exv10w4






Exhibit 10.4




 

 






AMENDED AND RESTATED




NOTE AND EQUITY PURCHASE AGREEMENT




by and among




GLOBAL DOSIMETRY SOLUTIONS, INC.




and




AMERICAN CAPITAL FINANCIAL SERVICES, INC.,

AS AGENT




and




PURCHASERS IDENTIFIED ON

ANNEX A HERETO




November 10, 2004




 

 






 









 












TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	ARTICLE 1
	 	DEFINITIONS	 	 	2	 
	1.1
	 	Certain Definitions	 	 	2	 
	1.2
	 	Accounting Principles	 	 	16	 
	1.3
	 	Other Definitional Provisions; Construction	 	 	16	 
	 
	ARTICLE 2
	 	ISSUE AND SALE OF SECURITIES AND SENIOR TERM NOTES	 	 	16	 
	2.1
	 	Authorization of Preferred Stock	 	 	16	 
	2.2
	 	Authorization of Common Stock	 	 	16	 
	2.3
	 	Senior Term Loans	 	 	16	 
	2.4
	 	Senior Subordinated Notes	 	 	17	 
	2.5
	 	Junior Subordinated Notes	 	 	17	 
	2.6
	 	Authorization and Issuance of the Warrants	 	 	17	 
	2.7
	 	Sale and Purchase	 	 	17	 
	2.8
	 	The Closing	 	 	17	 
	 
	ARTICLE 3
	 	REPAYMENT OF THE SENIOR TERM LOANS, THE SENIOR SUBORDINATED NOTES AND THE JUNIOR SUBORDINATED NOTES	 	 	18	 
	3.1
	 	Interest Rates and Interest Payments	 	 	18	 
	3.2
	 	Repayment of Senior Term B Notes	 	 	20	 
	3.3
	 	Repayment of Senior Term C Notes	 	 	20	 
	3.4
	 	Repayment of Senior Subordinated Notes	 	 	20	 
	3.5
	 	Repayment of Junior Subordinated Notes	 	 	20	 
	3.6
	 	Optional Prepayment of the Notes	 	 	20	 
	3.7
	 	Notice of Optional Prepayment	 	 	21	 
	3.8
	 	Mandatory Prepayment	 	 	21	 
	3.9
	 	Home Office Payment	 	 	21	 
	3.10
	 	Taxes	 	 	21	 
	3.11
	 	Maximum Lawful Rate	 	 	22	 
	3.12
	 	Capital Adequacy	 	 	22	 
	3.13
	 	Breakage	 	 	22	 
	3.14
	 	Certain Waivers	 	 	23	 
	3.15
	 	Redemption of Preferred Stock	 	 	23	 
	 
	ARTICLE 4
	 	CONDITIONS	 	 	23	 
	4.1
	 	Conditions to the Senior Term Loans and the Purchase of Securities	 	 	23	 
	4.2
	 	Waiver	 	 	26	 
	 
	ARTICLE 5
	 	REPRESENTATIONS AND WARRANTIES OF THE COMPANY	 	 	26	 
	5.1
	 	Representations and Warranties of the Company	 	 	26	 
	5.2
	 	Absolute Reliance on the Representations and Warranties	 	 	32	 
	 
	ARTICLE 6
	 	TRANSFER OF NOTES	 	 	32	 
	6.1
	 	Restricted Securities	 	 	32	 
	6.2
	 	Legends; Purchaser’s Representations	 	 	32	 
	6.3
	 	Transfer of Notes	 	 	32	 
	6.4
	 	Replacement of Lost Securities	 	 	32	 
	6.5
	 	No Other Representations Affected	 	 	33	 
	 
	ARTICLE 7
	 	COVENANTS	 	 	33	 






i









 






TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	7.1
	 	Affirmative Covenants	 	 	33	 
	7.2
	 	Negative Covenants	 	 	37	 
	7.3
	 	Financial Covenants	 	 	40	 
	 
	ARTICLE 8
	 	EVENTS OF DEFAULT	 	 	43	 
	8.1
	 	Events of Default	 	 	43	 
	8.2
	 	Consequences of Event of Default	 	 	44	 
	8.3
	 	Security	 	 	45	 
	 
	ARTICLE 9
	 	THE AGENT	 	 	45	 
	9.1
	 	Authorization and Action	 	 	45	 
	9.2
	 	Delegation of Duties	 	 	45	 
	9.3
	 	Exculpatory Provisions	 	 	45	 
	9.4
	 	Reliance	 	 	46	 
	9.5
	 	Non-Reliance on Agent and Other Purchasers	 	 	46	 
	9.6
	 	No Liability of Purchasers	 	 	46	 
	9.7
	 	Agent in its Individual Capacity	 	 	46	 
	9.8
	 	Successor Agent	 	 	46	 
	9.9
	 	Collections and Disbursements	 	 	46	 
	9.10
	 	Reporting	 	 	47	 
	9.11
	 	Services of the Agent	 	 	47	 
	9.12
	 	This Article Not Applicable to Company	 	 	48	 
	 
	ARTICLE 10
	 	PUT OPTION	 	 	48	 
	10.1
	 	Grant of Option	 	 	48	 
	10.2
	 	Put Price	 	 	48	 
	10.3
	 	Exercise of Put Option	 	 	48	 
	10.4
	 	Certain Remedies	 	 	49	 
	10.5
	 	Put Option Closing	 	 	49	 
	 
	ARTICLE 11
	 	PREEMPTIVE RIGHTS	 	 	49	 
	11.1
	 	Limited Preemptive Rights	 	 	49	 
	11.2
	 	Termination	 	 	50	 
	 
	ARTICLE 12
	 	REGISTRATION RIGHTS	 	 	50	 
	12.1
	 	Piggyback Registrations	 	 	50	 
	12.2
	 	Demand Registration Rights	 	 	51	 
	12.3
	 	S-3 Demand Registration Rights	 	 	52	 
	12.4
	 	Holdback Agreements	 	 	52	 
	12.5
	 	Registration Procedures	 	 	52	 
	12.6
	 	Registration Expenses	 	 	54	 
	12.7
	 	Indemnification	 	 	54	 
	12.8
	 	Participation in Underwritten Registrations	 	 	55	 
	 
	ARTICLE 13
	 	SUBORDINATION OF NOTES	 	 	55	 
	13.1
	 	General	 	 	55	 
	13.2
	 	Default in Respect of Senior Financing	 	 	56	 
	13.3
	 	Default in Respect of Senior Term Loans	 	 	57	 
	13.4
	 	Default in Respect of Senior Subordinated Notes	 	 	58	 
	13.5
	 	Insolvency, etc.	 	 	59	 






ii









 






TABLE OF CONTENTS

(continued)




	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 
	13.6
	 	Limited Suspension of Remedies of Holders of Subordinated Debt	 	 	60	 
	13.7
	 	Proof of Claim	 	 	60	 
	13.8
	 	Acceleration of Subordinated Debt	 	 	61	 
	13.9
	 	Turnover of Payments	 	 	61	 
	13.10
	 	Obligations Not Impaired	 	 	62	 
	13.11
	 	Payment of Debt; Subrogation	 	 	62	 
	13.12
	 	Reliance of Holders of Senior Financing and Senior Term Loans; Reliance of Holders of Senior Subordinated Notes; Amendments	 	 	63	 
	13.13
	 	Notices	 	 	63	 
	 
	ARTICLE 14
	 	MISCELLANEOUS	 	 	64	 
	14.1
	 	Successors and Assigns	 	 	64	 
	14.2
	 	Modifications and Amendments	 	 	64	 
	14.3
	 	No Implied Waivers; Cumulative Remedies; Writing Required	 	 	64	 
	14.4
	 	Reimbursement of Expenses	 	 	64	 
	14.5
	 	Holidays	 	 	64	 
	14.6
	 	Notices	 	 	64	 
	14.7
	 	Survival	 	 	66	 
	14.8
	 	Governing Law	 	 	66	 
	14.9
	 	Jurisdiction, Consent to Service of Process	 	 	66	 
	14.10
	 	Jury Trial Waiver	 	 	67	 
	14.11
	 	Severability	 	 	67	 
	14.12
	 	Headings	 	 	67	 
	14.13
	 	Indemnity	 	 	67	 
	14.14
	 	Environmental Indemnity	 	 	68	 
	14.15
	 	Counterparts	 	 	68	 
	14.16
	 	Integration	 	 	68	 
	14.17
	 	Subordination	 	 	69	 






iii









 






ANNEXES




	 	 	 
	Annex A

	 	Purchaser and Payment Information
	 
	 	 
	Annex B

	 	Allocation of Notes, Warrants and Preferred Stock






SCHEDULES




	 	 	 
	Organizational Schedule

	 	(Schedule 5.1(a))
	Litigation Schedule

	 	(Schedule 5.1(j))
	Environmental Schedule

	 	(Schedule 5.1(l))
	Properties Schedule

	 	(Schedule 5.1(q))
	Intellectual Property Schedule

	 	(Schedule 5.1(r))
	Liabilities Schedule

	 	(Schedule 5.1(w))
	Permitted Encumbrances Schedule

	 	(Schedule 7.2(b))






EXHIBITS




	 	 	 
	EXHIBIT A

	 	Amended and Restated Certificate of Incorporation of the
Company
	EXHIBIT B-1

	 	Form of Senior Term B Note
	EXHIBIT B-2

	 	Form of Senior Term C Note
	EXHIBIT C-1

	 	Form of Senior Subordinated Note-1
	EXHIBIT C-2

	 	Form of Senior Subordinated Note-2
	EXHIBIT D-1

	 	Form of Tranche A Junior Subordinated Note

	EXHIBIT D-2

	 	Form of Tranche B Junior Subordinated Note
	EXHIBIT E

	 	Form of Warrant
	EXHIBIT F

	 	Form of Security Agreement
	EXHIBIT G

	 	Form of Collateral Assignment
	EXHIBIT H

	 	Form of Stockholders Agreement
	EXHIBIT I

	 	Form of Investment Banking Agreement
	EXHIBIT J

	 	Form of Compliance Certificate







iv











 





AMENDED AND RESTATED

NOTE AND EQUITY PURCHASE AGREEMENT




$10,000,000 Senior Term Loan B

Due September 30, 2008




$4,000,000 Senior Term Loan C

Due November 10, 2011




$8,600,000 Aggregate Principal Amount of

Senior Subordinated Notes

Due September 30, 2009




$4,300,000 Aggregate Principal Amount of Tranche A

Junior Subordinated Notes

Due September 30, 2010




$4,300,000 Aggregate Principal Amount of Tranche B

Junior Subordinated Notes

Due September 30, 2010




20,000 Shares of Series A PIK Redeemable Preferred Stock




17,500 Shares of Common Stock




Warrants to Purchase 88,560 Shares

of Common Stock of Global Dosimetry Solutions, Inc.




     THIS AMENDED AND RESTATED NOTE AND EQUITY PURCHASE AGREEMENT (this “Agreement”), dated
as of November 10, 2004, is made by and among Global Dosimetry Solutions, Inc., a Delaware
corporation (the “Company”), the securities purchasers that are now and hereafter at any
time parties hereto and are listed in Annex A (or any amendment or supplement thereto)
attached hereto (each a “Purchaser” and collectively, “Purchasers”), and AMERICAN
CAPITAL FINANCIAL SERVICES, INC., a Delaware corporation (“ACFS”), as administrative agent
for Purchasers (in such capacity “Agent”). Capitalized terms used and not defined
elsewhere in this Agreement are defined in Article 1 hereof.



RECITALS




     A. The parties hereto were party to a Note and Equity Purchase Agreement, dated as of
September 30, 2003 (the “Existing Purchase Agreement”), pursuant to which the Company
obtained financing from Purchasers by selling to Purchasers Senior Term B Notes, due September 30,
2008, for an aggregate amount of $10,000,000, Senior Subordinated Notes, due September 30, 2009,
for an aggregate amount of $8,600,000, Tranche A Junior Subordinated Notes, due September 30, 2010,
for an aggregate amount of $4,300,000, and Tranche B Junior Subordinated



 









 




Notes, due September 30, 2010, for an aggregate amount of $4,300,000 (collectively the
“Original Notes”).




     B. Purchasers have sold or contributed certain of such Notes to ACS FUNDING TRUST I, a
Delaware statutory trust, and ACAS BUSINESS LOAN TRUST 2003-2, a Delaware statutory trust.



     C. Pursuant to an Asset Purchase Agreement (the “Acquisition Agreement”), dated
September 15, 2003, by and between ICN Pharmaceuticals, Inc., ICN Biomedicals, Inc. (collectively
the “ICN Sellers”) and the Company, the Company acquired by purchase from the ICN Sellers
certain assets, properties and rights comprising the Personnel Radiation Dosimetry Service division
of ICN Sellers (the “Acquisition”).



     D. The Company sold the Original Notes in the aggregate amount of $27,200,000 to Purchasers in
order to finance the Acquisition.



     E. The Company has sold to Purchasers 20,000 shares of Series A PIK Redeemable Preferred Stock
of the Company, par value $0.001 per share, for an aggregate price of $20,000,000, and 17,500
shares of Common Stock of the Company, par value $0.001 per share, for an aggregate price of
$1,750,000.



     F. In order to induce Purchasers to purchase the Original Notes, Preferred Stock and Common
Stock, the Company has, among other things, issued and sold to Purchasers, in connection with the
purchase of such Original Notes, Preferred Stock and Common Stock, the Warrants, subject to the
terms and conditions set forth in this Agreement.



     G. Pursuant to an Asset Purchase Agreement (the “Proxtronics Acquisition Agreement”),
dated of even date herewith, by and between the Company, Proxtronics Dosimetry, L.L.C.,
(“Proxtronics”), and certain members of Proxtronics, the Company has, concurrent herewith,
acquired by purchase certain assets of Proxtronics (the “Proxtronics Acquisition”).



     H. The Company, Purchasers and the Agent have agreed to amend and restate the Existing
Purchase Agreement for the purchase and sale of Senior Term C Notes (as defined herein) for the
purpose of financing the Proxtronics Acquisition and to amend certain other terms of the Existing
Purchase Agreement.



     I. It is the intent of the parties hereto that this Agreement not constitute a novation of the
obligations and liabilities existing under the Existing Purchase Agreement or evidence payment of
any such obligations and liabilities, that this Agreement amends and restates in its entirety the
Existing Purchase Agreement, and that from and after the date hereof the Existing Purchase
Agreement shall be of no further force or effect.



     NOW, THEREFORE, the parties hereto, in consideration of the foregoing premises and their
mutual covenants and agreements herein set forth and intending to be legally bound hereby, covenant
and agree as follows:



2









 





ARTICLE 1




DEFINITIONS




     1.1 Certain Definitions. In addition to other words and terms defined elsewhere in
this Agreement, the following words and terms shall have the meanings set forth below (and such
meanings shall be equally applicable to both the singular and plural form of the terms defined, as
the context may require):



     “ACAS” shall mean American Capital Strategies, Ltd.



     “ACFS” shall have the meaning assigned to such term in the preamble hereto.



     “Additional Closing” shall mean the closing of the purchase and sale of the Additional
Securities pursuant to this Agreement.



     “Additional Closing Date” shall have the meaning assigned to such term in Section
2.8(b) hereof.



     “Additional Securities” shall mean the Senior Term C Notes.



     “Affiliate” shall mean with respect to any Person, any other Person that is directly
or indirectly controlling, controlled by or under common control with such Person or entity or any
of its Subsidiaries, and the term “control” (including the terms “controlled by” and “under common
control with”) means having, directly or indirectly, the power to direct or cause the direction of
the management and policies of a Person, whether through ownership of voting securities or by
contract or otherwise. Without limiting the foregoing, the ownership of ten percent (10%) or more
of the voting securities of a Person shall be deemed to constitute control. Notwithstanding
anything to the contrary herein, neither Purchasers nor any of their respective Affiliates shall be
deemed to be Affiliates of the Company by virtue of the transactions contemplated in this
Agreement.



     “Agent” shall have the meaning assigned to such term in the preamble hereto and any
successor agent provided for hereunder.



     “Agreement” shall mean this Amended and Restated Note, Warrant, Preferred Stock and
Common Stock Purchase Agreement, as the same may be amended, restated, supplemented or otherwise
modified from time to time.



     “Appraised Value” shall mean the fair market value of a security without adjustment
for control premium or limitations on voting rights, minority interests, illiquidity or
restrictions on transfer, as determined by an appraisal performed at the expense of the Company by
any of (x) Matrix Capital Markets Group, (y) Duff & Phelps or (z) Willamette Management Associates,
or any successor to such firms, as the Company shall elect; provided that such appraiser
shall be directed to determine the value of such securities as soon as practicable, but in no event
later than thirty (30) days from the date of its selection and for such purposes all rights,
options and warrants to subscribe for or purchase, and other securities convertible into or
exchangeable for Common Stock of the Company shall be deemed to be exercised, exchanged or
converted, and the underlying shares of Common Stock of the Company shall be deemed outstanding.



     “Acquisition” shall have the meaning assigned to such term in the Recitals hereto.



3









 





     “Acquisition Agreement” shall mean that certain Asset Purchase Agreement, dated
September 15, 2003, by and among ICN Pharmaceuticals, Inc., ICN Biomedicals, Inc. and the Company.



     “Business” shall mean the principal business of the Company as set forth in Section
5.1(b) herein and as such shall continue to be conducted following the purchase and sale of the
Securities.



     “Business Day” shall mean any day other than a Saturday, Sunday or other day on which
banking institutions in the State of Maryland are authorized or required by law to close.



     “By-laws” shall mean the by-laws governing the operations of the Company, including
all amendments and supplements thereto.



     “Capital Expenditures” means, without duplication, all expenditures (including
deposits) for, or contracts for expenditures (excluding Facility Move Capital Expenditures of up to
$2,000,000) with respect to any fixed assets or improvements, or for replacements, substitutions or
additions thereto, which have a useful life of more than one year, including the direct or indirect
acquisition of such assets by way of increased product or service charges, offset items or
otherwise.



     “Capital Lease” means any lease of any property (whether real, personal or mixed)
that, in conformity with GAAP, should be accounted for as a capital lease.



     “Cash Flow” for any period shall mean the sum of Operating Cash Flow minus
Fixed Charges for such period.



     “CERCLA” shall mean the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. § 9601, et seq.), as amended, and all rules, standards and
regulations promulgated pursuant thereto.



     “Change of Control” shall mean the occurrence of any of the following:




     (a) any transaction or series of related transactions resulting in the sale or
issuance of securities or any rights to securities of the Company by the Company
representing in the aggregate more than 50% of its issued and outstanding voting
securities, on a fully diluted basis, or any transaction or series of related transactions
resulting in the sale, transfer, assignment or other conveyance or disposition of any
securities or any rights to securities of the Company by any holder or holders thereof
representing in the aggregate more than 50% of the issued and outstanding voting securities
of the Company on a fully diluted basis and the receipt of any consideration in connection
therewith;




     (b) a merger, consolidation, reorganization, recapitalization or share exchange in
which the stockholders of the Company immediately prior to such transaction receive, in
exchange for securities of the Company owned by them, cash, property or securities of the
resulting or surviving entity and as a result thereof Persons who were holders of voting
securities of the Company and Underlying Common Stock
hold less than 50% of the capital stock, calculated on a fully diluted basis, of the
resulting corporation entitled to vote in the election of directors;



4









 






     (c) a sale, transfer or other disposition of 30% or more of the assets of the Company;




     (d) any sale or issuance or series of sales or issuances of the Common Stock or any
other voting security (or security convertible into, exchangeable for, or exercisable for
any other voting security) of the Company within a 12-month period that results in a
transfer of more than 50% of the issued and outstanding shares of voting stock of the
Company or a transfer of more than 50% of the voting power of the Company; and




     (e) the initial public offer of securities by the Company other than an offering of
securities for an employee benefit plan on SEC Form S-8 or a successor form.



     “Charges” shall mean all taxes, charges, fees, imposts, levies or other assessments,
including, without limitation, all net income, gross income, gross receipts, sales, use, ad
valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding,
payroll, employment, social security, unemployment, excise, severance, stamp, occupation and
property taxes, custom duties, fees, assessments, liens, claims and charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional amounts, imposed by
any taxing or other authority, domestic or foreign (including, without limitation, the PBGC or any
environmental agency or superfund), upon the Collateral (as defined in the Security Agreement), the
Company or any of its Affiliates.



     “Charter” shall mean the Amended and Restated Certificate of Incorporation of the
Company, including all amendments and supplements thereto.



     “Closing” shall mean the closing of the purchase and sale of the Securities pursuant
to this Agreement.



     “Closing Date” shall mean September 30, 2003, the date and time of delivery and
payment of the Original Securities pursuant to Section 2.8 hereof.



     “Code” shall mean the Internal Revenue Code of 1986, as amended.



     “Collateral Assignment” shall have the meaning assigned to such term in Section 4.1(c)
hereof.



     “Company” shall have the meaning assigned to such term in the preamble.



     “Company on a Consolidated Basis” shall mean the consolidation in accordance with GAAP
of the accounts or other items of the Company, and when and if applicable, it’s Subsidiaries.



     “Common Stock” shall mean the common stock, $0.001 par value, of the Company.



     “Condition” shall mean any environmental condition that results in or otherwise
relates to any Environmental Liability.



     “Controlled Group” shall mean the “controlled group of corporations” as that term is
defined in Section 1563 of the Internal Revenue Code of 1986, as amended, of which the Company is a
part from time to time.



5









 





     “Covenant Default” shall mean the occurrence of an event of default under the terms of
particular Indebtedness beyond any applicable notice or cure period, other than a Payment Default.



     “Default” shall mean any event or condition that, but for the giving of notice or the
lapse of time, or both, would constitute an Event of Default.



     “Demand Registration” shall have the meaning assigned to such term in Section 12.2
hereof.



     “Earnings Before Interest and Taxes” shall mean for any period the sum of (i) net
income (or loss) of the Company on a Consolidated Basis for such period (excluding extraordinary
gains), plus (ii) all interest expense of the Company on a Consolidated Basis for such period, plus
(iii) all Charges against income of the Company on a Consolidated Basis for such period for
federal, state and local taxes.



     “EBITDA” shall mean for any period the sum of (i) Earnings Before Interest and Taxes
for such period plus (ii) depreciation expenses for such period, plus (iii) amortization expenses
for such period, plus (iv) all non-cash compensation expenses, plus (v) all non-recurring non-cash
expenses related to the Transactions, plus (vi) all Management Fees, whether paid or accrued, plus
(vii) Facility Move Expenses (not to exceed a sum equal to (a) $2,000,000 minus (b) all Facility
Move Capital Expenditures).



     “Environmental Laws” shall mean any applicable Laws that address, are related to or
otherwise are concerned with environmental, health or safety issues, including, without limitation,
any Laws relating to any emissions, Releases or discharges of Pollutants into ambient air, surface
water, ground water or land, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, handling, clean-up or control of Pollutants or any
impact on worker health and safety.



     “Environmental Liabilities” shall mean any obligations or liabilities (including,
without limitation, any claims, suits or other assertions of obligations or liabilities) that are:




     (a) related to environmental, health or safety issues (including, without limitation,
on-site or off-site contamination by Pollutants of surface or subsurface soil or water, and
occupational safety and health); and




     (b) based upon or related to (i) any provision of past, present or future United
States or foreign Environmental Law (including, without limitation, CERCLA and RCRA and the
Environmental Laws of the PRC) or common law, or (ii) any judgment, order, writ, decree,
permit or injunction imposed by any court, administrative agency, tribunal or otherwise.


The term “Environmental Liabilities” includes among other things, all: (i) fines,
penalties, judgments, awards, settlements, losses, damages, costs, fees (including, without
limitation, reasonable attorneys’ and consultants’ fees), but excluding consequential damages,
expenses and
disbursements; (ii) defense and other responses to any administrative or judicial action
(including, without limitation, claims, notice letters, complaints, and other assertions of
liability); and (iii) financial responsibility for (1) cleanup costs and injunctive relief,
including any Removal,


6









 






Remedial or other Response actions, and natural resource damages, and (2)
any other compliance or remedial measures.




     “EPA” shall mean the United States Environmental Protection Agency and any
governmental body or agency succeeding to the functions thereof.



     “Environmental Permit” shall mean any Permit that is required under any Environmental
Law.



     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as the same
may from time to time be amended, and the rules and regulations of any governmental agency or
authority, as from time to time may be in effect, promulgated thereunder.



     “Event of Default” shall mean any of the events of default described in Section 8.1
hereof.



     “Existing Purchase Agreement” shall have the meaning assigned to such term in the
Recitals hereto.



     “Facility Move” means, the closing of the Company’s operating plant located, as of the
Closing Date, in Costa Mesa, California, and the relocation and commencement of operations in a new
plant.



     “Facility Move Capital Expenditures” means, without duplication, all expenditures
(including deposits) for, or contracts for expenditures with respect to, the Facility Move.



     “Facility Move Expenses” means without duplication, all costs and expenses associated
with the Facility Move (to the extent such costs and expenses are not considered Facility Move
Capital Expenditures), including costs incurred in connection with commencement of such operations
as a stand-alone entity.



     “Fair Market Value” of a security shall mean (i) if determined in connection with a
sale of substantially all of the assets of or securities issued by the Company to an unrelated
third party, the value to be realized by the holder of the security as a result thereof, (ii)
otherwise, if available, the Market Price thereof, and (iii) otherwise, if Market Price is not
available, the Appraised Value.



     “Financial Statements” shall have the meaning assigned to such term in Section 5.1(c).



     “Financing Statements” shall have the meaning assigned to such term in Section 4.1(c)
hereof.



