5.3(ii) above due to the death of William P. Parker, Julie P. Parker shall
have the right to attend meetings of the Board of Directors as an observer (with



 









 







voice but without vote) and the Director vacancy shall be filled by an individual jointly
designated by the holders of a majority of the then-outstanding shares of New Class A Preferred,
with the approval (not to be unreasonably withheld) of the holders of a majority of the
then-outstanding shares of New Class B Preferred.



     5.5 Reimbursement of Expenses. The Company shall reimburse each director and observer
for all reasonable travel, accommodation and ancillary expenses incurred by such director or
observer to attend all meetings of the Board of Directors or incurred when conducting Company
business, in either case upon presentation of appropriate documentation therefor.



     5.6 New Class A Preferred Information Rights. The holders of the New Class A Preferred
shall have, and are hereby granted by the Company, the information rights of an “Investor” under
Section 5.1 of the Recapitalization Agreement.



ARTICLE 6.

MISCELLANEOUS




     6.1 Notices. All notices, demands and other communications provided for or permitted
hereunder shall be made in writing and shall be by registered or certified first-class mail, return
receipt requested, telecopier, courier service or personal delivery:



     if to the Company:


The O’Gara Group, Inc.

7570 East Kemper Road, Suite 460

Cincinnati, OH 45249

Attention: Wilfred T. O’Gara




     with a required copy (which shall not constitute notice) to:


Abram S. Gordon, Esq.

7570 East Kemper Road, Suite 460

Cincinnati, OH 45249




     if to any Shareholder:


To the addresses set forth in the register maintained by the Company.




     All such notices, demands and other communications shall be deemed to have been duly given
when delivered by hand, if personally delivered; when delivered by courier, if delivered by
commercial courier service; five (5) Business Days after being deposited in the mail, postage
prepaid, if mailed; and when receipt is mechanically acknowledged and telephonically confirmed, if
telecopied.



     6.2 Successors and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of the parties hereto. The Company may not



 









 







assign any of its rights under this Agreement, directly or indirectly, voluntarily or by
operation of law (by merger, consolidation or otherwise) without the written consent of the
beneficial owners of both: (x) a majority of the issued and outstanding New Class B Preferred of
all Series, voting together as a single class; and (y) the holders of not less than a majority in
interest of the issued and outstanding New Class A Preferred of all Series, voting together as a
single class. No Person other than the parties hereto and their successors and permitted assigns is
intended to be a beneficiary of this Agreement. No merger or consolidation of the Company with any
other Person, including any Person affiliated with any Shareholder of the Company, shall operate to
deprive the parties hereto of the benefits of this Agreement. Notwithstanding anything to the
contrary in this Agreement, whenever any Class B Shareholder or Class A Shareholder shall be
permitted to purchase any shares of Capital Stock pursuant to this Agreement, such Class B
Shareholder or Class A Shareholder shall have the right to designate an Affiliate of such Class B
Shareholder or Class A Shareholder to effectuate such purchase.



     6.3 Amendment and Waiver.



          (a)  Except as specifically set forth in this Agreement, no failure or delay on the part of
any party hereto in exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or remedy. The remedies
provided for herein are cumulative and are not exclusive of any remedies that may be available to
the parties hereto at law, in equity or otherwise.



          (b)  Any amendment, supplement or modification of or to any provision of this Agreement, any
waiver of any provision of this Agreement, and any consent to any departure by any party from the
terms of any provision of this Agreement, shall be effective only if it is made or given in writing
and signed by each of: (i) the Company; (ii) Shareholders beneficially owning not less than a
majority in interest of the then issued and outstanding New Class B Preferred of all Series, voting
together as a single class; and (iii) Shareholders beneficially owning not less than a majority of
the then outstanding New Class A Preferred of all Series, voting together as a single class. Any
such amendment, supplement, modification, waiver or consent shall be binding upon the Company and
all of the Shareholders. Not in limitation of the foregoing, (A) no amendment to Section 5.3 shall
eliminate or modify a Shareholder’s right to designate a director pursuant to subsections (i)-(iv)
thereof, without the written consent of the Shareholder or Shareholders designating such director,
and (B) no amendment shall adversely affect the rights of a Shareholder or a Class of Preferred
Stock in a manner disproportionate to the effect on other Shareholders or Class of Preferred Stock,
as the case may be, without the written consent of such Shareholder or holders of a majority of the
shares of all Series of such Class, voting together as a single class, as the case may be.



     6.4 Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument. The parties hereto confirm that any facsimile copy of another party’s executed
counterpart of this Agreement (or its signature page thereof) will be deemed to be an executed
original thereof.



 









 





     6.5 Specific Performance. The parties hereto intend that each of the parties have the
right to seek damages or specific performance in the event that any other party hereto fails to
perform such party’s obligations hereunder. Therefore, if any party shall institute any action or
proceeding to enforce the provisions hereof, any party against whom such action or proceeding is
brought hereby waives any claim or defense that the plaintiff party has an adequate remedy at law.



     6.6 Headings. The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.



     6.7 Severability. If any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect
for any reason, the validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired, unless the
provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.



     6.8 Rules of Construction. Unless the context otherwise requires, references to
sections or subsections refer to sections or subsections of this Agreement.



     6.9 Entire Agreement.



          (a)  This Agreement, together with the exhibits and schedules hereto, and the other
Transaction Documents are intended by the parties as a final expression of their agreement and
intended to be a complete and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter contained herein and therein. There are no restrictions,
promises, representations, warranties or undertakings other than those set forth or referred to
herein or therein. This Agreement, together with the exhibits and schedules hereto and the other
Transaction Documents, supersede all contemporaneous or prior agreements and understandings between
the parties with respect to such subject matter, including (without limitation) the Existing
Shareholders Agreement.




          (b)  Each of the parties to this Agreement consents to the termination of the rights of
certain Shareholders under: (i) Sections 4.16 and 4.17 of the Investment Agreement dated as of
December 16, 2005 among the Company, Walnut, Hauser, Motto, T. O’Gara, W. O’Gara, Lennon and
Campbell; (ii) the Irrevocable Subscription Agreement dated as of December 16, 2005 between T.
O’Gara and the Corporation; (iii) Section 4.16 and 4.17 of the Investment Agreement dated as of
May 6, 2005 among the Company, Walnut, Hauser and Campbell; (iv) the Irrevocable Subscription
Agreement dated as of May 6, 2005 between T. O’Gara and the Company; and (v) Section 4.17 of the
Investment Agreement dated as of May 17, 2004 between the Company and WIP.




     6.10 Term of Agreement. This Agreement shall become effective upon the execution
hereof and shall terminate upon the IPO Closing Date.



 









 





     6.11 Further Assurances. Each of the parties shall, and shall cause their respective
Affiliates to, execute such instruments and take such actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated hereby.



     6.12 Governing Law. This Agreement shall be governed by, and construed in accordance
with, the internal substantive laws of the State of Ohio, without regard to principles of conflicts
of law.



     6.13 Consent to Jurisdiction; Venue. Each of the parties to this Agreement hereby
agrees and irrevocably consents : (x) to the non-exclusive jurisdiction of any state or federal
court located within Hamilton County, Ohio for purposes of the enforcement by any party of its
rights, or the construction of the terms of, this Agreement and related documents; and (y) to such
service of process as may be made as set forth in the notice provision of this Agreement. Each of
the parties hereby irrevocably waives any objection to the venue of action instituted hereunder in
such state or federal court, whether on forum non conveniens or any other
ground.



