exv10w2






Exhibit 10.2




EXECUTION COPY




Revolving Loan Facility




Senior Term Notes




Senior Subordinated Notes




Junior Subordinated Notes




 

 





NOTE AND EQUITY PURCHASE AGREEMENT




by and among




MGP INSTRUMENTS, INC.




AS BORROWER,




DOSIMETRY ACQUISITIONS (U.S.), INC.




AS GUARANTOR,




AMERICAN CAPITAL FINANCIAL SERVICES, INC.




AS AGENT




and




THE PURCHASERS IDENTIFIED ON

ANNEX A HERETO




June 23, 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
	 	 	17	 
	 	 	 
	 	 	 	 
	ARTICLE 2	 	ESTABLISHMENT OF REVOLVING LOAN FACILITY
AND ISSUE AND SALE OF NOTES
	 	 	17	 
	2.1	 	Senior Term Loans
	 	 	17	 
	2.2	 	Subordinated Notes
	 	 	17	 
	2.3	 	Revolving Loans
	 	 	17	 
	2.4	 	Sale and Purchase
	 	 	18	 
	2.5	 	The Closing
	 	 	18	 
	 	 	 
	 	 	 	 
	ARTICLE 3	 	REPAYMENT OF THE REVOLVING LOANS, THE
SENIOR TERM LOANS AND THE SUBORDINATED
NOTES
	 	 	19	 
	3.1	 	Interest Rates and Interest Payments
	 	 	19	 
	3.2	 	Repayment of Senior Term Notes
	 	 	20	 
	3.3	 	Repayment of Subordinated Notes
	 	 	20	 
	3.4	 	Repayment of Revolving Loans
	 	 	21	 
	3.5	 	Optional Prepayment of Notes
	 	 	21	 
	3.6	 	Notice of Optional Prepayment
	 	 	21	 
	3.7	 	Mandatory Prepayment
	 	 	22	 
	3.8	 	Home Office Payment
	 	 	22	 
	3.9	 	Taxes
	 	 	22	 
	3.10	 	Maximum Lawful Rate
	 	 	23	 
	3.11	 	Break Funding Payments
	 	 	23	 
	3.12	 	Capital Adequacy
	 	 	23	 
	3.13	 	Certain Waivers
	 	 	24	 
	 	 	 
	 	 	 	 
	ARTICLE 4	 	CONDITIONS
	 	 	24	 
	4.1	 	Conditions to the Senior Term Loan B, Revolving Loan and
Purchase of Subordinated Notes
	 	 	24	 
	4.2	 	Conditions Precedent to each Revolving Loan
	 	 	27	 
	4.3	 	Waiver
	 	 	28	 
	 	 	 
	 	 	 	 
	ARTICLE 5	 	REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES
	 	 	28	 
	5.1	 	Representations and Warranties of Loan Parties
	 	 	28	 
	5.2	 	Absolute Reliance on the Representations and Warranties
	 	 	34	 
	 	 	 
	 	 	 	 
	ARTICLE 6	 	TRANSFER OF SECURITIES
	 	 	34	 
	6.1	 	Restricted Securities
	 	 	34	 
	6.2	 	Legends; Purchaser’s Representations
	 	 	34	 
	6.3	 	Transfer of Notes
	 	 	35	 






i









 





TABLE OF CONTENTS
(continued)








	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 	 	 
	 	 	 	 
	6.4	 	Replacement of Lost Securities
	 	 	35	 
	6.5	 	No Other Representations Affected
	 	 	35	 
	 	 	 
	 	 	 	 
	ARTICLE 7	 	COVENANTS
	 	 	35	 
	7.1	 	Affirmative Covenants
	 	 	35	 
	7.2	 	Negative Covenants
	 	 	40	 
	7.3	 	Financial Covenants
	 	 	44	 
	 	 	 
	 	 	 	 
	ARTICLE 8	 	EVENTS OF DEFAULT
	 	 	45	 
	8.1	 	Events of Default
	 	 	45	 
	8.2	 	Consequences of Event of Default
	 	 	47	 
	 	 	 
	 	 	 	 
	ARTICLE 9	 	THE AGENT
	 	 	47	 
	9.1	 	Authorization and Action
	 	 	47	 
	9.2	 	Delegation of Duties
	 	 	48	 
	9.3	 	Exculpatory Provisions
	 	 	48	 
	9.4	 	Reliance
	 	 	48	 
	9.5	 	Non-Reliance on Agent and Other Purchasers
	 	 	48	 
	9.6	 	Agent in its Individual Capacity
	 	 	49	 
	9.7	 	Successor Agent
	 	 	49	 
	9.8	 	Collections and Disbursements
	 	 	49	 
	9.9	 	Reporting
	 	 	50	 
	9.10	 	Consent of Purchasers
	 	 	50	 
	9.11	 	This Article Not Applicable to Loan Parties
	 	 	51	 
	 	 	 
	 	 	 	 
	ARTICLE 10	 	PUT OPTION AND UNLOCKING RIGHTS
	 	 	51	 
	10.1	 	Grant of Option
	 	 	51	 
	10.2	 	Put Price
	 	 	51	 
	10.3	 	Exercise of Put Option
	 	 	51	 
	10.4	 	Certain Remedies
	 	 	52	 
	10.5	 	Put Option Closing
	 	 	52	 
	10.6	 	Unlocking Rights
	 	 	52	 
	 	 	 
	 	 	 	 
	ARTICLE 11	 	PURCHASE RIGHTS
	 	 	53	 
	11.1	 	Limited Preemptive Rights
	 	 	53	 
	11.2	 	Termination
	 	 	53	 
	 	 	 
	 	 	 	 
	ARTICLE 12	 	REGISTRATION RIGHTS
	 	 	53	 
	12.1	 	Piggyback Registrations
	 	 	53	 
	12.2	 	Demand Registration Rights
	 	 	55	 
	12.3	 	S-3 Demand Registration Rights
	 	 	55	 
	12.4	 	Holdback Agreements
	 	 	56	 
	12.5	 	Registration Procedures
	 	 	56	 
	12.6	 	Registration Expenses
	 	 	58	 
	12.7	 	Indemnification
	 	 	59	 
	12.8	 	Participation in Underwritten Registrations
	 	 	60	 






 









 





TABLE OF CONTENTS
(continued)







	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 	 	 
	 	 	 	 
	ARTICLE 13	 	SUBORDINATION OF NOTES
	 	 	60	 
	13.1	 	General
	 	 	60	 
	13.2	 	Default in Respect of Senior Notes
	 	 	60	 
	13.3	 	Default in Respect of Senior Subordinated Notes
	 	 	61	 
	13.4	 	Insolvency, etc
	 	 	63	 
	13.5	 	Limited Suspension of Remedies of Holders of Subordinated Notes
	 	 	64	 
	13.6	 	Proof of Claim
	 	 	64	 
	13.7	 	Acceleration of Subordinated Notes
	 	 	64	 
	13.8	 	Turnover of Payments
	 	 	65	 
	13.9	 	Obligations Not Impaired
	 	 	66	 
	13.10	 	Payment of Debt; Subrogation
	 	 	66	 
	13.11	 	Reliance of Holders of Senior Notes; Reliance of Holders
of Senior Subordinated Notes; Amendments
	 	 	66	 
	 	 	 
	 	 	 	 
	ARTICLE 14	 	GUARANTEE
	 	 	67	 
	14.1	 	Guaranty
	 	 	67	 
	14.2	 	Guaranty Absolute and Unconditional
	 	 	68	 
	14.3	 	Waivers
	 	 	69	 
	14.4	 	Reliance
	 	 	69	 
	14.5	 	Waiver of Subrogation and Contribution Rights
	 	 	69	 
	14.6	 	Default; Remedies
	 	 	69	 
	14.7	 	Irrevocability
	 	 	70	 
	14.8	 	Setoff
	 	 	70	 
	14.9	 	No Marshalling
	 	 	70	 
	14.10	 	Collateral
	 	 	70	 
	14.11	 	Waiver of Consequential Damages
	 	 	70	 
	 	 	 
	 	 	 	 
	ARTICLE 15	 	MISCELLANEOUS
	 	 	71	 
	15.1	 	Successors and Assigns
	 	 	71	 
	15.2	 	Modifications and Amendments
	 	 	71	 
	15.3	 	No Implied Waivers; Cumulative Remedies; Writing Required
	 	 	71	 
	15.4	 	Reimbursement of Expenses
	 	 	71	 
	15.5	 	Holidays
	 	 	71	 
	15.6	 	Notices
	 	 	71	 
	15.7	 	Survival
	 	 	73	 
	15.8	 	Governing Law
	 	 	73	 
	15.9	 	Jurisdiction, Consent to Service of Process
	 	 	73	 
	15.10	 	Jury Trial Waiver
	 	 	74	 
	15.11	 	Severability
	 	 	74	 
	15.12	 	Headings
	 	 	74	 
	15.13	 	Indemnity
	 	 	74	 
	15.14	 	Environmental Indemnity
	 	 	75	 
	15.15	 	Counterparts
	 	 	75	 
	15.16	 	Integration
	 	 	76	 
	15.17	 	Federal Income Tax Treatment
	 	 	76	 






 









 





TABLE OF CONTENTS
(continued)





	 	 	 	 	 	 	 
	 	 	 	 	Page	 
	 	 	 
	 	 	 	 
	SIGNATURE PAGE TO NOTE AND EQUITY PURCHASE AGREEMENT	 	 	76	 
	 	 	 
	 	 	 	 
	ANNEX A INFORMATION RELATING TO PURCHASERS	 	 	80	 
	 	 	 
	 	 	 	 
	ANNEX B	 	 
	 	 	81	 
	 	 	 
	 	 	 	 
	SCHEDULES	 	 
	 	 	85	 
	 	 	 
	 	 	 	 
	EXHIBITS	 	 
	 	 	86	 






 











 





NOTE AND EQUITY PURCHASE AGREEMENT




$24,944,400 Aggregate Principal Amount of Senior Term B Notes Due June 23, 2010




$12,238,000 Aggregate Principal Amount of Senior Subordinated Notes Due June 23, 2011




$4,867,200 Aggregate Principal Amount of Junior Subordinated Notes Due June 23, 2011




$8,213,400 Revolving Loan Facility




          THIS NOTE AND EQUITY PURCHASE AGREEMENT (this “Agreement”), dated as of June 23, 2004,
is by and among MGP INSTRUMENTS, INC., a Delaware corporation (“Borrower”), DOSIMETRY
ACQUISITIONS (U.S.), INC., a Delaware corporation (“Topco”), as Guarantor as provided
herein, 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 and collateral 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. Pursuant to a Stock Purchase and Exchange Agreement (the “Stock Purchase Agreement”),
dated March 22, 2004, as amended and restated on June 16, 2004, by and between Topco and certain
stockholders (collectively, “Sellers”) of Synodys SA, a société anonyme existing under the
laws of the Republic of France (“Synodys”), Topco and its wholly-owned Subsidiary,
Dosimetry Acquisitions (France) SAS, a société par actions simplifiée (“Holdco”), have,
concurrent herewith, acquired by purchase from Sellers all of the issued and outstanding capital
stock of Synodys (the “Acquisition”).



B. Pursuant to a Subscription Agreement, dated March 8, 2004, as amended and restated on June 16,
2004 (the “Subscription Agreement”), ACAS has purchased shares of common stock, par value
$.001 per share, of Topco (the “Common Stock”), Series A Redeemable PIK Preferred Stock,
par vale $.001 per share, of Topco (the “Preferred Stock”), and warrants to purchase shares
of Common Stock (the “Company Warrants”), and in order to induce ACAS to purchase such
Common Stock, Preferred Stock and Company Warrants, Topco has agreed to grant ACAS certain rights
set forth herein.



C. The Loan Parties have proposed selling Notes to Purchaser in the aggregate amount of $41,979,600
for the purpose of financing the Acquisition.



D. The Loan Parties also propose to enter into a revolving credit facility with the Purchaser in
the amount of $8,213,400 for the purpose of financing the Acquisition and providing working
capital.



E. As an inducement for Purchasers to purchase the Notes, Topco has agreed to guaranty the
obligations of the Loan Parties.




 









 








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




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., a Delaware corporation.




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




          “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 Loan Parties by virtue of the transactions contemplated in this
Agreement.




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




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




          “Agreement” shall mean this Note and Equity 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 on a control premium basis
without discount for limitations on voting rights, minority interests, illiquidity or restrictions
on transfer, as determined by an appraisal performed at the expense of Topco by any of (x)
Houlihan, Lokey, Howard & Zukin, (y) Duff & Phelps or (z) Willamette Management Associates, or any
successor to such firms, as Topco 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 Topco shall be deemed to be exercised, exchanged or converted, and the Underlying Common Stock
of Topco shall be deemed outstanding.