     “Fiscal Year” or “fiscal year” shall mean each twelve month period ending on
December 31 of each year.



     “Fixed Charge Coverage Ratio” shall mean and include, with respect to the twelve month
period ending at the end of any fiscal period of any Person, Operating Cash Flow during such
period divided by Fixed Charges during such period; provided that, prior to the twelve month
period ending September 30, 2004, the measurement period used in determining the Fixed Charge



7









 







Coverage Ratio for the Company shall be the period from the Closing to the end of such fiscal
period.



     “Fixed Charges” means, for any period, and each calculated for such period (without
duplication), (a) interest expense of any Person paid in cash; plus (b) scheduled payments of
principal with respect to all Indebtedness of any Person paid in cash; plus (c) cash payments of
income or franchise taxes; plus (d) payment of deferred taxes accrued in any prior period; plus (e)
cash payments of Management Fees.



     “GAAP” shall have the meaning assigned to such term in Section 1.2 hereof.



     “GMAC” shall mean GMAC Commercial Finance, LLC, a Delaware limited liability company.



     “Governmental Authorities” shall mean any court, tribunal, arbitrator, authority,
agency, commission, official or other instrumentality of the United States, any nation or any
province, territory, state, county, city, or other political subdivision of any nation or any other
governmental or quasi-governmental, local, national or international body thereof.



     “Guaranty” shall mean any guaranty of the payment or performance of any Indebtedness
or other obligation and any other arrangement whereby credit is extended to one obligor on the
basis of any promise of another Person, whether that promise is expressed in terms of an obligation
to pay the Indebtedness of such obligor, or to purchase an obligation owed by such obligor, or to
purchase goods and services from such obligor pursuant to a take-or-pay contract, or to maintain
the capital, working capital, solvency or general financial condition of such obligor, whether or
not any such arrangement is reflected on the balance sheet of such other Person, firm or
corporation, or referred to in a footnote thereto, but shall not include endorsements of items for
collection in the ordinary course of business. For the purpose of all computations made under this
Agreement, the amount of a Guaranty in respect of any obligation shall be deemed to be equal to the
maximum aggregate amount of such obligation or, if the Guaranty is limited to less than the full
amount of such obligation, the maximum aggregate potential liability under the terms of the
Guaranty.



     “Holder” shall have the meaning assigned to such term in Section 10.1 hereof.



     “Indebtedness” of a Person at a particular date shall mean all obligations of such
Person which in accordance with GAAP would be classified upon a balance sheet as liabilities
(except accounts payable and accrued expenses incurred in the ordinary course of business and
capital stock and surplus earned or otherwise) and in any event, without limitation by reason of
enumeration, shall include (a) all indebtedness, debt and similar monetary obligations of such
Person whether direct or guaranteed; (b) all indebtedness for borrowed money; (c) that portion of
obligations with respect to Capital Leases that is properly classified as a liability on a balance
sheet in conformity with GAAP; (d) notes payable and drafts accepted representing extensions of
credit whether or not representing obligations for borrowed money; (e) any obligation owed for all
or any part of the deferred purchase price of property or services if the purchase price is due
more than six (6) months from the date the obligation is incurred or is evidenced by a note or
similar written instrument (provided that Indebtedness described in clause (e) shall not include
Borrower’s deferred liability for performance of prepaid services under customer service
contracts); and (f) all indebtedness secured by any Lien on any property or asset owned or
held by



8









 







that Person regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is nonrecourse to the credit of that Person.



     “Intercreditor Agreement” shall mean the Amended and Restated Intercreditor Agreement,
dated November 10, 2004, among ACFS, as agent for the Purchasers, the Company and GMAC, as agent
for the Senior Lenders, as amended from time to time and in effect.



     “Investment Banking Agreement” shall mean that certain investment banking services
agreement between the Company and the Purchasers dated as of the Closing Date.



     “Interest Rate Protection Agreement” shall mean any interest rate swap, interest rate
cap, interest rate collar or other interest rate hedging agreement or arrangement.



     “Inventory” shall mean, with respect to any Person now owned or hereafter acquired
goods, merchandise and other personal property, wherever located, to be furnished under any
contract of service or held for sale or lease, all raw materials, work in process, finished goods
and materials and supplies of any kind, nature or description which are or might be used or
consumed in such Person’s business or used in selling or furnishing such goods, merchandise and
other personal property, and all documents of title or other documents representing them.



     “Investment” as applied to any Person shall mean the amount paid or agreed to be paid
or loaned, advanced or contributed to other Persons, and in any event shall include without
limitation (i) any direct or indirect purchase or other acquisition of any notes, obligations,
instruments, stock, securities or ownership interest (including, without limitation, partnership
interests and joint venture interests) and (ii) any capital contribution to any other Person.



     “IRS” shall mean the Internal Revenue Service and any governmental body or agency
succeeding to the functions thereof.



     “Junior Cash Interest” shall have the meaning assigned to such term in Section 3.1(c).



     “Junior PIK Interest” shall have the meaning assigned to such term in Section 3.1(c).



     “Junior Subordinated Notes” shall have the meaning assigned to such term in Section
2.4.



     “Laws” shall mean all laws, statutes, treaties, rules, regulations, ordinances,
requirements, rules of common law and other pronouncements having the effect of law of any
Governmental Authority.



     “LIBOR Business Day” means a business day on which banks in the city of London are
generally open for interbank or foreign exchange transactions.



     “LIBOR Period” means each month commencing on the Closing Date, or the Additional
Closing Date, in the case of the Senior Term C Notes (or if the Closing Date (or the Additional
Closing Date) is not a LIBOR Business Day, the next succeeding LIBOR Business Day) and ending one
month thereafter; provided, that the foregoing provision relating to LIBOR Periods
is subject to the following:



          (a) if any LIBOR Period would otherwise end on a day that is not a LIBOR Business Day, such
LIBOR Period shall be extended to the next succeeding LIBOR Business Day




9









 







unless the result of such
extension would be to carry such LIBOR Period into another calendar month in which event such LIBOR
Period shall end on the immediately preceding LIBOR Business Day;




          (b) any LIBOR Period that would otherwise extend beyond the maturity date of the Senior Term
Notes shall end on such date; and




          (c) any LIBOR Period that begins on the last LIBOR Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the calendar month at the end of such
LIBOR Period) shall end on the last LIBOR Business Day of a calendar month.




     “LIBOR Rate” means for each LIBOR Period, a rate of interest determined by Agent,
equal to the rate of interest that under current practice is listed as the one month London
Interbank Offered Rate as of the commencement of such LIBOR Period under the heading “Money Rates”
in the Eastern Edition of The Wall Street Journal (and should such practice change, such other
indication of the prevailing LIBOR Rate as may reasonably be chosen by the Required Purchasers).



     “Lien” shall mean any security interest, pledge, bailment, mortgage, hypothecation,
deed of trust, conditional sales and title retention agreement (including any lease in the nature
thereof), charge, encumbrance or other similar arrangement or interest in real or personal
property, now owned or hereafter acquired, whether such interest is based on common law, statute or
contract.



     “Loan B Rate” shall mean a rate per annum equal to the LIBOR Rate + 7.75%.



     “Loan C Rate” shall mean a rate per annum equal to the LIBOR Rate + 8.25%.



     “Loan Origination Fee” shall mean a fee in an amount equal to $1,729,000.



     “Manage” or “Management” shall mean generation, production, handling,
distribution, processing, use, storage, treatment, operation, transportation, recycling, reuse
and/or disposal, as those terms are defined in CERCLA, RCRA and other Environmental Laws (including
as those terms are further defined, construed, or otherwise used in rules, standards and
regulations issued pursuant to Environmental Laws).



     “Management Fee” shall have the meaning assigned to such term in Section 7.1(k)
hereof.



     “Market Price” of any security shall mean the average of the closing prices of such
security’s sales on all securities exchanges on which such security may at the time be listed, or,
if there has been no sales on any such exchange on any day, the average of the highest bid and
lowest asked prices on all such exchanges at the end of each day, or, if on any day such security
is not so listed, the average of the representative bid and asked prices quoted in the NASDAQ
System as of 4:00 P.M., New York time, or, if on any day such security is not quoted in the NASDAQ
System, the average of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a period of thirty (30) days
consisting of the day as of which “Market Price” is being determined and the twenty-nine (29)
consecutive business days prior to such day. If at any time such security is not listed on any



10









 







securities exchange or quoted in the NASDAQ System or the over-the-counter market, the “Market
Price” shall be the fair value thereof determined jointly by the Company and the Holders of
Warrants representing a majority of the shares of Common Stock of the Company obtainable upon
exercise of the Warrants. If such parties are unable to reach agreement within ten (10) days, then
the Market Price shall be deemed not to be available.



     “Material Adverse Effect” shall mean a material adverse effect on the business,
properties, assets, liabilities or condition (financial or otherwise) of the Company, taken as a
whole.



     “Moody’s” shall have the meaning assigned to such term in Section 7.2(g) hereof.



     “Multiemployer Plan” shall mean a multiemployer plan (within the meaning of Section
3(37) of ERISA) that is maintained for the benefit of the employees of the Company or any member of
the Controlled Group.



     “Net Cash Flow” of the Company on a Consolidated Basis for any fiscal period shall
mean (a) Cash Flow for such period minus (b) Facility Move Capital Expenditures.



     “Net Income” shall mean, for any period, the net income (or loss) of the Company on a
Consolidated Basis for such period, after deduction of all expenses, taxes and other proper
charges, determined in accordance with GAAP, for such period taken as a single accounting period.



     “Notes” shall mean, collectively, the Original Notes and the Senior Term C Notes.



     “Operating Cash Flow” shall mean for any Person for any period, (i) EBITDA for such
period minus (ii) Capital Expenditures made during such period in cash.



     “Option Plan” shall mean the Global Dosimetry Solutions, Inc. 2003 Stock Plan.



     “Options” shall mean the options to purchase shares of Common Stock under the Option
Plan and, where the context requires, any shares of restricted stock issued upon exercise thereof.



     “Order” shall mean any writ, judgment, decree, injunction, award, decision, ruling or
similar order of any Governmental Authority (in each such case whether preliminary or final).



     “Original Notes” shall mean the Senior Term B Notes, the Senior Subordinated Notes and
the Junior Subordinated Notes.



     “Original Securities” shall mean the Original Notes, the Preferred Stock, Common
Stock, and the Common Stock issuable upon exercise of the Warrants.



     “Other Subordinated Junior Notes” shall have the meaning assigned to such term in
Section 13.5 hereof.



     “Other Subordinated Securities” shall have the meaning assigned to such term in
Section 13.5 hereof.



11









 





     “Payment Default” shall mean the occurrence of an event of default under the terms of
particular Indebtedness as a result of the failure to pay interest or principal on such
Indebtedness beyond any applicable cure period.



     “PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA, or any other governmental agency, department or instrumentality
succeeding to the functions thereof.



     “Permits” shall mean any permits, licenses, certifications, approvals, registrations,
consents and other authorizations.



     “Permitted Liens” shall have the meaning assigned to such term in Section 7.2(b)
hereof.



     “Person” shall mean any individual, partnership, limited partnership, corporation,
limited liability company, association, joint stock company, trust, joint venture, unincorporated
organization or governmental entity or department, agency or political subdivision thereof.



     “Plan” shall mean any employee benefit plan (within the meaning of Section 3(3) of
ERISA), other than a Multiemployer Plan, established or maintained by the Company or any member of
the Controlled Group.



     “Pollutant” shall mean any “hazardous substance” and any “pollutant or contaminant” as
those terms are defined in CERCLA; any “hazardous waste” as that term is defined in RCRA; and any
“hazardous material” as that term is defined in the Hazardous Materials Transportation Act (49
U.S.C. § 1801 et seq.), as amended (including as those terms are further defined in
rules, standards and regulations issued pursuant to said Environmental Laws); and including without
limitation any petroleum product or byproduct, solvent, flammable or explosive material,
radioactive material, asbestos, polychlorinated biphenyls (PCBs), dioxins, dibenzofurans, heavy
metals, and radon gas.



     “Preferred Stock” shall have the meaning assigned to such term in Section 2.1.



     “Properties and Facilities” shall have the meaning assigned to such term in Section
5.1(q).



     “Proprietary Rights” shall mean all patents, trademarks, trade names, service marks,
copyrights, inventions, production methods, licenses, formulas, know-how and trade secrets,
regardless of whether such are registered with any Governmental Authorities, including applications
therefor.



     “Proxtronics” shall have the meaning assigned to such term in the Recitals hereto.



     “Proxtronics Acquisition” shall have the meaning assigned to such term in the Recitals
hereto.



     “Proxtronics Acquisition Agreement” shall have the meaning assigned to such term in
the Recitals hereto.



     “Purchasers” shall have the meaning assigned to such term in the preamble hereto and
in Section 6.2 hereof.



12









 





     “Put Option” shall have the meaning assigned to such term in Section 10.1 hereof.



     “Put Option Closing” shall have the meaning assigned to such term in Section 10.5
hereof.



     “Put Price” shall have the meaning assigned to such term in Section 10.2 hereof.



     “Put Shares” shall have the meaning assigned to such term in Section 10.2 hereof.



     “RCRA” shall mean the Resource Conservation and Recovery Act (42 U.S.C. § 6901
et seq.), as amended, and all rules, standards and regulations adopted pursuant
thereto.



     “Registrable Securities” shall mean any shares of Common Stock of the Company
purchased upon the exercise of any Warrant, any shares of Common Stock of the Company purchased
pursuant to Article 11 hereof, and any shares of Common Stock of the Company now owned or hereafter
acquired by any Purchaser.



     “Release” shall mean any releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, placing, discarding, abandonment, or
disposing into the environment (including the placing, discarding or abandonment of any barrel,
container or other receptacle containing any Pollutant).



     “Removal,” “Remedial” and “Response” actions shall mean the types of
removal, remedial and response activities performed pursuant to CERCLA, RCRA, and other comparable
Environmental Laws, whether required by a Governmental Authority or by a Person asserting a private
right of action under such Environmental Laws.



     “Reportable Event” shall mean any of the events which are reportable under Section
4043 of ERISA and the regulations promulgated thereunder, other than an occurrence for which the
thirty (30) day notice contained in 29 C.F.R. § 2615.3(a) is waived.



     “Required Purchasers” shall mean, at any time, Purchasers holding a pro rata
percentage of the outstanding principal amount of the Notes aggregating at least 66-2/3% at such
time.



     “Revolving Financing” shall mean a secured revolving line of credit facility pursuant
to the Lending Agreements in an aggregate principal amount not to exceed $5,500,000, provided,
however, that the outstanding amount of Revolving Financing may exceed $5,500,000, but no more than
$6,500,000, so long as the advance rates and standards for determining the eligible receivables and
eligible inventory for inclusion in the borrowing base under the Revolving Financing are the same
as the criteria set forth in the Loan Agreement on the Closing Date, plus an overadvance (not based
upon eligible receivables or eligible inventory) in the sum of up to $750,000.



     “Revolving Notes” shall mean those notes issued in connection with the Revolving
Financing.



     “SEC” shall mean the Securities and Exchange Commission and any governmental body or
agency succeeding to the functions thereof.



     “Securities” shall mean collectively the Original Securities and the Additional
Securities.



13









 





     “Securities Act” shall mean the Securities Act of 1933, as amended.



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



     “Security Agreement” shall have the meaning assigned to such term in Section 4.1(c)
hereof.



     “Security Documents” shall mean the Security Agreement, the Collateral Assignment, the
Financing Statements, and all other documents, instruments and other materials necessary to create
or perfect the security interests created pursuant to the Security Agreement.



     “Senior Agent” shall mean any agent under the Senior Credit Agreement.



     “Senior Cash Interest” shall have the meaning assigned to such term in Section 3.1(b)
hereof.



     “Senior Credit Agreement” shall mean the Loan and Security Agreement, dated as of the
Closing Date, by and among GMAC, as administrative and collateral management agent, the lenders
party thereto and the Company, as amended by that certain Waiver and Amendment No. 1 to Loan and
Security Agreement, dated as of _______, and Waiver and Amendment No. 2 to Loan and Security
Agreement, dated as of the Additional Closing Date, and as thereafter further amended, restated,
supplemented or otherwise modified from time to time.



     “Senior Debt” shall mean, as of any date, the sum of the outstanding principal balance
on such date of the Senior Financing.



     “Senior Financing” shall mean all obligations, liabilities and indebtedness of the
Company to Senior Agent and/or the lenders under the Senior Credit Agreement now or hereafter
existing, whether principal, interest, fees, expenses, indemnification or otherwise under or in
respect of the Revolving Financing and the Term Financing (including all interest, charges,
expenses, fees and other sums accruing after commencement of any case, proceeding or other action
relating to the bankruptcy, insolvency or reorganization of the Company). Senior Financing shall
continue to constitute Senior Financing, notwithstanding the fact that such Senior Financing or any
claim for such Senior Financing is subordinated, avoided or disallowed under the United States
Bankruptcy Code or other applicable law. Senior Financing shall also include any Indebtedness of
the Company incurred in connection with a refinancing of the Senior Financing under the Senior
Credit Agreement if the principal amount of such refinanced indebtedness does not exceed the sum of
the principal amount of the Revolving Financing and the then outstanding principal amount of the
Term Financing and if the terms and conditions of the agreements, documents and instruments related
to such refinancing, taken as a whole, are not, in the reasonable judgment of Purchasers,
materially more onerous to Purchasers than those set forth in the Senior Credit Agreement as in
effect on the date hereof.



     “Senior Financing Blocking Notice” shall have the meaning assigned to such term in
Section 13.2(b)(i) hereof.



     “Senior Financing Covenant Default” shall mean a Covenant Default on Senior Financing.



     “Senior Financing Payment Default” shall mean a Payment Default on Senior Financing.



14









 





     “Senior Lender” shall collectively mean the lenders party to the Senior Credit
Agreement.



     “Senior Leverage Ratio” shall mean, for any period, the ratio of (x) Senior Debt as at
the end of such period to (y) EBITDA for such period, plus, with respect to the fiscal quarters
ending December 31, 2003, March 31, 2004 and June 30, 2004, the respective sums of $6,085,000,
$4,276,000 and $2,131,000.



     “Senior PIK Interest” shall have the meaning assigned to such term in Section 3.1(b).



     “Senior Subordinated Notes” shall have the meaning assigned to such term in Section
2.3.



     “Senior Subordinated Notes Blocking Notice” shall have the meaning assigned to such
term in Section 13.3(b)(i) hereof.



     “Senior Subordinated Notes Covenant Default” shall mean a Covenant Default on Senior
Notes.



     “Senior Subordinated Notes Payment Default” shall mean a Payment Default on Senior
Notes.



     “Senior Term Loan B” shall have the meaning assigned to such term in Section 2.3(a).



     “Senior Term Loan C” shall have the meaning assigned to such term in Section 2.3(b).



     “Senior Term Loans” shall have the meaning assigned to such term in Section 2.3(b).



     “Senior Term Loans Blocking Notice” shall have the meaning assigned to such term in
Section 13.3(b)(i).



     “Senior Term Loans Covenant Default” shall mean a Covenant Default under the Senior
Term Loans.



     “Senior Term Loans Payment Default” shall mean a Payment Default under the Senior Term
Loans.



     “Senior Term B Notes” shall have the meaning assigned to such term in Section 2.3(a).



     “Senior Term C Closing Fee” shall mean a fee in an amount equal to $120,000.



     “Senior Term C Notes” shall have the meaning assigned to such term in Section 2.3(b).



     “Senior Term Notes” shall mean the Senior Term B Notes and the Senior Term C Notes.



     “Stockholders Agreement” shall have the meaning assigned to such term in Section
4.1(h) hereof.



     “Structuring Fee” shall mean a fee in an amount equal to $1,450,000 payable by the
Company to ACFS in consideration of the structuring of the financing contemplated hereby.



15









 





     “Subject Securities” shall mean the Warrants, any shares of Common Stock of the
Company purchased upon the exercise of any Warrant, any shares of Common Stock of the Company
purchased pursuant to Article 11 hereof and shares of Common Stock purchased pursuant to Section
2.7.



     “Subordinated Debt” shall mean and include



          (a) all obligations, liabilities and indebtedness of the Company now or hereafter existing,
whether for principal, prepayment premium, if any, interest, fees, expenses or otherwise, under or
arising out of or relating to the Subordinated Notes, and




          (b) any claims arising in respect of any breach of this Agreement (including, without
limitation, the breach of any representation or warranty under this Agreement), and any claims in
respect of indemnification obligations in respect of or arising out of this Agreement, in each case
to the extent related to the Subordinated Notes, it being understood that no obligations,
liabilities, indebtedness or claims under, arising out of or relating to the Senior Term Loans or
the Senior Term Notes is or shall be considered Subordinated Debt.




     “Subordinated Notes” shall mean the Senior Subordinated Notes and the Junior
Subordinated Notes.



     “Subsidiary” shall mean a corporation or other entity of whose shares of stock or
other ownership interests having ordinary voting power (other than stock or other ownership
interests having such power only by reason of the happening of a contingency) to elect a majority
of the directors of such corporation, or other Persons performing similar functions for such
entity, are owned, directly or indirectly, by such Person.



     “S&P” shall have the meaning assigned to such term in Section 7.2(g) hereof.



     “Term Financing” shall mean the secured term credit facility pursuant to the Senior
Credit Agreement in an aggregate principal amount not to exceed $13,800,000, minus scheduled
principal payments made thereon after the date hereof.



     “Total Funded Debt” shall mean, for any date, the sum of the outstanding balance on
such date of (i) the obligations outstanding hereunder and under the Notes, (ii) the Senior
Financing (and all other agreements, instruments and other documents executed in connection
therewith and as in effect on the Closing Date) and (iii) Capital Leases.



     “Total Leverage Ratio” shall mean for any Person and for any period, the ratio of (x)
Total Funded Debt as at the end of such period to (y) EBITDA for such period, plus, with respect to
the fiscal quarters ending December 31, 2003, March 31, 2004 and June 30, 2004, the respective sums
of $6,085,000, $4,276,000 and $2,131,000.



     “Tranche A Notes” shall have the meaning assigned to such term in Section 2.5.



     “Tranche A PIK Condition” shall mean that, after giving effect to the suspension of
Junior Cash Interest payments on the Tranche B Notes pursuant to Section 3.1(d), either (a) except
solely during the period commencing on the Additional Closing Date and continuing through and
including January 31, 2005, the Undrawn Availability shall be less than $500,000 or



16









 




(b) the Fixed Charge Coverage Ratio shall be less than (i) 1.1 to 1 for each quarter ending
prior to the quarter ending March 31, 2005 and (ii) 1.05 to 1 thereafter.




     “Tranche B Notes” shall have the meaning assigned to such term in Section 2.5.



     “Tranche B PIK Condition” shall mean that, after giving effect to the suspension of
payments by the Company of Management Fees, either (a) except solely during the period commencing
on the Additional Closing Date and continuing through and including January 31, 2005, the Undrawn
Availability shall be less than $500,000 or (b) the Fixed Charge Coverage Ratio shall be less than
(i) 1.1 to 1 for each quarter ending prior to the quarter ending March 31, 2005 and (ii) 1.05 to 1
thereafter.



     “Transaction Documents” shall mean this Agreement, the Notes, the Warrants and the
Security Documents and all other agreements, instruments and documents delivered in connection
therewith as any or all of the foregoing may be supplemented or amended from time to time.



     “Transactions” means the transactions contemplated by the Acquisition Agreement, the
Senior Credit Agreement the Proxtronics Acquisition Agreement and under this Agreement.



     “Underlying Common Stock” shall mean (i) the Common Stock issued or issuable upon
exercise of the Warrants and (ii) any equity securities issued or issuable with respect to the
securities referred to in clause (i) above by way of stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other reorganization.



     “Undrawn Availability” shall have the meaning assigned to such term in the Senior
Credit Agreement as in effect on the date hereof.



     “UST” shall mean an underground storage tank, including as that term is defined,
construed and otherwise used in RCRA and in rules, standards and regulations issued pursuant to
RCRA and comparable state and local laws.



     “Warrants” shall have the meaning assigned to such term in Section 2.6 hereof.



     “Warrant Shares” shall mean the shares of Common Stock issued or issuable upon
exercise of the Warrants.



     1.2 Accounting Principles. Other than with respect to representations and warranties
made as of the Closing Date and as of date hereof, the character or amount of any asset, liability,
capital account or reserve and of any item of income or expense to be determined, and any
consolidation or other accounting computation to be made, and the construction of any definition
containing a financial term, pursuant to this Agreement shall be determined or made in accordance
with generally accepted accounting principles in the United States of America consistently applied
(“GAAP”), unless such principles are inconsistent with the express requirements of this
Agreement.



     1.3 Other Definitional Provisions; Construction. Whenever the context so requires,
neuter gender includes the masculine and feminine, the singular number includes the plural and vice
versa. The words “hereof” “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not in any particular provision of this
agreement, and references to section, article, annex, schedule, exhibit and like references are



17









 







references to this Agreement unless otherwise specified. A Default or Event of Default shall
“continue” or be “continuing” until such Default or Event of Default has been cured or waived by
Agent and Purchasers. References in this Agreement to any Persons shall include such Persons,
successors and permitted assigns. Other terms contained in this Agreement (which are not otherwise
specifically defined herein) shall have meanings provided in Article 9 of the New York Uniform
Commercial Code on the date hereof to the extent the same are used or defined therein.



ARTICLE 2




ISSUE AND SALE OF SECURITIES AND SENIOR

TERM NOTES




     The Company agrees to issue and sell, and the Purchasers agree to purchase, the Securities and
the Senior Term Notes, as provided in this Article 2.