(Remainder of page intentionally blank; signature page follows.)




 









 








     The undersigned have executed, or have caused to be executed, this Agreement on the date first
written above.



	 	 	 	 	 
	 	THE O’GARA GROUP, INC.

 	 
	 	By:  	 	 
	 	 	Name:	 
	 	 	Title:	 
	 
	 	WALNUT INVESTMENT PARTNERS, L.P.

 	 
	 	By:  	Walnut Investments Holding Company,
 	 
	 	 	LLC, Its General Partner 	 
	 	 	 	 
	 	 	By:  	
 	 
	 	 	 	Name:	 
	 	 	 	Title:	 
	 
	 	WALNUT PRIVATE EQUITY FUND, L.P.

 	 
	 	By:  	Walnut Private Equity Fund GP, LLC, Its
 	 
	 	 	General Partner 	 
	 	 	 
	 	 	By:  	
 	 
	 	 	 	Name:	 
	 	 	 	Title:	 
	 
	 	WALNUT HOLDINGS O’GARA, LLC

 	 
	 	By:  	 	 
	 	 	Name:	 
	 	 	Title:	 
	 	 	 
	 	WILLIAM J. MOTTO



PMR, LLC

 	 
	 	By:  	 	 
	 	 	Name:	 
	 	 	Title:	 
	 




 









 






	 	 	 	 	 
	 	THE THOMAS M. O’GARA FAMILY TRUST

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	
 	 
	 	WILFRED T. O’GARA 	 
	 	 	 
	 	
 	 
	 	MICHAEL J. LENNON 	 
	 	 	 
	 	
 	 
	 	KURT M. CAMPBELL 	 
	 	 	 
	 	
 	 
	 	WILLIAM P. PARKER 	 
	 	 	 
	 	
 	 
	 	JULIE P. PARKER 	 




 









 





	 	 	 	 	 
	 	
 	 
	 	MARK J. HAUSER 	 
	 	 	 
	 	HAUSER 43, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	VIR REALTY, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	

 	 
	 	BRETT T. BEAMAN 	 
	 	 	 
	 	
 	 
	 	RICHARD T. HOLMAN-VLCEK 	 
	 	 	 
	 	
 	 
	 	CALVIN O’DELL FRYE 	 




 









 





EXHIBIT 4.2




JOINDER AGREEMENT AND

COUNTERPART SIGNATURE PAGE




     The undersigned hereby executes and delivers this Joinder Agreement and Counterpart Signature
Page to the Second Amended and Restated Shareholders Agreement among The O’Gara Group, Inc. and its
Shareholders, as amended from time to time (the “Shareholders Agreement”). Concurrently with the
execution of this Joinder Agreement and Counterpart Signature Page, the undersigned will become a
New Class A shareholder of The O’Gara Group, Inc. under the terms of the Shareholders Agreement,
hereby joins to the Shareholders Agreement as if an original signatory thereto and hereby becomes
bound by the provisions (including restrictions on transfer) of the Shareholders Agreement.



	 	 	 	 	 
	 

	 	THE O’GARA GROUP, INC.
	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	By:	 	 
	 

	 	Its:	 	 
	 
	 	 	 	 
	 

	 	NEW CLASS A SHAREHOLDER:	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	By:	 	 






 









 





Section 7.6-2




New Articles of Incorporation




The Third Amended and Restated Articles of Incorporation of the Company are attached hereto.




 









 





THIRD AMENDED AND RESTATED

ARTICLES OF INCORPORATION

OF

THE O’GARA GROUP, INC.




     ARTICLE FIRST: The name of the corporation is: The O’Gara Group, Inc.



     ARTICLE SECOND: Location: City of Cincinnati, County of Hamilton



     Effective date: upon filing




     ARTICLE THIRD: The nature of the business and the purposes to be conducted and promoted by
the Corporation are to conduct any lawful business, to promote any lawful purpose, and to engage in
any lawful act or activity for which corporations may be organized under the Ohio General
Corporation Law, §§1701.01 et seq., as from time to time in effect.



     ARTICLE FOURTH: PART ONE: (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is One Million Five Hundred Thirty Six Thousand
(1,536,000) shares, consisting of: (i) Nine Hundred Fifty Six Thousand (956,000) shares of Common
Stock, no par value per share (“Common Stock”); and (ii) Five Hundred Eighty Thousand (580,000)
shares of Preferred Stock, no par value per share (“Preferred Stock”), of which Two Hundred Eighty
Thousand (280,000) shares are shares of New Class A 3% Cumulative Participating Preferred Stock
(“New Class A Preferred Stock”) and Three Hundred Thousand (300,000) shares are shares of New Class
B 5% Cumulative Participating Preferred Stock (“New Class B Preferred Stock”). The express terms
and provisions of the Preferred Stock are as set forth in Part Two of this Article Fourth.



          (b) There shall be several series of the New Class A Preferred Stock. Except as regards the
designation, the Subscription Price (as defined below in Part Two of this Article
Fourth) and the Conversion Price (as defined below in Part Two of this Article
Fourth) of such series, the express terms of each series of New Class A Preferred Stock shall
be identical. As of the date these Third Amended and Restated Articles of Incorporation are filed,
there is one (1) authorized series of New Class A Preferred Stock, the New A-1 Series. The
Corporation has authority to issue Seventy One Thousand One Hundred Seventy-Four (71,174) shares of
the New A-1 Series of New Class A Preferred Stock.



     Authority is hereby granted expressly to the Board of Directors from time to time to adopt
amendments to these Third Amended and Restated Articles of Incorporation providing for the issue,
pursuant to acquisitions approved by the Board of Directors in accordance with Section 5.3 of the
Investment and Recapitalization Agreement dated as of July 14, 2006 among the Corporation and
several investors (the “Recapitalization Agreement”), in one or more series of any unissued shares
of the New Class A Preferred Stock (as of the date these Third Amended and Restated Articles of
Incorporation are filed, there are Two Hundred Eight Thousand Eight Hundred Twenty Six (208,826)
such unissued shares), and to fix, by the amendment creating each such series of the New Class A
Preferred Stock, the designation and number of shares, the Subscription Price and the Conversion
Price of such shares, to the fullest extent now or hereafter



 









 







permitted by the laws of the State of Ohio and notwithstanding the provisions of any other
Article of these Third Amended and Restated Articles of Incorporation, in respect of the matters
set forth in the following subdivisions (i) to (iii), inclusive:



               (i) The designation and number of shares of such series;



               (ii) The Subscription Price for shares of such series;



               (iii) The Conversion Price for shares of such series.



          (c) The Subscription Price and Conversion Price of shares of any such series of New Class A
Preferred Stock may, to the fullest extent now or hereafter permitted by the laws of the State of
Ohio, be made dependent upon facts ascertainable outside these Third Amended and Restated Articles
of Incorporation or outside the amendment or amendments providing for the issue of such series of
New Class A Preferred Stock adopted by the Board of Directors pursuant to authority expressly
vested in it by this Part One of this Article Fourth.
There shall be several series of New Series B Preferred Stock. Except as regards the designation,
the Subscription Price and Conversion Price of such series, the express terms of each series of New
Class B Preferred Stock shall be identical. As of the date these Third Amended and Restated
Articles of Incorporation are filed, there are five (5) authorized series of New Class B Preferred
Stock, the New B-1 Series, the New B-2 Series, the New B-3 Series, the New B-4 Series and the New
B-5 Series. The number of shares authorized for each such series is as set forth below:




	 	 	 	 	 
	Series	 	No. of Authorized Shares
	New B-1 Series
	 	 	130,250	 
	New B-2 Series
	 	 	26,975	 
	New B-3 Series
	 	 	107,775	 
	New B-4 Series
	 	 	31,634	 
	New B-5 Series
	 	 	3,366	 






          (d) The Corporation shall from time to time in accordance with the laws of the State of Ohio
increase the authorized amount of its Common Stock if at any time the number of shares of Common
Stock remaining unissued and available for issuance shall not be sufficient to permit the
conversion of the Preferred Stock into Common Stock in accordance with the terms of this
Article Fourth governing such conversion.