          “BNP Agreement” shall mean that Convention de prêt of June 24, 2002 pour MGP Finance
co-arrangée par BNP Paribas & Lyonnaise de Banque, as amended on the date hereof.




2









 








          “Business” shall mean the principal business of the Synodys Companies 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 New York or Maryland are authorized or required by law to close.




          “By-laws” shall mean the by-laws, partnership agreement, operating agreement or analogous
instrument governing the operations of each of the Synodys Companies, as applicable, including all
amendments and supplements thereto.




          “Capital Expenditures” shall mean for any period of determination the sum of capital
expenditures and payments under Capitalized Leases of the Synodys Companies for such period
determined and consolidated in accordance with GAAP.




          “Capitalized Leases” shall mean, with respect to any Person, leases of (or other agreements
conveying the right to use) any property (whether real, personal or mixed) by such Person as lessee
that, in accordance with GAAP (as defined in Section 1.2 hereof), either would be required to be
classified and accounted for as capital leases on a balance sheet of such Person or otherwise be
disclosed as such in a note to such balance sheet.




          “Cash Flow Prepayments” shall have the meaning assigning to such term in Section 3.6(b)
hereof.




          “CERCLA” shall mean the Comprehensive Environmental Response, Compensation and Liability Act
(42 U.S.C. § 9604, et seq.), as amended, and rules, regulations, standards, guidelines and
publications issued thereunder.




          “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 Topco by Topco representing in the aggregate more than
fifty percent (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 Topco by any
holder or holders thereof representing in the aggregate more than 50% of the issued and outstanding
voting securities of Topco on a fully diluted basis and the receipt of any consideration in
connection therewith;




          (b) a merger, consolidation, reorganization, recapitalization or share exchange (whether or
not Topco is the surviving and continuing corporation) in which the stockholders of Topco
immediately prior to such transaction own, as a result of and receive in exchange for securities of
Topco owned by them (whether alone or together with cash, property or other securities), or the
issuance by Topco of securities to stockholders of another Person or Persons in
such transactions, cash, property or securities of the resulting or surviving entity and as a
result thereof Persons who were holders of voting securities of Topco 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;




3









 








          (c) a sale, transfer or other disposition of 30% or more of the assets of the Synodys
Companies, on a consolidated basis;




          (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 Topco within a 12-month period that results in a transfer of more than 50% of
the issued and outstanding shares of voting stock of Topco or a transfer of more than 50% of the
voting power of Topco; and




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




          “Charter Documents” shall mean the Articles of Incorporation, Certificate of Incorporation,
certificate of limited partnership, certificate of limited liability company, charter or analogous
organic instrument filed with the appropriate Governmental Authorities of each of the Synodys
Companies, as applicable, including all amendments and supplements thereto.




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




          “Closing Date” shall have the meaning assigned to such term in Section 2.4 hereof.




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




          “Collateral Access Agreement” shall mean an agreement in form and substance reasonably
satisfactory to the Agent pursuant to which a mortgagee or lessor of real property on which
collateral is stored or otherwise located, or a warehouseman, processor or other bailee of
Inventory, acknowledges the Liens of the Agent and waives any Liens held by such Person on such
property and, in the case of any such agreement with a mortgagee or lessor, permits the Agent
access to and use of such real property for a reasonable amount of time following the occurrence
and during the continuance of an Event of Default to assemble, complete and sell any collateral
stored or otherwise located thereon.




          “Common Stock” shall have the meaning ascribed thereto in the Recitals.




          “Company Warrants” shall have the meaning set forth in the Recitals hereto.




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




          “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 Synodys Companies
are a part from time to time.




          “Copyright Licenses” shall mean any agreement, whether written or oral, providing for the
grant by or to any Synodys Company of any right to use any Copyright.





4









 








          “Copyrights” shall mean all copyrights in published and unpublished works, and all
applications, registrations and renewals relating thereto.




          “Covered Taxes” shall have the meaning assigned to such term in Section 3.8 hereof.




          “Currency Agreement” means any foreign exchange contract, currency swap agreement, futures
contract, option contract, synthetic cap or other similar agreement or arrangement to which any of
the Synodys Companies is a party.




          “Debt to EBITDA Ratio” shall mean the ratio of (i) Indebtedness of the Synodys Companies, on a
consolidated basis, as of a particular date, to (ii) the EBITDA for the twelve months ending on
such date.




          “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 meaning assigned to such term in Section 12.2(a) hereof.




          “EBITDA” shall mean for any measurement period, without duplication, the total of the
following for the Synodys Companies on a consolidated basis, each calculated for such period: Net
Income plus interest expense, plus taxes based on income, plus depreciation, amortization and
Management Fees, as adjusted by the Board of Directors of Topco for non-recurring charges.




          “Environmental Laws” shall mean any Laws that address, are related to or are otherwise
concerned with environmental, health or safety issues, including 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 exposure or impact on
worker health and safety.




          “Environmental Liabilities” shall mean any obligations or liabilities (including any claims,
suits or other assertions of obligations or liabilities) that are:




          (a) related to environmental, health or safety issues (including 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 CERCLA and RCRA) 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: (i) fines, penalties, judgments, awards,
settlements, losses, damages (including foreseeable and unforeseeable consequential damages),
costs, fees (including attorneys’ and consultants’ fees), expenses and disbursements; (ii)



5









 






defense and other responses to any administrative or judicial action (including claims, notice letters,
complaints, and other assertions of liability); and (iii) financial responsibility for (1) cleanup
costs and injunctive relief, including any Removal, 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.




          “Equity Origination Fee” shall mean a fee of $871,229 to be paid by the Loan Parties to
Purchaser or its designee in consideration of the transactions in the Subscription Agreement.




          “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 in effect, promulgated thereunder.




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




          “Excess Cash Flow” shall mean for any period, on a consolidated basis, calculated in
accordance with GAAP: (a) EBITDA for such period, minus (b) the sum of (i) Capital
Expenditures made by the Synodys Companies during such period in cash; (ii) scheduled principal
payments made by the Synodys Companies with respect to Indebtedness; (iii) amounts paid in cash by
the Synodys Companies during such period for income taxes and interest; (iv) net changes in working
capital of the Synodys Companies and (v) amounts paid in cash by the Synodys Companies during such
period with respect to any Capitalized Leases.




          “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 Topco 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 Projections” shall have the meaning assigned to such term in Section 5.1(c)(ii)
hereof.




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




          “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 June 30 of each
year.




          “Fixed Charge Coverage Ratio” shall mean for any fiscal quarter, the ratio of EBITDA of the
Synodys Companies less Capital Expenditures on a consolidated basis during such fiscal quarter to
the Fixed Charges during such fiscal quarter.




6









 








          “Fixed Charges” shall mean, for any period, and each calculated for such period (without
duplication) on a consolidated basis, the sum of (a) cash interest expense of the Synodys
Companies; plus (b) scheduled payments of principal with respect to all Indebtedness of the Synodys
Companies; plus (c) any cash payment or income or franchise taxes included in the determination of
Net Income, excluding any provision for deferred taxes; plus (d) payment of deferred taxes accrued
in any prior period.




          “Fully Diluted Basis” shall mean the total number of shares of Common Stock, which are issued
and outstanding, plus the total number of shares of Common Stock which would be issued and
outstanding assuming the exercise of all outstanding options, warrants or rights to purchase Common
Stock and the conversion of all outstanding securities.




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




          “Governmental Authorities” shall mean any federal, state or municipal court or other
governmental department, commission, board, bureau, agency or instrumentality, governmental or
quasi-governmental, domestic or foreign.




          “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.




          “Hedge Agreement” means an Interest Rate Agreement or a Currency Agreement designed to hedge
against fluctuations in interest rates or currency values, respectively.




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




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




          “Indebtedness” shall mean, for any Person at the time of any determination, without
duplication, all obligations, contingent or otherwise, of such Person that, in accordance with
GAAP, should be classified upon the balance sheet of such Person as indebtedness, but in any event
including: (i) all obligations for borrowed money, (ii) all obligations arising from
installment purchases of property or representing the deferred purchase price of property or
services in respect of which such Person is liable, contingently or otherwise, as obligor or
otherwise (other than trade payables and other current liabilities incurred in the ordinary course
of business on terms customary in the trade), (iii) all obligations evidenced by notes, bonds,
debentures, acceptances or instruments, or arising out of letters of credit or bankers’ acceptances



7









 






issued for such Person’s account, (iv) all obligations, whether or not assumed, secured by any Lien
or payable out of the proceeds or production from any property or assets now or hereafter owned or
acquired by such Person, (v) all obligations for which such Person is obligated pursuant to a
Guaranty, (vi) the capitalized portion of lease obligations under Capitalized Leases, (vii) all
factoring arrangements, and (viii) all obligations of such Person upon which interest charges are
customarily paid or accrued. Obligations under Interest Rate Agreements and Currency Agreements
shall not constitute Indebtedness.




          “Intellectual Property Collateral” shall mean collectively all Patents, Trademarks and
Copyrights of the Synodys Companies and all Trademark Licenses, Patent Licenses, and Copyright
Licenses.




          “Intercompany Loan” means that certain Demand Loan, dated as of the date hereof, between
Borrower and Holdco, as amended and supplemented from time to time.




          “Interest Coverage Ratio” means, for any measurement date, the ratio of (a) EBITDA for the
twelve (12) months ended on such date over (b) cash interest expense less cash interest
income of the Synodys Companies during the twelve (12) months ended on such date.




          “Interest Rate Agreement” shall mean any interest rate swap, interest rate cap, interest rate
collar or other similar agreement or arrangement to which any Synodys Company is a party.




          “Inventory” shall mean, with respect to any Synodys Company, 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 Synodys Company’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 partnership interests and joint
venture interests), (ii) any capital contribution to any other Person and (iii) Interest Rate
Agreements or Currency Agreements not constituting Hedge Agreements.




          “Investment Banking Agreement” shall mean that certain investment banking agreement between
Topco and ACFS, dated June 16, 2004.




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




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




8









 








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




          “Junior Subordinated Origination Fee” shall mean a fee of $146,023 to be paid by the Loan
Parties to Purchaser or its designee in consideration of the Junior Subordinated Notes.




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




          “Junior Subordinated Notes” shall have the meaning assigned to such term in Section 2.2(b)
hereof.




          “Laws” shall mean all U.S. and foreign federal, state or local statutes, laws, rules,
regulations, ordinances, codes, policies, rules of common law, and the like, now or hereafter in
effect, including any judicial or administrative interpretations thereof, and any judicial or
administrative orders, consents, decrees or judgments.




          “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 if the 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 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




9









 







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 Parties” shall mean Borrower and any Subsidiary of Borrower who becomes a party hereto
after the date hereof.




          “Manage” and “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, regulations, standards, guidelines and
publications issued pursuant to, or otherwise in implementation of, such Environmental Laws).




          “Management Fee” shall mean the management fee set forth in the Investment Banking Agreement.




          “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
have 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 Stock Market as
of 4:00 P.M., New York time, or, if on any day such security is not quoted in the the Nasdaq Stock
Market, 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 securities
exchange or quoted in the Nasdaq Stock Market or the over-the-counter market, the “Market Price”
shall be the fair value thereof determined jointly by Topco and the Holders of Company Warrants
representing a majority of the shares of Common Stock obtainable upon exercise of the Company
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 Change” shall mean any change that has a Material Adverse Effect.




          “Material Adverse Effect” shall mean (i) a material adverse effect on the business, assets,
properties, results of operation or condition (financial or otherwise) of the Synodys Companies,
taken as a whole, or (ii) a material adverse effect on the financial, banking, capital markets or
general economic conditions. Material Adverse Effect does not include effects
resulting directly and primarily from changes relating to generally applicable economic
conditions (including currency exchange rates) or effects relating to the Synodys Companies’
industry in general, which effects do not and would not reasonably be expected to have a materially
disproportionate effect on the Synodys Companies, taken as a whole, relative to other Persons in
the same industry.




10









 








          “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 Synodys Companies or any member
of the Controlled Group.




          “Net Income” shall mean, for any period, the net income (or loss) of the Synodys Companies 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 Senior Term B Notes, the Revolving Notes, the Senior
Subordinated Notes and the Junior Subordinated Notes.