     2.1 Authorization of Preferred Stock. The Company has duly authorized the issuance
and sale, pursuant to the terms and conditions of this Agreement, of 20,000 shares of Series A PIK
Redeemable Preferred Stock, par value $0.001 per share (the “Preferred Stock”), having the
rights, preferences, privileges and restrictions set forth in the Charter of the Company attached
hereto as Exhibit A.



     2.2 Authorization of Common Stock. The Company has duly authorized the issuance and
sale, pursuant to the terms and conditions of this Agreement, of 17,500 shares of Common Stock.



     2.3 Senior Term Loans.



          (a) Subject to the terms and conditions set forth in this Agreement, Purchasers agree to make
a loan (“Senior Term Loan B”) to the Company on the Closing Date in the principal amount of
$10,000,000. From and after Closing, the Senior Term Loan B shall be evidenced by one or more
promissory notes made by the Company in favor of Purchasers in the form attached hereto as Exhibit
B-1 (the “Senior Term B Notes”) to be delivered by the Company at the Closing.




          (b) Subject to the terms and conditions set forth in this Agreement, Purchasers agree to make
a loan (“Senior Term Loan C” and together with Senior Term Loan B the “Senior Term
Loans”) to the Company on the Additional Closing Date in the principal amount of $4,000,000.
From and after the Additional Closing, the Senior Term Loan C shall be evidenced by one or more
promissory notes made by the Company in favor of Purchasers in the form attached hereto as Exhibit
B-2 (the “Senior Term C Notes”, and together with the Senior Term B Notes, the “Senior
Term Notes”) to be delivered by the Company at the Additional Closing.




     2.4 Senior Subordinated Notes. The Company has duly authorized the issuance and sale
to Purchasers of $8,600,000 in aggregate principal amount of the Company’s Senior Subordinated
Notes Due September 30, 2009 (together with any Notes issued in substitution therefor pursuant to
Sections 6.3 and 6.4, the “Senior Subordinated Notes”), to be substantially in the form of
the Senior Subordinated Notes attached hereto as Exhibit C.



18









 





     2.5 Junior Subordinated Notes. The Company has duly authorized the issuance and sale
to Purchasers of $8,600,000 in aggregate principal amount of the Company’s Junior Subordinated
Notes Due September 30, 2010 (together with any Notes issued in substitution therefor pursuant to
Sections 6.3 and 6.4 and Notes issued in exchange for Put Shares pursuant to Section 10.4 or
Section 10.5, the “Junior Subordinated Notes”) (the Junior Subordinated Notes together with
the Senior Subordinated Notes, the “Subordinated Notes”). The Junior Subordinated Notes
are authorized in two tranches: Tranche A Junior Subordinated Notes in the aggregate principle
amount of $4,300,000 (“Tranche A Notes”) and Tranche B Junior Subordinated Notes in the
aggregate principle amount of $4,300,000 (the “Tranche B Notes”). The Junior Subordinated
Notes will be in substantially the forms attached as Exhibits D-1 and D-2.



     2.6 Authorization and Issuance of the Warrants. The Company has duly authorized the
issuance and sale to Purchasers of stock purchase warrants substantially in the form of the warrant
attached hereto as Exhibit E evidencing Purchasers’ right to acquire an aggregate of 88,560
shares of Common Stock of the Company (the “Warrants”) representing 83.5% of issued and
outstanding Common Stock of the Company at the time of Closing (before giving effect to the
exercise of all Options issued or reserved for issuance as of the Closing Date).



     2.7 Sale and Purchase. Subject to the terms and conditions and in reliance upon the
representations, warranties and agreements set forth herein, (a) the Company shall sell to
Purchasers, and Purchasers shall purchase from the Company, in an amount equal to the pro rata
portion of the Notes as set forth on Annex B, the Notes in the aggregate principal amount
set forth in Section 2.3, Section 2.4 and Section 2.5 hereof for $31,200,000 in the aggregate, (b)
the Company shall sell to Purchasers, and Purchasers shall purchase from the Company, in an amount
equal to the pro rata portion of the Warrants as set forth on Annex B, the Warrants for
$100 in the aggregate and (c) the Company shall sell to Purchasers, and Purchasers shall purchase
from the Company, in an amount equal to the pro rata portion of the Preferred Stock as set forth on
Annex B, 20,000 shares of Preferred Stock for $20,000,000 in the aggregate and 17,500 shares of
Common Stock for $1,750,000 in the aggregate.



     2.8 The Closing.



          (a) The closing of the sale of the Original Securities took place at the offices of Weil,
Gotshal & Manges LLP, 767 Fifth Avenue, New York, NY 10153, on September 30, 2003 (the “Closing
Date”). The Original Securities were issued in such name or names and in such permitted
denomination or denominations as set forth in Annex B or as Purchasers requested in writing not
less than two (2) Business Days before the Closing Date. Delivery of the Original Securities were
made to Purchasers against payment of the purchase price therefor, less the Loan Origination Fee,
the Structuring Fee and any other amounts payable pursuant to Section 4.1(i).




          (b) Delivery of and payment for the Additional Securities (the “Additional Closing”)
shall be made at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, NY 10153,
commencing at 10:00 a.m., local time, on the date hereof or at such place or on such other date as
may be mutually agreeable to the Company and Purchasers. The date and time of the Additional
Closing as finally determined pursuant to this Section 2.8(b) are referred to herein as the
“Additional Closing Date.” Delivery of the Additional Securities shall be made to
Purchasers (or their designees) against payment of the purchase price therefor, less any unpaid
Senior Term C Closing Fee and any other amounts due and payable pursuant to Section 4.1(i) hereof,
by wire transfer of immediately available funds in the manner agreed to by the Company




19









 







and Purchasers. The Senior Term C Notes shall be issued in such name or names and in such
permitted denomination or denominations as set forth in Annex B or as Purchasers may
request in writing not less than two (2) Business Days before the Additional Closing Date.




ARTICLE 3




REPAYMENT OF THE SENIOR TERM LOANS,

THE SENIOR SUBORDINATED NOTES

AND THE JUNIOR SUBORDINATED NOTES




     3.1 Interest Rates and Interest Payments.



          (a) Senior Term Loan B. The Company covenants and agrees to make payments to Agent,
for the ratable benefit of Purchasers, of accrued interest on the Senior Term Loan B on the first
Business Day of each month, commencing November 1, 2003 through the date of repayment in full of
the Senior Term Loan B. The Senior Term Loan B shall bear interest on the outstanding principal
thereof at the Loan B Rate. Interest shall be computed on the basis of a year of three hundred
sixty (360) days, composed of twelve 30-day months, and the actual number of days elapsed.




          (b) Senior Term Loan C. The Company covenants and agrees to make payments to Agent,
for the ratable benefit of Purchasers, of accrued interest on the Senior Term Loan C on the first
Business Day of each month commencing January 1, 2005 through the date of repayment in full of the
Senior Term Loan C. The Senior Term Loan C shall bear interest on the outstanding principal
thereof at the Loan C Rate. Interest shall be computed on the basis of a year of three hundred
sixty (360) days, composed of twelve 30-day months, and the actual number of days elapsed.




          (c) Senior Subordinated Notes. The Company covenants and agrees to make payments to
Agent for the ratable benefit of Purchasers, of accrued interest on the Senior Subordinated Notes
on the first Business Day of each month during the term of the Senior Subordinated Notes commencing
on November 1, 2003. The Senior Subordinated Notes will bear interest in two components: (i)
interest will be payable in cash on the outstanding principal amount thereof (as increased by
Senior PIK Interest that is paid-in-kind as described below), at a rate equal to thirteen percent
(13.0%) per annum (“Senior Cash Interest”) and (ii) interest will be payable in kind on
(and thereby increase) the outstanding principal amount of the Senior Subordinated Notes (as such
principal amount is so increased from time to time), at a rate of two percent (2%) per annum
(“Senior PIK Interest”); provided, further, that a late fee of two hundred and fifty (250)
basis points shall be added on any amounts due hereunder which are not paid when due in accordance
with this Section 3.1(b). Senior PIK Interest shall be payable monthly as provided above. Senior
PIK Interest shall be payable as an increase in the principal amount of the Senior Subordinated
Notes without any further action on the part of Agent or the Company and such increased principal
amount of the Senior Subordinated Notes shall be paid in full in connection with the repayment of
the Senior Subordinated Notes. Both Senior Cash Interest and Senior PIK Interest will be computed
on the basis of a year of 360 days, composed of twelve 30-day months, and the actual number of days
elapsed. The Agent’s determination of the amount of Senior Subordinated Notes outstanding at any
time shall be conclusive and binding, absent manifest error.




20









 








          (d) Junior Subordinated Notes. The Company covenants and agrees to make payments to
Agent for the ratable benefit of Purchasers, of accrued interest on the Junior Subordinated Notes
on the first Business Day of each month during the term of the Junior Subordinated Notes commencing
on November 1, 2003. The Junior Subordinated Notes will bear interest in two components: (i)
interest will be payable in cash on the outstanding principal amount thereof (as increased by
Junior PIK Interest that is paid-in-kind as described below), at a rate equal to fourteen percent
(14.0%) per annum (“Junior Cash Interest”) and (ii) interest will be payable in kind on
(and thereby increase) the outstanding principal amount of the Junior Subordinated Notes (as such
principal amount is so increased from time to time), at a rate of three percent (3%) per annum
(“Junior PIK Interest”); provided, further, that a late fee of two hundred and fifty (250)
basis points shall be added on any amounts due hereunder which are not paid when due in accordance
with this Section 3.1(c). Junior PIK Interest shall be payable as an increase in the principal
amount of the Junior Subordinated Notes without any further action on the part of Agent or the
Company and such increased principal amount of the Junior Subordinated Notes shall be paid in full
in connection with the repayment of the Junior Subordinated Notes. Both Junior Cash Interest and
Junior PIK Interest on the Junior Subordinated Notes will be computed on the basis of a year of 360
days, composed of twelve 30-day months, and the actual number of days elapsed. The Agent’s
determination of the amount of Junior Subordinated Notes outstanding at any time shall be
conclusive and binding, absent manifest error.




          (e) Further PIK Conditions. From and after the date on which the Senior Agent gives
the Agent and the Company notice that either of the Tranche B PIK Conditions exists,
notwithstanding the Junior Cash Interest Payment obligations of the Company pursuant to Section
3.1(d), the entire amount of interest payable on the Tranche B Notes shall be payable in the form
of Junior PIK Interest at a rate of 17.0% per annum, subject to such other terms with respect to
Junior PIK Interest as are provided in Section 3.1(d). From and after the date on which the Senior
Agent gives the Agent and the Company notice that either of the Tranche A PIK Conditions exists,
notwithstanding the Junior Cash Interest Payment obligations of the Company pursuant to Section
3.1(d), the entire amount of interest payable on the Tranche A Notes shall be payable in the form
of Junior PIK Interest at a rate of 17.0% per annum, subject to such other terms with respect to
Junior PIK Interest as are provided in Section 3.1(d). The Tranche A Notes shall resume payment of
Junior Cash Interest prospectively from and after the date (and so long as) both Tranche A PIK
Conditions shall cease to exist and the Tranche B Notes shall resume payment of Junior Cash
Interest prospectively from and after the date (and so long as) both Tranche B PIK Conditions shall
cease to exist.




          (f) Cash Payments in Lieu of PIK Interest. Notwithstanding Sections 3.1(c), (d) and
3.1(e) hereof, commencing with the first “accrual period” (as defined for purposes of the Code)
ending after the fifth anniversary of the Closing Date, the Company shall, in respect to either or
both series of Subordinated Notes (including, for all purposes of this Section 3.1(f), any Tranche
thereof), pay in cash, on or before the end of such accrual period, both the annual Junior or
Senior PIK Interest and the accrued and unpaid PIK Interest with respect to such series of
Subordinated Notes if, but only to the extent that, the aggregate amount of the sum of (i) the PIK
Interest and (ii) the original issue discount (other than PIK Interest), in each case that has
accrued and not been paid in cash from the Closing Date through the end of such accrual period on
such series of Subordinated Notes, exceeds the product of the “issue price” (as defined for
purposes of the Code) for such series of Subordinated Notes and the “yield to maturity” (as defined
for purposes of the Code) on such series of Subordinated Notes.




21









 








     3.2 Repayment of Senior Term B Notes. The Company covenants and agrees to repay to
Agent, for the ratable benefit of Purchasers, the unpaid principal balance of the Senior Term B
Notes in the amount of $25,000 per calendar quarter commencing January 1, 2004. The Company
covenants and agrees to repay to Agent, for the ratable benefit of Purchasers, the then unpaid
principal balance of the Senior Term B Notes in full, together with all accrued and unpaid
interest, fees and other amounts due hereunder on September 30, 2008.



     3.3 Repayment of Senior Term C Notes. The Company covenants and agrees to repay
Agent, for the ratable benefit of Purchasers, the then unpaid principal balance of the Senior Term
C Notes in full, together with all accrued and unpaid interest, fees and other amounts due
hereunder on November 10, 2011.



     3.4 Repayment of Senior Subordinated Notes. The Company covenants and agrees to repay
to Agent, for the ratable benefit of Purchasers, the then unpaid principal balance of the Senior
Subordinated Notes in full, together with all accrued and unpaid interest, fees and other amounts
due hereunder on September 30, 2009.



     3.5 Repayment of Junior Subordinated Notes. The Company covenants and agrees to pay
to Agent, for the ratable benefit of Purchasers, the then unpaid principal balance of the Junior
Subordinated Notes in full, together with all accrued and unpaid interest, fees and other amounts
due hereunder on September 30, 2010.



     3.6 Optional Prepayment of the Notes. Subject to the terms of this Section 3.6, the
Company may prepay to Agent, for the ratable benefit of Purchasers, the outstanding principal
amount of the Senior Term Notes, the Senior Subordinated Notes and the Junior Subordinated Notes in
whole or in part in multiples of $100,000, or such lesser amount as is then outstanding on any of
the Notes, at any time at a price equal to (i) the accrued interest on such Note, if any, to the
date set for prepayment, plus, (ii) a prepayment fee representing the amortization of certain of
Purchasers’ costs incurred in connection with the purchase of the Notes, equal to the principal
amount prepaid on such Note multiplied by the following percentage:



	 	 	 
	If Prepaid During	 	 
	the 12-Month Period	 	 
	Ending on September 30	 	 
	of the Following Years:	 	Percentage
	2004
	 	5%
	2005
	 	4%
	2006
	 	3%
	2007
	 	2%
	2008
	 	1%





provided, however, that (a) the Senior Subordinated Notes may not be prepaid so
long as any Senior Term Notes remain outstanding and (b) the Junior Subordinated Notes may not be
prepaid so long as any Senior Subordinated Notes remain outstanding. All such prepayments (A)
shall be applied by Agent to the outstanding principal of the Notes in order of priority set forth
above and in the inverse order of maturity after application of such prepayment to any accrued
interest and prepayment premium payable in connection therewith, and (B) in connection with the
Senior Term Loans, shall be applied first to the Senior Term Loan B and second, so long as no
Senior Term B Notes remain outstanding, to the Senior Term Loan C.




22









 








     3.7 Notice of Optional Prepayment. If the Company elects to prepay any Notes pursuant
to Section 3.6 hereof, the Company shall give notice of such prepayment to Agent and each holder of
the Notes to be prepaid not less than thirty (30) days or more than ninety (90) days prior to the
date fixed for prepayment, specifying (i) the date on which such prepayment is to be made, (ii) the
principal amount of such Notes to be prepaid on such date, and (iii) the premium, if any, and
accrued interest applicable to the prepayment. Such notice shall be accompanied by a certificate
of the Chairman of the Board of Directors, the President or the Vice President and the Treasurer of
the Company that such prepayment is being made in compliance with Section 3.6. Notice of
prepayment having been so given, the aggregate principal amount of the Notes specified in such
notice, together with accrued interest thereon and the premium, if any, shall become due and
payable on the prepayment date set forth in such notice.



     3.8 Mandatory Prepayment.



          (a) Change of Control. The Notes shall be prepaid in full, together with all
interest, fees and expenses plus a prepayment premium computed in accordance with Section 3.6, as
if such prepayment were an optional prepayment pursuant to Section 3.6, in the event of a Change of
Control or upon such Notes becoming due pursuant to Section 8.2.




          (b) Excess Cash Flow. Subject to the satisfaction of each of the conditions set forth
in the second sentence of Section 7.18 of the Senior Credit Agreement, the Company shall prepay the
outstanding amount of the Senior Term Notes in an amount equal to 75% of Net Cash Flow for each
fiscal year commencing on or after December 31, 2003, payable upon delivery of the financial
statements to the Agent referred to in and required by Section 7.1(e)(i) for such fiscal year but
in any event not later than ninety (90) days after the end of each such subsequent fiscal year,
which amount shall be applied first, to the outstanding principal installments of the Term
Financing in the inverse order of the maturities thereof; provided, however, that
(a) with respect to each fiscal year during which the Senior Leverage Ratio (as defined in the
Senior Credit Agreement) was equal to or less than 1.25 to 1.00, the 75% figure set forth in this
Section 3.8(b) shall be reduced to 50%; and provided, further, that the amount of any prepayment
due pursuant to this Section 3.8(b) shall be reduced by the amount of any prepayment made by the
Company on the Term Financing pursuant to Section 2.14(b) of the Senior Credit Agreement. All such
prepayments shall be applied by Agent to the outstanding principal of Senior Term Loan B, and then
to the outstanding principal of Senior Term Loan C, in each case in the inverse order of maturity
after application of such prepayment to any accrued interest payable in connection therewith.




     3.9 Home Office Payment. The Company will pay all sums becoming due on the Notes for
principal, premium, if any, and interest to Agent by the method and at the address specified for
such purpose in Annex A, or by such other method or at such other address as Purchasers
shall have from time to time specified to the Company in writing for such purpose, without the
presentation or surrender of such Notes or the making of any notation thereon, except that, upon
written request of the Company made concurrently with or reasonably promptly after payment or
prepayment in full of any Note, each holder thereof shall surrender such Notes for cancellation,
reasonably promptly after such request, to the Company at its principal executive office.



     3.10 Taxes. Any and all payments by the Company hereunder or under the Notes or any
other Transaction Documents that are made to or for the benefit of Purchasers shall be made free
and clear of and without deduction for any and all present or future taxes, levies, imposts,



23









 







deductions, charges or withholdings and penalties, interests and all other liabilities with
respect thereto (collectively, “Taxes”), excluding taxes imposed on Agent’s or Purchasers’
net income or capital and franchise taxes imposed on any of them by the jurisdiction under the laws
of which any of them is organized or any political subdivision thereof (all such nonexcluded Taxes
being hereinafter referred to as “Covered Taxes”). If the Company shall be required by law
to deduct any Covered Taxes from or in respect of any sum payable hereunder or under any Note or
other Purchase Document to Agent for the benefit of Purchasers, or to Purchasers, the sum payable
shall be increased as may be necessary so that after making all required deductions of Covered
Taxes (including deductions of Covered Taxes applicable to additional sums payable under this
Section 3.10), each Purchaser receives an amount equal to the sum it would have received had no
such deductions been made. The Company shall make such deductions and the Company shall pay the
full amount so deducted to the relevant taxation authority or other authority in accordance with
applicable law. In addition, the Company agrees to pay any present or future stamp, documentary,
excise, privilege, intangible or similar levies that arise at any time or from time to time from
any payment made under any and all Transaction Documents or from the execution or delivery by the
Company or from the filing or recording or maintenance of, or otherwise with respect to the
exercise by Agent or Purchasers of their respective rights under any and all Transaction Documents
(collectively, “Other Taxes”). The Company will indemnify Agent and Purchasers for the
full amount of Covered Taxes imposed on or with respect to amounts payable hereunder and Other
Taxes, and any liability (including, without limitation, penalties, interest and expenses) arising
therefrom or with respect thereto. Payment of this indemnification shall be made within thirty
(30) days from the date Agent or Purchasers provide the Company with a certificate certifying and
setting forth in reasonable detail the calculation thereof as to the amount and type of such Taxes.
Any such certificates submitted by Agent or Purchasers in good faith to the Company shall, absent
manifest error, be final, conclusive and binding on all parties. The obligation of the Company
under this Section 3.10 shall survive the payment of the Notes and the termination of this
Agreement. Within thirty (30) days after the Company having received a receipt for payment of
Covered Taxes and/or Other Taxes, the Company shall furnish to Agent, the original or certified
copy of a receipt evidencing the full payment thereof.



     3.11 Maximum Lawful Rate. This Agreement, the Notes and the other Transaction
Documents are hereby limited by this Section 3.11. In no event, whether by reason of acceleration
of the maturity of the amounts due hereunder or otherwise, shall interest and fees contracted for,
charged, received, paid or agreed to be paid to Purchasers exceed the maximum amount permissible
under such applicable law. If, from any circumstance whatsoever, interest and fees would otherwise
be payable to Agent or Purchasers in excess of the maximum amount permissible under applicable law,
the interest and fees shall be reduced to the maximum amount permitted under applicable law. If
from any circumstance, Agent or Purchasers shall have received anything of value deemed interest by
applicable law in excess of the maximum lawful amount, an amount equal to any excess of interest
shall be applied to the reduction of the principal amount of the Notes, in such manner as may be
determined by Purchasers, and not to the payment of fees or interest, or if such excessive interest
exceeds the unpaid balance of the principal amount of the Notes, such excess shall be refunded to
the Company.



     3.12 Capital Adequacy. If, after the date hereof, either the introduction of or any
change of the interpretation of any law or the compliance by Purchasers with any guideline or
request from any governmental authority (whether or not having the force of law) has or would have
the effect of reducing the rate of return on the capital or assets of Purchasers as a consequence
of, as determined by Agent or Purchasers in their sole discretion, the existence of



24









 







any Purchaser’s obligations under this Agreement or any other Transaction Documents, then,
upon demand by Purchasers, the Company immediately shall pay to Purchasers, from the time as
specified by Purchasers, additional amounts sufficient to compensate Purchaser in light of such
circumstances.



     3.13 Breakage. In addition to all amounts required to be paid by the Company pursuant
to this Agreement, the Company shall compensate each Purchaser, upon demand, for all losses,
expenses and liabilities that such Purchaser may sustain (i) if for any reason any LIBOR Rate based
loan is prepaid on a date that is not the last day of the applicable interest period or (ii) as a
consequence of any failure by the Company to repay LIBOR Rate based loans when required by the
terms hereof. The Purchaser making demand for such compensation shall deliver to the Company
concurrently with such demand a written statement as to such losses, expenses and liabilities in
reasonable detail, and this statement shall be conclusive as to the amount of compensation due to
such Purchaser, absent manifest error.



     3.14 Certain Waivers. The Company unconditionally waives (i) any rights to
presentment, demand, protest or (except as expressly required hereby) notice of any kind, and (ii)
any rights of rescission, setoff, counterclaim or defense to payment under the Notes or otherwise
that the Company may have or claim against any Purchaser, the Agent or any prior Purchaser or
Agent.



     3.15 Redemption of Preferred Stock. The Company shall redeem the Preferred Stock as
specified in its Charter and shall make all payments required to be made thereunder.



ARTICLE 4




CONDITIONS




     4.1 Conditions to the Senior Term Loans and the Purchase of Securities. The
obligation of Purchasers to advance the Senior Term Loans and to purchase and pay for the
Securities is subject to the satisfaction, prior to or at the Closing, in the case of the issuance
of the Original Securities, and the Additional Closing, in the case of the issuance of the
Additional Securities, as the case maybe, of the following conditions:



          (a) Representations and Warranties True. The representations and warranties contained
in Article 5 hereof shall be true and correct in all material respects at and as of the Closing
Date and the Additional Closing Date, as the case may be, as though then made, except to the extent
of changes caused by the transactions expressly contemplated herein.




          (b) Material Adverse Change. There will have been no material adverse change in the
business or financial condition of the Company since July 30, 2003.




          (c) Security Agreement; Collateral Assignment. The Company and Agent, for the benefit
of Purchasers, shall have entered into (i) a security agreement, in form and substance as set forth
in Exhibit F attached hereto (as the same may be amended, modified or supplemented from
time to time in accordance with the terms thereof, the “Security Agreement”) and (ii) a
collateral patent, trademark, copyright and license assignment or assignments in form and substance
as set forth in Exhibit G attached hereto (as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof, the “Collateral
Assignment”). The Company shall have executed and delivered to Agent, for the benefit of




25









 







Purchasers, such financing statements and other instruments (collectively, “Financing
Statements”) as Agent shall require in order to perfect and maintain the continued perfection
of the security interest created by the Security Agreement and the Collateral Assignment. Agent
shall have received reports of filings with appropriate government agencies showing that there are
no Liens on the assets of the Company other than Permitted Liens.




          (d) Consummation of Acquisitions.





          (i) On the Closing Date, the Acquisition shall have been consummated on the
terms set forth in the Acquisition Agreement and in form and substance satisfactory
to Purchasers, in their sole discretion, and Purchasers shall have been provided
copies of all agreements, instruments and documents delivered in connection
therewith.




          (ii) On the Additional Closing Date, the Proxtronics Acquisition shall have
been consummated on the terms set forth in the Proxtronics Acquisition Agreement in
form and substance satisfactory to Purchasers, in their sole discretion, and
Purchasers shall have been provided copies of all agreements, instruments and
documents delivered in connection therewith.



          (e) Senior Financing. The Senior Financing shall have been consummated in form and
substance satisfactory to Purchasers, in their sole discretion, and Purchasers shall have been
provided copies of all agreements, instruments and documents delivered in connection therewith.




          (f) Environmental Reports. Agent shall have received all requested reports covering
the Company’s properties in form and substance satisfactory to Agent regarding the Company’s
compliance with Environmental Laws.