          (e) Except as otherwise provided in this Article Fourth, in the Investment Agreement
dated May 17, 2004 (the “2004 Investment Agreement”) between Walnut Investment Partners, L.P.
(“WIP”) and the Corporation, in the Investment Agreement dated as of May 6, 2005 among WIP, Walnut
Private Equity Fund, L.P. (“WPEF”) (WIP and WPEF collectively, “Walnut”), Mark J. Hauser (“Hauser”)
and the Corporation (the “Series D Investment Agreement”), in the Irrevocable Subscription
Agreement dated as of May 6, 2005 between the Corporation and The Thomas M. O’Gara Family Trust
(“T. O’Gara”) (the “Series E Investment Agreement”), in the Contribution Agreement dated as of May
9, 2005 among the Corporation, Marsupial Holdings, Inc., Platypus Holdings, LLC, William P. Parker
and Julie P. Parker (the




 









 







“Series C Investment Agreement”), in the Investment Agreement dated as of December 16, 2005
among the Corporation and certain investors (the “Series F Investment Agreement”), in the
Irrevocable Subscription Agreement dated as of December 16, 2005 between T. O’Gara and the
Corporation and in the Recapitalization Agreement, no holder of shares of the Corporation of any
class, now or hereafter authorized, shall have any preferential or preemptive rights to subscribe
for, purchase or receive: (i) any shares of the Corporation of any class, now or hereafter
authorized; or (ii) any options or warrants for such shares; or (iii) any rights to subscribe for,
purchase or receive any securities participating to or exchangeable for such shares, which may at
any time be issued, granted, sold or offered for sale by the Corporation.




PART TWO: Terms of the Preferred Stock.




     1. Certain Definitions. Unless the context otherwise requires, the terms defined in
this Section 1 of Part Two of Article Fourth shall have, for all purposes
of this Part Two of Article Fourth, the meanings herein specified.



          Common Stock. The term “Common Stock” shall mean all shares now or hereafter
authorized of Common Stock of the Corporation and any other stock of the Corporation, howsoever
designated, that has the right (subject always to prior rights of any class or series of Preferred
Stock) to participate in the distribution of the assets and earnings of the Corporation without
limit as to per share amount.




          Conversion Date. The term “Conversion Date” shall have the meaning set forth in
Section 5(d) below.




          Conversion Price. The term “Conversion Price” shall mean the price per share of
Common Stock used to determine the number of shares of Common Stock deliverable upon conversion of
a share of the Preferred Stock. The Conversion Price for the shares of New A-1 Series of New Class
A Preferred Stock shall initially be $118.8476 per share (the “New A-1 Series Conversion Price”),
subject to adjustment in accordance with the provisions of Section 5 below. The Conversion Price
for each of the series of New Class B Preferred Stock authorized on the date these Third Amended
and Restated Articles of Incorporation are filed is, subject to adjustment in accordance with the
provisions of Section 5 below, as set forth in the following table:




	 	 	 	 	 
	 	 	Applicable New B Series
	Series	 	Conversion Price
	New B-1 Series
	 	$	118.8476	 
	New B-2 Series
	 	$	74.1867	 
	New B-3 Series
	 	$	12.0622	 
	New B-4 Series
	 	$	90.1695	 
	New B-5 Series
	 	$	118.8476	 





References hereinto “applicable Conversion Price” shall mean the Conversion Price applicable to a
particular class and series of Preferred Stock. References herein to “applicable New A Series




 









 







Conversion Price” shall mean the Conversion Price applicable to a particular series of New Class A
Preferred Stock and references herein to “applicable New B Series Conversion Price” shall mean the
Conversion Price applicable to a particular series of New Class B Preferred Stock.




          Current Market Price. The term “Current Market Price” shall have the meaning set
forth in Section 5(h) below.




          Dividend Payment Date. The term “Dividend Payment Date” shall have the meaning set
forth in Section 2(a) below.




          Junior Stock. The term “Junior Stock” shall mean, for purposes of Sections 2
and 8 below, the Common Stock and any other class or series of stock of the Corporation not
entitled to receive any dividends in any Dividend Period unless all dividends have been so paid or
declared and set apart for payment and, for purposes of Sections 3 and 8 below, any
class or series of stock of the Corporation not entitled to receive any assets upon the
liquidation, dissolution or winding up of the affairs of the Corporation until the Preferred Stock
shall have received the entire amount to which such stock is entitled upon such liquidation,
dissolution or winding up.




          Subscription Price. The term “Subscription Price” shall, as to the New A-1 Series of
New Class A Preferred Stock, mean $118.8476 per share (the “New A-1 Series Subscription Price”).
The term “Subscription Price” shall, as to the various series of New Class B Preferred Stock
authorized on the date these Third Amended and Restated Articles of Incorporation are filed, is as
set forth in the following table:




	 	 	 	 	 
	 	 	Applicable New B Series
	Series	 	Subscription Price
	New B-1 Series
	 	$	118.8476	 
	New B-2 Series
	 	$	74.1867	 
	New B-3 Series
	 	$	12.0622	 
	New B-4 Series
	 	$	90.1695	 
	New B-5 Series
	 	$	118.8476	 





References herein to the “applicable Subscription Price” shall mean the Subscription Price
applicable to a particular class and series of Preferred Stock. References herein to the
“applicable New A Series Subscription Price” shall mean the Subscription Price applicable to a
particular series of New Class A Preferred Stock and references herein to the “applicable New B
Series Subscription Price” shall mean the Subscription Price applicable to a particular series of
New Class B Preferred Stock.




          Subsidiary. The term “Subsidiary” shall mean any corporation, limited liability
company or other entity of which shares of stock or other equity securities possessing at least a
majority of the general voting power electing the board of directors or other governing body are,
at the time as of which any determination in being made, owned by the Corporation, whether directly
or indirectly through one or more Subsidiaries.




 









 








     2. Dividends.



          (a) The holders of New Class A Preferred Stock shall be entitled to receive, out of funds
legally available for that purpose, dividends at the rate of three percent (3%) of the applicable
New A Series Subscription Price, per annum, and no more. The holders of all series of New Class B
Preferred Stock shall be entitled to receive, out of funds legally available for that purpose,
dividends at the rate of five percent (5%) of the applicable New B Series Subscription Price, per
annum, and no more. The entitlement of the New Class A Preferred Stock and the New Class B
Preferred Stock to such dividends shall be pro rata and on a parity. Such dividends shall be
cumulative (cumulating from the date of issuance of such shares of Preferred Stock on a day-to-day
basis on the basis of a 360-day year), shall be compounded annually and shall be payable in arrears
upon the occurrence of a Liquidation Event (as defined in Section 3 of Part Two of
this Article Fourth (such date being herein referred to as the “Dividend Payment Date”).
Dividends shall be paid to the holders of record of the New Class A Preferred Stock and New Class B
Preferred Stock, as their names appear on the share register of the Corporation on the
corresponding record date for the distribution.