          “Obligations” shall mean (a) the principal and interest (including, without limitation,
interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on the Notes, when and
as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or
otherwise, and (b) all other monetary obligations of the Loan Parties under the Purchase Documents,
including but not limited to, fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including, without limitation, monetary obligations
incurred during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding regardless of whether allowed or allowable in such proceeding).




          “Option Plan” shall mean the Dosimetry Acquisitions (U.S.), Inc. 2004 Option 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.




          “Other Taxes” shall have the meaning assigned to such term in Section 3.8 hereof.




          “Patent Licenses” shall mean all agreements, whether written or oral, providing for the grant
by or to the Synodys Companies of any right to use any Patent.




          “Patents” shall mean (a) all patents now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection therewith, whether in the
United States Patent and Trademark Office or in any similar office or agency of the United States,
Canada, or any other country or any political subdivision thereof, or otherwise, and all common-law
rights related thereto, and (b) the right to obtain all renewals thereof.




          “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.




11









 








          “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.




          “Piggyback Registration” shall have the meaning assigned to such term in Section 12.1(a).




          “PIK Interest” shall mean Junior PIK Interest or Senior PIK Interest, as applicable.




          “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 any of the Synodys Companies or any
member of the Controlled Group.




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




          “Pollutant” shall include 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, construed, or
otherwise used in rules, regulations, standards, guidelines and publications issued pursuant to, or
otherwise in implementation of, 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;
and including any other substance or material that is reasonably determined to present a threat,
hazard or risk to human health or the environment.




          “Preferred Stock” has the meaning ascribed thereto in the Recitals.




          “Prime Rate” shall mean the rate of interest that under current practice is listed as such
under the heading “Money Rates” in the Eastern Edition of The Wall Street Journal, and if a range
of rates is listed, the highest such rate, and should such practice change, such other indication
of the prevailing prime rate of interest as may reasonably be chosen by Required Purchasers.




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




          “Proprietary Rights” shall mean all right, title, and interest in the following intellectual
property, including both statutory and common law rights: (i) copyrights in published and
unpublished works, and all applications, registrations and renewals relating thereto; (ii)
registered or unregistered trademarks, service marks, domain names, logos, trade dress and other
source or business identifiers, and the goodwill associated therewith; (iii) patents, patent
applications, and other patent or industrial property rights in any country; and (iv) trade
secrets, confidential or proprietary information, inventions, ideas, designs, concepts,
compilations of



12









 






information, methods, techniques, procedures, processes, and know-how, whether or
not patentable, 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.




          “Purchase Documents” shall mean this Agreement, the Notes, 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.




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




          “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, regulations, standards, guidelines, and publications issued thereunder.




          “Receivables” shall mean all of such Synodys Company’s accounts, contract rights, instruments
(including those evidencing indebtedness owed to such Synodys Company by its Affiliates),
documents, chattel paper, general intangibles relating to accounts, drafts and acceptances, and all
other forms of obligations owing to such Synodys Company arising out of or in connection with the
sale or lease of Inventory or the rendition of services, all guarantees and other security
therefor, whether secured or unsecured, now existing or hereafter created, and whether or not
specifically sold or assigned to Agent hereunder.




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




          “Removal,” “Remedial” and “Response” actions shall include the types of activities “covered”
by CERCLA, RCRA, and other comparable Environmental Laws, and
whether the activities are those that might be taken by a government entity or those that a
government entity or any other person might seek to require of waste generators, handlers,
distributors, processors, users, storers, treaters, owners, operators, transporters, recyclers,
reusers, disposers, or other persons under “removal,” “remedial,” or other “response” actions.




          “Reportable Event” shall mean any of the events that 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.




13









 








          “Request for Borrowing” shall have the meaning assigned to such term in Section 2.3(b) hereof.




          “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 Loan” shall have the meaning assigned to such term in Section 2.3 hereof.




          “Revolving Loan Commitment” shall mean the amount of $8,213,400.




          “Revolving Loan Commitment Fee” shall mean a fee of $234,268 to be paid by the Loan Parties to
the Purchaser or its designee in consideration of the Revolving Loan Commitment.




          “Revolving Loan Termination Date” shall have the meaning assigned to such term in Section
2.3(a) hereof.




          “Revolving Notes” shall have the meaning assigned to such term in Section 2.3(a) hereof.




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




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




          “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 IP Collateral Assignments, the
Pledge Agreement, 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 Cash Interest” shall have the meaning assigned to such term in Section 3.1(b).




          “Senior Notes” shall mean, collectively, the Revolving Notes and Senior Term B Notes.




14









 








          “Senior Note Payment Default” shall have the meaning assigned to such term in Section 13.2
hereof.




          “Senior Note Covenant Default” shall have the meaning assigned to such term in Section 13.2
hereof.




          “Senior Origination Fee” shall mean a fee of $623,610 to be paid by the Loan Parties to
Purchaser or its designee in consideration of the Senior Term Loan B.




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




          “Senior Subordinated Notes” shall have the meaning assigned to such term in Section 2.2(a)
hereof.




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




          “Senior Subordinated Notes Payment Default” shall have the meaning assigned to such term in
Section 13.3(a) hereof.




          “Senior Subordinated Origination Fee” shall mean a fee of $365,040 payable by the Loan Parties
to Purchaser or its designee in consideration of the Senior Subordinated Notes.




          “Senior Term Loan B” shall have the meaning assigned to such term in Section 2.1 hereof.




          “Senior Term B Notes” shall have the meaning assigned to such term in Section 2.1 hereof.




          “Structuring Fee” shall mean a fee of $973,440 payable by the Loan Parties to ACFS in
consideration of the structuring of the financing contemplated hereby.




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




          “Subordinated Notes” shall have the meaning assigned to such term in Section 2.2(b) hereof.




          “Subsidiary” of any corporation shall mean any other corporation or limited liability company
of which the outstanding capital stock possessing a majority of voting power in the election of
directors (otherwise than as the result of a default) is owned or controlled by such corporation
directly or indirectly through Subsidiaries.




          “Synodys Company” shall mean, each of Topco, Borrower, Synodys and each of the other
Subsidiaries of Topco.




15









 








          “Taxes” shall have the meaning assigned to such term in Section 3.8 hereof.




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




          “Trademark Licenses” shall mean any agreement, whether written or oral, providing for the
grant by or to any Synodys Company of any right to use any Trademark.




          “Trademarks” shall mean (a) all trademarks, trade names, corporate names, company names,
business names, fictitious business names, trade styles, service marks, logos and other source or
business identifiers, and all goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in connection therewith,
whether in the United States Patent and Trademark Office, the Canadian Intellectual Property Office
or in any similar office or agency of the United States, Canada, any state, any province or any
other country or any political subdivision thereof, or otherwise, and all common-law rights related
thereto, and (b) the right to obtain all renewals and extensions thereof.




          “Transaction Documents” shall have the meaning assigned to such term in Section 5.1(f) hereof.




          “Transactions” shall mean the incurrence of debt and the issuance of securities in connection
therewith, as contemplated by this Agreement, the Notes and all other agreements contemplated
hereby and thereby.




          “Underlying Common Stock” shall mean (i) the Common Stock of Topco issued or issuable upon
exercise of the Company 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.




          “Unlocking Offer” shall have the meaning assigned to such term in Section 10.6 hereof.




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




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




          1.2 Accounting Principles. 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.




16









 








          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 any particular provision of this
Agreement, and references to section, article, annex, schedule, exhibit and like references are
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

ESTABLISHMENT OF REVOLVING LOAN FACILITY AND ISSUE AND SALE OF

NOTES




          2.1 Senior Term Loans. Subject to the terms and conditions set forth in this
Agreement, Purchasers agree to make a loan (“Senior Term Loan B”) to the Loan Parties on
the Closing Date in the principal amount of $24,944,400. From and after Closing, the Senior Term
Loan B shall be evidenced by one or more promissory notes made by the Loan Parties in favor of
Purchasers in the form attached hereto as Exhibit A-1 (together with any promissory notes
issued in substitution therefor pursuant to Sections 6.3 and 6.4, the “Senior Term B
Notes”) to be delivered by the Loan Parties at the Closing.




          2.2 Subordinated Notes.




          (a) Senior Subordinated Notes. The Loan Parties have duly authorized the issuance and
sale to Purchasers of $12,238,000 in aggregate principal amount of the Loan Parties’ Senior
Subordinated Notes due June 23, 2011 (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 Note attached hereto as Exhibit A-2.




          (b) Junior Subordinated Notes. The Loan Parties have duly authorized the issuance and
sale to Purchasers of $4,867,200 in aggregate principal amount of the Loan Parties’ Junior
Subordinated Notes due June 23, 2011 (together with any Notes issued in substitution therefor
pursuant to Sections 6.3 and 6.4, the “Junior Subordinated Notes”, and together with the
Senior Subordinated Notes, the “Subordinated Notes”), to be substantially in the form of
the Junior Subordinated Note attached hereto as Exhibit A-3.




          2.3 Revolving Loans.




          (a) Subject to the terms and conditions set forth in this Agreement, on or after the Closing
Date and to, but excluding, June 23, 2005 (the “Revolving Loan Termination Date”),
Purchasers shall, severally, on a pro rata basis based on the percentages specified to Agent, make
loans and advances to the Loan Parties on a revolving credit basis (collectively, the
“Revolving Loans”) in an aggregate amount outstanding at any time less than or equal to the
Revolving Loan



17









 






Commitment Amount. From and after the Closing, the Revolving Loans shall be
evidenced by a promissory note made by the Loan Parties in favor of Purchasers (the “Revolving
Notes”) in the form attached hereto as Exhibit A-4 to be delivered by the Loan parties
at the Closing. The date and amount of each Revolving Loan made by Purchasers and each payment on
account of principal thereof shall be recorded by Agent on its books; provided that, the failure of
Agent to make any such recordation shall not affect the obligations of the Loan Parties to make
payments when due of any amounts owing in respect of the Revolving Loans.




          (b) Purchasers shall make Revolving Loans available to the Loan Parties up to a maximum of one
draw per week, in integral multiples of $100,000, provided that the conditions set forth in Section
2.3(a) hereof, this Section 2.3(b) and Section 4.2 hereof have been satisfied. Before a Revolving
Loan is made, the Loan Parties shall have (i) provided Agent an irrevocable written Request for
Borrowing in the form of Exhibit G (a “Request for Borrowing”) by facsimile or
other means set forth in Section 15.6 so that such notice is received by Agent not later than three
(3) Business Days before the day on which the Revolving Loan is to be made and (ii) contacted Agent
and received from Agent either oral or written confirmation of Agent’s receipt of the Request for
Borrowing not later than 1:00 pm New York time three (3) Business Days before the date on which the
Revolving Loan is to be made. No Revolving Loan shall be made if it would cause the aggregate
amount of Revolving Loans to exceed the Revolving Loan Commitment Amount. Agent and Purchasers
shall be entitled to rely conclusively on any officer of the Loan Parties authority to deliver a
Request for Borrowing or other writing on behalf of the Loan Parties and neither Agent nor any
Purchaser shall have any duty to verify the identity of or signature of any Person identifying
himself as an Executive Officer.




          2.4 Sale and Purchase. Subject to the terms and conditions and in reliance upon the
representations, warranties and agreements set forth herein, the Loan Parties shall sell to
Purchasers, and Purchasers shall purchase from the Loan Parties, in an amount equal to the relative
portion of the Notes to be purchased by each Purchaser as set forth on Annex B, the Notes
in the aggregate principal amounts set forth in Sections 2.1 and 2.2 hereof for $41,979,600 in the
aggregate plus the amount of the Revolving Loan.




          2.5 The Closing. Delivery of and payment for the Notes (the “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 on
or before the date hereof as may be mutually agreeable to the Loan Parties and Purchasers. The
date and time of the Closing as finally determined pursuant to this Section 2.4 are referred to
herein as the “Closing Date.” Delivery of the Notes shall be made to Purchasers against
payment of the purchase price therefor, less any unpaid Senior Origination Fee, Junior Origination
Fee, Revolving Loan Commitment Fee, Structuring Fee and any other amounts due and payable pursuant
to Section 4.1(g) hereof, by wire transfer of immediately available funds in the manner
agreed to by the Loan Parties and Purchasers. The Notes shall be issued in such name or names
and in such permitted denomination or denominations, numbers and amounts as set forth in Annex
B or as Purchasers may request in writing not less than two (2) Business Days before the
Closing Date.