          (g) Stockholders Agreement. The Company and each of its stockholders shall have
entered into a stockholders agreement in form and substance as set forth in Exhibit H
hereto (as the same may be amended, modified or supplemented and in effect from time to time, the
“Stockholders Agreement”).




          (h) Closing Documents. The Company will have delivered or caused to be delivered to
Agent all of the following documents in form and substance satisfactory to Agent:





          (i) one or more Senior Term B Notes evidencing the Senior Term Loan B (as
designated by Agent and Purchasers pursuant to Section 2.3(a) and Annex B
hereof) in aggregate original principal amounts as set forth herein, duly completed
and executed by the Company;




          (ii) one or more Senior Term C Notes evidencing the Senior Term Loan C (as
designated by Agent and Purchasers pursuant to Section 2.3(b) and Annex B
hereof) in aggregate original principal amount as set forth herein, duly completed
and executed by the Company;




          (iii) one or more Senior Subordinated Notes (as designated by Agent and
Purchasers pursuant to Section 2.4 and Annex B hereof) in



26









 







aggregate original principal amounts as set forth herein, duly completed and
executed by the Company;




          (iv) one or more Junior Subordinated Notes (as designated by Agent and
Purchasers pursuant to Section 2.5 and Annex B hereof) in aggregate
original principal amounts as set forth herein, duly completed and executed by the
Company;




          (v) one or more Warrants (as designated by Agent and Purchasers pursuant to
Section 2.6 and Annex B hereof) evidencing the right to acquire the number
of shares of Common Stock of the Company set forth in Section 2.6 and Annex
B hereof, subject to adjustment from time to time in accordance with the terms
thereof;




          (vi) one or more stock certificates representing the Preferred Stock purchased
pursuant to this Agreement;




          (vii) one or more stock certificates representing the Common Stock purchased
pursuant to this Agreement;




          (viii) certificates of good standing dated not more than 10 days prior to the
Closing Date and the Additional Closing Date, as the case may be, for the Company
issued by its jurisdiction of organization and each jurisdiction where it is
qualified to operate as a foreign corporation, or its equivalent;




          (ix) a copy of the Charter of the Company certified by the appropriate
governmental official of the jurisdiction of its organization as of a date not more
than 10 days prior to the Closing Date and the Additional Closing Date, as the case
may be;




          (x) a copy of the By-laws of the Company, certified as of the Closing Date and
the Additional Closing Date, as the case may be, by the secretary or assistant
secretary of the Company;




          (xi) a certificate of the secretary or assistant secretary of the Company,
certifying as to the names and true signatures of the officers or other authorized
person of the Company authorized to sign this Agreement and the other documents to
be delivered by the Company hereunder;




          (xii) copies of the resolutions duly adopted by the Company’s board of
directors, general partners, board of managers or other governing body, authorizing
the execution, delivery and performance by the Company of this Agreement and each
of the other agreements, instruments and documents contemplated hereby to which the
Company is a party, and the consummation of all of the other Transactions,
certified as of the Closing Date and the Additional Closing Date, as the case may
be, by the secretary or assistant secretary of the Company;



27









 






          (xiii) a certificate dated as of the Closing Date and the Additional Closing
Date, as the case may be, from an officer of the Company stating that the
conditions specified in this Section 4.1 have been fully satisfied or waived by
Agent;




          (xiv) certificates of insurance evidencing the existence of all insurance
required to be maintained by the Company pursuant to Section 7.1(c), and Agent
shall be satisfied with the type and extent of such coverage;




          (xv) copies of all material leases to which the Company is a party; and




          (xvi) such other documents relating to the Transactions contemplated by this
Agreement as Agent or its special counsel reasonably may request.



          (i) Purchaser’s Fees and Expenses.





          (i) Loan Origination Fee. On the Closing Date, the Company shall pay
the Loan Origination Fee to ACFS (and the Company hereby authorizes Agent to deduct
from the aggregate proceeds from the sale of the Original Securities, by the
Company, the unpaid amount of such Loan Origination Fee);




          (ii) Structuring Fee. On the Closing Date, the Company shall pay the
Structuring Fee to ACFS (and the Company hereby authorizes the Agent to deduct from
the sale of the Original Securities, by the Company, the unpaid amount of such
Structuring Fee);




          (iii) Senior Term C Closing Fee. On the Additional Closing Date, the
Company shall pay the Senior Term C Closing Fee to ACFS (and the Company hereby
authorizes the Agent to deduct from the sale of the Additional Securities, by the
Company, the unpaid amount of such Senior Term C Closing Fee); and




          (iv) Other Fees and Expenses. On the Closing Date and the Additional
Closing Date, as the case may be, the Company shall have paid the fees and expenses
of Agent and Purchasers, payable by the Company pursuant to Section 14.4 hereof
(and the Company hereby authorizes Agent to deduct from the aggregate proceeds of
the sale of the Securities, by the Company, all such amounts).



          (j) Legal Investment. On the Closing Date and the Additional Closing Date, as the
case may be, Purchasers’ purchase of the Securities and making of the Senior Term Loans shall not
be prohibited by any applicable law, rule or regulation of any Governmental Authority (including,
without limitation, Regulations T, U or X of the Board of Governors of the Federal Reserve System)
as a result of the promulgation or enactment thereof or any changes therein.




          (k) Proceedings. All proceedings taken or required to be taken in connection with the
transactions contemplated hereby to be consummated at or prior to the Closing and the




28









 







Additional Closing Date, as the case may be, and all documents incident thereto will be
satisfactory in form and substance to Agent and its special counsel and to Purchaser and its
special counsel.




          (l) Consummation of Senior Financing. The Senior Financing shall have been
consummated in form and substance satisfactory to the Purchasers in the Purchasers’ sole discretion
and the Purchasers shall have been provided copies of all agreements, instruments and documents in
connection therewith.




          (m) Investment Banking Services Agreement. The Company and ACFS shall have executed
an Investment Banking Services Agreement in the form attached hereto as Exhibit I.




          (n) Employment Agreement of Sandra Nemecek. The Company shall have entered into an
Employment Agreement with Sandra Nemecek in form and substance satisfactory to the Agent and the
Purchaser in their sole discretion.




          (o) Intercreditor Agreement. The Company and Agent, for the benefit of Purchasers,
and GMAC, as agent for the Senior Lenders, shall have entered into the Intercreditor Agreement.




          4.2 Waiver. Any condition specified in Section 4.1 hereof may be waived by Agent on
behalf of Purchasers; provided that no such waiver will be effective against Agent unless it is set
forth in a writing executed by Agent.




ARTICLE 5




REPRESENTATIONS AND WARRANTIES OF THE COMPANY




     5.1 Representations and Warranties of the Company. As a material inducement to Agent
and Purchasers to enter into this Agreement, advance the Senior Term Loans, and purchase the
Securities, the Company hereby represents and warrants to Agent and Purchasers as follows:



          (a) Organization and Power. The Company is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of incorporation. The Company has
all requisite corporate or other organizational power and authority and all material licenses,
permits, approvals and authorizations necessary to own and operate its properties, to carry on its
businesses as now conducted and presently proposed to be conducted and to carry out the
Transactions, and is qualified to do business in the jurisdictions listed on the “Organization
Schedule” attached hereto as Schedule 5.1(a), which includes every jurisdiction where
the failure to so qualify would reasonably be expected to have a Material Adverse Effect. The
Company has its principal place of business as set forth on the “Organization Schedule”.
The copies of the Charter and By-laws of the Company has been furnished to Agent and reflect all
amendments made thereto at any time prior to the date of this Agreement and are correct and
complete.




          (b) Principal Business. The Company is primarily engaged in the business of supplying
analytical monitoring services to detect personal occupational exposure to radiation (the
“Business”).




          (c) Financial Statements and Financial Projections.




29









 









          (i) Financial Statements; Historical Statements. The Company has
delivered to Agent copies of its unaudited pro forma balance sheet and income
statements of the Business for the year ended December 31, 2002, and unaudited
balance sheet and income statements for the six (6) month period ended June 30,
2003 (together, the “Financial Statements”). The Financial Statements
present fairly the financial position, results of operations and cash flows of the
Business as at the dates and for the periods indicated.




          (ii) Financial Projections. The Company has delivered to Agent
financial projections of the Company and their Subsidiaries for the period the
Closing Date through December 31, 2008 derived from various assumptions of
Company’s management (the “Financial Projections”). The Financial
Projections represent a reasonable range of possible results in light of the
history of the Business and the Company’s present and reasonably foreseeable
conditions and the intentions of the Company’s management. The Financial
Projections accurately reflect the liabilities of the Company upon consummation of
the transactions contemplated hereby as of the Closing Date in all material
respects.




          (iii) Accuracy of Financial Statements. The Company and their
Subsidiaries do not have any liabilities, contingent or otherwise, or forward or
long-term commitments that are not disclosed in the Annual Statements or in the
notes thereto, and except as disclosed therein, there are no unrealized or
anticipated losses from any commitments of the Company and their Subsidiaries in
each case which would be reasonably expected to cause a Material Adverse Effect.



          (d) Capitalization and Related Matters. As of the Additional Closing Date, after
giving effect to the Transactions, the authorized capital stock of the Company will consist of
200,000 shares of Common Stock of which 17,581 shares of Common Stock are issued and outstanding
and of which 88,967 shares of Common Stock of the Company have been reserved for issuance upon
exercise of the Warrants, and 50,000 shares of Preferred Stock, 20,092 of which are issued and
outstanding. As of the Additional Closing Date, after giving effect to the Transactions, the
Company will not have outstanding any stock or securities convertible or exchangeable for any
shares of its capital stock or any rights or options to subscribe for or to purchase its capital
stock or any stock or securities convertible into or exchangeable for its capital stock, other than
the Warrants and Options. As of the Additional Closing Date, after giving effect to the
Transactions, the Company will not be subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of its capital stock, except as set forth
herein, in the Charter and in the Stockholders Agreement. As of the Additional Closing Date, after
giving effect to the Transactions, all of the outstanding shares of the Company’s capital stock
will be validly issued, fully paid and nonassessable. There are no statutory or contractual
stockholders’ preemptive rights with respect to the issuance of the Warrants or Preferred Stock
hereunder. The Company has not violated any applicable federal or state securities laws in
connection with the offer, sale or issuance of any of its capital stock, and the offer, sale and
issuance of the Securities hereunder do not require registration under the Securities Act or any
applicable state securities laws. There are no agreements among the Company’s stockholders with
respect to the voting or transfer of the Company’s capital stock other than as contemplated herein
and in the Stockholders Agreement.




30









 








          (e) Subsidiaries. The Company does not own, or hold any rights to acquire, any shares
of stock or any other security or interest in any other Person. The Company has no Subsidiaries.




          (f) Authorization; No Breach. The execution, delivery and performance of the
Transaction Documents, and the consummation of the Transactions has been duly authorized by the
Company. Except as specifically provided by the Transaction Documents, the execution and delivery
by the Company of the Transaction Documents and the consummation of the Transactions do not and
will not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii)
constitute a default under, (iii) except as created pursuant to the Security Documents, result in
the creation of any Lien upon the Company’s capital stock or assets pursuant to, (iv) give any
third party the right to accelerate any obligation under, (v) result in a violation of, or (vi)
require any authorization, consent, approval, exemption or other action by or notice to any
Governmental Authority pursuant to, the Charter or By-laws of the Company, or any law, statute,
rule or regulation to which the Company is subject, or any agreement, instrument, order, judgment
or decree to which the Company is a party or to which it or its assets are subject.




          (g) Governmental Approvals. Except as specifically provided by the Transaction
Documents, no registration with or consent or approval of, or other action by, any Governmental
Authority is or will be required in connection with the consummation of the Transactions by the
Company.




          (h) Enforceability. This Agreement constitutes, and each of the other Transaction
Documents when duly executed and delivered by the Company will constitute, legal, valid and binding
obligations of the Company enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and
remedies generally, and subject, as to enforceability, to general principles of equity.




          (i) No Material Adverse Change. Since June 30, 2003 there has been no event or
occurrence that is reasonably likely to have a Material Adverse Effect.




          (j) Litigation. Except as described in the “Litigation Schedule” attached
hereto as Schedule 5.1(j) there are no actions, suits or proceedings at law or in equity or
by or before any arbitrator or any Governmental Authority now pending or, to the best knowledge of
the Company’ management after due inquiry, threatened against or filed by or affecting the Company,
its directors or officers or the businesses, assets or rights of the Company. The Company, its
directors or officers shall promptly provide Agent with a copy of all pleadings of all lawsuits
filed against others and, in the case of other actions, a letter stating the nature of such suits
and a copy of all pleadings.




          (k) Compliance with Laws. The Company is not in violation in any respect of any
applicable Law where such violation would reasonably be expected to have a Material Adverse Effect.
The Company is not in default with respect to any Order, rule or regulation of any Governmental
Authority which default would reasonably be expected to have a Material Adverse Effect. The
Company is not in, and the consummation of the Transactions will not cause any, default concerning
any Order, rule or regulation of any Governmental Authority which default would reasonably be
expected to have a Material Adverse Effect, and there is no investigation, enforcement action or
regulatory action pending or to the Company’s knowledge,




31









 







threatened against or affecting the Company by any Governmental Authority, except as set forth
on the Litigation Schedule or would not be reasonably be expected to have a Material Adverse
Effect. Except as set forth in the Litigation Schedule, there is no remedial or other corrective
action that the Company is required to take to remain in compliance with any Order, rule or
regulation of any Governmental Authority or to maintain any material Permits granted by any
Governmental Authority in full force and effect. During the past ten (10) years, none of the
officers, directors or management of the Company has been arrested or convicted of any material
crime nor have any of them been bankrupt or an officer or director of a bankrupt company.




          (l) Environmental Protection. Except as specified in the “Environmental
Schedule” attached hereto as Schedule 5.1(l) and after giving effect to the
Transactions: (i) the business of the Company, the methods and means employed by it in its
operation (including all operations and conditions at or in its properties), and the assets owned,
leased, managed, used, controlled, held or operated by it, comply in all respects with all
applicable Environmental Laws, except where such non-compliance would not reasonably be expected to
have a Material Adverse Effect; (ii) with respect to the Properties and Facilities, the Company has
obtained, possesses and is in compliance with all Environmental Permits, except where such
non-compliance would not reasonably be expected to have a Material Adverse Effect; (iii) the
Company has not received (x) any claim or notice of violation, lien, complaint, suit, Order or
other claim or notice to the effect they are or may be liable to any Person as a result of (A) the
environmental condition of any of their Properties or any other property, or (B) the Release or
threatened Release of any Pollutant, or (y) any letter or request for information under Section 104
of the CERCLA, or comparable state laws, and to the best of the Company’s knowledge, none of the
operations of the Company is the subject of any investigation by a Governmental Authority
evaluating whether any remedial action is needed to respond to a Release or threatened Release of
any Pollutant at the Properties and Facilities or at any other location, including any location to
which the Company has transported, or arranged for the transportation of, any Pollutants with
respect to the Properties and Facilities; (iv) neither the Company, nor any prior owner or operator
has incurred in the past, or is now subject to, any material Environmental Liabilities; (v) there
are no Liens, covenants, deed restrictions, notice or registration requirements, or other
limitations applicable to the Properties and Facilities, based upon any Environmental Laws; (vi)
there are no USTs located in, at, on, or under the Properties and Facilities other than the USTs
identified in the Environmental Schedule as USTs; and each of those USTs is in full compliance with
all Environmental Laws; and (vii) except as disclosed in the Environmental Schedule, there are no
PCBs, lead paint, asbestos (of any type or form), or materials, articles or products containing
PCBs, lead paint or asbestos, located in, at, on, under, a part of, or otherwise related to the
Properties and Facilities (including, without limitation, any building, structure, or other
improvement that is a part of the Properties and Facilities), and all of the PCBs, lead paint,
asbestos, and materials, articles and products containing PCBs, lead paint or asbestos identified
in the Environmental Schedule are in full compliance with all Environmental Laws.




          (m) Legal Investments; Use of Proceeds. The Company will use the proceeds from the
sale of the Original Securities and the making of the Senior Term Loan B to pay a portion of the
purchase consideration under the Acquisition Agreement. The Company will use the proceeds from the
making of the Senior Term Loan C to pay a portion of the purchase consideration under the
Proxtronics Acquisition Agreement. The Company is not engaged in the business of extending credit
for the purpose of purchasing or carrying any “margin stock” or “margin security” (within the
meaning of Regulations T, U or X issued by the Board of Governors of the Federal Reserve System),
and no proceeds of the sale of the Securities and the





32









 







making of the Senior Term Loans will be used to purchase or carry any margin stock or margin
security or to extend credit to others for the purpose of purchasing or carrying any margin stock
or margin security.




          (n) Taxes. The Company has filed or caused to be filed all Federal, state and local
tax returns that are required to be filed by them, and has paid or caused to be paid all taxes
shown to be due and payable on such returns or on any assessments received by it, including payroll
taxes, except where such taxes are being contested in good faith by appropriate proceedings and the
Company has set aside on its books adequate reserves with respect thereto.




          (o) Labor and Employment. The Company and its Plans are in compliance in all respects
with those provisions of ERISA, the Code, the Age Discrimination in Employment Act, and the
regulations and published interpretations thereunder which are applicable to the Company or any
such Plan except where such non-compliance would not reasonably be expected to have a Material
Adverse Effect. No Reportable Event has occurred with respect to any Plan as to which the Company
is or was required to file a report with the PBGC. No Plan has any material amount of unfunded
benefit liabilities (within the meaning of Section 4001(a)(18) of ERISA) or any accumulated funding
deficiency (within the meaning of Section 302(a)(2) of ERISA), whether or not waived, and neither
the Company nor any member of the Controlled Group has incurred or expects to incur any material
withdrawal liability under Subtitle E of Title IV of ERISA to a Multiemployer Plan. The Company is
in compliance in all respects with all labor and employment laws, rules, regulations and
requirements of all applicable domestic and foreign jurisdictions except where such non-compliance
would not reasonably be expected to have a Material Adverse Effect. There are no pending or to the
Company’s knowledge, threatened labor disputes, work stoppages or strikes.




          (p) Investment Company Act; Public Utility Holding Company Act. The Company is not
(i) an “investment company” or “controlled” by an investment company within the meaning of the
Investment Company Act of 1940, as amended, or (ii) a “holding company” or a “subsidiary company”
of a “holding company” or an “affiliate” of a “holding company” or of a “subsidiary company” of a
“holding company,” within the meaning of the Public Utility Holding Company Act of 1935, as
amended.




          (q) Properties; Security Interests. The Company has good and marketable title to, or
valid leasehold interests in, all of the material assets and properties used or useful by the
Company in the Business (collectively, the “Properties and Facilities”), subject to no
Liens except for Permitted Liens. All of the Properties and Facilities are in good repair, working
order and condition (ordinary wear and tear excepted) and all such assets and properties are owned
by the Company free and clear of all Liens except for Permitted Liens. The Properties and
Facilities constitute all of the material assets, properties and rights of any type used in or
necessary for the conduct of the Business. The Security Agreement creates and grants to Agent a
valid and perfected security interest in all the collateral thereunder, subject only to Permitted
Liens. All real estate owned or leased by the Company is listed on the “Properties
Schedule,” attached hereto as Schedule 5.1(q).




          (r) Intellectual Property; Licenses. The Company possesses all Proprietary Rights
necessary to conduct the Business as heretofore conducted or as proposed to be conducted by it.
All material Proprietary Rights (other than for commercial off-the-shelf software) registered in
the name of the Company and applications therefor filed by the Company are listed on the
“Intellectual Property Schedule,” attached hereto as Schedule 5.1(r). No event has




33









 







occurred that permits, or after notice or lapse of time or both would permit, the revocation
or termination of any of the foregoing, which taken in isolation or when considered with all other
such revocations or terminations would reasonably be expected to have a Material Adverse Effect.
The Company has no notice or knowledge of any facts or any past, present or threatened occurrence
that could preclude or impair the Company’s ability to retain or obtain any authorization necessary
for the operation of the Business.




          (s) Solvency. After giving effect to the Transactions, (i) the fair value of the
assets of the Company, at a fair valuation, will exceed its debts and liabilities, subordinated,
contingent or otherwise, (ii) the present fair saleable value of the property of the Company will
be greater than the amount that will be required to pay the probable liability of its debts and
other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities
become absolute and matured, (iii) the Company will be able to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured,
and (iv) the Company will not have unreasonably small capital with which to conduct the business in
which it is engaged as such business is now conducted and is proposed to be conducted following the
Closing Date and the Additional Closing Date.




          (t) Complete Disclosure. All factual information furnished by or on behalf of the
Company to Agent for purposes of or in connection with this Agreement or the Transactions is, and
all other such factual information hereafter furnished by or on behalf of the Company will be, true
and accurate in all material respects on the date as of which such information is furnished and not
incomplete by omitting to state any material fact necessary to make such information not misleading
at such time in light of the circumstances under which such information was provided.




          (u) Side Agreements. Neither the Company nor any director, officer or employee of the
Company or any of its Affiliates has entered into any material side agreement, either oral or
written, with any individual or business, pursuant to which the director, officer, employee, the
Company or Affiliate agreed to do anything beyond the requirements of the formal, written contracts
executed by the Company and disclosed to Purchasers and Agent herein.




          (v) Broker’s or Finder’s Commissions. Other than broker’s fees payable to Natexis
Bleichroeder, David C. Watt and Taylor A. Gibson in connection with the Acquisition Agreement, no
broker’s or finder’s or placement fee or commission will be payable to any broker or agent engaged
by the Company or any of its officers, directors or agents with respect to the issuance and sale of
the Securities or the making of the Senior Term Loans or the transactions contemplated by this
Agreement, including without limitation the Transactions, except for fees payable to ACFS,
Purchasers and Agent. The Company agrees to indemnify Agent and Purchasers and hold them harmless
from against any claim, demand or liability for broker’s or finder’s or placement fees or similar
commissions, whether or not payable by the Company, alleged to have been incurred in connection
with such transactions, other than any broker’s or finder’s fees payable to Persons engaged by
Agent or Purchasers without the knowledge of the Company.




          (w) Absence of Undisclosed Liabilities. Except as set forth on Schedule
5.1(w), the Company has no material liabilities or obligations, either accrued, absolute,
contingent or otherwise, except:




34









 









          (i) those liabilities or obligations set forth on the Financial Statements and
not heretofore paid or discharged;




          (ii) liabilities arising in the ordinary course of business under any
agreement, contract, commitment, lease or plan specifically disclosed on the
schedules or not required to be disclosed because of the term or amount involved or
otherwise; and




          (iii) those liabilities or obligations incurred, consistently with past
business practice, in or as a result of the normal and ordinary course of business.



     5.2 Absolute Reliance on the Representations and Warranties. All representations and
warranties contained in this Agreement and any financial statements, instruments, certificates,
schedules or other documents delivered in connection herewith, shall survive the execution and
delivery of this Agreement, regardless of any investigation made by Agent or Purchasers or on
Agent’s or Purchasers’ behalf.



ARTICLE 6




TRANSFER OF NOTES




     6.1 Restricted Securities. Purchasers acknowledge that the Securities have not been
registered under the Securities Act and may be resold only if registered pursuant to the provisions
of the Securities Act or if an exemption from registration is available, and that the Company is
not required to register any of the Securities, as the case may be.



     6.2 Legends; Purchaser’s Representations. Each Purchaser hereby represents and
warrants to the Company that it is an “accredited investor” within the meaning of Rule 501(a) under
the Securities Act and is acquiring the Securities for investment for its own account, with no
present intention of dividing its participation with others (except for a potential transfer or
transfers of the Securities to an affiliate or affiliates of Purchasers) or reselling or otherwise
distributing the same in violation of the Securities Act or any applicable state securities laws.
The Company may place an appropriate legend on the Securities owned by Purchasers concerning the
restrictions set forth in this Article 6. Upon the assignment or transfer by Purchasers or any of
its successors or assignees of all or any part of the Securities permitted under this Agreement,
the term “Purchaser” as used herein shall thereafter mean, to the extent thereof, the then holder
or holders of such Securities, or portion thereof.



     6.3 Transfer of Notes. Subject to Section 6.2 hereof, a holder of a Note may transfer
such Note to a new holder, or may exchange such Note for Notes of different denominations (but in
no event of denominations of less than $100,000 in original principal amount), by surrendering such
Note to the Company duly endorsed for transfer or accompanied by a duly executed instrument of
transfer naming the new holder (or the current holder if submitted for exchange only), together
with written instructions for the issuance of one or more new Notes specifying the respective
principal amounts of each new Note and the name of each new holder and each address therefor. The
Company shall simultaneously deliver to such holder or its designee such new Notes, shall mark the
surrendered Notes as canceled and shall provide notice of such transfer to Agent. In lieu of the
foregoing procedures, a holder may assign a Note (in whole but not in part) to a new holder by
sending written notice to the Company and Agent of such assignment



35









 







specifying the new holder’s name and address; in such case, the Company shall promptly
acknowledge such assignment in writing to both the old and new holder. The Company shall not be
required to recognize any subsequent holder of a Note unless and until the Company has received
reasonable assurance that all applicable transfer taxes have been paid.



     6.4 Replacement of Lost Securities. Upon receipt of evidence reasonably satisfactory
to the Company of the mutilation, destruction, loss or theft of any Securities or Notes and the
ownership thereof, the Company shall, upon the written request of the holder of such Securities or
Notes, execute and deliver in replacement thereof new Securities or Notes in the same form, in the
same original principal amount and dated the same date as the Securities or Notes so mutilated,
destroyed, lost or stolen; and such Securities or Notes so mutilated, destroyed, lost or stolen
shall then be deemed no longer outstanding hereunder. If the Securities or Notes being replaced
have been mutilated, they shall be surrendered to the Company; and if such replaced Securities or
Notes have been destroyed, lost or stolen, such holder thereof shall furnish the Company with an
indemnity in writing to save it harmless in respect of such replaced Security.