          (b) If, on any Dividend Payment Date, the holders of the New Class A Preferred Stock and New
Class B Preferred Stock shall not have received the full dividends provided for in the other
provisions of this Section 2, then such dividends shall cumulate, whether or not earned or
declared, with additional dividends thereon until such dividends shall be paid. Unpaid dividends
shall cumulate on a day-to-day basis and shall be computed on the basis of a 360-day year.



          (c) So long as any shares of Preferred Stock shall be outstanding, without the written consent
of the holders of not less than a majority of the shares of New Class A Preferred Stock then
outstanding, all series voting together as a single class, and the written consent of the holders
of not less than fifty five percent (55%) of the shares of New Class B Preferred Stock then
outstanding, all series voting together as a single class, neither the Corporation nor any
Subsidiary or affiliate of the Corporation shall: (i) declare or pay on any Junior Stock any
dividend whatsoever, whether in cash, property or otherwise; or (ii) except as set forth in
Section 3 of Part Two of this Article Fourth, make any distribution on any
Junior Stock, or purchase or redeem any Junior Stock, or pay or make available any monies for a
sinking fund for the purchase or redemption of any Junior Stock.



     3. Distributions Upon Liquidation, Dissolution or Winding Up.



          (a) In the event of any voluntary or involuntary liquidation, dissolution or other winding up
of the affairs of the Corporation (together with all other transactions deemed under this
Section 3 to be a Liquidation Event, collectively “Liquidation Events”), the holders of the
New Class A Preferred Stock and New Class B Preferred Stock, which shall be on a parity as to any
such entitlements, shall be entitled: (i) first, to be paid the applicable Subscription Price of
all outstanding shares of Preferred Stock (as appropriately adjusted for any stock dividend, stock
subdivision or split-up, combination or similar event affecting the Preferred Stock or the Common
Stock), with the New Class A Preferred Stock being entitled to be paid the applicable New A Series
Subscription Price and with the New Class B Preferred Stock being entitled to be



 









 







paid the applicable New B Series Subscription Price; plus (ii) second, any accrued and unpaid
dividends thereon to such date; plus (iii) third, to be paid an amount equal to the product of: (x)
the balance of the proceeds of the Liquidation Event; and (y) the fully-diluted ownership
percentage (excluding out-of-the-money options and warrants) represented by the Preferred Stock,
treating the Preferred Stock on an “as-converted” basis. If and after payment shall have been made
in full to the holders of the Preferred Stock of all amounts to which such holders shall be
entitled, the remaining assets and funds of the Corporation shall be distributed among the holders
of Junior Stock, according to their respective shares and priorities. If, upon any such
liquidation, dissolution or other winding up of the affairs of the Corporation, the net assets of
the Corporation distributable among the holders of all outstanding shares of the Preferred Stock
shall be insufficient to permit the payment in full to such holder of the preferential amounts to
which they are entitled, then the entire net assets of the Corporation shall be distributed among
the holders of the Preferred Stock ratably in proportion to the full amounts to which they would
otherwise be respectively entitled.



          (b) Each of the following events shall be deemed to be a “Liquidation Event” for purposes of
this Section 3: (i) the acquisition of the Corporation, or of a controlling equity
interest in the Corporation, by another party or entity or group of affiliated parties by means of
any transaction or series of related transactions (including, without limitation, any stock
acquisition or transfer, any issuance of stock by the Corporation, a reorganization, merger,
consolidation, mandatory share exchange or conversion transaction), other than a transaction or
series of related transactions in which the holders of the voting securities of the Corporation
outstanding immediately prior to such transaction or the first of the series of related
transactions continue to retain (either by such voting securities remaining outstanding or by such
voting securities being converted into voting securities of the surviving or resulting entity) at
least fifty percent (50%) of the total voting power represented by the voting securities of the
Corporation or such surviving or resulting entity outstanding immediately after such transaction or
the last of the series of related transactions; or (ii) a sale, lease or other conveyance of all or
substantially all of the assets of the Corporation in one (1) transaction or in a series of related
transactions.



     4. Redemption by the Corporation. For so long as any shares of any series of New
Class B Preferred Stock remain outstanding, none of the New Class A Preferred Stock shall be
redeemed, in whole or in part, and neither the Corporation nor any affiliate or Subsidiary of the
Corporation shall purchase or otherwise acquire any shares of New Class A Preferred Stock prior to
the date on which all of the shares of all series of the New Class B Preferred Stock shall have
been redeemed. Walnut, a substantial holder of the New Class B Preferred Stock, has stated its
desire to exit its investment in the New Class B Preferred Stock at a point in the future,
preferably on or around May 31, 2009. The Corporation acknowledges this desire and will assist
Walnut in the sale of its New Class B Preferred Stock provided that such sale does not harm the
holders of the New Class A Preferred or the Common Stock or the other holders of New Class B
Preferred Stock and does not violate any covenants of the Corporation in any Corporation debt
instruments that may be in place at such time.



     5. Conversion Rights. The Preferred Stock shall be convertible into Common Stock as
follows:



 









 





          (a) Optional Conversion. Subject to and upon compliance with the provisions of this
Section 5, the holder of any shares of Preferred Stock shall have the right at such
holder’s option, at any time or from time to time, to convert any of such shares of Preferred Stock
into fully paid and nonassessable shares of Common Stock at the Conversion Price applicable to such
class and series of Preferred Stock (i.e., the applicable New A Series Conversion Price or the
applicable New B Series Conversion Price, as the case may be) in effect on the Conversion Date (as
hereinafter defined) upon the terms hereinafter set forth.



          (b) Automatic Conversion. Each outstanding share of Preferred Stock shall
automatically be converted, without any further act of the Corporation or its stockholders, into
fully paid and nonassessable shares of Common Stock at the Conversion Price for such Preferred
Stock then in effect upon the closing of an underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, covering the offering and sale
of the Common Stock for the account of the Corporation in which the gross proceeds to the
Corporation are equal to or in excess of Twenty Five Million Dollars ($25,000,000) (“Qualified
Public Offering”).



          (c) Conversion Price. Each share of Preferred Stock shall be converted into a number
of shares of Common Stock determined by dividing (i) the applicable Subscription Price, by (ii) the
applicable Conversion Price in effect on the Conversion Date. The applicable New A Series
Conversion Prices and the applicable New B Series Conversion Prices shall each be subject to
adjustment as set forth in subsection (f) below. No payment or adjustment shall be made for any
dividends on the Common Stock issuable upon such conversion. Upon any such conversion, the holders
of Preferred Stock shall also be entitled to payment, in cash, of all accrued but unpaid dividends
on shares of Preferred Stock.