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ARTICLE 3

REPAYMENT OF THE REVOLVING LOANS, THE SENIOR TERM LOANS

AND THE SUBORDINATED NOTES




          3.1 Interest Rates and Interest Payments.




          (a) Senior Term Loan B. The Loan Parties, jointly and severally, covenant and agree
to make payments to the Agent, for the ratable benefit of Purchasers, of accrued interest on the
Senior Term Loan B on the last day of each LIBOR Period, commencing on the first LIBOR Period after
the date hereof, 2004 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 a rate equal to the LIBOR
Rate, as such rate may adjust from time to time, plus six percent (6%) per annum.




          (b) Senior Subordinated Notes. The Loan Parties, jointly and severally, covenant and
agree to make payments to Agent for the ratable benefit of Purchasers, of accrued interest on the
Senior Subordinated Notes on the last day of each LIBOR Period, commencing with the first LIBOR
Period after the date hereof, 2004 through the date of repayment in full of the Senior Subordinated
Notes. 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 the LIBOR Rate, as such rate may adjust
from time to time, plus nine and three tenths percent (9.3%) 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 increased from time
to time) at a rate of three percent (3%) per annum (“Senior PIK Interest”). A late fee of
two hundred and fifty (250) basis points shall be added on any amounts due hereunder which are not
paid in accordance with this Section 3.1(b). Senior PIK Interest shall be payable as an increase
in the principal amount of the Senior Subordinated Notes on the first Business Day of each month
without any further action on the part of Agent or the Loan Parties 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. The Agent’s determination of the amount of Senior Subordinated
Notes outstanding at any time shall be conclusive and binding, absent manifest error.




          (c) Junior Subordinated Notes. The Loan Parties, jointly and severally, covenant and
agree to make payments to Agent for the ratable benefit of Purchasers, of accrued interest on the
Junior Subordinated Notes on the last day of each LIBOR Period, commencing with the first LIBOR
Period after the date hereof, 2004 through the date of repayment in full of the Junior Subordinated
Notes. 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 the LIBOR Rate, as such rate may adjust
from time to time, plus ten and three tenths percent (10.3%) 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
increased from time to time) at a rate of four percent (4%) per annum (“Junior PIK
Interest”). A late fee of two hundred and fifty (250) basis points shall be added on any
amounts due hereunder which are not paid 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
on the first Business Day of each month without any further action on the part of Agent or the Loan
Parties and such increased




19









 







principal amount of the Junior Subordinated Notes shall be paid in full
in connection with the repayment of the Junior Subordinated Notes. The Agent’s determination of
the amount of Junior Subordinated Notes outstanding at any time shall be conclusive and binding,
absent manifest error.




          (d) Cash Payments in Lieu of PIK Interest. Notwithstanding Sections 3.1(b) and 3.1(c)
hereof, commencing with the first “accrual period” (as defined for purposes of the Code) ending
after the fifth anniversary of the Closing Date and continuing with each subsequent accrual period
thereafter, the Loan Parties shall, in respect of each series of Subordinated Notes, pay in cash,
on or before the end of such accrual period, an amount equal to the sum of the annual PIK Interest,
the accrued and unpaid PIK Interest and the accrued and unpaid original issue discount (other than
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.
Any such payment shall first be allocated to the accrued and unpaid PIK Interest.




          (e) Revolving Loans. The Loan Parties, jointly and severally, covenant and agree to
make payments to the Agent for the ratable benefit of Purchasers of accrued interest on the
Revolving Loans on the last day of each LIBOR Period, commencing with the first LIBOR Period after
the date hereof, through the date of their repayment in full. The Revolving Loans will bear
interest on the outstanding principal thereof at a rate per annum equal to the LIBOR Rate, as such
rate may adjust from time to time, plus six percent (6.0%).




          (f) Computation of Interest. Interest on the Notes will be computed on the basis of a
year of three hundred sixty (360) days of twelve (12) thirty (30) day months and the actual number
of days elapsed.




          3.2 Repayment of Senior Term Notes. The Loan Parties, jointly and severally, covenant
and agree to repay to Agent, for the ratable benefit of Purchasers, the unpaid balance of the
Senior Term B Notes in full, together with all accrued and unpaid interest, fees and other amounts
due hereunder, on June 23, 2010.




          3.3 Repayment of Subordinated Notes.




          (a) Senior Subordinated Notes. The Loan Parties, jointly and severally, covenant and
agree to repay to Agent, for the ratable benefit of Purchasers, the unpaid balance of the Senior
Subordinated Notes in full, together with all accrued and unpaid interest, fees and other amounts
due hereunder, on June 23, 2011.




          (b) Junior Notes. The Loan Parties, jointly and severally, covenant and agree to
repay to Agent, for the ratable benefit of Purchasers, the unpaid balance of the Junior
Subordinated Notes in full, together with all accrued and unpaid interest, fees and other amounts
due hereunder, on June 23, 2011.




20









 








          3.4 Repayment of Revolving Loans. The Loan Parties covenant and agree to pay to
Agent, for the ratable benefit of Purchasers, the Revolving Loans in full together with all unpaid
accrued interest, fees and other amounts due hereunder on the Revolving Loan Termination Date. In
addition, the Loan Parties covenant and agree to pay to Agent, for the ratable benefit of
Purchasers, such amount of the Revolving Loans as shall be necessary at any time so that the
aggregate amount of Revolving Loans outstanding at any time does not exceed the Revolving Loan
Commitment Amount.




          3.5  Optional Prepayment of Notes. Subject to the terms of this Section 3.5, the Loan
Parties may prepay to Agent, for the ratable benefit of Purchasers, the outstanding principal
amount of the Senior Term B Notes and the Subordinated Notes in whole or in part in multiples of
$250,000, or such lesser amount as is then outstanding, at any time at a price equal to (i) the
accrued interest, if any, to the date set for prepayment, plus (ii) in the case of the Subordinated
Notes, a prepayment fee representing the amortization of certain of Purchasers’ costs incurred in
connection with the purchase of the Subordinated Notes equal to the principal amount prepaid
thereon multiplied by the following percentage:




	 	 	 
	If Prepaid During	 	 
	the 12-Month Period	 	 
	Ending on June 23	 	 
	of the Following Years:	 	Percentage
	2005
	 	5%
	2006
	 	4%
	2007
	 	3%
	2008
	 	2%
	2009 and Thereafter
	 	1%





provided, however, that no prepayment shall be applied to (a) the Subordinated
Notes so long as the Senior Term B Notes remain outstanding and (b) to the Junior Subordinated
Notes so long as the Senior Subordinated Notes remain outstanding. All such prepayments shall be
applied by Agent to the outstanding principal in the inverse order of maturity after application of
such prepayment to any accrued interest and prepayment premium payable in connection therewith.




          3.6 Notice of Optional Prepayment. If the Loan Parties shall elect to prepay any
Notes pursuant to Section 3.5 hereof, the Loan Parties 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 of the Treasurer of Borrower that such prepayment is being made in compliance with
Section 3.5. 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.




21









 








          3.7 Mandatory Prepayment.




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




          (b) Excess Cash Flow. In addition to the amounts payable by the Loan Parties in
respect of the Notes pursuant to Sections 3.2, 3.3, 3.4 and 3.5 hereof, the Loan Parties jointly
and severally, covenant and agree to make an annual principal prepayment on the Senior Term Loan B
(the “Cash Flow Prepayment”) on or before the end of the LIBOR Period that occurs the
soonest after the one hundred twentieth (120th) day following the end of each Fiscal Year in an
amount equal to seventy-five percent (75%) of the Excess Cash Flow, or such lesser amount as is
then outstanding under the Senior Term B Notes, for so long as any amounts remain outstanding under
the Senior Term B Notes. All Cash Flow Prepayments in respect of any Fiscal Year shall be applied
by Agent to the outstanding principal of the Senior Term B Notes in the inverse order of maturity
after application of such prepayment to any accrued interest payable in connection therewith.




          3.8 Home Office Payment. The Loan Parties will pay all sums becoming due on any Note
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 Loan Parties in writing for such purpose, without the
presentation or surrender of such Note or the making of any notation thereon, except that upon
written request of the Loan Parties made concurrently with or reasonably promptly after payment or
prepayment in full of any Note, each holder of a Note shall surrender such Note for cancellation,
reasonably promptly after such request, to the Loan Parties at their principal executive office.




          3.9 Taxes. Any and all payments by the Loan Parties hereunder or under the Notes or
other Purchase 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,
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 any of the Loan Parties shall be
required by law to deduct any Covered Taxes from or in respect of any sum payable hereunder or
under any Notes or other Purchase Documents 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 paragraph), each Purchaser receives an amount equal to the sum
it would have received had no such deductions been made. The Loan Parties shall make such
deductions and the Loan
Parties shall pay the full amount so deducted to the relevant taxation authority or other
authority in accordance with applicable law. In addition, the Loan Parties agree to pay any
present or future stamp, documentary, excise, privilege, intangible or similar levies that arise at
any time or from



22









 






time to time from any payment made under any and all Purchase Documents or from
the execution or delivery by the Loan Parties 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 Purchase Documents (collectively, “Other Taxes”). The Loan Parties 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 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 Loan Parties 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 Loan
Parties shall, absent manifest error, be final, conclusive and binding on all parties. The
obligation of the Loan Parties under this Section 3.9 shall survive the payment of the Notes and
the termination of this Agreement. Within thirty (30) days after the Loan Parties having received
a receipt for payment of Covered Taxes and/or Other Taxes, the Loan Parties shall furnish to Agent
the original or certified copy of a receipt evidencing payment thereof.




          3.10 Maximum Lawful Rate. This Agreement, the Notes and the other Purchase Documents
are hereby limited by this Section 3.10. 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 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 excess interest
exceeds the unpaid balance of the principal amount of the Notes, such excess shall be refunded to
the Loan Parties.




          3.11 Break Funding Payments. In the event of the payment of any principal of any Note
(other than the Subordinated Notes) other than on the date such payment was scheduled to be paid or
the due date for mandatory prepayments pursuant to Section 3.7 hereof (including payments as a
result of an Event of Default), the Loan Parties shall compensate each Purchaser, upon demand, for
the loss, cost and expense attributable to such event with respect to the period from such payment
date to the day immediately preceding the next scheduled payment or due date.




          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 (provided they are legally binding) 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 any Purchaser’s
obligations under this Agreement or any other Purchase Documents, then, upon demand by
Purchasers, the Loan Parties immediately shall pay to Purchasers, from the time as specified
by Purchasers, additional amounts sufficient to compensate Purchasers in light of such
circumstances. The obligations of the Loan Parties under this Section 3.12 shall survive the
payment of the Notes and the termination of this Agreement.





23











 





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




ARTICLE 4

CONDITIONS




          4.1 Conditions to the Senior Term Loan B, Revolving Loan and Purchase of Subordinated
Notes. The obligation of Purchasers to advance the Senior Term Loan B and to purchase and pay
for the Notes is subject to the satisfaction, prior to or at the Closing, 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 as though then made, except to the extent of changes caused by the transactions expressly
contemplated herein.




          (b) Material Adverse Change. There shall have been no Material Adverse Change in the
business, financial condition, assets, Business or prospects of the Synodys Companies or the
capital markets since June 30, 2003.




          (c) Security Documents. The Loan Parties, Topco and Agent, for the benefit of the
Purchasers, shall have entered into (i) a security agreement or security agreements with Agent
subordinated in lien priority only to the Liens in favor of any senior lender as contemplated
therein, if any, in form and substance as set forth in Exhibit B attached hereto (as the
same may be amended, modified or supplemented from time to time in accordance with the terms
thereof, the “Security Agreement”), (ii) a collateral patent, trademark and license
assignment or assignments in form and substance as set forth in Exhibit C attached hereto
(as the same may be amended, modified or supplemented from time to time in accordance with the
terms thereof, the “IP Collateral Assignments”) and (iii) stock pledge and security
agreements in form and substance as set forth in Exhibit D attached hereto (as the same may
be amended, modified or supplemented from time to time in accordance with the terms thereof, the
“Pledge Agreements”). The Loan Parties and Topco shall have executed and delivered to
Agent, for the benefit of the 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.
Agent shall have received reports of filings with appropriate government agencies showing that
there are no Liens on the assets of the Loan Parties and Topco other than Permitted Liens.




          (d) Environmental Reports. Agent shall have received reports covering the Synodys
Companies’ properties in form and substance satisfactory to Agent regarding the Synodys Properties’
compliance with Environmental Laws.




24









 








          (e) Collateral Access Agreements. The Loan Parties shall have delivered to Agent a
Collateral Access Agreement for each property specified by the Agent, in form and substance
satisfactory to the Agent.