     6.5 No Other Representations Affected. Nothing contained in this Article 6 shall
limit the full force or effect of any representation, agreement or warranty made herein or in
connection herewith to Purchaser.



ARTICLE 7




COVENANTS




     7.1 Affirmative Covenants. The Company covenants that, so long as all or any of the
principal amount of the Notes or any interest thereon shall remain outstanding, and, thereafter, so
long as any Purchaser owns any Warrants, Preferred Stock, Common Stock or Underlying Common Stock,
the Company shall:



          (a) Existence. Do or cause to be done all things necessary to preserve, renew and
keep in full force and effect its legal existence.




          (b) Businesses and Properties; Compliance with Laws. At all times (i) do or cause to
be done all things reasonably necessary to preserve, renew and keep in full force and effect the
rights, Permits, franchises, patents, copyrights, trademarks and trade names, which may be material
to the conduct of its businesses; (ii) comply in all respects with all Laws applicable to the
operation of such business, including but not limited to, all Environmental Laws, whether now in
effect or hereafter enacted, and with all other applicable Laws except where such non-compliance
would not reasonably be expected to have a Material Adverse Effect, (iii) take all action which may
be reasonably required to obtain, preserve, renew and extend all rights, patents, copyrights,
trademarks, tradenames, franchises, Permits and any other authorizations which may be material to
the operation of such business, (iv) maintain, preserve and protect all property material to the
conduct of such business, and (v) except for obsolete or worn out equipment and ordinary wear and
tear, keep their property in good repair, working order and condition and from time to time make,
or cause to be made, all needful and proper repairs, renewals, additions, improvements and
replacements thereto reasonably necessary in order that the business carried on in connection
therewith may be properly conducted at all times.




36









 








          (c) Insurance. Maintain insurance required by the Transaction Documents and any and
all contracts entered into by the Company, including but not limited to: (i) coverage on its
insurable properties (including all inventory, equipment and real property) against the perils of
fire, theft and burglary; (ii) public liability; (iii) workers’ compensation; (iv) business
interruption; (v) product liability; (vi) such other risks as are customary with companies
similarly situated and in the same or similar businesses as that of the Company under policies
issued by financially sound and reputable insurers in such amounts as are customary with companies
similarly situated and in the same or similar business. The Company shall pay all insurance
premiums payable by it and shall deliver the policy or policies of such insurance (or certificates
of insurance with copies of such policies) to Purchasers. All insurance policies of the Company
shall contain endorsements, in form and substance reasonably satisfactory to Agent, providing that
the insurance shall not be cancelable except upon thirty (30) days’ prior written notice to Agent.
Agent, on behalf of Purchasers, shall be shown as a loss payee and an additional named insured
party under all such insurance policies.




          (d) Obligations and Taxes. Pay and discharge promptly when due all taxes, assessments
and governmental charges or levies imposed upon it or upon its income or profits or in respect of
their properties before the same shall become delinquent or in default, as well as all lawful
claims for labor, materials and supplies or otherwise, which, if unpaid, might give rise to Liens
or charges upon such properties or any part thereof; provided, however, that the Company shall not
be required to pay and discharge or to cause to be paid and discharged any such tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be contested in good faith by
appropriate proceedings and the Company shall have set aside on its books adequate reserves with
respect thereto.




          (e) Financial Statements; Reports. Furnish to Agent:





          (i) Annual Statements. Within one hundred twenty (120) days after the
end of each fiscal year, a balance sheet and statements of operations,
stockholders’ equity and cash flows of the Company showing the financial condition
of the Company on a Consolidated Basis as of the close of such year and the results
of operations during such year, all the foregoing financial statements to be
audited by a firm of independent certified public accountants of recognized
national standing acceptable to Agent and accompanied by an opinion of such
accountants without material exceptions or qualifications. Additionally, such
financial statements shall be accompanied by a certificate of such accountants
(which shall not contain any qualification exception or score limitation not
acceptable to Agent) stating that in the course of its regular audit of the
Business of the Company, which audit was conducted in accordance with GAAP, no
Default or Event of Default relating to financial and accounting matters has come
to their attention, or if any Default or Event of Default exists, a statement as to
the nature thereof.




          (ii) Monthly Statements. Within forty-five (45) days after the end of
each month ending prior to January 1, 2004, and within thirty (30) days after the
end of each subsequent calendar month, unaudited financial statements (including a
balance sheet and cash flow and income statements) showing the financial condition
and results of operations of the Company on a Consolidated Basis as of the end of
each such month and for the then elapsed portion of the current fiscal year,
together with comparisons to the corresponding



37









 







periods in the preceding year and the budget for such periods, accompanied by
a certificate of an officer that such financial statements have been prepared in
accordance with GAAP (except with respect to up to the first six (6) months ending
after the Closing Date) subject to the absence of footnote disclosures and year-end
adjustments, on a basis consistent with practices commenced after the Closing Date,
and setting forth in comparative form the respective financial statements for the
corresponding date and period in the previous fiscal year.




          (iii) Format; Management Report; Certificate of Compliance: Each
balance sheet, operations statement and cash flow statement furnished to Agent or
Purchasers pursuant to subsections (i) and (ii) of this 7.1(e) will be furnished by
an electronic means in Excel spreadsheet format containing such line items and
other formatting requirements as maybe specified by Agent. Each financial
statement furnished to Agent pursuant to subsections (i) and (ii) of this Section
7.1(e) shall be accompanied by (A) a written narrative report by the management of
the Company explaining material developments and trends in the Business and such
financial statements and (B) a written certificate signed by the Company’s chief
financial officer to the effect that no Default or Event of Default has occurred
during the period covered by such statements or, if any such Default or Event of
Default has occurred during such period, setting forth a description of such
Default or Event of Default and specifying the action, if any, taken by the Company
to remedy the same, and a compliance certificate in the form of Exhibit J
showing the Company’s compliance with the covenants set forth in Section 7.3.




          (iv) Accountant Reports. Promptly upon the receipt thereof, copies of
all reports, if any, submitted to the Company by independent certified public
accountants in connection with each annual, interim or special audit or review of
the financial statements of the Company made by such accountants, including but not
limited to, any comment letter submitted by such accountants to management in
connection with any annual review.




          (v) Projections. As soon as available, but in no event later than
thirty (30) days after the end of each fiscal year, a projection of the Company’s
balance sheet, and income, retained earnings and cash flow statements,
respectively, for the following five (5) fiscal years and comparable actual and
budgeted figures for the current year; provided that for each five (5) year period
for which any projections relate, the first two (2) years included in such
projections will be prepared on a monthly basis and the last three years will be
prepared on an annual basis, and within ten (10) days after any material update or
amendment of any such plan or forecast, a copy of such update or amendment,
including a description of and reasons for such update or amendment. Each such
projection, update or amendment shall be accompanied by a written certificate
signed by the Company’s chief financial officer to the effect that it has been
prepared on the basis of the Company’s historical financial statements and records,
together with the assumptions set forth in such projection and that it reflects
expectations, after reasonable analysis, of the Company’s management as to the
matters set forth therein.



38









 






          (vi) Additional Information. Promptly, from time to time, such other
information regarding the compliance by the Company with the terms of this
Agreement and the other Transaction Documents or the affairs, operations or
condition (financial or otherwise) of the Company as Agent or Required Purchasers
may reasonably request and that is capable of being obtained, produced or generated
by the Company or of which the Company has knowledge.



          (f) Litigation and Other Notices. Give Agent prompt written notice of the following:





          (i) Orders; Injunctions. The issuance by any court or Governmental
Authority of any injunction, order, decision or other restraint prohibiting, or
having the effect of prohibiting, the making of any loan or the initiation of any
litigation or similar proceeding seeking any or any of injunction, order or other
restraint.




          (ii) Litigation. The notice, filing or commencement of any action,
suit or proceeding against the Company whether at law or in equity or by or before
any court or any Federal, state, municipal or other Governmental Authority that, if
adversely determined against the Company, could reasonably result in uninsured
liability in excess of $100,000 in the aggregate.




          (iii) Environmental Matters. (A) Any Release or threatened Release of
any Pollutant required to be reported to any Federal, state or local Governmental
Authority under any applicable Environmental Laws in the ordinary course of
business, (B) any Removal, Remedial or Response action taken by the Company or any
other person in response to any Pollutant in, at, on or under, a part of or about
the Company’s properties or any other property, (C) any violation by the Company of
any Environmental Law, in each case, that could result in a Material Adverse
Effect, or (D) any notice, claim or other information that the Company would
reasonably be subject to a Environmental Liability.




          (iv) Default. Any Default or Event of Default, specifying the nature
and extent thereof and the action (if any) that is proposed to be taken with
respect thereto.




          (v) Material Adverse Effect. Any development in the business or
affairs of the Company that could reasonably be anticipated to have a Material
Adverse Effect.




          (vi) Board Meetings. Written notice of each regular meeting of the
Company’s Board of Directors at least thirty (30) days in advance of such meeting
and prior written notice of each special meeting of the Company’s Board of
Directors at least seven (7) days in advance of such meeting; provided, however,
(1) if longer advance notice is given to the members of the board of directors, the
same notice shall be given to the Purchasers and (2) if exceptional circumstances
arise which make it prudent for a special meeting of the board of directors to be
called on less then seven (7) days advance notice, then such



39









 







meeting may be called with such notice as may be reasonable at the time and
the same advance notice given to any of the members of the board of directors will
be given to the Purchasers. In addition, the Company will send Agent copies of all
reports and materials provided to members of the Board of Directors at meetings or
otherwise.



          (g) ERISA. Comply in all respects with the applicable provisions of ERISA and the
provisions of the Code relating thereto, except where such non-compliance would not reasonably be
expected to have a Material Adverse Effect, and furnish to Agent and if so requested by them in
writing, Purchasers (i) as soon as possible, and in any event within thirty (30) days after the
Company knows or has reason to know thereof, notice of (A) the establishment by the Company of any
Plan, (B) the commencement by the Company of contributions to a Multiemployer Plan, (C) any failure
by the Company or any of its ERISA Affiliates to make contributions required by Section 302 of
ERISA (whether or not such requirement is waived pursuant to Section 303 of ERISA), or (D) the
occurrence of any Reportable Event with respect to any Plan or Multiemployer Plan for which the
reporting requirement is not waived, together with a statement of an officer setting forth details
as to such Reportable Event and the action which the Company proposes to take with respect thereto,
together with a copy of the notice of such Reportable Event given to the PBGC if any such notice
was provided by the Company, and (ii) promptly after receipt thereof, a copy of any notice the
Company may receive from the PBGC relating to the intention of the PBGC to terminate any Plan or
Multiemployer Plan, or to appoint a trustee to administer any Plan or Multiemployer Plan, and (iii)
promptly after receipt thereof, a copy of any notice of withdrawal liability from any Multiemployer
Plan.




          (h) Maintaining Records; Access to Premises and Inspections. Maintain financial
records in accordance with generally accepted practices and, upon reasonable notice, at all
reasonable times and as often as Agent or any Purchaser may reasonably request (and at any time
after the occurrence and during the continuation of a Default or Event of Default), permit any
authorized representative designated by Agent to visit and inspect the properties and financial
records of the Company and to make extracts from such financial records, all at the Company’s
reasonable expense, and permit any authorized representative designated by Agent or any Purchasers
to discuss the affairs, finances and conditions of the Company with the Company’s chief financial
officer and such other officers as the Company shall deem appropriate, and the Company’s
independent public accountants.




          (i) Board of Directors.





          (i) The Company’s Board of Directors shall meet at least once per calendar
quarter.



          (j) Future Financings. The Company hereby gives to Purchasers a right of first refusal
to provide all or any portion of the principal amount of any future financings of the Company.




          (k) Management Fee. The Company shall pay ACFS, a management fee equal to the amount
set forth in the Investment Banking Agreement on the terms and conditions set forth therein (the
“Management Fee”).




40









 








     7.2 Negative Covenants. The Company, covenants that, so long as all or any part of
the principal amount of the Notes or any interest thereon shall remain outstanding, the Company
will not take any of the following actions:



          (a) Indebtedness. The Company shall not create, incur, assume guarantee or be or
remain liable for, contingently or otherwise, or suffer to exist any Indebtedness, except:





          (i) Indebtedness under this Agreement;




          (ii) the Senior Financing;




          (iii) Indebtedness incurred in the ordinary course of business with respect to
customer deposits, trade payables and other unsecured current liabilities not the
result of borrowing and not evidenced by any note or other evidence of
indebtedness;




          (iv) Indebtedness incurred for Capital Expenditures which, when combined with
Capital Expenditures made in cash, does not in the aggregate exceed the amounts in
Section 7.3 hereof; and




          (v) the existing Indebtedness set forth on Schedule 7.2(a) hereof.



          (b) Negative Pledge; Liens. The Company shall not create, incur, assume or suffer to
exist any Lien of any kind on any of its properties or assets of any kind, except the following
(collectively, “Permitted Liens”):





          (i) Liens for or priority claims imposed by law that are incidental to the
conduct of business or the ownership of properties and assets (including
mechanic’s, warehousemen’s, attorneys’ and statutory landlords’ liens) and
deposits, pledges or liens to secure statutory obligations, surety or appeal bonds
or other liens of like general nature incurred in the ordinary course of business
and not in connection with the borrowing of money; provided, however, that in each
case, the obligation secured thereby shall not be overdue, or, if overdue, is being
contested in good faith and adequate reserves have been set up by the Company; and
provided, further, that the lien and security interest provided in the Security
Documents or any portion thereof created or intended to be created thereby is not,
in the opinion of Purchaser, unreasonably jeopardized thereby;




          (ii) Liens securing the payments of taxes, assessments and governmental
charges or levies incurred in the ordinary course of business that either (a) are
not delinquent, or (b) are being contested in good faith by appropriate legal or
administrative proceedings and as to which adequate reserves have been set aside on
their books, and so long as during the period of any such contest, the Company
shall suffer no loss of any privilege of doing business or any other right, power
or privilege necessary or material to the operation of the Business;



41









 






          (iii) Liens listed on the Permitted Encumbrances Schedule attached hereto as
Schedule 7.2(b);




          (iv) extensions, renewals and replacements of Liens referred to in clauses (i)
through (iii) of this Section 7.2(b); provided, however, that any such extension,
renewal or replacement Lien shall be limited to the property or assets covered by
the Lien extended, renewed or replaced and that the obligations secured by any such
extension, renewal or replacement Lien shall be in an amount not greater than the
amount of the obligations secured by the Lien extended, renewed or replaced;




          (v) Liens granted in connection with and securing the Senior Financing; and




          (vi) Liens granted in connection with Capital Leases permitted hereunder.



          (c) Contingent Liabilities. The Company shall not become liable for any Guaranties,
except for the endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business.




          (d) Mergers, etc. The Company shall not merge into or consolidate or combine with any
other Person, or purchase, lease or otherwise acquire (in one transaction or a series of related
transactions) all or any part of the property or assets of any Person other than purchases or other
acquisitions of inventory, materials, leases, property and equipment in the ordinary course of
business. Except as expressly permitted by the Security Documents, the Company shall not sell,
transfer or otherwise dispose of any of its assets, including the collateral under the respective
Security Documents.




          (e) Affiliate Transactions. The Company shall not make any loan or advance to any
director, officer or employee of the Company or any Affiliate, or enter into or be a party to any
transaction or arrangement with any Affiliate of the Company, including, without limitation, the
purchase from, sale to or exchange of property with, any merger or consolidation with or into, or
the rendering of any service by or for, any Affiliate, except (i) pursuant to the reasonable
requirements of the Company’s or its Affiliates Business and upon fair and reasonable terms no less
favorable to the Company or its Affiliates than would be obtained in a comparable arm’s-length
transaction with a Person other than an Affiliate and (ii) payment of the Management Fee; and (iii)
reimbursement of customary out-of-pocket expenses including ACAS, as controlling stockholders of
the Company, in connection with its ownership and management of its equity investment in the
Company.




          (f) Dividends and Stock Purchases. The Company shall not directly or indirectly:
declare or pay any dividends or make any distribution of any kind on its outstanding capital stock
or any other payment of any kind to any of its stockholders or its Affiliates (including any
redemption, purchase or acquisition of, whether in cash or in property, securities or a combination
thereof, any partnership interests or capital accounts or warrants, options or any of its other
securities), or set aside any sum for any such purpose;
provided, however, that this Section 7.2(f)
shall not apply to (i) stock purchases pursuant to Article 10 hereof, (ii) stock purchases pursuant
to the Stockholders Agreement, or the Option Plan, (iii) payment of the




42









 







Management Fee, and (iv) payments made to the holders of the Preferred Stock as contemplated
in the Charter.




          (g) Advances, Investments and Loans. The Company shall not purchase, or hold
beneficially, any stock, other securities or evidences of Indebtedness of, or make or permit to
exist any loan, Guaranty or advance to, or make any investment or acquire any interest whatsoever
in, any other Person (including, but not limited to, the formation or acquisition of any
Subsidiaries), except:





          (i) securities issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof having maturities
of not more than six (6) months from the date of acquisition;




          (ii) United States dollar-denominated time deposits, certificates of deposit
and bankers acceptances of any bank or any bank whose short-term debt rating from
Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc.
(“S&P”), is at least A-1 or the equivalent or from Moody’s Investors
Service, Inc. (“Moody’s”) is at least P-1 or the equivalent with maturities
of not more than six (6) months from the date of acquisition;




          (iii) commercial paper with a rating of at least A-1 or the equivalent by S&P
or at least P-1 or the equivalent by Moody’s maturing within six (6) months after
the date of acquisition;




          (iv) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within six (6) months from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either S&P or Moody’s;




          (v) Investments in money market funds substantially all the assets of which
are comprised of securities of the types described in clauses (i) through (iv)
above;




          (vi) Investments (including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and suppliers arising
in the ordinary course of business;




          (vii) receivables owing to the Company created or acquired in the ordinary
course of business and payable on customary trade terms of the Company;




          (viii) deposits made in the ordinary course of business consistent with past
practices to secure the performance of leases or in connection with bidding on
government contracts; and




          (ix) advances to employees in the ordinary course of business for business
expenses; provided, however, that the aggregate amount of such advances at any time
outstanding shall not exceed $10,000.



43









 





          (h) Use of Proceeds. The Company shall not use any proceeds from the sale of the
Notes hereunder, directly or indirectly, for the purposes of purchasing or carrying any “margin
securities” within the meaning of Regulations T, U or X promulgated by the Board of Governors of
the Federal Reserve Board or for the purpose of arranging for the extension of credit secured,
directly or indirectly, in whole or in part by collateral that includes any “margin securities.”




          (i) Stock Issuances. Except as provided in this Agreement, upon the exercise of the
Warrants, or pursuant to the Option Plan as in effect on the Closing Date, the Company shall not
issue any capital stock or other equity interests or any options or warrants to purchase, or
securities convertible into capital or equity interests or establish any stock appreciation rights
or similar programs based on the value of their equity interests.




          (j) Amendment of Charter. The Company shall not amend, terminate, modify or waive or
agree to the amendment, modification or waiver of any material term or provision of its Charter or
By-laws.




          (k) Subsidiaries. The Company shall not establish or acquire any Subsidiary, unless
such Subsidiaries become a co-borrower under this Agreement.




          (l) Business. The Company shall not engage, directly or indirectly, in any business
other than the Business.




          (m) Fiscal Year; Accounting. The Company shall not change its Fiscal Year from ending
on December 31 or method of accounting (other than immaterial changes in methods), except as
required by GAAP.




          (n) Establishment of New or Changed Business Locations. The Company shall not
relocate its principal executive offices or other facilities or establish new business locations or
store any inventory or other assets at a location not identified to Agent on or before the date
hereof, without providing not less than thirty (30) days advance written notice to Agent.




          (o) Changed or Additional Business Names. The Company shall not change its corporate
names or establish new or additional trade names without providing not less than thirty (30) days
advance written notice to Agent.




     7.3 Financial Covenants. The Company covenants that, so long as all or any part of
the principal amount of the Notes or any interest thereon shall remain outstanding, the Company
shall:



          (a) EBITDA. Maintain EBITDA for the Company on a Consolidated Basis as of the end of
each fiscal quarter set forth below for the respective fiscal periods set forth below ending on the
last day of such fiscal quarter in an amount not less than the amount set forth below:




	 	 	 	 	 
	Fiscal Period	 	Minimum EBITDA
	Closing Date through December 31, 2003
	 	$	1,660,000	 
	Closing Date through March 31, 2004
	 	$	3,080,000	 
	Closing Date through June 30, 2004
	 	$	4,540,000	 
	Closing Date through September 30, 2004
	 	$	5,980,000	 






44









 






	 	 	 	 	 
	Four Fiscal Quarters	 	 	 	 
	Ending in Fiscal Quarter Ending	 	 	 	 
	December 31, 2004
	 	$	5,880,000	 
	March 30, 2005
	 	$	6,353,750	 
	June 30, 2005
	 	$	6,481,250	 
	September 30, 2005
	 	$	6,630,000	 
	December 31, 2005
	 	$	6,757,500	 
	March 30, 2006
	 	$	6,842,500	 
	June 30, 2006
	 	$	6,927,500	 
	September 30, 2006
	 	$	7,012,500	 
	December 31, 2006
	 	$	7,097,500	 
	March 30, 2007
	 	$	7,182,500	 
	June 30, 2007
	 	$	7,267,500	 
	September 30, 2007
	 	$	7,373,750	 






          (b) Total Leverage Ratio. Maintain a Total Leverage Ratio for the Company on a
Consolidated Basis as of the end of each fiscal quarter set forth below for the respective periods
set forth below of not greater than the ratios set forth below:




	 	 	 	 	 
	Four Fiscal Quarters	 	 
	Ending on Fiscal Quarter	 	Leverage Ratio
	December 31, 2003
	 	 	5.75 to 1.0	 
	March 31, 2004
	 	 	5.75 to 1.0	 
	June 30, 2004
	 	 	6.00 to 1.0	 
	September 30, 2004
	 	 	6.75 to 1.0	 
	December 31, 2004
	 	 	7.00 to 1.0	 
	March 31, 2005
	 	 	6.00 to 1.0	 
	June 30, 2005
	 	 	6.00 to 1.0	 
	September 30, 2005
	 	 	5.75 to 1.0	 
	December 31, 2005
	 	 	5.75 to 1.0	 
	March 31, 2006
	 	 	5.50 to 1.0	 
	June 30, 2006
	 	 	5.25 to 1.0	 
	September 30, 2006
	 	 	5.00 to 1.0	 
	December 31, 2006
	 	 	5.00 to 1.0	 
	March 31, 2007
	 	 	4.75 to 1.0	 
	June 30, 2007
	 	 	4.50 to 1.0	 
	September 30, 2007
	 	 	4.50 to 1.0	 






          (c) Senior Leverage Ratio. Maintain a Senior Leverage Ratio for the Company on a
Consolidated Basis as of the end of each fiscal quarter set forth below for the respective period
set forth below of not greater than the ratio set forth below:




	 	 	 	 	 
	Four Fiscal Quarters	 	Senior
	Ending on Fiscal Quarter	 	Leverage Ratio
	December 31, 2003
	 	 	2.50 to 1.0	 
	March 31, 2004
	 	 	2.50 to 1.0	 






45









 






	 	 	 	 	 
	Four Fiscal Quarters	 	Senior
	Ending on Fiscal Quarter	 	Leverage Ratio
	June 30, 2004
	 	 	2.50 to 1.0	 
	September 30, 2004
	 	 	2.50 to 1.0	 
	December 31, 2004
	 	 	2.50 to 1.0	 
	March 31, 2005
	 	 	2.25 to 1.0	 
	June 30, 2005
	 	 	2.25 to 1.0	 
	September 30, 2005
	 	 	2.00 to 1.0	 
	December 31, 2005
	 	 	2.00 to 1.0	 
	March 31, 2006
	 	 	2.00 to 1.0	 
	June 30, 2006
	 	 	1.75 to 1.0	 
	September 30, 2006
	 	 	1.75 to 1.0	 
	December 31, 2006
	 	 	1.75 to 1.0	 
	March 30, 2007
	 	 	1.50 to 1.0	 
	June 30, 2007
	 	 	1.50 to 1.0	 
	September 30, 2007
	 	 	1.50 to 1.0	 






          (d) Fixed Charge Coverage Ratio. Maintain as of the end of each quarter a Fixed
Charge Coverage Ratio for the Company on a Consolidated Basis of not less than the ratio set forth
below for the respective period:




	 	 	 	 	 
	 	 	Fixed Charge
	Fiscal Period	 	Coverage Ratio
	 
	 	 	 	 
	Closing Date through December 31, 2003
	 	 	0.90 to 1.0	 
	Closing Date through March 31, 2004
	 	 	0.80 to 1.0	 
	Closing Date through June 30, 2004
	 	 	0.80 to 1.0	 
	Closing Date through September 30, 2004
	 	 	0.80 to 1.0	 






	 	 	 	 	 
	Four Fiscal Quarters	 	 	 	 
	Ending in Fiscal Quarter Ending	 	 	 	 
	December 31, 2004
	 	 	0.75 to 1.0	 
	March 30, 2005
	 	 	0.80 to 1.0	 
	June 30, 2005
	 	 	0.75 to 1.0	 
	September 30, 2005
	 	 	0.75 to 1.0	 
	December 31, 2005
	 	 	0.75 to 1.0	 
	March 30, 2006
	 	 	0.75 to 1.0	 
	June 30, 2006
	 	 	0.80 to 1.0	 
	September 30, 2006
	 	 	0.80 to 1.0	 
	December 31, 2006
	 	 	0.80 to 1.0	 
	March 30, 2007
	 	 	0.80 to 1.0	 
	June 30, 2007
	 	 	0.80 to 1.0	 
	September 30, 2007
	 	 	0.80 to 1.0	 






          (e) Capital Expenditures. Not contract for, purchase or make Facility Move Capital
Expenditures (x) either (i) in excess of the sum of $2,000,000 in the aggregate together with all
Facility Move Expenses or (ii) beyond the fifteen (15) month period commencing on the Closing Date,
or (y) not contract for, purchase or make any Capital Expenditures and Capital Leases (or incur
Indebtedness for Capital Expenditures and Capital leases) in the aggregate during each of the
respective fiscal periods in excess of the amounts set forth below:




46









 








	 	 	 	 	 
	Fiscal Period	 	Capital Expenditures
	Closing Date through December 31, 2003
	 	$	420,000	 
	Calendar Year 2004
	 	$	1,920,000	 
	Calendar Year 2005
	 	$	1,992,000	 
	Calendar Year 2006
	 	$	2,100,000	 
	Calendar Year 2007 and each calendar year thereafter
	 	$	1,800,000	 





Notwithstanding the foregoing, in the event the Company does not expend the entire permitted
Capital Expenditure amount in any fiscal year, the Company may carry forward once to the
immediately succeeding fiscal year 100% of the unutilized portion of such permitted Capital
Expenditure amount, which shall be deemed the first Capital Expenditures made in such succeeding
year. All Capital Expenditures made by the Company shall first be applied to reduce the applicable
limit for the current year and then to reduce the carry forward from the previous fiscal year, if
any.