          (d) Mechanics of Conversion. The holder of any shares of Preferred Stock may exercise
the conversion right specified in subsection (a) above by surrendering to the Corporation or any
transfer agent of the Corporation the certificate or certificates for the share to be converted,
accompanied by written notice specifying the number of shares to be converted. Upon the occurrence
of the event specified in subsection (b) above, the outstanding shares of Preferred Stock shall be
converted automatically without any further action by the holders of such shares and whether or not
the certificates representing such shares are surrendered to the Corporation or its transfer
agent; provided that the Corporation shall not be obligated to issue to any such holder
certificates evidencing the shares of Common Stock issuable upon such conversion unless
certificates evidencing the shares of Preferred Stock are either delivered to the Corporation or
any transfer agent of the Corporation. Conversion shall be deemed to have been effected on the
date when delivery of notice of an election to convert and certificates for shares is made or on
the date of the occurrence of the event specified in subsection (b) above, as the case may be, and
such date is referred to herein as the “Conversion Date.” Subject to the provisions of
subsection(f)(vii) below, as promptly as practicable thereafter (and after surrender of the
certificate or certificates representing shares of Preferred Stock to the Corporation or any
transfer agent of the Corporation in the case of conversions pursuant to subsection (b) above), the
Corporation shall issue and deliver to or upon the written order of such holder a certificate or
check or cash with respect to any fractional interest in a share of Common Stock as provided in
subsection (e) below. Subject to the provisions of subsection (f)(vii) below, the person in whose



 









 







name the certificate or certificates for Common Stock are to be issued shall be deemed to have
become a holder of record of such Common Stock on the applicable Conversion Date. Upon conversion
of only a portion of the number of shares covered by a certificate representing shares of Preferred
Stock surrendered for conversion (in the case of conversion pursuant to subsection (a) above), the
Corporation shall issue and deliver to or upon the written order of the holder of the certificate
so surrendered for conversion, at the expense of the Corporation, a new certificate covering the
number of shares of Preferred Stock representing the unconverted portion of the certificate so
surrendered.



          (e) Fractional Shares. No fractional shares of Common Stock or scrip shall be issued
upon conversion of shares of Preferred Stock. If more than one (1) share of Preferred Stock shall
be surrendered for conversion at any one (1) time by the same holder, the number of full shares of
Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate
number of shares of Preferred Stock so surrendered. Instead of any fractional shares of Common
Stock which would otherwise be issuable upon conversion of any shares of Preferred Stock, the
Corporation shall pay a cash adjustment in respect of such fractional interest in an amount equal
to that fractional interest of the then Current Market Price.



          (f) Conversion Price Adjustments. The applicable New Series A Conversion Prices and
the applicable New Series B Conversion Prices shall each be subject to adjustment from time to time
as follows:



               (i) Common Stock Issued at Less Than the Conversion Price. If the Corporation shall
issue any Common Stock other than Excluded Stock (as hereinafter defined) without consideration or
for a consideration per share less than the applicable Conversion Price (i.e., the applicable New
Series A Conversion Price and the applicable New Series B Conversion Price, as the case may be) in
effect immediately prior to such issuance, the applicable Conversion Price in effect immediately
prior to each such issuance shall immediately (except as provided below) be reduced to the per
share price of the shares issued in that issuance, which shall be determined by dividing the
aggregate consideration received by the Corporation for the shares issued in that issuance by the
aggregate number of shares so issued in that issuance.



                    For the purposes of any adjustment of the applicable Conversion Price pursuant to clause
(i), the following provisions shall be applicable:



                    (A) Cash. In the case of the issuance of Common Stock for cash, the amount of the
consideration received by the Corporation shall be deemed to be the amount of the cash proceeds
received by the Corporation for such Common Stock before deducting therefrom any discounts,
commissions, taxes or other expenses allowed, paid or incurred by the Corporation for any
underwriting or otherwise in connection with the issuance and sale thereof.



                    (B) Consideration Other Than Cash. In the case of the issuance of Common Stock
(otherwise than upon the conversion of shares of capital stock or other securities of the
Corporation) for a consideration in whole or in part other than cash, including securities acquired
in exchange therefor (other than securities by their terms so exchangeable),



 









 







the consideration other than cash shall be deemed to be fair value thereof as determined by
the Board of Directors, irrespective of any accounting treatment; provided that such fair value as
determined by the Board of Directors shall not exceed the aggregate Current Market Price of the
shares of Common Stock being issued as of the date the Board of Directors authorizes the issuance
of such shares.



                    (C) Options and Convertible Securities. In the case of the issuance of: (i) options,
warrants or other rights to purchase or acquire Common Stock (whether or not at the time
exercisable); (ii) securities by their terms convertible into or exchangeable for Common Stock
(whether or not at the time so convertible or exchangeable); or options, warrants or rights to
purchase such Participating or exchangeable securities (whether or not at the time exercisable):



                         (1) the aggregate maximum number of shares of Common Stock deliverable upon exercise of such
options, warrants or other rights to purchase or acquire Common Stock shall be deemed to have been
issued at the time such options, warrants or rights were issued and for a consideration equal to
the consideration (determined in the manner provided in subclauses (A) and (B) above), if any,
received by the Corporation upon the issuance of such options, warrants or rights plus the minimum
purchase price provided in such options, warrants or rights for the Common Stock covered thereby;



                         (2) the aggregate maximum number of shares of Common Stock deliverable upon conversion of or
in exchange for any such convertible or exchangeable securities or upon the exercise of options,
warrants or other rights to purchase or acquire such convertible or exchangeable securities and the
subsequent conversion or exchange thereof, shall be deemed to have been issued at the time such
securities were issued or such options, warrants or rights were issued and for a consideration
equal to the consideration, if any, received by the Corporation for any such securities and related
options, warrants or rights (excluding any cash received on account of accrued interest or accrued
dividends), plus the additional consideration (determined in the manner provided in subclauses (A)
and (B) above), if any, to be received by the Corporation upon the conversion or exchange of such
securities or upon the exercise of any related options, warrants or rights to purchase or acquire
such convertible or exchangeable securities and the subsequent conversion or exchange thereof;



                         (3) on any change in the number of shares of Common Stock deliverable upon exercise of any
such options, warrants or rights or conversion or exchange of such convertible or exchangeable
securities or any change in the consideration to be received by the Corporation upon such exercise,
conversion or exchange, including, but not limited to, a change resulting from the anti-dilution
provisions thereof, the applicable Conversion Price as then in effect shall forthwith be readjusted
to such Conversion Price as would have been obtained had an adjustment been made upon the issuance
of such options, warrants or rights not exercised prior to such change or of such convertible or
exchangeable securities not converted or exchanged prior to such change, upon the basis of such
change;



                         (4) on the expiration or cancellation of any such options, warrants or rights or the
termination of the right to convert or exchange such convertible



 









 







or exchangeable securities, if the applicable Conversion Price shall have been adjusted upon
the issuance thereof, that Conversion Price shall forthwith be readjusted to such Conversion Price
as would have been obtained had an adjustment been made upon the issuance of such options,
warrants, rights or such convertible or exchangeable securities on the basis of the issuance of
only the number of shares of Common Stock actually issued upon the exercise of such options,
warrants or rights or upon the conversion of exchange of such Participating or exchangeable
securities; and



                         (5) if the applicable Conversion Price shall have been adjusted upon the issuance of any such
options, warrants, rights or convertible or exchangeable securities, no further adjustment of the
Conversion Price shall be made for that actual issuance of Common Stock upon the exercise,
conversion or exchange thereof;


provided, however, that no increase in the applicable Conversion Price shall be made pursuant to
subclauses (1) or (2) of this subclause (C).




               (ii) Excluded Stock. “Excluded Stock” shall mean: (A) shares of Common Stock issued
or reserved for issuance by the Corporation as a stock dividend payable in shares of Common Stock,
or upon any subdivision or split-up of the outstanding shares of Common Stock or Preferred Stock,
(B) shares of Common Stock issued or reserved for issuance by the Corporation upon conversion of
shares of Preferred Stock; (C) shares of Common Stock to be issued to employees, consultants and
advisors of the Corporation, whether pursuant to options, warrants or other rights, together with
any such shares that are repurchased by the Corporation and reissued to any such employee,
consultant or advisor, but only to the extent that such issuances are authorized pursuant to
resolutions adopted by unanimous vote of the Board of Directors, including both directors
designated by Walnut, and, if required, the Corporation’s shareholders; and (D) shares of New Class
A Preferred Stock issued as compensation, including contingent, “earn-out” or deferred
compensation, to the sellers of businesses acquired by the Corporation in acquisitions approved by
the Board of Directors in accordance with Section 5.3 of the Recapitalization Agreement or as
contingent, “earn-out” or deferred compensation to sellers of businesses acquired by the
Corporation in transactions consummated prior to July 14, 2006.