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





     (i) two or more Senior Term B Notes evidencing the Senior Term Loan B (as
designated by Agent and Purchasers pursuant to Section 2.1 and Annex A
hereof) in aggregate original principal amounts as set forth herein, duly completed
and executed by the Loan Parties;




     (ii) one or more Subordinated Notes (as designated by Agent and Purchasers
pursuant to Section 2.2 and Annex A hereof) in aggregate original principal
amounts as set forth herein, duly completed and executed by the Loan Parties;




     (iii) one or more Revolving Notes evidencing the Revolving Loans (as designated
by Agent and Purchasers pursuant to Section 2.3 and Annex A hereof) in the
maximum amounts as set forth herein, duly completed and executed by the Loan
Parties;




     (iv) certificates of good standing dated not more than 10 days prior to the
Closing Date for each of the Loan Parties and Topco issued by their respective
jurisdictions of organization and each jurisdiction where it is qualified to operate
as a foreign corporation, or its equivalent;




     (v) a copy of the Charter Documents of each of the Loan Parties and Topco,
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;




     (vi) a copy of the By-laws of each of the Loan Parties and Topco, certified as
of the Closing Date by the secretary, assistant secretary, manager or general
partner, as applicable, of each respective Loan Party and Topco;




     (vii) a certificate of the secretary or assistant secretary, manager or general
partner of each of the Loan Parties and Topco, certifying as to the names and true
signatures of the officers or other authorized person of the respective Loan Party
and Topco authorized to sign this Agreement and the other documents to be delivered
by the respective Loan Party and Topco hereunder;




     (viii) copies of the resolutions duly adopted by each Loan Party’s and Topco’s
board of directors, general partners, board of managers or other governing body,
authorizing the execution, delivery and performance by the respective Loan Party and
Topco of this Agreement and each of the other agreements, instruments and documents
contemplated hereby to which the respective Loan Party and Topco is a party to, and
the consummation of all of the other Transactions, certified as of



25









 







the Closing Date by the secretary, assistant secretary, manager or general
partner of the respective Loan Party and Topco;




     (ix) a certificate dated as of the Closing Date from an officer, general
partner or manager of each of the Synodys Companies stating that the conditions
specified in this Section 4.1 have been fully satisfied or waived by Agent;




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




     (xi) copies of all material leases to which any of the Loan Parties is a party
to; and




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



          (g) Purchaser’s Fees and Expenses.





     (i) Revolving Loan Commitment Fee. On the Closing Date, the Loan
Parties shall pay the Revolving Loan Commitment Fee to ACFS (and the Loan Parties
hereby authorize Agent to deduct from the aggregate proceeds from the sales of the
Notes by the Loan Parties, the unpaid amount of such Revolving Loan Commitment Fee);




     (ii) Senior Origination Fee. On the Closing Date, the Loan Parties
shall pay the Senior Origination Fee to ACFS (and the Loan Parties hereby authorize
Agent to deduct from the aggregate proceeds from the sales of the Notes by the Loan
Parties, the unpaid amount of such Senior Origination Fee);




     (iii) Junior Subordinated Origination Fee. On the Closing Date, the
Loan Parties shall pay the Junior Origination Fee to ACFS (and the Loan Parties
hereby authorize Agent to deduct from the aggregate proceeds from the sales of the
Notes by the Loan Parties, the unpaid amount of such Junior Origination Fee);




     (iv) Structuring Fee. On the Closing Date, the Loan Parties shall pay
the Structuring Fee to ACFS (and the Loan Parties hereby authorize the Agent to
deduct from the sales of the Notes by the Loan Parties the unpaid amount of such
Structuring Fee);




     (v) Equity Fee. On the Closing Date, the Loan Parties shall pay the
Equity Fee to ACFS (and the Loan Parties hereby authorize the Agent to deduct from
the sales of the Notes by the Loan Parties the unpaid amount of such Equity Fee);




     (vi) Senior Subordinated Origination Fee. On the Closing Date, the
Loan Parties shall pay the Senior Subordinated Origination Fee to ACFS (and the Loan



26









 







Parties hereby authorize the Agent to deduct from the sales of the Notes by the
Loan Parties the unpaid amount of such Senior Subordinated Origination Fee); and




     (vii) Other Fees and Expenses. On the Closing Date, the Loan Parties
shall have paid the fees and expenses of Agent and Purchasers, payable by the Loan
Parties pursuant to Section 15.4 hereof (and the Loan Parties hereby authorize Agent
to deduct all such amounts from the aggregate proceeds of the sale of the Notes by
the Loan Parties).



          (h) Legal Investment. On the Closing Date, Purchasers’ purchases of the Notes 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, or
change in the interpretation thereof by any Governmental Authority, subsequent to the date of this
Agreement.




          (i) 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 all documents
incident thereto will be satisfactory in form and substance to Agent and its counsel and to
Purchasers and their counsel.




          (j) Consummation of Acquisition. The Acquisition 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 delivered
in connection therewith.




          (k) Investment Banking Agreement. Topco and ACFS shall have executed an Investment
Banking Agreement in a form reasonably satisfactory to ACFS in the form attached hereto as
Exhibit F.




          4.2 Conditions Precedent to each Revolving Loan. The obligation of the Purchasers on
any date (including the Closing Date) to make a Revolving Loan is subject to the satisfaction of
each of the following conditions precedent:




          (a) Request for Borrowing. Agent shall have received a duly executed Request for
Borrowing with respect to each Revolving Loan in accordance with Section 2.3(b) hereof.




          (b) Compliance. Both before and after giving effect to the proceeds of any Revolving
Loan, (i) no Default or Event of Default shall have occurred and be continuing, (ii) repayment of
the Notes shall not been accelerated in accordance with Section 8.2 hereof, (iii) the Loan Parties
shall have complied and be in compliance with all the terms, covenants and conditions of each
Purchase Document, and (iv) the representations and warranties of the Loan Parties contained in
Section 5 hereof shall be true and correct on and as of the Closing Date and shall be true and
correct in all material respects on and as of any such date after the Closing Date with the same
effect as though made on and as of the date of each Revolving Loan (except to the extent that any
of the Schedules to this Agreement have been amended prior to any funding date to appropriately
update any immaterial matters disclosed therein); and the Agent, if it so requests,





27









 







shall have received a certificate, dated as of the date of each Revolving Loan, signed by an
Executive Officer of the Loan Parties to the foregoing effect.




          (c) No Material Adverse Change. No Material Adverse Change shall have occurred since
the date of the last audited financial statements of the Synodys Companies delivered to the Agent.




          (d) Additional Documents. The Agent shall have received prior to the date of each
Revolving Loan all additional documents and certificates that the Agent shall have reasonably
requested.




          4.3 Waiver. Any condition specified in this Article 4 may be waived by Agent on
behalf of the 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 LOAN PARTIES




          5.1 Representations and Warranties of Loan Parties. As a material inducement to Agent
and Purchasers to enter into this Agreement, advance the Senior Term Loan B and purchase the Notes,
the Loan Parties and Topco, jointly and severally, hereby represent and warrant to Agent and
Purchasers as follows:




          (a) Organization and Power. Each of the Synodys Companies is a corporation (or
comparable entity of non-U.S. jurisdiction) duly organized, validly existing and in good standing
under the laws of its jurisdiction of formation. Each of the Synodys Companies 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 might reasonably be expected to have a Material Adverse Effect. Each of the Synodys
Companies has its principal place of business as set forth on the Organization Schedule. The
copies of the Charter Documents and By-Laws of the Synodys Companies that have been furnished to
Agent reflect all amendments made thereto at any time prior to the date of this Agreement and are
correct and complete.




          (b) Principal Business. The Synodys Companies are manufacturers and distributors of
equipment for the detection of radiation (the “Business”).




          (c) Financial Statements and Financial Projections.





     (i) Financial Statements; Historical Statements. The Loan Parties have
delivered to Agent copies of Synodys’s audited consolidated year-end financial
statements for and as of the fiscal years ended June 30, 2000, June 30, 2001, June
30, 2002 and June 30, 2003 and unaudited balance sheet, income statements and
statement of cash flows for the eleven (11) month period ended May 31, 2004
(together, the “Financial Statements”). The Financial Statements were
compiled



28









 







from the books and records maintained by Synodys’ management, are correct
and complete and fairly represent the consolidated financial condition of Synodys
and its Subsidiaries as of their dates and the results of operations for the fiscal
periods then ended and have been prepared in accordance with generally accepted
accounting principles in France, consistently applied.




     (ii) Financial Projections. The Synodys Companies have delivered to
Agent financial projections (consisting of a projected income statement) of the
Synodys Companies for the period June 30, 2004 through June 30, 2007 derived from
various assumptions of the Synodys Companies’ management (the “Financial
Projections”). The Financial Projections represent a reasonable range of
possible results in light of the history of the Business and the Synodys Companies,
present and foreseeable conditions and the intentions of the Synodys Companies’
management. The Financial Projections accurately reflect the liabilities of the
Synodys Companies upon consummation of the transactions contemplated hereby as of
the Closing Date.




     (iii) Accuracy of Financial Statements. The Synodys Companies do not
have any liabilities, contingent or otherwise, or forward or long-term commitments
that are not disclosed in the Financial Statements or in the notes thereto, and
except as disclosed therein there are no unrealized or anticipated losses from any
commitments of the Synodys Companies that may cause a Material Adverse Effect.



          (d) Capitalization and Related Matters. As of the Closing Date, the authorized
capital stock of each of the Synodys Companies and the number and ownership of all outstanding
capital stock of each of the Synodys Companies is set forth on the Organization Schedule. Except
as set forth in Schedule 5.1(d), as of the Closing Date, none of the Synodys Companies will
have outstanding any stock or securities convertible into or exchangeable for any shares of its
capital stock and none will have outstanding 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. As of the Closing Date, none of the Synodys Companies will be subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital
stock. As of the Closing, all of the outstanding shares of each Synodys Company’s capital stock
will be validly issued, fully paid and nonassessable. None of the Synodys Companies has 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 Notes hereunder do not require
registration under the Securities Act or any applicable state securities laws. Except as set forth
in Schedule 5.1(d), there are no agreements among the Synodys Companies’ stockholders with
respect to the voting or transfer of the Synodys Companies’ capital stock.




          (e) Subsidiaries. The Synodys Companies do not own, or hold any rights to acquire,
any shares of stock or any other security or interest in any other Person, and the Synodys
Companies have no Subsidiaries, except in each case as set forth on the Organizational Schedule.




          (f) Authorization; No Breach. The execution, delivery and performance of this
Agreement, the other Purchase Documents and all other agreements contemplated hereby and
thereby to which each of the Synodys Companies is a party (collectively, the “Transaction






29









 







Documents”), and the consummation of the Transactions have been duly authorized by each of the
Synodys Companies. The execution and delivery by each of the Synodys Companies 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 any
of the Synodys Companies’ 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 Documents of any of the Synodys Companies, or any law, statute,
rule or regulation to which any of the Synodys Companies is subject, or any agreement, instrument,
order, judgment or decree to which any of the Synodys Companies is a party or to which they or
their 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
Loan Parties and Topco.




          (h) Enforceability. This Agreement constitutes, and each of the other Transaction
Documents when duly executed and delivered by each of the Loan Parties who are parties thereto will
constitute, legal, valid and binding obligations of each of the Loan Parties enforceable in
accordance with their respective terms.




          (i) No Material Adverse Change. Since June 30, 2003, there has been no Material
Adverse Change.




          (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
Loan Parties’ and Topco’s management after due inquiry, threatened against or filed by or affecting
any of the Synodys Companies or any of their directors or officers or the businesses, assets or
rights of any of the Synodys Companies. The Synodys Companies and their 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 Synodys Companies are not in violation in any material
respect of any applicable Law. The Synodys Companies are not in default with respect to any
judgment, order, writ, injunction, decree, rule or regulation of any Governmental Authority. The
Synodys Companies are not in, and the consummation of the Transactions will not cause any, default
concerning any judgment, order, writ, injunction or decree of any Governmental Authority, and there
is no investigation, enforcement action or regulatory action pending or threatened against or
affecting any of the Synodys Companies by any Governmental Authority, except as set forth on the
Litigation Schedule. Except as set forth in the Litigation Schedule, there is no remedial or other
corrective action that any of the Synodys Companies is required to take to remain in compliance
with any judgment, order, writ, injunction or decree of any Governmental Authority or to maintain
any material permits, approvals or licenses granted by any Governmental Authority in
full force and effect. During the past ten (10) years, none of the officers, directors or
management




30









 







of any of the Synodys Companies has been arrested or convicted of any material crime nor
has any of them been bankrupt or an officer or director of a bankrupt company.