ARTICLE 8




EVENTS OF DEFAULT




     8.1 Events of Default. An Event of Default shall mean the occurrence of one or more
of the following described events:



          (a) the Company shall default in the payment of (i) interest on any of the Notes within five
(5) days after its due date or (ii) principal of any of the Notes when due, whether at maturity,
upon notice of prepayment in accordance with Sections 3.6 or 3.7, upon any scheduled payment date
or by acceleration or otherwise;




          (b) the Company shall default under any agreement under which any Indebtedness in an aggregate
principal amount of $200,000 or more is created in a manner entitling the holder of such
Indebtedness to accelerate the maturity of such Indebtedness.




          (c) any representation or warranty herein made by the Company or any certificate or financial
statement furnished pursuant to the provisions hereof, shall prove to have been false or misleading
in any material respect as of the time made or furnished or deemed made or furnished;




          (d) the Company shall default in the performance of any covenant, condition or provision of
Section 7.1(h), 7.2 or 7.3;




          (e) a default or event of default shall occur under any of the other Transaction Documents,
beyond any applicable notice or cure periods;




          (f) the Company shall default in the performance of any other covenant, condition or provision
of this Agreement, the Notes or the other Transaction Documents, and such default shall not be
remedied to Agent’s or Required Purchasers’ satisfaction for a period of thirty (30) days of the
earlier of (i) written notice from a Agent of such default or (ii) actual knowledge by the Company
of such default;




47









 








          (g) a proceeding shall have been instituted in a court having jurisdiction in the premises
seeking a decree or order for relief in respect of the Company in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or for the
appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of the Company or for any substantial part of its property, or for the winding-up or
liquidation of its affairs, and such proceeding shall remain undismissed or unstayed and in effect
for a period of sixty (60) days;




          (h) the Company shall commence a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, shall consent to the entry of an order for relief in
an involuntary case under any such law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official)
of or for any substantial part of its property, or shall make a general assignment for the benefit
of creditors, or shall fail generally to pay its debts as they become due, or shall take any action
in furtherance of any of the foregoing;




          (i) both the following events shall occur: (i) a Reportable Event, the occurrence of which
would have a Material Adverse Effect which could cause the imposition of a Lien under Section 4068
of ERISA, shall have occurred with respect to any Plan or Plans; and (ii) the aggregate amount of
the then “current liability” (as defined in Section 412(l)(7) of the Internal Revenue Code of 1986,
as amended) of all accrued benefits under such Plan or Plans exceeds the then current value of the
assets allocable to such benefits by more than $100,000 at such time;




          (j) a final judgment which, with other undischarged final judgments against the Company,
exceeds an aggregate of $100,000 (excluding judgments to the extent the Company is fully insured or
the deductible or retention limit does not exceed $100,000 and with respect to which the insurer
has assumed responsibility in writing), shall have been entered against the Company and within
thirty (30) days after the entry thereof, such judgment shall not have been discharged or execution
thereof stayed pending appeal, or if, within thirty (30) days after the expiration of any such
stay, such judgment shall not have been discharged;




          (k) any Transaction Document or Security Document shall at any time after the Closing Date
cease for any reason to be in full force and effect or shall cease to create perfected security
interests in favor of Agent in the collateral subject or purported to be subject thereto, subject
to no other Liens other than Permitted Liens, or such collateral shall have been transferred to any
Person without the prior written consent of the holders of a majority in principal amount of the
outstanding Notes; or




          (l) a Change of Control shall have occurred.




     8.2 Consequences of Event of Default.



          (a) Bankruptcy. If an Event of Default specified in paragraphs (g) or (h) of Section
8.1 hereof shall occur, the unpaid balance of the Notes and interest accrued thereon and all other
liabilities of the Company to the holders thereof hereunder and thereunder shall be immediately due
and payable, without presentment, demand, protest or (except as expressly required hereby) notice
of any kind, all of which are hereby expressly waived.




48









 








          (b) Other Defaults. If any other Event of Default shall occur, Required Purchasers
may at their option, by written notice to the Company, declare the entire unpaid
balance of the Notes, and interest accrued thereon and all other liabilities of the Company
hereunder and thereunder to be forthwith due and payable, and the same shall thereupon become
immediately due and payable, without presentment, demand, protest or (except as expressly required
hereby) notice of any kind, all of which are hereby expressly waived; provided, that in the case of
a default specified in clause (ii) of paragraph (a) of Section 8.1 hereof shall occur, any holder
of a Note may declare the entire unpaid balance of such Note (but only such Note) and other amounts
due hereunder and thereunder with regard to such Note to become immediately due and payable.




          (c) Penalty Interest. Following the occurrence and during the continuance of any
Event of Default, the holders of the Notes shall be entitled to receive, to the extent permitted by
applicable law, interest on the outstanding principal of, and premium and overdue interest, if any,
on, the Notes at a rate per annum equal to the interest rate thereon (determined as provided in
Section 3.1) plus two hundred fifty (250) basis points.




          (d) Premium. In the event of any acceleration of Notes pursuant to Section 8.2(b)
hereof, the Company shall also pay to Agent, for the ratable benefit of Purchasers, the prepayment
premium that would otherwise be payable upon any voluntary prepayment of such Notes.




     8.3 Security. Payments of principal of, and premium, if any, and interest on, the
Notes and all other obligations of the Company with respect to the Notes under this Agreement or
the Notes are secured pursuant to the terms of the Security Documents and subject to the
Intercreditor Agreement.



ARTICLE 9




THE AGENT




     9.1 Authorization and Action. Each Purchaser and each subsequent holder of any Note
by its acceptance thereof, hereby designates and appoints ACFS as Agent hereunder and authorizes
ACFS to take such actions as agent on its behalf and to exercise such powers as are delegated to
Agent by the terms of this Agreement and the other Transaction Documents, together with such powers
as are reasonably incidental thereto. Agent shall not have any duties or responsibilities, except
those expressly set forth herein, or any fiduciary relationship with any Purchaser, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities on the part of Agent
shall be read into this Agreement or otherwise exist for Agent. In performing its functions and
duties hereunder, Agent shall act solely as agent for Purchasers and does not assume, nor shall be
deemed to have assumed, any obligation or relationship of trust or agency with or for the Company
or any of its successors or assigns. Agent shall not be required to take any action that exposes
Agent to personal liability or that is contrary to this Agreement or applicable Laws. The
appointment and authority of Agent hereunder shall terminate at the indefeasible payment in full of
the Notes and related obligations.



     9.2 Delegation of Duties. Agent may execute any of its duties under this Agreement by
or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it with reasonable care.



49









 





     9.3 Exculpatory Provisions. Neither Agent nor any of its directors, officers, agents
or employees shall be (i) liable for any action lawfully taken or omitted to be taken by it or them
under or in connection with this Agreement (except for its, their or such Person’s own gross
negligence or willful misconduct or, in the case of Agent, the breach of its obligations expressly
set forth in this Agreement, unless such action was taken or omitted to be taken by Agent at the
direction of the Required Purchasers), or (ii) responsible in any manner to any Purchaser for any
recitals, statements, representations or warranties made by the Company contained in this Agreement
or in any certificate, report, statement or other document referred to or provided for in, or
received under or in connection with, this Agreement for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other document furnished in
connection herewith, or for any failure of the Company to perform its obligations hereunder, or for
the satisfaction of any condition specified in Article 4. Agent shall not be under any obligation
to any Purchaser to ascertain or to inquire as to the observance or performance of any of the
agreements or covenants contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of the Company.



     9.4 Reliance. Agent shall in all cases be entitled to rely, and shall be fully
protected in relying, upon any document or conversation believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons and upon advice and
statements of legal counsel (including, without limitation, counsel to the Company), independent
accountants and other experts selected by Agent. Agent shall in all cases be fully justified in
failing or refusing to take any action under this Agreement or any other document furnished in
connection herewith unless it shall first receive such advice or concurrence of the Required
Purchasers or all of Purchasers, as applicable, as it deems appropriate or it shall first be
indemnified to its satisfaction by Purchasers; provided, that, unless and until Agent shall have
received such advice, Agent may take or refrain from taking any action, as Agent shall deem
advisable and in the best interests of Purchasers. Agent shall in all cases be fully protected in
acting, or in refraining from acting, in accordance with a request of the Required Purchasers or
all of Purchasers, as applicable, and such request and any action taken or failure to act pursuant
thereto shall be binding upon each Purchaser.



     9.5 Non-Reliance on Agent and Other Purchasers. Each Purchaser expressly acknowledges
that neither Agent, nor any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no act by Agent or hereafter
taken, including, without limitation, any review of the affairs of the Company, shall be deemed to
constitute any representation or warranty by Agent. Each Purchaser represents and warrants to
Agent that it has and will, independently and without reliance upon Agent or any other Purchaser
and based on such documents and information as it has deemed appropriate, made its own appraisal of
and investigation into the business, operations, property, prospects, financial and other
conditions and creditworthiness of the Company and made its own decision to enter into this
Agreement.



     9.6 No Liability of Purchasers. Purchasers shall have no liability to the Company or
any other entity as a result of any actions or failures to act by Agent hereunder or otherwise.



     9.7 Agent in its Individual Capacity. Agent, and each of its Affiliates may make
loans to, purchase securities from, provide services to, accept deposits from and generally engage
in any kind of business with the Company or any Affiliate of the Company as though Agent were not
Agent hereunder.



50









 





     9.8 Successor Agent. Agent may, upon forty-five (45) days’ notice to the Company and
Purchaser, and Agent will, upon the direction of the Required Purchasers (other than Agent, in its
individual capacity), resign as Agent. If Agent shall resign, then the Required Purchasers during
such 45-day period shall appoint a successor Agent and if the Required Purchasers direct Agent to
resign, such direction shall include an appointment of a successor Agent. If for any reason no
successor Agent is appointed by the Required Purchasers during such 45-day period, then effective
upon the expiration of such 45-day period, Purchasers shall perform all of the duties of Agent
hereunder and the Company shall make all payments in respect of the Notes directly to the
applicable Purchaser and for all purposes shall deal directly with Purchasers. After any retiring
Agent’s resignation hereunder as Agent, the provisions of Article 9 shall inure to its benefit as
to any actions taken or omitted to be taken by it while it was Agent under this Agreement.



     9.9 Collections and Disbursements.



          (a) Agent will have the right to collect and receive all payments of the Notes, and to collect
and receive all reimbursements due hereunder, together with all fees, charges or other amounts due
under this Agreement and the other Transaction Documents with regard to the Notes, and Agent will
remit to each Purchaser, according to its pro rata percentage, all such payments actually received
by Agent in accordance with the settlement procedures established from time to time. Settlements
shall occur on such dates as Agent may elect in its sole discretion, but which date shall be no
later than two (2) Business Days after request by Agent.




          (b) If any such payment received by Agent is rescinded or otherwise required to be returned
for any reason at any time, whether before or after termination of this Agreement or the other
Transaction Documents, each Purchaser will, upon written notice from Agent, promptly pay over to
Agent its pro rata percentage of the amounts so rescinded or returned, together with interest and
other fees thereon so rescinded or returned.




          (c) All payments by Agent and Purchasers to each other hereunder shall be in immediately
available funds. Agent will at all times maintain proper books of accounts and records reflecting
the interest of each Purchaser in the Notes, in a manner customary to Agent’s keeping of such
records, which books and records shall be available for inspection by each Purchaser at reasonable
times during normal business hours, at such Purchaser’s sole expense. Agent may treat the payees
of any Note as the holder thereof until written notice of the transfer thereof shall have been
received by Agent in accordance with Section 6.3. In the event that any Purchaser shall receive
any payment in reduction of the Notes in an amount greater than its applicable pro rata percentage
in respect of obligations to Purchasers evidenced hereby (including, without limitation amounts
obtained by reason of setoffs) such Purchaser shall hold such excess in trust for Agent (on behalf
of all other Purchasers) and shall promptly remit to Agent such excess amount so that the amounts
received by each Purchaser hereunder shall at all times be in accordance with its applicable pro
rata percentage. If, however, any Purchaser that has received any such excess amount fails to
remit such amount to the Agent, the Agent shall reallocate the amounts paid on the next payment
date to each Purchaser so that, after giving effect to such payments, the pro rata obligations owed
by the Company to each Purchaser shall be in an amount equal to the pro rata amount owed by the
Company before the date of the payment of such excess amount. In no event shall any Purchaser be
deemed to have a participation or other right in, to or against any other Purchaser’s Note as a
result of the payment of any excess amount.




51









 








     9.10 Reporting. During the term of this Agreement, Agent will promptly furnish each
Purchaser with copies of all notices and financial statements of the Company required to be
delivered or obtained hereunder and such other financial statements and reports and other
information in Agent’s possession as any Purchaser may reasonably request. Agent will immediately
notify Purchasers when it receives actual knowledge of any Event of Default under the Transaction
Documents.



     9.11 Services of the Agent.



          (a) Except as expressly provided herein and except with respect to the Warrants and Preferred
Stock, Agent shall have the sole and exclusive right to service, administer and monitor the Notes
and the Transaction Documents related thereto, including, without limitation, the right to exercise
all rights, remedies, privileges and options under this Agreement and under the other Transaction
Documents, including, without limitation, the credit judgment with respect to the purchasing of the
Notes and the determination as to the basis on which and extent to which purchases of Notes may be
made.




          (b) Notwithstanding anything to the contrary contained in Section 9.11(a) above, Agent shall
not without the prior written consent of all Purchasers then holding Notes: (i) extend any payment
date under the Notes, (ii) reduce any interest rate applicable to any of the Notes or any fee
payable to Purchasers hereunder, (iii) waive any Event of Default under Section 8.1 (a), (iv)
compromise or settle all or a portion of the Indebtedness under the Notes, (v) release any obligor
from the Indebtedness under the Notes except in connection with full payment and satisfaction of
all Indebtedness under the Notes, (vi) amend the definition of Required Purchasers, or (vii) amend
this Section 9.11(b).




          (c) Notwithstanding anything to the contrary contained in Section 9.11(a) above, and subject
to any applicable limitation set forth in Section 9.11(b) above, Agent shall not, without the prior
written consent of Required Purchasers: (i) waive any Event of Default; (ii) consent to any
Company’s taking any action that, if taken, would constitute an Event of Default under this
Agreement or under any of the other Transaction Documents; or (iii) amend or modify or agree to an
amendment or modification of this Agreement or other Transaction Documents.




          (d) After an acceleration of the Indebtedness, Agent shall have the sole and exclusive right,
after consultation (to the extent reasonably practicable under the circumstances) with all
Purchasers and, unless otherwise directed in writing by Required Purchasers, to exercise or refrain
from exercising any and all rights, remedies, privileges and options under this Agreement or the
other Transaction Documents and available at law or in equity to protect the rights of Agent and
Purchasers and collect the Indebtedness under the Notes, including, without limitation, instituting
and pursuing all legal actions brought against the Company or to collect the Indebtedness under the
Notes, or defending any and all actions brought by the Company or other Person; or incurring
expenses or otherwise making expenditures to protect the collateral, the Notes or Agent’s or any
Purchaser’s rights or remedies.




     9.12 This Article Not Applicable to Company. Except for Section 9.6 hereof, this
Article 9 is included in this Agreement solely for the purpose of determining certain rights as
between Agent and Purchasers and does not create, nor shall it give rise to, any rights in or
obligations on the part of the Company and all rights and obligations of the Company (other than



52









 






as
specifically set forth herein) under this Agreement shall be determined by reference to the
provisions of this Agreement other than this Article 9.



ARTICLE 10




PUT OPTION




     10.1 Grant of Option. The Company hereby grants to each holder of Subject Securities
(a “Holder”) an option to sell to the Company, and the Company is obligated to purchase
from each Holder under such option (the “Put Option”), all (or such portion as is
designated by any such Holder pursuant to Section 10.3 below) of the Subject Securities then owned
by such Holder. The Put Option will be effective at any time and from time to time after the
earliest to occur of (i) the fifth anniversary of the Closing Date, (ii) the date of the payment in
full of the outstanding principal, interest and fees in respect of the Notes, or (iii) the sale of
the Company’s or of at least 30% of their assets as part of a single transaction or series of
related transactions.



     10.2 Put Price. In the event that any Holder exercises the Put Option, the price (the
“Put Price”) to be paid to each such Holder pursuant to this Agreement will be the sum of
the amount determined by multiplying the number of shares of Subject Securities (or, in the case of
any Warrant, the number of shares of Underlying Common Stock into which such Warrant is
convertible) for which the Put Option is being exercised (collectively, the “Put Shares”)
by the Fair Market Value therefor.



     10.3 Exercise of Put Option. If any Holder elects to exercise its Put Option, such
Holder shall give notice to the Company and each other Holder of such Holder’s election to exercise
the Put Option, specifying, among other things, the date on which the Put Option Closing (as
hereinafter defined) shall occur, which date shall not be less than twenty-one (21) days after the
date of such notice. If a Holder receives such notice of another Holder’s exercise of such other
Holder’s Put Option and the Put Option of the Holder receiving such notice is effective pursuant to
Section 10.1, the Holder receiving such notice may elect to exercise its Put Option and designate a
Put Option Closing simultaneous with that of such other Holder by giving the Company not less than
five (5) days notice of such election. The Company will provide each Holder desiring to exercise
its Put Option with the name and address of each other Holder. Notwithstanding the foregoing, the
right of each Holder to exercise its Put Option shall be an individual and separate right, and the
exercise of any Put Option by any Holder shall not be conditioned upon the exercise by any other
Holder of its Put Option.



     10.4 Certain Remedies. In the event that the Company defaults on its obligation to
purchase all or any portion of the Put Shares upon exercise of the Put Option by any Holder, the
Holder may elect, in addition to any other rights or remedies of such Holder, either to (i) rescind
its exercise of the Put Option, in which case the Put Option will continue in full force and
effect, or (ii) receive a Note in the form attached hereto as Exhibit D, duly executed by
the Company, payable to the Holder in the principal amount of the Put Price, which Note shall
constitute a “Junior Subordinated Note” for all purposes hereunder and under the Transaction
Documents which shall be subordinated to any and all Notes; provided, however, that such Junior
Subordinated Note shall bear interest in cash on the outstanding principal thereof at a rate per
annum equal to 17%; provided, further, that the Company shall repay the unpaid principal balance of
such Junior Subordinated Note in full, together with all accrued and unpaid interest, fees and
other amounts due thereunder, in sixty (60) consecutive equal monthly payments



53









 







commencing on the
first Business Day of the first full month following the execution of such Note and there shall be
no premium charged for prepaying such Note.



     10.5 Put Option Closing. Each closing for the purchase and sale of the Put Shares as
to which any Holder has notified the Company of such Holder’s intention to exercise the Put Option
(a “Put Option Closing”) shall occur on the date specified in such notice of exercise. At
any Put Option Closing, to the extent applicable, the Holder of the Put Shares will deliver the
certificate or certificates evidencing the Put Shares being purchased, duly endorsed in blank. In
consideration therefor, the Company will deliver to the Holder the Put Price, which will be payable
by wire transfer of immediately payable funds to an account designated by such Holder, or, at the
option of Holder in its sole discretion by a Note in the form attached hereto as Exhibit C,
duly executed by the Company, payable to the Holder in the principal amount of the Put Price, which
Junior Subordinated Note shall constitute a “Junior Subordinated Note” for all purposes hereunder
and under the Transaction Documents. In the event multiple Holders have exercised the Put Option
and there is insufficient cash available to pay each such Holder the full amount of funds they have
requested pursuant to the preceding sentence, any payment of cash will be made on a pro rata basis
among such Holders in proportion to their respective number of Put Shares.



ARTICLE 11




PREEMPTIVE RIGHTS




     11.1 Limited Preemptive Rights. If after the date of this Agreement, the Company
authorizes the issuance and sale of any shares of capital stock or any securities containing
options or rights to acquire any shares of capital stock (other than in connection with the
exercise of the Warrants, an underwritten public offering or the issuance of such securities in
exchange for the securities or assets of another Person as a part of an acquisition of a business
as a going concern, or other than the issuance of any Preferred Stock to Purchasers as a
dividend-in-kind) at any time that any Purchaser holds any Common Stock or Warrants of the Company,
the Company will offer to sell to each Purchaser a portion of such securities equal to the
percentage determined by dividing (i) the number of shares of Common Stock of the Company and
Underlying Common Stock (without duplication) then held by such Purchaser by (ii) the number of
shares of Common Stock of the Company outstanding (on a fully diluted basis). For purposes of
clause (ii) above, a share of Common Stock of the Company acquirable upon exercise or conversion of
options or rights to acquire any shares of Common Stock of the Company shall be deemed outstanding
only if the applicable conversion price, exercise price or other acquisition price is equal to or
less than the then current Market Price of a share of Common Stock of the Company. Each Purchaser
will be entitled to purchase such stock or securities at the same price and on the same terms as
such stock or securities are to be offered to any other Person. Each Purchaser must exercise its
purchase rights within thirty (30) days after receipt of written notice from the Company describing
in reasonable detail the stock or securities being so offered, the purchase price thereof, the
payment terms and each Purchaser’s percentage allotment. Upon the expiration of such period of
thirty (30) days, the Company will be free to sell such stock or securities which Purchasers have
not elected to purchase during the one hundred twenty (120) days following such expiration on terms
and conditions no more favorable to purchasers thereof than those offered to Purchasers. Any stock
or securities offered or sold by the Company after such one hundred twenty (120) day period must be
reoffered to each Purchaser pursuant to the terms of this Section 11.1. Any stock or securities
purchased by a Purchaser from the Company pursuant to this



54









 







Section 11.1 shall, upon such purchase
and thereafter be deemed to be Securities and Registrable Securities for all purposes of this
Agreement.



     11.2 Termination. The provisions of Section 11.1 shall terminate upon the
consummation of an underwritten public offering of the Company’s Common Stock registered under the
Securities Act with an investment banking firm of national reputation as managing underwriter.



ARTICLE 12




REGISTRATION RIGHTS




     12.1 Piggyback Registrations.



          (a) Whenever the Company proposes to register any of its securities under the Securities Act
and the registration form to be used may be used for the registration of Registrable Securities (a
“Piggyback Registration”), the Company will give prompt written notice (in any event within three
Business Days after its receipt of notice of any exercise of demand registration rights other than
under this Agreement) to all holders of Registrable Securities with respect of the proposed
offering at least thirty (30) days before the initial filing with the SEC of such registration
statement, and offer to include in such filing such Registrable Securities as any such holder may
request. Each such holder of Registrable Securities desiring to have Registrable Securities
registered under this Section 12.1 shall advise the Company in writing within fifteen (15) days
after the date of receipt of such notice from the Company, setting forth the amount of such
Registrable Securities for which registration is requested. The Company shall thereupon include in
such filing the number of Registrable Securities for which registration is so requested, and shall
use its best efforts to effect registration under the Securities Act of such Registrable
Securities.




          (b) The registration expenses of the holders of Registrable Securities will be paid by the
Company in all Piggyback Registrations to the extent provided in Section 12.6.




          (c) If a Piggyback Registration is an underwritten primary registration on behalf of holders
of the Company’s securities, and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such registration exceeds the
number which can be sold in an orderly manner in such offering within a price range acceptable to
the Company, the Company will include in such registration: (i) first, the securities the Company
proposes to sell, (ii) second, the Registrable Securities requested to be included in such
registration, pro rata among the holders of the securities requested to be included in such
registration, provided that no holders of such securities will have priority for inclusion in such
registration over the holders of the Registrable Securities.




          (d) If a Piggyback Registration is an underwritten secondary registration on behalf of holders
of the Company’s securities, and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such registration exceeds the
number that can be sold in an orderly manner in such offering within a price range acceptable to
the holders initially requesting such registration, the Company will include in such registration
the Registrable Securities requested to be included in such registration, pro rata among the
holders of other securities requested to be included in such




55









 







registration, provided that no holders
of such securities will have priority for inclusion in such registration over the holders of the
Registrable Securities.