               (iii) Stock Dividends, Subdivisions, Reclassifications or Combinations. If the
Corporation shall: (A) declare a dividend or make a distribution on its Common Stock in shares of
its Common Stock; (B) subdivide or reclassify the outstanding shares of Common Stock into a greater
number of shares; or (C) combine or reclassify the outstanding Common Stock into a smaller number
of shares, the Conversion Price in effect at the time of the record date for such dividend or
distribution or the effective date of such subdivision, combination or reclassification shall be
proportionately adjusted so that the holder of any shares of Preferred Stock surrendered for
conversion after such date shall be entitled to receive the number of shares of Common Stock which
he would have owned or been entitled to receive had such Preferred Stock been converted immediately
prior to such date. Successive adjustments in the applicable Conversion Price shall be made
whenever any event specified above shall occur.



               (iv) Other Distributions. In case the Corporation shall fix a record date for the
making of a distribution to all holders of shares of its Common Stock: (A) of shares of



 









 







any class other than its Common Stock; or (B) of evidence of indebtedness of the Corporation
or any Subsidiary; or (C) of assets (excluding cash dividends or distributions, and dividends or
distributions referred to in subsection (f)(iii) above); or (D) of rights or warrants (excluding
those referred to in subsection (f)(i) above), in each such case the applicable Conversion Price in
effect immediately prior thereto shall be reduced immediately thereafter to the price determined by
dividing: (1) an amount equal to the difference resulting from: (a) the number of shares of Common
Stock outstanding on such record date multiplied by the applicable Conversion Price per share on
such record date, less (b) the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive) of said shares or evidences of indebtedness or assets or rights
or warrants to be so distributed, by: (2) the number of shares of Common Stock outstanding on such
record date. Such adjustment shall be made successively whenever such a record date is fixed. In
the event that such distribution is not so made, the applicable Conversion Price then in effect
shall be readjusted, effective as of the date when the Board of Directors determines not to
distribute such shares, evidences of indebtedness, assets, rights or warrants, as the case may be,
to that Conversion Price which would then be in effect if such record date had not been fixed.



               (v) Consolidation, Merger, Sale, Lease and Conveyance. In case of any consolidation
with or merger of the Corporation with or into another corporation, or in case of any sale, lease
or conveyance to another corporation of the assets of the corporation as an entirety or
substantially as an entirety, each share of Preferred Stock shall after the date of such
consolidation, merger, sale, lease or conveyance be convertible into the number of shares of stock
or other securities or property (including cash) to which the Common Stock issuable (at the time of
such consolidation, merger, sale, lease or conveyance) upon conversion of such share of Preferred
Stock would have been entitled upon such consolidation, merger, sale, lease or conveyance; and in
any such case, if necessary the provisions set forth herein with respect to the rights and interest
thereafter of the holders of the shares of Preferred Stock shall be appropriately adjusted so as to
be applicable, as nearly as may reasonably be, to any shares of stock or other securities or
property thereafter deliverable on the conversion of the shares of Preferred Stock.



               (vi) Rounding of Calculations; Minimum Adjustment. All calculations under this
subsection (f) shall be made to the nearest cent ($0.01) or to the nearest one hundredth
(1/100th) of a share, as the case may be. Any provision of this Section 5 to
the contrary notwithstanding, no adjustment in the applicable Conversion Price shall be made if the
amount of such adjustment would be less than five cents ($0.05), but any such amount shall be
carried forward and an adjustment with respect thereto shall be made at the time of and together
with any subsequent adjustment which, together with such amount and any other amount or amounts so
carried forward, shall aggregate five cents ($0.05) or more.



               (vii) Timing of Issuance of Additional Common Stock Upon Certain Adjustments. In any
case in which the provisions of this subsection (f) shall require that an adjustment shall become
effective immediately after a record date for an event, the Corporation may defer until the
occurrence of such event: (A) issuing to the holder of any share of Preferred Stock converted after
such record date and before the occurrence of such event the additional shares of Common Stock
issuable upon such conversion by reason of the adjustment required by such event over and above the
shares of Common Stock issuable upon such conversion before



 









 







giving effect to such adjustment; and (B) paying to such holder any amount of cash in lieu of
a fractional share of Common Stock pursuant to subsection (e) above; provided that the Corporation
upon request shall deliver to such holder a due bill or other appropriate instrument evidencing
such holder’s right to receive such additional shares, and such cash, upon the occurrence of the
event requiring such adjustment.



          (g) No Impairment. The Corporation shall not, by amendment, restatement or
modification of this Part Two of Article Fourth or any other provisions of these
Third Amended and Restated Articles of Incorporation or any provisions of its Amended and Restated
Regulations or through any reorganization, transfer of assets, merger, consolidation, mandatory
share exchange, conversion transaction, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Corporation but shall at all times in good faith assist in the carrying
out of all of the provisions of this Section 5 and in the taking of all such action as may
be necessary or appropriate in order to protect the rights of the holders of Preferred Stock
against dilution or impairment.



          (h) Current Market Price. The Current Market Price at any date shall mean, in the
event the Common Stock is publicly traded, the average of the daily closing prices per share of
Common Stock for thirty (30) consecutive trading days ending no more than fifteen (15) business
days before such date (as adjusted for any stock dividend, split, combination or reclassification
that took effect during such thirty (30) business day period). The closing price for each day
shall be the last reported sale price regular way or in case no such reported sale takes place on
such day, the average of the last closing bid and asked prices regular way, in either case on the
principal national securities exchange on which the Common Stock is listed or admitted to trading
or if not listed or admitted to trading on any national securities exchange, the closing sale price
for such day reported by NASDAQ, if the Common Stock is traded over-the-counter and quoted in the
National Market System or if the Common Stock is so traded, but not so quoted, the average of the
closing reported bid and asked prices of the Common Stock as reported by NASDAQ or any comparable
system or if the Common Stock is not listed on NASDAQ or any comparable system, the average of the
closing bid and asked prices as furnished by two members of the National Association of Securities
Dealers, Inc. selected from time to time by the Corporation for that purpose. If the Common Stock
is not traded in such manner that the quotations referred to above are available for the period
required hereunder, the Current Market Price per share of Common Stock shall be deemed to be the
fair value as determined by the Board of Directors, irrespective of any accounting treatment.



          (i) Statement Regarding Adjustments. Whenever the applicable Conversion Price shall
be adjusted as provided in subsection (f) above, the Corporation shall forthwith file, at the
office of any transfer agent for the Preferred Stock and at the principal office of the
Corporation, a statement showing in detail the facts requiring such adjustment and the Conversion
Price that shall be in effect after such adjustment, and the Corporation shall also cause a copy of
such statement to be sent by mail, first class postage prepaid, to each holder of shares of
Preferred Stock at its address appearing on the Corporation’s records. Each such statement shall
be signed by the Corporation’s chief financial officer or its independent public



 









 







accountants, if applicable. Where appropriate, such copy may be given in advance and may be
included as part of a notice required to be mailed under the provisions of subsection (j) below.