          (l) Environmental Protection. Except as specified in “Environmental Schedule”
attached hereto as Schedule 5.1(l) and after giving effect to the Transactions: (i) the
business of the Synodys Companies, the methods and means employed by the Synodys Companies in the
operation thereof (including all operations and conditions at or in the properties of the Synodys
Companies), and the assets owned, leased, managed, used, controlled, held or operated by the
Synodys Companies, comply in all material respects with all applicable Environmental Laws; (ii)
with respect to the Properties and Facilities, and except as disclosed in the Environmental
Schedule, the Synodys Companies have obtained, possess, and are in full compliance with all
permits, licenses, reviews, certifications, approvals, registrations, consents, and any other
authorizations required under any Environmental Laws; (iii) the Synodys Companies have not received
(x) any claim or notice of violation, lien, complaint, suit, order or other claim or notice to the
effect that the Synodys Companies 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 other comparable state laws, and to the best of the any of Loan Parties’ and
Topco’s knowledge, none of the operations of the Synodys Companies 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 Synodys Companies have transported, or
arranged for the transportation of, any Pollutants with respect to the Properties and Facilities;
(iv) except as disclosed in the Environmental Schedule, neither the Synodys Companies nor any prior
owner or operator has incurred in the past, or is now subject to, any Environmental Liabilities;
(v) except as disclosed in the Environmental Schedule, 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 or other legal obligations; (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 other legal obligations; 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 and other legal obligations.




          (m) Legal Investments; Use of Proceeds. The Loan Parties will use the proceeds from
the sale of the Notes to pay a portion of the purchase consideration for the Acquisition. The Loan
Parties are 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 Notes 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.




31









 








          (n) Taxes. Each of the Synodys Companies has filed or caused to be filed all Federal,
state, local and other tax returns that are required to be filed by it, 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.




          (o) Labor and Employment. The Synodys Companies are and each of their Plans are in
compliance in all material respects with those provisions of ERISA, the Code, the Age
Discrimination in Employment Act, and the regulations and published interpretations thereunder that
are applicable to the Synodys Companies or any such Plan. As of the date hereof, no Reportable
Event has occurred with respect to any Plan as to which any of the Synodys Companies are or were
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 Synodys Companies 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
Synodys Companies are in compliance in all material respects with all labor and employment laws,
rules, regulations and requirements of all applicable domestic and foreign jurisdictions. There
are no pending or threatened labor disputes, work stoppages or strikes.




          (p) Investment Company Act; Public Utility Holding Company Act. None of the Synodys
is (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 Synodys Companies have good and marketable
title to, or valid leasehold interests in, all of the material assets and properties used or useful
by the Synodys Companies 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 and all such assets and properties are owned by the Synodys
Companies 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.
Except as specified in Schedule 5.1(q), the Synodys Companies do not own any real estate.
All real estate leased by any of the Synodys Companies is listed on the “Properties Schedule,”
attached hereto as Schedule 5.1(q).




          (r) Intellectual Property; Licenses. Each of the Synodys Companies possesses all
Proprietary Rights necessary to conduct the Business as heretofore conducted or as proposed to be
conducted by it. All Proprietary Rights registered in the name of any of the Synodys Companies and
applications therefor filed by any of the Synodys Companies are listed on the “Intellectual
Property Schedule,” attached hereto as Schedule 5.1(r). No event has 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 could have a Material Adverse Effect. None of the Property Rights
owned by or used




32









 







under license by any Synodys Company infringes, misappropriates or conflicts with
any Proprietary Rights or other rights of any other Person; no products or services sold by any
Synodys Company in connection with the Business is infringing on, misappropriating or making any
unlawful or unauthorized use of any Proprietary Rights or other rights of another Person; and no
other Person is infringing upon, misappropriating or making any unlawful or unauthorized use of any
Proprietary Rights of any Synodys Company. None of the Loan Parties has notice or knowledge of any
facts or any past, present or threatened occurrence that could preclude or impair the Synodys
Companies’ 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 Loan Parties, at a fair valuation, will exceed their debts and liabilities,
subordinated, contingent or otherwise, (ii) the present fair saleable value of the property of the
Loan Parties will be greater than the amount that will be required to pay the probable liability of
their debts and other liabilities, subordinated, contingent or otherwise, as such debts and other
liabilities become absolute and matured, (iii) the Loan Parties will be able to pay their debts and
liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute
and matured, and (iv) the Loan Parties will not have unreasonably small capital with which to
conduct the business in which they are engaged as such business is now conducted and is proposed to
be conducted following the Closing Date.




          (t) Complete Disclosure. All factual information furnished by or on behalf of the
Loan Parties 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 Loan Parties 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 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 Synodys Companies nor any Affiliate of the Synodys
Companies nor any director, officer or employee of the Synodys Companies or any of their
Affiliates, respectively, has entered into, as of the date hereof, any side agreement, either oral
or written, with any individual or business, pursuant to which the director, officer, employee,
Synodys Companies or Affiliate agreed to do anything beyond the requirements of the formal, written
contracts executed by the Synodys Companies and disclosed to Purchasers and Agent herein.




          (v) Broker’s or Finder’s Commissions. No broker’s or finder’s or placement fee or
commission will be payable to any broker or agent engaged by the Loan Parties or any of their
officers, directors or agents with respect to the issuance and sale of the Notes or the
transactions contemplated by this Agreement, including without limitation the Transactions, except
for fees payable to ACFS, Purchasers and Agent. The Loan Parties and Topco agree to indemnify
Agent and Purchasers and to hold them harmless from and against any claim, demand or liability for
broker’s or finder’s or placement fees or similar commissions, whether or not payable by the Loan
Parties, 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 Loan Parties.




33









 








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





     (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 (including those relating to foreign
exchange purchasing contracts) incurred, consistently with past business practice,
in or as a result of the normal and ordinary course of business.



          (x) Accuracy of Information. None of the Purchase Documents nor any other information
furnished to any of the Purchasers by any of the Loan Parties and any of their Affiliates in
connection with the Transactions contains any untrue statement of material fact or omits to state
any material fact necessary to make the statements contained therein not misleading.




          (y) OFAC; USA PATRIOT Act. No Synodys Company nor any Affiliate of any Synodys
Company is (i) a country, territory, organization, person or entity named on an Office of Foreign
Asset Control (OFAC) list, (ii) a Person that resides or has a place of business in a country or
territory named on such lists or which is designated as a “Non-Cooperative Jurisdiction” by the
Financial Action Task Force on Money Laundering, or whose subscription funds are transferred from
or through such a jurisdiction; or (iii) a person or entity that resides in or is organized under
the laws of a jurisdiction designated by the United States Secretary of the Treasury under Sections
311 or 312 of the USA PATRIOT Act as warranting special measures due to money laundering concerns.




          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 SECURITIES




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




          6.2 Legends; Purchaser’s Representations. Each of the Purchasers hereby represents
and warrants to the Loan Parties that it is an “accredited investor” within the meaning of Rule
501(a) under the Securities Act and is acquiring the Notes for investment for its own account,





34









 







with
no present intention of dividing its participation with others (except for a potential transfer or
transfers of the Notes 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 Loan Parties may place an appropriate legend on the Notes 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 Notes, the term “Purchaser” as used herein
shall thereafter mean, to the extent thereof, the then holder or holders of such Notes, 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 Loan Parties 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
Loan Parties 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 Loan Parties and Agent of such assignment specifying the new holder’s
name and address; in such case, the Loan Parties shall promptly acknowledge such assignment in
writing to both the old and new holder.




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




          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 Loan Parties, jointly and severally, covenant that, so
long as all or any of the principal amount of the Notes or any interest thereon shall remain
outstanding the Loan Parties shall, and Topco covenants to cause each of its Subsidiaries to:




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




35









 








          (b) Businesses and Properties; Compliance with Laws. At all times (i) do or cause to
be done all things necessary to preserve, renew and keep in full force and effect the rights,
licenses, registrations, permits, certifications, approvals, consents, franchises, patents,
copyrights, trademarks and trade names, and any other trade names that may be material to the
conduct of their businesses; (ii) comply in all material respects with all laws and regulations
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 and regulations;
(iii) take all action that may be required to obtain, preserve, renew and extend all rights,
patents, copyrights, trademarks, tradenames, franchises, registrations, certifications, approvals,
consents, licenses, permits and any other authorizations that 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, 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 necessary in order that the
business carried on in connection therewith may be properly conducted at all times.




          (c) Insurance. (i) Within forty-five (45) days after the Closing Date, Topco shall
deliver to Agent evidence of a directors and officers insurance policy issued by a carrier
reasonably acceptable to Agent insuring the directors and officers of Topco and its Subsidiaries;
(ii) maintain insurance required by the Purchase Documents and any and all contracts entered into
by the Synodys Companies, including but not limited to: (a) coverage on their insurable properties
(including all inventory, equipment and real property) against the perils of fire, theft and
burglary; (b) public liability; (c) workers’ compensation; (d) business interruption; (e) product
liability; and (f) such other risks as are customary with companies similarly situated and in the
same or similar business as that of the Synodys Companies 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. Each of the Synodys Companies 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 Purchaser. All insurance policies of the Synodys
Companies 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 them or upon their 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 Synodys Companies
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 Synodys Companies shall have set aside on their books
adequate reserves with respect thereto.




36









 








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





     (i) Annual Statements. Within ninety (90) days after the end of each
fiscal year, a balance sheet and statements of operations, stockholders’ equity and
cash flows of the Synodys Companies showing the financial condition of the Synodys
Companies as of the close of such year and the results of operations during such
year, all of 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 scope limitation not acceptable to Agent) stating that in
the course of its regular audit of the business of the Synodys Companies, 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 thirty (30) calendar days after the
end of each calendar month, financial statements (including a balance sheet and cash
flow and income statements) showing the financial condition and results of
operations of the Synodys Companies 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 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, consistently applied, 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 may be 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 Synodys
Companies explaining material developments and trends in the Business and such
financial statements and (B) a written certificate signed by Topco’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 Synodys Companies to remedy
the same, and a compliance certificate in the form of Exhibit E showing the
Synodys Companies’ 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 Synodys Companies by independent certified
public accountants in connection with each annual, interim or special audit or
review of



37









 







the financial statements of the Synodys Companies 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
April 15 of each year, a projection of the Synodys Companies’ balance sheet, and
income, retained earnings and cash flow statements, respectively, for the following
four (4) fiscal years (provided that for the first fiscal year the foregoing
information shall be provided on a monthly basis) and comparable actual and budgeted
figures for the current year; 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 Topco’s chief financial officer to the effect that it has been prepared on the
basis of the Synodys Companies’ historical financial statements and records,
together with the assumptions set forth in such projection and that it reflects
expectations, after reasonable analysis, of the Synodys Companies’ management as to
the matters set forth therein.




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




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




     (i) Orders; Injunctions. The issuance by any court or governmental
agency or 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 such injunction,
order or other restraint.




     (ii) Litigation. The notice, filing or commencement of any action,
suit or proceeding against any of the Synodys Companies whether at law or in equity
or by or before any court or any Federal, state, municipal, foreign or other
governmental agency or authority and that, if adversely determined against any of
the Synodys Companies, could resulted 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, local or other
governmental or regulatory agency under any applicable Environmental Laws, (B) any
Removal, Remedial or Response action taken by any of the Synodys Companies or any
other person in response to any Pollutant in, at, on or under, a part of or about
any of the



38









 







Synodys Companies’ properties or any other property, (C) any violation by any
of the Synodys Companies of any Environmental Law, in each case, that could result
in a Material Adverse Effect, or (D) any notice, claim or other information that any
of the Synodys Companies might be subject to an 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 any of the Synodys Companies that could have a Material Adverse Effect.




     (vi) Board Meetings. Written notice of each regular meeting of each of
the Synodys 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 Synodys
Company’s Board of Directors at least seven (7) days in advance of such meeting, but
in any case such notice shall be delivered no later than the date on which the
members of the Board of Directors are notified of such meeting. In addition, the
Synodys Companies 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 material respects with the applicable provisions of ERISA
and the provisions of the Code relating thereto and furnish to Agent, and if requested by them in
writing, furnish to Purchasers, (i) as soon as possible, and in any event within thirty (30) days
after knowing or having reason to know thereof, notice of (A) the establishment by the Synodys
Companies of any Plan, (B) the commencement by the Synodys Companies of contributions to a
Multiemployer Plan, (C) any failure by the Synodys Companies or any of their 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 that the
Synodys Companies propose 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 Synodys Companies, and
(ii) promptly after receipt thereof, a copy of any notice the Synodys Companies 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 Purchasers 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 Synodys Companies and to make extracts from such financial records, all at the
Synodys Companies’ reasonable expense, and permit any authorized representative designated by Agent
or any Purchasers to discuss the affairs, finances and condition of the Synodys Companies




39









 







with the Synodys Companies’ chief financial officers and such other officers as the Synodys
Companies shall deem appropriate, and the Synodys Companies’ independent public accountants.