          (e) If any Piggyback Registration is an underwritten offering, the selection of investment
banker(s) and manager(s) for the offering must be approved by the holders of a majority of the
Registrable Securities who request to be included in such Piggyback Registration. Such approval
will not be unreasonably withheld.




          (f) If the Company has previously filed a registration statement with respect to Registrable
Securities pursuant to this Section 12.1, and if such previous registration statement has not been
withdrawn or abandoned, the Company will not file a registration statement or cause to be effected
any other registration of any of its equity securities or securities convertible or exchangeable
into or exercisable for its equity securities under the Securities Act (except on Form S-8 or any
successor form), whether on its own behalf or at the request of any holder or holders of such
securities, until a period of at least 180 days has elapsed from the effective date of such
previous registration.




     12.2 Demand Registration Rights.



          (a) At any time after the Company has filed any registration statement under the Securities
Act or the Securities Exchange Act, except with respect to registration statements filed on Form
S-8 or any successor form, the Company receives a written request by the holders of a majority of
the Registrable Securities to effect the registration under the Securities Act of such shares of
Common Stock of the Company, the Company shall follow the procedures described in this Section
12.2. Within five (5) days of its receipt of such request, the Company shall give written notice
of such proposed registration (a “Demand Registration”) to all holders of Registrable
Securities, and thereupon, the Company shall, as expeditiously as possible, use its best reasonable
efforts to effect the registration on a form of general use under the Securities Act of the shares
it has been requested to register in such initial request and in any response to such notice given
to the Company within twenty (20) days after the Company’s giving of such notice; provided,
however, that the Company shall not be required to effect a Demand Registration if two or
more Demand Registrations have been undertaken.




          (b) The Company may not be required to effect a registration pursuant to this Section 12.2
during the first 180 days after the effective date of any registration statement filed by the
Company under Section 12.1 if the holders of Registrable Securities requesting registration have
been afforded the opportunity to register in such registration all or a majority of their
Registrable Securities.




          (c) The Company may include in any registration under this Section 12.2 any other shares of
Common Stock of the Company (including issued and outstanding shares of stock as to which the
holders thereof have contracted with the Company for “piggyback” registration rights) so long as
the inclusion in such registration of such shares will not, in the opinion of the managing
underwriter of the shares of the stockholder or stockholders first demanding registration (if the
offering is underwritten), interfere with the successful marketing in accordance with the intended
method of sale or other disposition of all the stock sought to be registered by such demanding
stockholder or stockholders pursuant to this Section 12.2.




     12.3 S-3 Demand Registration Rights. In addition to the registration rights provided
in Section 12.1 and 12.2 above, if at any time the Company is eligible to use SEC Form S-3 (or



56









 







any
successor form) for registration of secondary sales of Registrable Securities, any holder of
Registrable Securities may request in writing that the Company register shares of Registrable
Securities on such form. Upon receipt of such request, the Company will promptly notify all
holders of Registrable Securities in writing of the receipt of such request and each such
Holder may elect (by written notice sent to the Company within thirty (30) days of receipt of the
Company’s notice) to have its Registrable Securities included in such registration pursuant to this
Section 12.3. Thereupon, the Company will, as soon as practicable, use its best efforts to effect
the registration on Form S-3 of all Registrable Securities that the Company has so been requested
to register by such holder for sale. The Company will use its best efforts to qualify and maintain
its qualification for eligibility to use Form S-3 for such purposes.



     12.4 Holdback Agreements.



          (a) Each holder of Registrable Securities agrees not to effect any public sale or distribution
(including sales pursuant to Rule 144) of equity securities of the Company, or any securities
convertible into or exchangeable or exercisable for such securities, during the seven days prior to
and the 90-day period (or such longer period, not to exceed 90 additional days, as the managing
underwriter shall require) beginning on the effective date of any underwritten Piggyback
Registration in which Registrable Securities are included (except as part of such underwritten
registration), unless the underwriters managing the registered public offering otherwise agree.




          (b) The Company agrees (i) not to effect any public sale or distribution of its equity
securities, or any securities convertible into or exchangeable or exercisable for such securities,
during the seven days prior to and during the 90-day period beginning on the effective date of or
any underwritten Piggyback Registration (except as part of such underwritten registration or
pursuant to registrations on Form S-8 or any successor form), unless the underwriters managing the
registered public offering otherwise agree, and (ii) to cause each holder of at least 10% (on a
fully-diluted basis) of its Common Stock of the Company, or any securities convertible into or
exchangeable or exercisable for Common Stock, purchased from the Company at any time after the date
of this Agreement (other than in a registered public offering) to agree not to effect any public
sale or distribution (including sales pursuant to Rule 144) of any such securities during such
period (except as part of such underwritten registration, if otherwise permitted), unless the
underwriters managing the registered public offering otherwise agree.




     12.5 Registration Procedures. Whenever the holders of Registrable Securities have
requested that any Registrable Securities be registered pursuant to this Agreement, the Company
will use reasonable efforts to effect the registration and the sale of such Registrable Securities
in accordance with the intended method of disposition thereof (including, without limitation, the
registration of Warrants held by a holder of Registrable Securities requesting registration as to
which the Company has received reasonable assurances that only Registrable Securities will be
distributed to the public), and pursuant thereto the Company will as expeditiously as possible:



          (a) prepare and file with the SEC a registration statement with respect to such Registrable
Securities and use reasonable efforts to cause such registration statement to become effective
(provided that before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company will furnish to the counsel selected by the holders of a majority
of the Registrable Securities covered by such registration statement copies of all such documents
proposed to be filed, which documents will be subject to the review of such counsel);




57









 








          (b) furnish to each seller of Registrable Securities such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus included in
such registration statement (including each preliminary prospectus) and such other documents
as such seller may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such seller;




          (c) use reasonable efforts to register or qualify such Registrable Securities under such other
securities or blue sky laws of such jurisdictions as any seller of Registrable Securities
reasonably requests and do any and all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller (provided that the Company will not be required to (i)
qualify generally to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) subject itself to taxation in any such jurisdictions, (iii)
consent to general service of process in each such jurisdiction or (iv) undertake such actions in
any jurisdiction other than the states of the United States of America and the District of
Columbia);




          (d) notify each seller of such Registrable Securities, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein not misleading, and,
at the request of any such seller, the Company will prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading;




          (e) use its best efforts to cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then listed and, if not
so listed, to be listed on the NASD automated quotation system and, if listed on the NASD automated
quotation system, use its best efforts to secure designation of all such Registrable Securities
covered by such registration statements as a NASDAQ “national market system security” within the
meaning of Rule 11Aa2-1 of the Securities and Exchange Commission or, failing that, to secure
NASDAQ authorization for such Registrable Securities and, without limiting the generality of the
foregoing, to arrange for at least two market makers to register as such with respect to such
Registrable Securities with the NASD;




          (f) provide a transfer agent and registrar for all such Registrable Securities not later than
the effective date of such registration statement;




          (g) enter into such customary agreements (including underwriting agreements in customary form)
and take all such other actions as the holders of a majority of the Registrable Securities being
sold or the underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including, without limitation, effecting a stock split
or a combination of shares);




          (h) make available for inspection by any seller of Registrable Securities, any underwriter
participating in any disposition pursuant to such registration statement and any attorney,
accountant or other agent retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company’s, and cause the Company’s
officers, directors, employees and independent accountants to supply all information




58









 







reasonably
requested by any such seller, underwriter, attorney, accountant or agent in connection with such
registration statement;




          (i) otherwise use its best efforts to comply with all applicable rules and regulations of the
SEC, and make available to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months beginning with the first day of the
Company’s first full calendar quarter after the effective date of the registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder;




          (j) permit any holder of Registrable Securities which holder, in its sole and exclusive
judgment, might be deemed to be an underwriter or a controlling person of the Company, to
participate in the preparation of such registration or comparable statement and to require the
insertion therein of material, furnished to the Company in writing, which in the reasonable
judgment of such holder and its counsel should be included; and




          (k) in the event of the issuance of any stop order suspending the effectiveness of a
registration statement, or of any order suspending or preventing the use of any related prospectus
or suspending the qualification of any Common Stock of the Company included in such registration
statement for sale in any jurisdiction, the Company will use its reasonable best efforts promptly
to obtain the withdrawal of such order. If any such registration or comparable statement refers to
any holder by name or otherwise as the holder of any securities of the Company and if in its sole
and exclusive judgment such holder is or might be deemed to be a controlling person of the Company,
such holder shall have the right to require (i) the insertion therein of language, in form and
substance satisfactory to such holder and presented to the Company in writing, to the effect that
the holding by such holder of such securities is not to be construed as a recommendation by such
holder of the investment quality of the Company’s securities covered thereby and that such holding
does not imply that such holder will assist in meeting any future financial requirements of the
Company, (ii) in the event that such reference to such holder by name or otherwise is not required
by the Securities Act or any similar federal statute then in force, the deletion of the reference
to such holder; provided that with respect to this clause (ii) such holder shall furnish to the
Company an opinion of counsel to such effect, which opinion and counsel shall be reasonably
satisfactory to the Company.




     12.6 Registration Expenses. All expenses incident to the Company’s performance of or
compliance with this Article 12, including without limitation all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and
delivery expenses, and fees and disbursements of counsel for the Company and all independent
certified public accountants, underwriters (excluding discounts and commissions) and other Persons
retained by the Company (all such expenses, excluding underwriting discounts and commissions, being
herein called “Registration Expenses”), will be borne by the Company. the Company will bear the
cost of one set of counsel for the Holders of Registrable Securities participating in any Piggyback
Registration. All underwriting discounts and commissions will be borne by the seller of the
securities sold pursuant to the registration.



     12.7 Indemnification.



          (a) The Company hereby agrees to indemnify, to the extent permitted by law, each holder of
Registrable Securities, its officers and directors and each Person who controls such holder (within
the meaning of the Securities Act) against all losses, claims, damages,




59









 







liabilities and expenses
caused by any untrue or alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto or
any omission or alleged omission of a material fact required to
be stated therein or necessary to make the statements therein not misleading, except insofar
as the same are caused by or contained in any information furnished in writing to the Company by
such holder expressly for use therein or by such holder’s failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto after the Company has
furnished such holder with a sufficient number of copies of the same. In connection with an
underwritten offering, the Company shall indemnify such underwriters, their officers and directors
and each Person who controls such underwriters (within the meaning of the Securities Act) to the
same extent as provided above with respect to the indemnification of the holders of Registrable
Securities.




          (b) In connection with any registration statement in which a holder of Registrable Securities
is participating, each such holder will furnish to the Company in writing such information and
affidavits as the Company reasonably requests for use in connection with any such registration
statement or prospectus and, to the extent permitted by law, will indemnify the Company, its
directors and officers and each Person who controls the Company (within the meaning of the
Securities Act) against any losses, claims, damages, liabilities and expenses resulting from any
untrue or alleged untrue statement of material fact contained in the registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement thereto or any omission
or alleged omission of a material fact required to be stated therein or necessary to make the
statements therein not misleading but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by such holder and only to the
extent of the amount of net proceeds received by such holder in the offering.




          (c) Any Person entitled to indemnification hereunder will (i) give prompt written notice to
the indemnifying party of any claim with respect to which it seeks indemnification and (ii) unless
in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume
the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such
defense is assumed, the indemnifying party will not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent will not be unreasonably
withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a
claim will not be obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such indemnified party
and any other of such indemnified parties with respect to such claim.




          (d) The indemnification provided for under this Agreement will remain in full force and effect
regardless of any investigation made by or on behalf of the indemnified party or any officer,
director or controlling Person of such indemnified party and will survive the transfer of
securities. the Company also agrees to make such provisions, as are reasonably requested by any
indemnified party, for contribution to such party in the event the Company’s indemnification is
unavailable for any reason.




     12.8 Participation in Underwritten Registrations. No Person may participate in any
registration hereunder which is underwritten unless such Person (a) agrees to sell such Person’s
securities on the basis provided in any underwriting arrangements approved by the Person or



60









 







Persons
entitled hereunder to approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents required under the
terms of such underwriting arrangements; provided that no holder of
Registrable Securities included in any underwritten registration shall be required to make any
representations or warranties to the Company or the underwriters other than representations and
warranties regarding such holder and such holder’s intended method of distribution.



ARTICLE 13




SUBORDINATION OF NOTES




     13.1 General. The Subordinated Debt is subordinate and junior in right of payment to
all Senior Financing and the Senior Term Loans to the extent provided in this Article 13. The
Junior Subordinated Notes are subordinate and junior in right of payment to the Senior Subordinated
Notes to the extent provided in this Article 13.



     13.2 Default in Respect of Senior Financing.



          (a) Senior Financing Payment Default. In the event of a Senior Financing Payment
Default then, unless and until such Senior Financing Payment Default shall have been cured or
waived or shall have ceased to exist, no direct or indirect payment (in cash, property or by
set-off or otherwise, except that payment may be made by delivery of Notes of the same type) shall
be made on account of the principal of, or prepayment premium, if any, or any other amount in
respect of, or interest on, any Subordinated Debt, or as a sinking fund for any Subordinated Debt,
or in respect of any redemption, retirement, purchase or other acquisition of any Subordinated
Debt, during any period:





          (i) commencing on the date such Senior Financing Payment Default shall first
occur and ending on the date on which such Senior Financing Payment Default shall
have been cured or waived or shall have ceased to exist; or




          (ii) in which any judicial proceeding or any other proceeding or action
(whether judicial or otherwise) seeking to foreclose or otherwise realize on any
collateral shall be pending in respect of such Senior Financing Payment Default, or
in which the maturity of such Senior Financing shall have been accelerated in
respect of such Senior Financing Payment Default and such acceleration shall not
have been annulled.



          (b) Senior Financing Covenant Default. In the event of a Senior Financing Covenant
Default, then, unless and until such Senior Financing Covenant Default shall have been cured or
waived or shall have ceased to exist, no direct or indirect payment (in cash, property or by
set-off or otherwise, except that payment may be made by delivery of Notes of the same type) shall
be made on account of the principal of, or prepayment premium, if any, or any other amount in
respect of, or interest on, any Subordinated Debt, or as a sinking fund for any Subordinated Debt,
or in respect of any redemption, retirement, purchase or other acquisition of any Subordinated
Debt, during any period:





          (i) of one hundred eighty (180) days after written notice (a “Senior
Financing Blocking Notice”) of such Senior Financing Covenant Default shall
have been given to the Company and to the Purchasers by the Senior Agent,



61









 







provided
that only one (1) such Senior Financing Blocking Notice shall be given pursuant to
the terms of this Section 13.2(b)(i) in any three hundred sixty (360) day period;
or



          (ii) in which any judicial proceeding or any other proceeding or action
(whether judicial or otherwise) seeking to foreclose or otherwise realize on any
collateral shall be pending in respect of such Senior Financing Covenant Default,
or in which an effective notice of acceleration of the maturity of such Senior
Financing shall have been transmitted to the Company and each of the holders of the
Notes in respect of such Senior Financing Covenant Default and such acceleration
shall not have been annulled, or in which notice of the failure to pay such Senior
Financing upon its final maturity shall have been transmitted to the Company and
each of the holders of the Notes and such failure shall be continuing;


provided that no Senior Financing Covenant Default that served as the basis for, or existed at the
time of, a previous Senior Financing Blocking Notice, shall provide the basis for a subsequent
Senior Financing Blocking Notice unless such Senior Financing Covenant Default has been cured or
waived for a period of at least one hundred eighty (180) consecutive days.




          (c) Notice by the Company. The Company shall give written notice to each holder of
Subordinated Debt of any Senior Financing Payment Default (and any acceleration of the maturity of
any Indebtedness as a result thereof) and the receipt of any notice under Section 13.2(b)(i) or
Section 13.2(b)(ii) immediately upon the occurrence or receipt thereof, as the case may be.




     13.3 Default in Respect of Senior Term Loans



          (a) Senior Term Loans Payment Default. In the event of a Senior Term Loans Payment
Default then, unless and until such Senior Term Loans Payment Default shall have been cured or
waived or shall have ceased to exist, no direct or indirect payment (in cash, property or by
set-off or otherwise, except that payment may be made by delivery of Notes of the same type) shall
be made on account of the principal of, or prepayment premium, if any, or any other amount in
respect of, or interest on, any Subordinated Notes, or as a sinking fund for any Subordinated
Notes, or in respect of any redemption, retirement, purchase or other acquisition of any
Subordinated Notes, during any period:





          (i) commencing on the date such Senior Term Loans Payment Default shall first
occur and ending on the date on which such Senior Term Loans Payment Default shall
have been cured or waived or shall have ceased to exist; or




          (ii) in which any judicial proceeding or any other proceeding or action
(whether judicial or otherwise) seeking to foreclose or otherwise realize on any
collateral shall be pending in respect of such Senior Term Loans Payment Default,
or in which the maturity of such Senior Term Notes shall have been accelerated in
respect of such Senior Term Loans Payment Default and such acceleration shall not
have been annulled.



62









 





          (b) Senior Term Loans Covenant Default. In the event of a Senior Term Loans Covenant
Default, then, unless and until such Senior Term Loans Covenant Default shall have been cured or
waived or shall have ceased to exist, no direct or indirect payment (in cash, property or by
set-off or otherwise, except that payment may be made by delivery of Subordinated Notes) shall be
made on account of the principal of, or prepayment premium, if any,
or any other amount in respect of, or interest on, any Subordinated Notes, or as a sinking
fund for any Subordinated Notes, or in respect of any redemption, retirement, purchase or other
acquisition of any Subordinated Notes, during any period:





          (i) of one hundred eighty (180) days after written notice (a “Senior Term
Loans Blocking Notice”) of such Senior Term Loans Covenant Default shall have
been given to the Company and to the Purchasers by the Agent, provided that only
one (1) such Senior Term Loans Blocking Notice shall be given pursuant to the terms
of this Section 13.3(b)(i) in any three hundred sixty (360) day period; or




          (ii) in which any judicial proceeding or any other proceeding or action
(whether judicial or otherwise) seeking to foreclose or otherwise realize on any
collateral shall be pending in respect of such Senior Term Loans Covenant Default,
or in which an effective notice of acceleration of the maturity of such Senior Term
Notes shall have been transmitted to the Company and each of the holders of the
Subordinated Notes in respect of such Senior Term Loans Covenant Default and such
acceleration shall not have been annulled, or in which notice of the failure to pay
such Senior Term Notes upon its final maturity shall have been transmitted to the
Company and each of the holders of the Subordinated Notes and such failure shall be
continuing;


provided that no Senior Term Loans Covenant Default that served as the basis for, or existed at the
time of, a previous Senior Term Loans Blocking Notice, shall provide the basis for a subsequent
Senior Term Loans Blocking Notice unless such Senior Term Loans Covenant Default has been cured or
waived for a period of at least one hundred eighty (180) consecutive days.




          (c) Notice by the Company. The Company shall give written notice to each holder of
Subordinated Notes of any Senior Term Loans Payment Default (and any acceleration of the maturity
of any Indebtedness as a result thereof) and the receipt of any notice under Section 13.3(b)(i) or
Section 13.3(b)(ii) immediately upon the occurrence or receipt thereof, as the case may be.




     13.4 Default in Respect of Senior Subordinated Notes.



          (a) Senior Subordinated Notes Payment Default. In the event of a Senior Subordinated
Notes Payment Default then, unless and until such Senior Subordinated Notes Payment Default shall
have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash,
property or by set-off or otherwise, except that payment may be made be delivery of Junior
Subordinated Notes) shall be made on account of the principal of, or prepayment premium, if any, or
any other amount in respect of, or interest on, any Junior Subordinated Notes, or as a sinking fund
for any Junior Subordinated Notes, or in respect of any redemption, retirement, purchase or other
acquisition of any Junior Subordinated Notes, during any period:




63









 









          (i) commencing on the date such Senior Subordinated Notes Payment Default
shall first occur and ending on the date on which such Senior Subordinated Notes
Payment Default shall have been cured or waived or shall have ceased to exist; or




          (ii) in which any judicial proceeding or any other proceeding or action
(whether judicial or otherwise) seeking to foreclose or otherwise realize on any
collateral shall be pending in respect of such Senior Notes Payment Default, or in
which the maturity of such Senior Subordinated Notes shall have been accelerated in
respect of such Senior Subordinated Notes Payment Default and such acceleration
shall not have been annulled.



          (b) Senior Subordinated Notes Covenant Default. In the event of a Senior Subordinated
Notes Covenant Default, then, unless and until such Senior Subordinated Notes Covenant Default
shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in
cash, property or by set-off or otherwise, except that payment may be made be delivery of Junior
Subordinated Notes) shall be made on account of the principal of, or prepayment premium, if any, or
any other amount in respect of, or interest on, any Junior Subordinated Notes, or as a sinking fund
for any Junior Subordinated Notes, or in respect of any redemption, retirement, purchase or other
acquisition of any Junior Subordinated Notes, during any period:





          (i) of one hundred eighty (180) days after written notice (a “Senior
Subordinated Notes Blocking Notice”) of such Senior Subordinated Notes Covenant
Default shall have been given to the Company and to the Purchaser by the Agent,
provided that only one (1) such Senior Subordinated Notes Blocking Notice shall be
given pursuant to the terms of this Section 13.4(b)(i) in any three hundred sixty
(360) day period; or




          (ii) in which any judicial proceeding or any other proceeding or action
(whether judicial or otherwise) seeking to foreclose or otherwise realize on any
collateral shall be pending in respect of such Senior Subordinated Notes Covenant
Default, or in which an effective notice of acceleration of the maturity of such
Senior Subordinated Notes shall have been transmitted to the Company and each of
the holders of the Junior Subordinated Notes in respect of such Senior Subordinated
Notes Covenant Default and such acceleration shall not have been annulled, or in
which notice of the failure to pay such Senior Subordinated Notes upon its final
maturity shall have been transmitted to the Company and each of the holders of the
Junior Subordinated Notes and such failure shall be continuing;


provided that (A) no Senior Subordinated Notes Covenant Default that served as the basis for, or
existed at the time of, a previous Senior Subordinated Notes Blocking Notice, shall provide the
basis for a subsequent Senior Subordinated Notes Blocking Notice unless such Senior Subordinated
Notes Covenant Default has been cured or waived for a period of at least one hundred eighty (180)
consecutive days, and (B) notwithstanding the foregoing, no more than four (4) payment blockages
may be imposed under any of the provisions of this Section 13.4(b) while the Junior Subordinated
Notes shall remain outstanding.




64









 








          (c) Notice by the Company. The Company shall give written notice to each holder of
Junior Subordinated Notes of any Senior Subordinated Notes Payment Default (and any acceleration of
the maturity of any Indebtedness as a result thereof) and the receipt of any notice under Section
13.4(b)(i) or Section 13.4(b)(ii) immediately upon the occurrence or receipt thereof, as the case
may be.




     13.5 Insolvency, etc. In the event of:



          (a) any insolvency, bankruptcy, receivership, liquidation, reorganization, readjustment,
composition or other similar proceeding relating to any Company, its creditors or its Properties
and Facilities;




          (b) any proceeding for the liquidation, dissolution or other winding-up of the Company,
voluntary or involuntary, whether or not involving insolvency or bankruptcy proceedings;




          (c) any assignment by the Company for the benefit of creditors; or




          (d) any other marshalling of the assets of the Company



first, all Senior Financing shall be paid in full in cash before any payment or distribution,
whether in cash, securities (other than securities of the Company or any other corporation provided
for by a plan of reorganization or readjustment the payment of which is subordinated, at least to
the extent provided in this Article 13 with respect to Subordinated Debt, to the payment of all
Senior Financing and the Senior Term Loans at the time outstanding and to any securities issued in
respect thereof under any such plan or reorganization or readjustment (such securities being
referred to as “Other Subordinated Securities”)) or other property shall be made to any
holder of any Subordinated Debt or any Senior Term Notes on account of any Subordinated Debt or the
Senior Term Notes;



and second, all Senior Term B Notes shall be paid in full in cash before any payment or
distribution, whether in cash, securities (other than Other Subordinated Securities) or other
property shall be made to any holder of any Senior Term C Notes,



and third, all Senior Term C Notes shall be paid in full in cash before any payment or
distribution, whether in cash, securities (other than Other Subordinated Securities) or other
property shall be made to any holder of any Subordinated Notes,



and Fourth, all Senior Subordinated Notes shall be paid in full in cash before any payment or
distribution, whether in cash, securities (other than securities of the Company’s or any other
corporation provided for by a plan of reorganization or readjustment the payment of which is
subordinated, at least to the extent provided in this Article 13 with respect to Junior
Subordinated Notes, to the payment of all Senior Subordinated Notes at the time outstanding and to
any securities issued in respect thereof under any such plan of reorganization or readjustment
(such securities being referred to as “Other Subordinated Junior Notes”)) or other property
shall be made to any holder of any Junior Subordinated Notes on account of any Junior Subordinated
Notes.



Any payment or distribution, whether made in cash, securities (other than Other Subordinated
Securities or Other Subordinated Junior Notes) or other property, and whether made directly or


65









 






indirectly that would otherwise (but for this Section 13.5) be payable or deliverable in respect of
Subordinated Debt shall first be paid or delivered directly to the holders of Senior Financing in
accordance with the priorities then existing among such holders until all Senior Financing shall
have been paid in full in cash and second be paid or delivered directly to the holders of Senior
Term Loan B in accordance with the priorities then existing among such holders until all Senior
Term B Notes shall have been paid in full in cash and third be paid or delivered directly to the
holders of Senior Term Loan C in accordance with the priorities then existing among such holders
until all Senior Term C Notes shall have been paid in full in cash and fourth be paid or delivered
directly to the holders of Senior Subordinated Notes in accordance with the priorities then
existing among such holders until all Senior Subordinated Notes shall have been paid in full in
cash.