          (j) Notice to Holders. In the event the Corporation shall propose to take any action
of the type described in clause (i) (but only if the action of the type described in clause (i)
would result in an adjustment in the applicable Conversion Price), (iii), (iv) or (v) of subsection
(f) above, the Corporation shall give notice to each holder of shares of Preferred Stock, in the
manner set forth in subsection (h) above, which notice shall specify the record date, if any, with
respect to any such action and the approximate date on which such action is to take place. Such
notice shall also set forth such facts with respect thereto as shall be reasonably necessary to
indicate the effect of such action (to the extent such effect may be known at the date of such
notice) on the applicable Conversion Price and the number, kind or class of shares or other
securities or property which shall be deliverable upon conversion of shares of Preferred Stock. In
the case of any action which would require the fixing of a record date, such notice shall be given
at least ten (10) days prior to the date so fixed, and in case of all other action, such notice
shall be given at least fifteen (15) days prior to the taking of such proposed action. Failure to
give such notice, or any defect therein, shall not affect the legality or validity of any such
action.



          (k) Treasury Stock. For the purposes of this Section 5, the sale or other
disposition of any Common Stock theretofore held in the Corporation’s treasury shall be deemed to
be an issuance thereof.



          (l) Costs. The Corporation shall pay all documentary, stamp, transfer or other
transactional taxes attributable to the issuance or delivery of shares of Common Stock upon
conversion of any shares of Preferred Stock; provided, that the Corporation shall not be
required to pay any taxes which may be payable in respect of any transfer involved in the issuance
or delivery of any certificate for such shares in a name other than that of the holder of the
shares of Preferred Stock in respect of which such shares are being issued.



          (m) Reservation of Shares. The Corporation shall reserve at all times so long as any
shares of Preferred Stock remain outstanding, free from preemptive rights, out of its treasury
stock (if applicable) or its authorized but unissued shares of Common Stock, or both, solely for
the purpose of effecting the conversion of the shares of Preferred Stock, sufficient shares of
Common Stock to provide for the conversion of all outstanding shares of Preferred Stock.



          (n) Approvals. If any shares of Common Stock to be reserved for the purpose of
conversion of shares of Preferred Stock require registration with or approval of any governmental
authority under any Federal or state law before such shares may be validly issued or delivered upon
conversion, then the Corporation will in good faith and as expeditiously as possible endeavor to
secure such registration or approval, as the case may be. If, and so long as, any Common Stock
into which the shares of Preferred Stock are then convertible is listed on any national securities
exchange, the Corporation will, if permitted by the rules of such exchange, list and keep listed on
such exchange, upon official notice of issuance, all shares of such Common Stock issuable upon
conversion.



 









 





          (o) Valid Issuance. All shares of Common Stock which may be issued upon conversion of
the shares of Preferred Stock will upon issuance by the Corporation be duly and validly issued,
fully paid and nonassessable and free from all taxes, liens and charges with respect to the
issuance thereof, and the Corporation shall take no action which will cause a contrary result
(including without limitation, any action which would cause the applicable Conversion Price to be
less than the par value, if any, of the Common Stock).



     6. Voting Rights.



          (a) In addition to the special voting rights provided in subsections (b), (c) and (d) below
and by applicable law, and except for the election of directors, which shall be governed by the
Second Amended and Restated Shareholders Agreement dated as of July 14, 2006, as in effect from
time to time (the “2006 Shareholders Agreement”), the holders of shares of Preferred Stock shall be
entitled to vote upon all matters upon which holders of the Common Stock have the right to vote.
The holders of the New Class A Preferred Stock and New Class B Preferred Stock (other than T.
O’Gara, Wilfred O’Gara (“W. O’Gara”) and Michael J. Lennon (“Lennon”)) shall be entitled to the
number of votes equal to the sum of largest number of full shares of Common Stock into which such
shares of New Class A Preferred Stock or New Class B Preferred Stock could be converted pursuant to
the provisions of Section 5 hereof at the record date for the determination of the
stockholders entitled to vote on such matters, or if no such record date is established, at the
date such vote is taken or any written consent of stockholders is solicited, such votes to be
counted together with all other shares of capital stock having general voting powers and not
separately as a class. The shares of New Class B Preferred Stock held by T. O’Gara, W. O’Gara and
Lennon shall be entitled to one thousand (1,000) votes for each such share (except in or with
respect to the election of directors, which shall be governed by the 2006 Shareholders Agreement,
the approval of incentive compensation for members of the Corporation’s senior management, the
amendment or restatement of these Third Amended and Restated Articles of Incorporation and any
matters reserved for class or series votes or as to which holders of Preferred Stock enjoy
protective provisions, whether in these Third Amended and Restated Articles of Incorporation or
otherwise). In all cases where the holders of shares of Preferred Stock have the right to vote
separately as a class, such holders shall be entitled to one (1) vote for each such share held by
them respectively.




          (b) Without the prior consent of the holders of at least a majority of the then-outstanding
shares of all series of New Class A Preferred Stock, given in writing or by vote at a meeting of
stockholders called for such purpose, voting or consenting together as a single class, the
Corporation will not:




               (i) Alter or change the rights, preferences or privileges of the New Class A Preferred Stock;



               (ii) Increase or decrease the authorized number of shares of New Class A Preferred Stock;



 









 





               (iii) Materially change the nature of the Corporation’s business (which shall not include any
expansion of the Corporation or its acquisition of related or strategic businesses); or



               (iv) Amend or restate the Corporation’s Third Amended and Restated Articles of Incorporation,
Amended and Restated Regulations or other charter documents (including any amendment or restatement
effected by merger, consolidation, mandatory share exchange or otherwise) in a manner that
adversely affects the rights of the holders of the New Class A Preferred Stock.



          (c) Without the prior consent of the holders of at least fifty five percent (55%) of the
then-outstanding shares of all series of New Class B Preferred Stock, given in writing or by vote
at a meeting of stockholders called for such purpose, voting or consenting together as a single
class, the Corporation shall not:




               (i) Alter or change the rights, preferences or privileges of the New Class B Preferred Stock;



               (ii) Increase or decrease the authorized number of shares of New Class B Preferred Stock;



               (iii) Create (by reclassification or otherwise) any new class or series of capital stock
having rights, preferences or privileges on a par with or senior to the New Class B Preferred
Stock;



               (iv) Materially change the nature of the Corporation’s business (which shall not include any
expansion of the Corporation or its acquisition of related or strategic businesses);



               (v) Amend or restate the Corporation’s Third Amended and Restated Articles of Incorporation,
Amended and Restated Regulations or other charter documents (including any amendment or restatement
effected by merger, consolidation, mandatory share exchange or otherwise) in a manner that
adversely affects the rights of the holders of the New Class B Preferred Stock;



               (vi) Sell or otherwise convey all or substantially all the assets of the Corporation or sell
or issue shares of capital stock of the Corporation representing fifty percent (50%) or more of the
capital stock of the Corporation or enter into any consolidation or merger, mandatory share
exchange or conversion transaction;



               (vii) Initiate the voluntary dissolution or winding-up or reorganization of the Corporation;



               (viii) Enter into any agreement, directly or indirectly, with officers, employees,
stockholders or directors of the Corporation, other than employment agreements,



 









 







compensation arrangements, stock options or other service related transactions that are
approved by the Board of Directors (with the consent of both directors designed by Walnut); or



               (ix) Enter into any agreements, directly or indirectly, with any person to issue any capital
stock of the Corporation in return for goods or services provided by such person.