          (i) Board of Directors.




               (i) The Borrower’s Board of Directors shall be identical in composition to the Board of
Directors of Topco and shall meet at least once per calendar quarter.



               (ii) The Boards of Directors of each of Borrower’s domestic Subsidiaries shall be identical to
the Board of Directors of Borrower, both in terms of their general composition and the formation
and composition of any committees thereof.



               (iii) Members of the Board of Directors of Borrower or any Subsidiary thereof shall be
reimbursed by Borrower for reasonable out of pocket expenses incurred in connection with attendance
at Board of Directors, committee and stockholder meetings.



               (iv) Borrower hereby agrees that, notwithstanding the fiduciary duties a director may have as
a director of Borrower, a director or any observer described in this Section 7.1(i) may share with
Agent or any Purchaser and such Purchaser’s legal and financial advisors any confidential
information related to the business and operations of the Borrower disclosed to him during the
exercise of his duties as a director of Borrower and its Subsidiaries or his participation as an
observer to the Board of Directors of Borrower and its Subsidiaries, as the case may be, unless
such Board of Directors specifically directs that such confidential information not be so
disclosed.



          (j) Future Financings. The Synodys Companies shall give to Agent and Purchasers an
opportunity to participate in any future financings of the Synodys Companies.




          7.2 Negative Covenants. The Loan Parties, jointly and severally, covenant that, and
Topco shall cause that, so long as all or any part of the principal amount of the Notes or any
interest thereon shall remain outstanding:




          (a) Indebtedness. None of the Synodys Companies shall 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) 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;




     (iii) Indebtedness under the BNP Agreement;




     (iv) Indebtedness and obligations owing under Hedge Agreements; and



40









 






     (v) Indebtedness listed on the Permitted Indebtedness Schedule attached hereto
as Schedule 7.2(a).



          (b) Negative Pledge; Liens. The Synodys Companies shall not create, incur, assume or
suffer to exist any Lien of any kind on any of their 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 and pledges
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 is not
overdue, or, if overdue, is being contested in good faith and adequate reserves have
been set up by the Synodys Companies as the case may be; 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
Purchasers, 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 Synodys
Companies 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;




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




     (iv) Liens granted pursuant to the BNP Agreement;




     (v) Liens in favor of a provider of a Hedge Agreement; and




     (vi) Extensions, renewals and replacements of Liens referred to in clauses (i)
through (v) 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.



          (c) Contingent Liabilities. The Synodys Companies 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) Leases. At no point shall the sum of the aggregate amount of annualized payments
on operating leases by the Synodys Companies during any Fiscal Year exceed $250,000.




41









 








          (e) Mergers, etc. The Synodys Companies 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 Synodys
Companies shall not sell, transfer or otherwise dispose of any of their assets, including the
collateral under the respective Security Documents.




          (f) Affiliate Transactions. The Synodys Companies shall not make any loan or advance
to any director, officer or employee of the Synodys Companies or any Affiliate, or enter into or be
a party to any transaction or arrangement with any Affiliate of the Synodys Companies, 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 Intercompany Loan, (ii) pursuant to the reasonable requirements of the Synodys
Companies’ Business and upon fair and reasonable terms no less favorable to the Synodys Companies
than would be obtained in a comparable arm’s-length transaction with a Person other than an
Affiliate, (iii) payment of the Management Fee and of other fees payable pursuant to Section
4.1(g), (v) payment of directors’ fees to non-officer directors not to exceed $20,000 a year in the
aggregate, and (iv) payment of reasonable expenses (including legal, accounting, and professional
fees) of ACAS and its affiliates incurred in connection with the Acquisition and the transactions
contemplated herein and in connection with ACAS’s management of its investment in the Synodys
Companies and its Affiliates.




          (g) Dividends and Stock Purchases. The Synodys Companies shall not directly or
indirectly: declare or pay any dividends or make any distribution of any kind on their outstanding
capital stock or any other payment of any kind to any of their 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 their other securities), or set aside any sum for any such purpose other than for such
dividends, distributions or payments paid solely to other Synodys Companies; provided, however,
that this Section 7.2(g) shall not apply to (i) payment of the Management Fee and of other fees
pursuant to Section 4.1(g) and (ii) redemptions and other purchases of capital stock pursuant to
any stockholders agreement of Topco in effect from time to time.




          (h) Advances, Investments and Loans. The Synodys Companies 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



42









 







Companies, Inc. (“S&P”), is at least A-1 or the equivalent or whose
short-term debt rating from Moody’s Investors Service, Inc. (“Moody’s”) is
at least P-1 or the equivalent with maturities of not more than six 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 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 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 Synodys Companies created or acquired in the
ordinary course of business and payable on customary trade terms of the Synodys
Companies;




     (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;




     (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 $20,000;




     (x) Securities issued by other Synodys Companies;




     (xi) Investments in forward exchange contracts related to foreign currencies in
the ordinary course of business consistent with past practice;




     (xii) Investments pursuant to the Intercompany Loan;




     (xiii) Investments in Hedging Agreements; and




     (xiv) The provisions of clauses (i) through (xiv) above shall apply to debt
instruments and securities, whether denominated in United States dollars or in
Euros, issued, as applicable, by a state that was a member of the European Union
prior to May 1, 2004 or an issuer located in any such member, mutatis mutandis.



43









 





          (i) Use of Proceeds. The Synodys Companies 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.”




          (j) Stock Issuances. Except pursuant to the Option Plan, the Synodys Companies 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 the Synodys Companies’ equity interests.




          (k) Amendment of Charter Documents. The Synodys Companies shall not amend, terminate,
modify or waive or agree to the amendment, modification or waiver of any material term or provision
of their respective Charter Documents, or Bylaws.




          (l) Subsidiaries. None of the Synodys Companies shall establish or acquire any
Subsidiary unless approved by Agent and, if so requested by Agent, such Subsidiary becomes a Loan
Party.




          (m) Business. None of the Synodys Companies shall engage, directly or indirectly, in
any business other than the Business.




          (n) Fiscal Year; Accounting. None of the Synodys Companies shall change its Fiscal
Year from ending on June 30 or method of accounting (other than immaterial changes in methods),
except as required by GAAP.




          (o) Establishment of New or Changed Business Locations. None of the Synodys Companies
shall 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.




          (p) Changed or Additional Business Names. None of the Synodys Companies shall change
its corporate name, establish new or additional trade names or change its state of organization
without providing not less than thirty (30) days advance written notice to Agent.




          7.3 Financial Covenants.




          (a) The Loan Parties, jointly and severally, covenant that, and Topco shall cause that, so
long as all or any part of the principal amount of the Notes or any interest thereon shall remain
outstanding, the Synodys Companies shall maintain, on a consolidated basis at the end of each three
month period beginning September 30, 2004:





     (i) Minimum Fixed Charge Coverage Ratio. A minimum Fixed Charge
Coverage Ratio of 1 to 1 (1:1);



44









 






     (ii) Maximum Debt to EBITDA Ratio. A maximum Debt to EBITDA Ratio as
set forth on Annex C hereto;




     (iii) Minimum Interest Coverage Ratio. A minimum Interest Coverage
Ratio as set forth on Annex D hereto; and




     (iv) Minimum EBITDA. A minimum EBITDA as set forth on Annex E
hereto.



          (b) So long as all or any part of the principal amount of the Notes or any interest thereon
shall remain outstanding, the Loan Parties covenant that, and Topco shall cause that, the Synodys
Companies shall not make or commit to make any payments in any Fiscal Year on account of Capital
Expenditures that in the aggregate would cost more than:




	 	 	 
	Fiscal Year	 	Amount
	2004 and Thereafter (provided covenant will be tested on each
measurement date)

	 	€2,000,000





Fifty percent (50%) of the amount of Permitted Capital Expenditures not utilized in any Fiscal Year
may be carried forward, but may be expended only in the immediately succeeding Fiscal Year. The
amount so carried forward shall only be used after utilization of all allowed amounts (without
regard to such rollover) for Capital Expenditures in such succeeding Fiscal Year.




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) any Loan Party shall default in the payment of (i) interest on any Note within five (5)
days after its due date or (ii) principal of any Notes when due, whether at maturity, upon notice
of prepayment in accordance with Sections 3.5 or 3.6, upon any scheduled payment date, a mandatory
prepayment date in accordance with Section 3.7 or by acceleration or otherwise;




          (b) any Synodys 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 any Loan Party or Topco, 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) any Loan Party or Topco shall default in the performance of any covenant, condition or
provision of Section 7.1(h), 7.2 or 7.3;




45









 








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




          (f) any Loan Party or Topco shall default in the performance of any other covenant, condition
or provision of this Agreement, any Note or any other Purchase Document, 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 an Agent of such default or (ii) actual knowledge by any Loan
Party or Topco of such default;




          (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 any Synodys 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 any Synodys Company or for any substantial part of its property, or for the winding-up
or liquidation of their affairs, and such proceeding shall remain undismissed or unstayed and in
effect for a period of sixty (60) days;




          (h) any Synodys 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 any Synodys Company 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 that 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 Code) 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 that with other undischarged final judgments against any Synodys Company,
exceeds an aggregate of $100,000 (excluding judgments to the extent the applicable Synodys 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 any
Synodys Company if, 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





46











 





          (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 Loan Parties 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.




          (b) Other Defaults. If any other Event of Default shall occur, Required Purchasers
may at their option, by written notice to the Loan Parties, declare the entire unpaid balance of
the Notes, and interest accrued thereon and all other liabilities of the Loan Parties 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
as to which such Event of Default has occurred 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 (i) any
failure to pay interest on any Note on its scheduled due date or (ii) 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 and fifty (250) basis points.




          (d) Premium. In the event of any acceleration of Notes pursuant to Section 8.2(b)
hereof, the Loan Parties 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.




          (e) Security. Payments of principal of, and premium, if any, and interest on, the
Notes and all other obligations of the Loan Parties under this Agreement or the Notes are secured
pursuant to the terms of the Security Documents.




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 Purchase 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




47









 







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 Loan Parties, Topco or any of their respective 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.




          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 of the Purchasers
for any recitals, statements, representations or warranties made by the Loan Parties or Topco
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 any of the Loan Parties or Topco
to perform its respective 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 any of the Loan
Parties or Topco.




          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 Loan Parties),
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 the 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 the Purchasers, as applicable, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all Purchasers.




          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 Loan
Parties, shall be




48









 







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 Loan Parties and made its own
decision to enter into this Agreement.




          9.6 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 Loan Parties or any Affiliate of the Loan Parties as though Agent
were not Agent hereunder.




          9.7 Successor Agent. Agent may, upon forty-five (45) days’ notice to the Loan Parties
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 forty-five-day (45) 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
forty-five-day period, then effective upon the expiration of such forty-five-day period, Purchasers
shall perform all of the duties of Agent hereunder and the Loan Parties 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.




          9.8 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 Purchase 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 shall be no later
than two (2) Business Days after request by the Required Purchasers.




          (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
Purchase 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 payee of any Note as the holder thereof until written notice of the
transfer





49









 







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 Purchaser 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 Loan Parties to each Purchaser shall be in
an amount equal to the pro rata amount owed by the Loan Parties 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.




          9.9 Reporting. During the term of this Agreement, Agent will promptly furnish each
Purchaser with copies of all notices and financial statements of the Synodys Companies 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 Purchase
Documents.




          9.10 Consent of Purchasers.




          (a) Except as expressly provided herein, Agent shall have the sole and exclusive right to
service, administer and monitor the Notes and the Purchase Documents related thereto, including,
without limitation, the right to exercise all rights, remedies, privileges and options under this
Agreement and under the other Purchase Documents. Notwithstanding the foregoing, each Purchaser
shall make its own investment decision with regard to the Notes, 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 9.10(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 9.10(b).




          (c) Notwithstanding anything to the contrary contained in Section 9.10(a) above, and subject
to any applicable limitation set forth in Section 9.10(b) above, Agent shall not, without the prior
written consent of Required Purchasers: (i) waive any Event of Default; (ii) consent to any
Synodys Companies’ taking any action that, if taken, would constitute an Event of Default under
this Agreement or under any of the other Purchase Documents; or (iii) amend or modify or agree to
an amendment or modification of this Agreement or other Purchase Documents.