     13.6 Limited Suspension of Remedies of Holders of Subordinated Debt. At any time
during which payment on the Subordinated Debt shall be prohibited pursuant to the terms of Sections
13.2 or 13.3, no holder of Subordinated Debt may:



          (a) declare or join in the declaration of any Subordinated Debt to be due and payable or
otherwise accelerate the maturity of the principal of the Notes, accrued interest thereon or
prepayment premium or other amounts due thereunder, or




          (b) commence any administrative, legal or equitable action against the Company;



     provided, however, that the limitations contained in clauses (a) and (b) above shall terminate
with respect to such period on the earlier of (i) the date on which the Senior Agent or any Senior
Lender accelerates the maturity of the Senior Financing in the case of a prohibition of payment
pursuant to Section 13.2 or the date on which the holders of the Senior Term Loans accelerate the
maturity of the Senior Term Notes in the case of a prohibition of payment pursuant to Section 13.3
and (ii) the date that is the one hundred eightieth (180th) day after the date of delivery of
written notice by Agent to Senior Lender or holders of Senior Term Loans, as the case may be, of
the occurrence and continuance of a Default or Event of Default under this Agreement.




     13.7 Proof of Claim. Each holder of Subordinated Debt irrevocably authorizes and
empowers the holders of Senior Financing and the Senior Term Loans and each holder of Junior
Subordinated Notes irrevocably authorizes and empowers the holders of Senior Subordinated Notes in
any proceeding under any federal or state bankruptcy or insolvency law, or any other
reorganization, dissolution or liquidation proceedings of the Company to file a proof of claim on
behalf of such holder of Subordinated Debt or Junior Subordinated Notes, as the case may be, with
respect to the Subordinated Debt or the Junior Subordinated Notes, as the case may be, and the
other amounts owing hereunder and the Notes if (and only if) such holder of Subordinated Debt or
Junior Subordinated Notes, as the case may be, fails to file proof of its claims prior to ten (10)
days before the expiration of the time period during which such proof of claim must be filed.
Neither this Section 13.7, nor any other provisions hereof, shall be construed to give the holders
of Senior Financing or the Senior Term Loans any right to vote any Subordinated Debt or the holders
of Senior Subordinated Notes any right to vote any Junior Subordinated Notes, or any related claim,
whether in connection with any resolution, arrangement, plan of reorganization, compromise,
settlement, election, or otherwise.



66









 





     13.8 Acceleration of Subordinated Debt. In the event that any Subordinated Debt shall
be declared due and payable as the result of the occurrence of any one or more Events of Default in
respect thereof, under circumstances when the terms of Section 13.2 or 13.3 do not prohibit payment
on Subordinated Debt, no payment shall be made in respect of any Subordinated Debt unless and until
all Senior Financing and the Senior Term Loans shall have been paid in full in cash or such
declaration and its consequences shall have been rescinded and all such Defaults and Events of
Default shall have been remedied or waived or shall have ceased
to exist. In the event that any Junior Subordinated Notes shall be declared due and payable as
the result of the occurrence of any one or more Events of Default in respect thereof, under
circumstances when the terms of Section 13.4 do not prohibit payment on Junior Subordinated Notes,
no payment shall be made in respect of any Junior Subordinated Notes unless and until all Senior
Subordinated Notes shall have been paid in full in cash or such declaration and its consequences
shall have been rescinded and all such Defaults and Events of Default shall have been remedied or
waived or shall have ceased to exist.



     13.9 Turnover of Payments.



          (a) If:





          (i) any payment or distribution shall be collected or received by any holders
of Subordinated Debt in contravention of any of the terms of this Article 13 and
prior to the payment in full in cash of the Senior Financing or the Senior Term
Loans at the time outstanding; and




          (ii) Agent or the Senior Agent shall have notified such holders of
Subordinated Debt, within one hundred eighty (180) days of any such payment or
distribution, of the facts by reason of which such collection or receipt so
contravenes this Article 13;


then such holders of Subordinated Debt will deliver such payment or distribution, to the extent
necessary to pay all such Senior Financing or Senior Term Loans in full in cash, to the holders of
such Senior Financing or Senior Term Loans and, until so delivered, the same shall be held in trust
by such holders of Subordinated Debt as the property of the holders of such Senior Financing or
Senior Term Loans. If after any amount is delivered pursuant to this Section 13.9(a), whether or
not such amounts have been applied to the payment of Senior Financing or the Senior Term Loans, and
the outstanding Senior Financing or the Senior Term Loans shall thereafter be paid in full in cash
by the Company or otherwise other than pursuant to this Section 13.9(a), the holders of Senior
Financing or the Senior Term Loans shall return to such holders of Subordinated Debt an amount
equal to the amount delivered to such holders of Senior Financing or the Senior Term Loans pursuant
to this Section 13.9(a). Any optional prepayment made in respect of the Subordinated Debt that
violates this Agreement or the Senior Credit Agreement shall also be subject to this Section
13.9(a).




67









 








          (b) If:





          (i) any payment or distribution shall be collected or received by any holders
of Junior Subordinated Notes in contravention of any of the terms of this Article
13 and prior to the payment in full in cash of the Senior Subordinated Notes at the
time outstanding; and




          (ii) the Agent shall have notified such holders of Junior Subordinated Notes,
within one hundred eighty (180) days of any such payment or distribution, of the
facts by reason of which such collection or receipt so contravenes this Article 13;


then such holders of Junior Subordinated Notes will deliver such payment or distribution, to the
extent necessary to pay all such Senior Subordinated Notes in full in cash, to the holders of such
Senior Subordinated Notes and, until so delivered, the same shall be held in trust by such holders
of Junior Subordinated Notes as the property of the holders of such Senior Subordinated Notes. If
after any amount is delivered to the holders of Senior Subordinated Notes pursuant to this Section
13.9(b), whether or not such amounts have been applied to the payment of Senior Subordinated Notes,
and the outstanding Senior Subordinated Notes shall thereafter be paid in full in cash by the
Company or otherwise other than pursuant to this Section 13.9(b), the holders of Senior
Subordinated Notes shall return to such holders of Junior Subordinated Notes an amount equal to the
amount delivered to such holders of Senior Subordinated Notes pursuant to this Section 13.9(b).




     13.10 Obligations Not Impaired.



          (a) No Impairment of Senior Financing or Senior Term Loans. No right of any present
or future holder of any Senior Financing or Senior Term Loans and no right of any present or future
holder of any Senior Subordinated Notes to enforce the subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder, or by any
non-compliance by the Company with the terms, provisions and covenants of this Agreement,
regardless of any knowledge thereof any such holder may have or be otherwise charged with.




          (b) No Impairment of Subordinated Debts. Nothing contained in this Section 13.10
shall impair, as between the Company and any holder of Subordinated Debt, the obligation of the
Company to pay to such holder the principal thereof and prepayment premium, if any, and interest
thereon as and when the same shall become due and payable in accordance with the terms of this
Agreement, or prevent any holder of any Subordinated Debt from exercising all rights, powers and
remedies otherwise permitted by applicable law or under this Agreement or the Stockholders
Agreement, all subject to the rights of the holders of the Senior Financing and the Senior Term
Loans to receive cash, Securities or other property otherwise payable or deliverable to the holders
of Subordinated Debt.




     13.11 Payment of Debt; Subrogation. Upon the payment in full of all Senior Financing
and Senior Term Loans in cash, the holders of Subordinated Debt shall be subrogated to all rights
of any holder of Senior Financing or any holder of Senior Term Loans to receive any further
payments or distributions applicable thereto until the Subordinated Debt shall have been paid in
full, and such payments or distributions received by the holders of Subordinated Debt by reason of
such subrogation, of cash, Securities or other property which otherwise would be paid or



68









 







distributed to the holders of Senior Financing or Senior Term Loans, shall, as between the Company
and its creditors other than the holders of Senior Financing or Senior Term Loans, on the one hand,
and the holders of Subordinated Debt, on the other hand, be deemed to be a payment by the Company
on account of Senior Financing or Senior Term Loans and not on account of Subordinated Debt. Upon
the payment in full of all Senior Subordinated Notes in cash, the holders of Junior Subordinated
Notes shall be subrogated to all rights of any holder of Senior Subordinated Notes to receive any
further payments or distributions applicable to the Senior Subordinated Notes until the Junior
Subordinated Notes shall have been paid in full, and such payments or distributions received by the
holders of Junior Subordinated Notes by reason of such subrogation, of cash, Securities or other
property which otherwise would be paid or distributed to the holders of Senior Subordinated Notes,
shall, as between the Company and its creditors other than the holders of Senior Subordinated
Notes, on the one hand, and the holders of Junior Subordinated Notes, on the other hand, be deemed
to be a payment by the Company on account of Senior Subordinated Notes and not on account of Junior
Subordinated Notes.



     13.12 Reliance of Holders of Senior Financing and Senior Term Loans; Reliance of Holders
of Senior Subordinated Notes; Amendments.



          (a) Reliance of Holders of Senior Financing. Each holder of Subordinated Debt by its
acceptance thereof shall be deemed to acknowledge and agree that the foregoing subordination
provisions are, and are intended to be, an inducement to and a consideration of each holder of any
Senior Financing and Senior Term Loans, whether such financing was created or acquired before or
after the creation of Subordinated Debt, to acquire and hold, or to continue to hold, such Senior
Financing or Senior Term Loans, and such holder of Senior Financing or Senior Term Loans shall be
deemed conclusively to have relied on such subordination provisions in acquiring and holding, or in
continuing to hold, such Senior Financing or Senior Term Loans.




          (b) Reliance of Holders of Senior Subordinated Notes. Each holder of Junior
Subordinated Notes by its acceptance thereof shall be deemed to acknowledge and agree that the
foregoing subordination provisions are, and are intended to be, an inducement to and a
consideration of each holder of any Senior Subordinated Notes, whether such Senior Subordinated
Note was created or acquired before or after the creation of Junior Subordinated Notes, to acquire
and hold, or to continue to hold, such Senior Subordinated Notes, and such holder of Senior
Subordinated Notes shall be deemed conclusively to have relied on such subordination provisions in
acquiring and holding, or in continuing to hold, such Senior Subordinated Notes.




          (c) Amendments. Notwithstanding anything to the contrary herein, no amendment, waiver
or other modification of this Article 13 shall be effective unless such amendment, waiver or other
modification shall have been approved in writing by Senior Agent and all of the holders of Senior
Term Loans and Senior Subordinated Notes outstanding at the time of such amendment, waiver or other
modification.




     13.13 Notices. Whenever any notice to holders of Notes shall be required pursuant to
the provisions of this Article 13, the Senior Agent and the other holders of Senior Financing shall
be deemed to have given such notice if such notice shall have been delivered to



          (a) all holders of Notes identified on Annex A and all holders of Notes identified in
the register of the Company maintained pursuant to Section 6.1 in each case in the manner specified
in Section 14.6, and




69









 








          (b) all other holders of Notes that shall have given written notice to the Senior Agent that
such holder holds one or more Notes;



provided, however, that if the Company shall fail to make such register available to the Senior
Agent, then such notice shall be deemed to have been given if such notice is delivered to (i) all
holders of Notes identified on Annex A, in the manner specified in Section 14.6, and (ii)
all other holders of Notes that shall have given written notice to the Senior Agent that such
holder holds one or more Notes. For the purposes of this Section 13.13, any such written notice to
the Senior Agent by any such other holder of Notes shall be effective if given to the Senior Agent
at the address of the Senior Agent supplied by the Company from time to time.




ARTICLE 14




MISCELLANEOUS




     14.1 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns, except that (i) the
Company may not assign or transfer its rights hereunder or any interest herein or delegate its
duties hereunder and (ii) Purchasers shall have the right to assign their rights hereunder and
under the Notes and Securities in accordance with Article 6.



     14.2 Modifications and Amendments. The provisions of this Agreement may be modified,
waived or amended, but only by a written instrument signed by the Company and the Agent to be bound
thereby and, to the extent such modification, amendment or waiver relates (i) to the Notes, such
instrument must be executed by Agent on behalf of Purchasers upon satisfaction of the conditions
set forth in Section 9.11 and (ii) to the Preferred Stock, the Common Stock, the Warrants or the
Warrant Shares, such instrument must be executed by the holders of at least seventy-five percent
(75%) of the Preferred Stock, Common Stock or the Warrant Shares, as appropriate.



     14.3 No Implied Waivers; Cumulative Remedies; Writing Required. No delay or failure
in exercising any right, power or remedy hereunder shall affect or operate as a waiver thereof; nor
shall any single or partial exercise thereof or any abandonment or discontinuance of steps to
enforce such a right, power or remedy preclude any further exercise thereof or of any other right,
power or remedy. The rights and remedies hereunder are cumulative and not exclusive of any rights
or remedies that Agent or Purchasers or any holder of Notes, Preferred Stock, Common Stock,
Warrants or Warrant Shares would otherwise have. Any waiver, permit, consent or approval of any
kind or character of any breach or default under this Agreement or any such waiver of any provision
or condition of this Agreement must be in writing, satisfy the conditions set forth in Section 9.11
and shall be effective only to the extent in such writing specifically set forth.



     14.4 Reimbursement of Expenses. The Company upon demand shall pay or reimburse Agent
and Purchasers for all reasonable fees and expenses incurred or payable by Agent or Purchasers
(including, without limitation, reasonable fees and expenses of special counsel for Agent and
Purchasers), from time to time (i) arising in connection with the negotiation, preparation and
execution of this Agreement, the Notes, the other Transaction Documents and all other instruments
and documents to be delivered hereunder or thereunder or arising in connection with the
transactions contemplated hereunder or thereunder, (ii) relating to any amendments,



70









 







waivers or
consents pursuant to the provisions hereof or thereof, and (iii) arising in connection with the
enforcement of this Agreement or collection of the Notes.



     14.5 Holidays. Whenever any payment or action to be made or taken hereunder or under
the Notes shall be stated to be due on a day which is not a Business Day, such payment or action
shall be made or taken on the next following Business Day, and such extension of time shall be
included in computing interest or fees, if any, in connection with such payment or action.



     14.6 Notices. All notices and other communications given to or made upon any party
hereto in connection with this Agreement shall, except as otherwise expressly herein provided, be
in writing (including telecopy, but in such case, a confirming copy will be sent by another
permitted means) and mailed via certified mail, telecopied or delivered by guaranteed overnight
parcel express service or courier to the respective parties, as follows:


to the Company:



Global Dosimetry Solutions, Inc.

2652 McGaw Avenue

Irvine, CA 92614

Attention: Chief Financial Officer



with a copy to:



Global Dosimetry Solutions, Inc.

c/o American Capital Strategies, Ltd.

Two Bethesda Metro Center

14th Floor

Bethesda, Maryland 20814

Attention: Compliance Officer



with a copy to:



Global Dosimetry Solutions, Inc.

c/o American Capital Strategies, Ltd.

Attention: Robert Klein, Principal

                   Brian Graff, Principal

461 Fifth Avenue, 26th Floor

New York, New York 10017

Fax: (212) 213-2060



with a copy to:



Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York 10153

Attention: Christopher K. Aidun

Fax: (212) 310-8007




71









 







to Agent:



American Capital Strategies, Ltd.

2 Bethesda Metro Center, 14th Floor

Bethesda, Maryland 20814

Attention: Compliance Officer

Fax: (301) 654-6714



with a copy to:



American Capital Strategies, Ltd.

Attention: Robert Klein, Principal

461 Fifth Avenue, 26th Floor

New York, NY 10017

Fax: (212) 213-2060



and



Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York 10153

Attention: Christopher K. Aidun, Esq.

Fax: (212) 310-8007



to Purchasers:



as set forth on Annex A



or in accordance with any subsequent written direction from the recipient party to the sending
party. All such notices and other communications shall, except as otherwise expressly herein
provided, be effective upon delivery if delivered by courier or overnight parcel express service;
in the case of certified mail, three (3) Business Days after the date sent; or in the case of
telecopy, when received.




     14.7 Survival. All representations, warranties, covenants and agreements of the
Company contained herein or made in writing in connection herewith shall survive the execution and
delivery of this Agreement and the purchase of the Notes, Preferred Stock, Common Stock and the
Warrants and shall continue in full force and effect so long as any Note, Preferred Stock, Common
Stock or Warrant is outstanding and until payment in full of all of the Company’s obligations
hereunder or thereunder. All obligations relating to indemnification hereunder shall survive any
termination of this Agreement and shall continue for the length of any applicable statute of
limitations.



     14.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.



     14.9 Jurisdiction, Consent to Service of Process.



72









 





          (a) THE COMPANY HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY,
TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT OF THE UNITED STATES
OF AMERICA SITTING IN THE CITY OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER PURCHASE
DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ALL CLAIMS
IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK OR, TO THE
EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS
AGREEMENT SHALL AFFECT ANY RIGHT THAT AGENT, PURCHASERS AND THE COMPANY MAY OTHERWISE HAVE TO BRING
ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE NOTES OR ANY OTHER PURCHASE DOCUMENT
AGAINST AGENT, PURCHASERS,
COMPANY, AS APPLICABLE, OR THEIR RESPECTIVE PROPERTIES IN THE COURTS OF ANY JURISDICTION.




          (b) THE COMPANY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY
LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTES OR
ANY OTHER PURCHASE DOCUMENT IN ANY NEW YORK OR FEDERAL COURT. IF EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO
THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.




          (c) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER
PROVIDED FOR NOTICES IN SECTION 14.6 HEREOF. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF
ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.




     14.10 Jury Trial Waiver. THE PARTIES HEREBY IRREVOCABLY WAIVE ANY RIGHT TO TRIAL BY
JURY IN ANY ACTION OR PROCEEDING (I) TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR IN CONNECTION WITH
THIS AGREEMENT, OR (II) ARISING FROM ANY DISPUTE OR CONTROVERSY IN CONNECTION WITH OR RELATED TO
THIS AGREEMENT AND AGREE THAT ANY SUCH ACTION OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY.



     14.11 Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable law in any jurisdiction,
such provision shall be ineffective only to the extent of such prohibition or invalidity, without
invalidating any other provision of this Agreement.



73









 





     14.12 Headings. Article, section and subsection headings in this Agreement are
included for convenience of reference only and shall not constitute a part of this Agreement for
any other purpose.



     14.13 Indemnity. The Company hereby agrees to indemnify, defend and hold harmless
Agent and Purchasers and their officers, directors, employees, agents and representatives, and
their respective successors and assigns in connection with any losses, claims, damages, liabilities
and expenses, including reasonable attorneys’ fees, to which Agent or any Purchaser may become
subject (other than as a result and to the extent of the gross negligence or willful misconduct of
any such Person), insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or by reason of any investigation, litigation or other proceedings related to
or resulting from any act of, or omission by, the Company or its Affiliates or any officer,
director, employee, agent or representative of the Company or its Affiliates with respect to the
Transactions, the Notes, the Preferred Stock, the Common Stock, the Warrants, Charter, the By-laws
or any agreements entered into in connection with any such agreements, instruments or documents,
and to reimburse Agent and Purchasers and each such Person and Affiliate, upon demand, for any
legal or other expenses incurred in connection with investigating or defending any such loss,
claim, damage, liability, expense or action, except to the extent that any such loss,
claim, damage, liability, expense or action arises out of or by reason of the willful
misconduct or gross negligence of Agent, Purchaser or any of their respective officers, directors,
employees, agents and representatives. To the extent that the foregoing undertakings may be
unenforceable for any reason, the Company agrees to make the maximum contribution to the payment
and satisfaction of indemnified liabilities set forth in this Section 14.13 which is permissible
under applicable law.



     14.14 Environmental Indemnity. The Company and its respective successors and assigns,
hereby release and discharge, and agree to defend, indemnify and hold harmless, Agent, Purchasers
and their Affiliates (including their partners, subsidiaries, customers, guests, and invitees, and
the successors and assigns of all of the foregoing, and their respective officers, employees and
agents) from and against any and all Environmental Liabilities, whenever and by whomever asserted,
to the extent that such Environmental Liabilities are based upon, or otherwise relate to: (i) any
Condition at any time in, at, on, under, a part of, involving or otherwise related to the
Properties and Facilities (including any of the properties, materials, articles, products, or other
things included in or otherwise a part of the Properties and Facilities); (ii) any action or
failure to act of any Person, including any prior owner or operator of the Properties and
Facilities (including any of the properties, materials, articles, products, or other things
included in or otherwise a part of the Properties and Facilities), involving or otherwise related
to the Properties and Facilities or operations of the Company; (iii) the Management of any
Pollutant, material, article or product (including Management of any material, article or product
containing a Pollutant) in any physical state and at any time, involving or otherwise related to
the Properties and Facilities or any property covered by clause (iv) (including Management either
from the Properties and Facilities or from any property covered by clause (iv), and Management to,
at, involving or otherwise related to the Properties and Facilities or any property covered by
clause (iv)); (iv) Conditions, and actions or failures to act, in, at, on, under, a part of,
involving or otherwise related to any property other than the Properties and Facilities, which
property was, at or prior to the Additional Closing Date, (I) acquired, held, sold, owned,
operated, leased, managed, or divested by, or otherwise associated with, (A) the Company, (B) any
of the Company’s Affiliates, or (C) any predecessor or successor organization of those identified
in (A) or (B); or (II) engaged in any tolling, contract manufacturing or processing, or other
similar



74









 







activities for, with, or on behalf of the Company; (v) any violation of or noncompliance
with or the assertion of any Lien under the Environmental Laws, (vi) the presence of any toxic or
hazardous substances, wastes or contaminants on, at or from the past and present Properties and
Facilities, including, without limitation, human exposure thereto; (vii) any Release affecting the
past or present Properties and Facilities, whether or not the same originates or emanates from such
Properties and Facilities or from any contiguous real estate, including, without limitation, any
loss of value of such Properties and Facilities as a result thereof; or (viii) a misrepresentation
in any representation or warranty or breach of or failure to perform any covenant made by the
Company in this Agreement. This indemnity and agreement to defend and hold harmless shall survive
any termination or satisfaction of the Notes, or the sale, assignment or foreclosure thereof, or
the sale, transfer or conveyance of all or part of the past and present Properties and Facilities,
or any other circumstances which might otherwise constitute a legal or equitable release or
discharge, in whole or in part, of the Company under the Notes.



     14.15 Counterparts. This Agreement may be executed in any number of counterparts and
by either party hereto on separate counterparts, each of which, when so executed and delivered,
shall be an original, but all such counterparts shall together constitute one and the same
instrument.



     14.16 Integration. This Agreement and the other Transaction Documents set forth the
entire understanding of the parties hereto with respect to all matters contemplated hereby and
supersede all previous agreements and understandings among them concerning such matters. No
statements or agreements, oral or written, made prior to or at the signing hereof, shall vary,
waive or modify the written terms hereof. This Agreement shall amend and restate the Existing
Purchase Agreement in its entirety, and the initial agreement shall have no further effect as of
the date hereof.



     14.17 Subordination. The obligations evidenced hereby are subordinate in the manner
and to the extent set forth herein and in the Intercreditor Agreement by and among the Senior
Agent, Agent and the Company, to the Senior Financing, and each holder hereof, by its acceptance
hereof, acknowledges and agrees to be bound by the provisions hereof and of the Intercreditor
Agreement when so executed.



* * *




75









 





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



	 	 	 	 	 
	 	COMPANY:




GLOBAL DOSIMETRY SOLUTIONS, INC.

 	 
	 	By:  	/s/ Thomas  Logan 	 
	 	 	Name:  	Thomas Logan 	 
	 	 	Title:  	CEO	 
	 
	 	AGENT:




AMERICAN CAPITAL FINANCIAL SERVICES, INC.

 	 
	 	By:  	/s/ Todd Wilson	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PURCHASERS:




AMERICAN CAPITAL STRATEGIES, LTD.

 	 
	 	By:  	/s/ Todd Wilson	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	ACS FUNDING TRUST I



By: AMERICAN CAPITAL STRATEGIES, LTD.,

        its Servicer

 	 
	 	By:  	/s/ Todd Wilson	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 






	 	 	 	 	 
	 	ACAS BUSINESS LOAN TRUST 2003-2



By: AMERICAN CAPITAL STRATEGIES, LTD.,

        its Servicer

 	 
	 	By:  	/s/ Todd Wilson	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 



Signature Page to Note and Equity Purchase Agreement




2









 








ANNEX A

INFORMATION RELATING TO PURCHASERS





 









 











ANNEX B




	 	 	 
	Holder	 	 
	American Capital Strategies, Ltd.

	 	Senior Term B Note-1, $5,000,000
	American Capital Strategies

	 	Senior Term B Note-2, $5,000,000
	American Capital Strategies

	 	Senior Term C Note, $4,000,000
	American Capital Strategies

	 	Senior Subordinated Note-1, $4,300,000
	American Capital Strategies

	 	Senior Subordinated Note-2, $4,300,000
	American Capital Strategies

	 	Tranche A Junior Subordinated Note, $4,300,000
	American Capital Strategies

	 	Tranche B Junior Subordinated Note, $4,300,000






	 	 	 
	 	 	Warrants and Number of Shares of Common
	Holder	 	Stock of the Company
	American Capital Strategies, Ltd.

	 	Warrant, 88,560 shares






	 	 	 
	Holder	 	Preferred Stock
	 
	 	 
	American Capital Strategies, Ltd.

	 	20,000 shares of Series A PIK Preferred Stock






	 	 	 
	Holder	 	Common Stock
	 
	 	 
	American Capital Strategies, Ltd.

	 	17,500 shares of Common Stock