          (d) Without the prior consent of the holders of at least a majority of the then-outstanding
shares of any series of Preferred Stock, given in writing or by vote at a meeting of stockholders
called for such purpose, all holders of such series voting or consenting together as a single
class, the Corporation will not alter or change, directly by amendment or restatement of these
Third Amended and Restated Articles of Incorporation or indirectly by merger, consolidation,
mandatory share exchange, conversion transaction or otherwise, the Subscription Price or Conversion
Price applicable to such series.




     7. Preemptive Rights.



          (a) The Corporation hereby grants to each holder of Preferred Stock a right of first refusal
to purchase, on a pro rata basis, all or any part of New Securities (as defined below) which the
Corporation may, from time to time, propose to sell and issue subject to the terms and conditions
set forth below. Each such holder’s pro rata share, for purposes of this Section 7, shall
equal a fraction, the numerator of which is the number of shares of Common Stock then held by such
holder of Preferred Stock or issuable upon conversion of the Preferred Stock then held by such
holder or upon the exercise of any other Participating securities, options, rights or warrants then
held by such holder, and the denominator of which is the total number of shares of Common Stock
then outstanding plus the number of shares of Common Stock issuable upon conversion or
exercise of then outstanding New Class A Preferred Stock, New Class B Preferred Stock, other
participating securities, options, rights or warrants (i.e., calculated on a fully-diluted basis).



          (b) “New Securities” shall mean any capital stock of the Corporation whether now
authorized or not and rights, options or warrants to purchase capital stock, and securities of any
type whatsoever which are or may become, Participating into capital stock; provided, however, that
the term “New Securities” does not include: (i) the New Class B Preferred and New A-1 Series; (ii)
the shares of Common Stock issuable upon conversion of such shares of New Class B Preferred and New
A-1 Series; (iii) the New Class A Preferred issued in connection with the acquisitions approved by
the Board of Directors in accordance with Section 5.3 of the Recapitalization Agreement or the
shares of Common Stock issuable upon conversion of such shares of New Class A Preferred; (iv)
securities offered to the public pursuant to a Qualified Public Offering; (v) securities issued as
a result of any stock split, stock dividend or reclassification of Common Stock, distributable on a
pro rata basis to all holders of Common Stock; or (vi) securities issued in connection with the
exercise of warrants or options listed on Section 4.4 of the Disclosure Schedule to the
Recapitalization Agreement; or (viii) securities issued in connection with any of the Company’s
stock option plans pursuant to resolutions adopted by unanimous vote of the Board of Directors,
including both directors designated by



 









 







Walnut; and (viii) securities issued in connection with acquisitions of other businesses by
the Company.



          (c) If the Corporation intends to issue New Securities, it shall give each holder of Preferred
Stock written notice of such intention, describing the type of New Securities to be issued, the
price thereof and the general terms upon which the Corporation proposes to effect such issuance.
Each holder of Preferred Stock shall have thirty (30) days from the date of any such notice to
agree to purchase all or part of its, her or his pro rata share of such New Securities for the
price and upon the general terms and conditions specified in the Corporation’s notice by giving
written notice to the Corporation stating the quantity of New Securities to be so purchased. Each
holder of Preferred Stock shall have a right of over allotment such that if any other holder of
Preferred Stock fails to exercise his, her or its right hereunder to purchase his, her or its total
pro rata portion of New Securities, the other holders of Preferred Stock may purchase such portion
on a pro rata basis, by giving written notice to the Corporation within five (5) days from the date
that the Corporation provides written notice to the other Investors of the amount of New Securities
with respect to which such non-purchasing holder of Preferred Stock has failed to exercise its, her
or his right hereunder.


If any holder of Preferred Stock fails to exercise the foregoing right of first refusal with
respect to any New Securities within such thirty (30)-day period (or the additional five (5)-day
period provided for overallotments), the Corporation may within one hundred eighty (180) days
thereafter sell any or all of such New Securities not agreed to be purchased by the holders of
Preferred Stock, at a price and upon general terms no more favorable to the purchasers thereof than
specified in the notice given to each holder of Preferred Stock pursuant to paragraph (c) above.
In the event the Corporation has not sold such New Securities within such one hundred eighty
(180)-day period, the Corporation shall not thereafter issue or sell any New Securities without
first offering such New Securities to the holders of Preferred Stock in the manner provided in this
Section 7.




     8. Exclusion of Other Rights. Except as may otherwise be required by law, the shares
of Preferred Stock shall not have any preferences or relative, participating, optional or other
special rights, other than those specifically set forth herein (as amended from time to time).



     9. Headings of Subdivisions. The headings of the various subdivisions hereof are for
convenience of reference only and shall not affect the interpretation of any of the provisions
hereof.



     10. Severability of Provisions. If any right, preference or limitation of the
Preferred Stock set forth herein (as amended from time to time) is invalid, unlawful or incapable
of being enforced by reason of any rule of law or public policy, all other rights, preferences and
limitations set forth herein (as so amended) which can be given effect without the invalid,
unlawful or unenforceable right, preference or limitation shall, nevertheless, remain in full force
and effect, and no right, preference or limitation herein set forth shall be deemed dependent upon
any other such right, preference or limitation unless so expressed herein.



 









 





     11. Status of Reacquired Shares. Shares of Preferred Stock which have been issued and
reacquired in any manner shall (upon compliance with any applicable provisions of the laws of the
State of Ohio) have the status of authorized and unissued shares of Preferred Stock issuable in
series undesignated as to series and may be redesignated and reissued.



     ARTICLE FIFTH: The Corporation is to have perpetual existence.



     ARTICLE SIXTH: Except as provided in this Article Sixth, any of the provisions of
these Third Amended and Restated Articles of Incorporation may be amended, altered, or repealed,
and other provisions authorized by the laws of the State of Ohio at the time in force may be added
or inserted as prescribed by said laws, and all rights at any time conferred upon the stockholders
of the Corporation by these Third Amended and Restated Articles of Incorporation are granted
subject to the provisions of this Article Sixth. Notwithstanding any other provision of
these Third Amended and Restated Articles of Incorporation to the contrary, this Article
Sixth may not be amended, altered or repealed (including any amendment, alteration or repeal
effected by merger, consolidation, mandatory share exchange, conversion transaction or otherwise)
without each of: (x) the affirmative vote of a majority in interest of the then-outstanding shares
of all series of the then-outstanding New Class A Preferred Stock; and (y) the affirmative vote of
the holders of at least fifty five percent (55%) of the then-outstanding shares of all series of
the New Class B Preferred Stock. Part Two of Article Fourth of these Third Amended
and Restated Articles of Incorporation may not be amended, altered or repealed (including any
amendment, alteration or repeal effected by merger, consolidation, mandatory share exchange,
conversion transaction or otherwise) without the affirmative vote of a majority in interest of the
then-outstanding shares of all series of the New Class A Preferred Stock and of the holders of at
least fifty five percent (55%) of the then-outstanding shares of all series of the New Class B
Preferred Stock.



     ARTICLE SEVENTH: This Corporation, through its Board of Directors, shall have the right and
power to purchase any of its outstanding shares at such price and upon such terms as may be agreed
upon between the Corporation and any selling shareholder.



     ARTICLE EIGHTH: No shareholder shall have the right to vote cumulatively in the election of
directors.



     ARTICLE NINTH: These Third Restated and Amended Articles of Incorporation take the place of
and supersede the existing Second Restated and Amended Articles of Incorporation of the Corporation
as heretofore amended and/or restated.



 









 





Exhibit 4.5.1




Balance Sheet




See attached.




 









 





Exhibit 6.4




Brokers




None