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          (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, upon written instruction from the Required Purchasers, to exercise or refrain from
exercising any and all rights, remedies, privileges and options under this Agreement or the other
Purchase 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 any Loan Party or Topco or to collect the Indebtedness
under the Notes, or defending any and all actions brought by any Loan Party 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.




          9.11 This Article Not Applicable to Loan Parties. Except for this Section 9.11, 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 Synodys Companies and all rights and obligations of the Loan Parties
and Topco (other than 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 AND UNLOCKING RIGHTS




          10.1 Grant of Option. Topco hereby grants to each holder of Subject Securities (a
“Holder”) an option to sell to Topco, and Topco 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, (iii) a Change of Control.




          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 Company Warrant, the number of shares of Underlying Common Stock into which such Company
Warrant is convertible) for which the Put Option is being exercised (collectively, the “Put
Shares”) by the Fair Market Value thereof.




          10.3 Exercise of Put Option. If any Holder elects to exercise its Put Option, such
Holder shall give notice to Topco 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, 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 sending a notice in
accordance with Section 10.1. Topco 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





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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 Topco 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 promissory note, duly executed by Topco, payable to the Holder in the principal
amount of the Put Price, which promissory note shall be on the same terms as the Junior
Subordinated Notes hereunder; provided, however, that such note shall bear interest payable in cash
on the outstanding principal thereof at a rate per annum equal to the Prime Rate, as such may
adjust from time to time, plus three hundred (300) basis points per annum; provided, further, that
Topco shall repay the unpaid principal balance of such note in full, together with all accrued and
unpaid interest, fees and other amounts due thereunder, in sixty (60) consecutive equal monthly
payments 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 Topco 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 Share will deliver the
certificate or certificates evidencing the Put Shares being purchased, duly endorsed in blank. In
consideration therefor, Topco 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, a promissory note in form and with terms identical to
those of the Senior Subordinated Notes, duly executed by the Loan Parties, payable to the Holder in
the principal amount of the Put Price. 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 and the remaining amounts
due shall be paid by delivery of a note in accordance with Section 10.4.




          10.6 Unlocking Rights. In the event that at any time after the date two (2) years
from the Closing Date, Topco shall receive a bona fide third-party offer not solicited by any
Purchaser or Agent (unless such solicitation occurred at the request of Topco) to purchase all or
substantially all of the Common Stock or assets of Topco or to merge with Topco or for Topco or any
other Synodys Company or Companies to engage in any similar transaction in a manner with no
conditions that are unlikely to be satisfied prior to the proposed closing thereof that would cause
Topco’s stockholders to receive cash or publicly-traded securities in exchange for their Common
Stock (an “Unlocking Offer”) and a majority of the Holders shall have notified Topco that
they support the Unlocking Offer, either (i) Topco shall accept such Unlocking Offer within ten
(10) Business Days of receipt of notice of such Unlocking Offer or (ii) if Topco does not accept
such Unlocking Offer, each Holder shall have the right to put all, but not less than all, of its
Subject Securities to Topco in accordance with Section 10.1 at any time prior to the date that is
thirty (30) days after the date Topco receives such Unlocking Offer, except that the Fair Market
Value per share shall be deemed to be equal to the amount of such Unlocking Offer. Topco shall




52









 







provide the Holders with prompt notice of its receipt of any Unlocking Offer and the material
terms thereof.




ARTICLE 11

PURCHASE RIGHTS




          11.1 Limited Preemptive Rights. If after the date of this Agreement, Topco 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 Company
Warrants, the issuance or exercise of Options issued pursuant to the Option Plan, an underwritten
public offering or the issuance of such securities in exchange for the securities or assets of
another Person as a part of Change of Control) at any time that any Purchaser holds any Common
Stock or Company Warrants, Topco 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 Topco
and Underlying Common Stock (without duplication) then held by such Purchaser by (ii) the number of
shares of Common Stock outstanding (on a Fully Diluted Basis). For purposes of clause (ii) above,
a share of Common Stock acquirable upon exercise or conversion of options or rights to acquire any
shares of Common Stock 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 Fair Market
Value of a share of Common Stock. 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 twenty (20) days after
receipt of written notice from Topco 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 twenty (20) days, Topco will be free to sell such
stock or securities that Purchasers have not elected to purchase during the ninety (90) 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 Topco after such ninety
(90) 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 Topco pursuant to this Section 11.1 shall,
upon such purchase and thereafter be deemed to be 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 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 Topco proposes to register any of its securities under the Securities Act, if the
registration statement proposed to be used by the Topco is not a registration statement on Form S-4
or S-8 (or any substitute form for comparable purposes that may be adopted by the Commission) or a
registration statement filed in connection with an exchange offer or an offering of securities
solely to Topco’s existing security holders and the registration form to be





53









 







used may be used for the registration of Registrable Securities (a “Piggyback
Registration”), Topco will give prompt written notice (in any event within three (3) 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 Topco in writing within fifteen (15) days after the date of receipt of
such notice from Topco, setting forth the amount of such Registrable Securities for which
registration is requested. Topco 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 Topco
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 Topco’s securities, and the managing underwriters advise Topco 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 Topco, Topco will
include in such registration: (i) first, the securities Topco proposes to sell, (ii) second, the
Registrable Securities and any other securities requested to be included in such registration, pro
rata among the holders of such Registrable Securities and the holders of such other securities on
the basis of the number of shares owned by each such holder..




          (d) If a Piggyback Registration is an underwritten secondary registration on behalf of holders
of Topco’s securities, and the managing underwriters advise Topco 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, Topco will include in such registration (A) first, any
Registrable Securities requested to be included in such registration, (B) second, the securities
requested to be included in such registration pursuant to any stockholders agreement of Topco and
not described in clause (A), pro rata among the holders of such securities on the basis of the
number of shares owned by each such holder, and (C) third other securities requested to be included
in such registration.




          (e) If the managing underwriters in either an underwritten primary or secondary registration
advise Topco in writing that in their opinion the relationship to Topco (i.e., as officers,
directors or stockholders) of the selling stockholders holding Registrable Securities requested to
be included in the registration statement will adversely effect an orderly sale of Registrable
Securities within a price range acceptable to Topco or the holders initially requesting such
registration, Topco may exclude from such registration such amount up to all of such Registrable
Securities of such selling stockholders as the managing underwriters determine are desirable to
complete such an orderly sale.




          (f) 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




54









 







majority of the Registrable Securities who request to be included in such Piggyback
Registration. Such approval will not be unreasonably withheld.




          (g) If Topco has previously filed a registration statement with respect to Registrable
Securities pursuant to this Section 12.1, and if such previous registration has not been withdrawn
or abandoned, Topco 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) If, at any time after Topco 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, Topco 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 Topco, Topco shall follow the procedures described in this Section 12.2. Within five (5)
days of its receipt of such request, Topco shall give written notice of such proposed registration
(a “Demand Registration”) to all holders of Registrable Securities, and thereupon, Topco
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 Topco within twenty (20) days
after Topco’s giving of such notice; provided, however, that Topco shall not be required to effect
a Demand Registration if more than two (2) Demand Registrations have been undertaken.




          (b) Topco 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 Topco 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) Topco may include in any registration under this Section 12.2 any other shares of Common
Stock of Topco (including issued and outstanding shares of stock as to which the holders thereof
have contracted with Topco 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 Sections 12.1 and 12.2 above, if at any time Topco is eligible to use SEC Form S-3 (or any
successor form) for registration of secondary sales of Registrable Securities, any holder of
Registrable Securities may request in writing that Topco register shares of Registrable Securities
on such form. Upon receipt of such request, Topco will promptly notify all holders of Registrable
Securities in writing of the receipt of such request and each such Holder may elect (by written





55









 







notice sent to Topco within thirty (30) days of receipt of Topco’s notice) to have its
Registrable Securities included in such registration pursuant to this Section 12.3. Thereupon,
Topco will, as soon as practicable, use its best efforts to effect the registration on Form S-3 of
all Registrable Securities that Topco has so been requested to register by such holder for sale.
Topco will use its best efforts to qualify and maintain its qualification for eligibility to use
Form S-3 for such purposes. Topco shall not be required to effect more than three (3)
registrations pursuant to this Section 12.3.




          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 Topco, or any securities convertible
into or exchangeable or exercisable for such securities, during the seven days prior to and the
ninety (90)-day period (or such longer period, not to exceed ninety (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 or Demand Registration (except as part of
such underwritten registration), unless the underwriters managing the registered public offering
otherwise agree.




          (b) Topco 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 or Demand 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 Topco, or any securities
convertible into or exchangeable or exercisable for Common Stock, purchased from Topco 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, Topco 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 the registration of Company
Warrants held by a holder of Registrable Securities requesting registration as to which Topco has
received reasonable assurances that only Registrable Securities will be distributed to the public),
and pursuant thereto Topco 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, Topco 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);




56









 








          (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 that 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 Topco 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, Topco 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 Topco 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




57









 







other records, pertinent corporate documents and properties of Topco, and cause Topco’s
officers, directors, employees and independent accountants to supply all information 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 Topco’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 Topco, to participate in
the preparation of such registration or comparable statement and to require the insertion therein
of material, furnished to Topco 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 Topco included in such registration
statement for sale in any jurisdiction, Topco 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 Topco and if in its sole and
exclusive judgment such holder is or might be deemed to be a controlling person of Topco, 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 Topco 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 Topco’s securities covered thereby and that such holding does not imply that
such holder will assist in meeting any future financial requirements of Topco, (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 Topco an opinion of counsel to
such effect, which opinion and counsel shall be reasonably satisfactory to Topco.




          12.6 Registration Expenses. All expenses incident to Topco’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 Topco and all independent certified
public accountants, underwriters (excluding discounts and commissions) and other Persons retained
by Topco (all such expenses, excluding underwriting discounts and commissions, being herein called
“Registration Expenses”), will be borne by Topco. Topco will bear the cost of one set of counsel
for the Holders of Registrable Securities participating in any Piggyback Registration or Demand
Registration. All underwriting discounts and commissions will be borne by the seller of the
securities sold pursuant to the registration.




58









 








          12.7 Indemnification.




          (a) Topco 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, 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 Topco 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 Topco has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, Topco will 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 Topco in writing such information and affidavits
as Topco reasonably requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, will indemnify Topco, its directors and officers
and each Person who controls Topco (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; provided, however, that the obligations of each holder of
Registrable Securities shall be limited to an amount equal to the net proceeds to such holder of
Registrable Securities sold as contemplated herein.




          (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




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any officer, director or controlling Person of such indemnified party and will survive the
transfer of securities. Topco also agrees to make such provisions, as are reasonably requested by
any indemnified party, for contribution to such party in the event Topco’s indemnification is
unavailable for any reason.




          12.8 Participation in Underwritten Registrations. No Person may participate in any
registration hereunder that 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 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
Topco 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 Senior Term Loan B and the Revolving Loan are pari passu. The
Subordinated Notes are subordinate and junior in right of payment to the Senior Notes and 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 Notes.




          (a) Senior Note Payment Default. In the event of an Event of Default pursuant to
Section 8.1(a) with respect to any Senior Notes (a “Senior Note Payment Default”) then,
unless and until such Senior Note 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 notice of such Senior Note Payment Default shall have been given to
the Purchaser holding Subordinated Notes by the Agent and ending on the date on which such Senior
Note 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 Note Payment Default, or in which the maturity of such Senior Notes shall have been
accelerated in respect of such Senior Note Payment Default and such acceleration shall not have
been annulled.



          (b) Senior Note Covenant Default. In the event of an Event of Default with respect to
any Senior Notes other than pursuant to Section 8.1(a) (a
“Senior Note Covenant




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Default”),
then, unless and until such Senior Note 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 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 Note Blocking
Notice”) of such Senior Note Covenant Default shall have been given to the Loan Parties and to
the Purchaser holding Subordinated Notes by the Agent, provided that only one (1) such Senior Note
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 Note Covenant Default, or in which an effective notice of acceleration of the
maturity of such Senior Notes shall have been transmitted to the Loan Parties and each of the
holders of the Subordinated Notes in respect of such Senior Note Covenant Default and such
acceleration shall not have been annulled, or in which notice of the failure to pay such Senior
Notes upon their final maturity shall have been transmitted to the Loan Parties and each of the
holders of the Subordinated Notes and such failure shall be continuing;


provided that (A) no Senior Note Covenant Default that served as the basis for, or existed at the
time of, a previous Senior Note Blocking Notice, shall provide the basis for a subsequent Senior
Note Blocking Notice unless such Senior Note 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 13.2(b) while the Subordinated Notes shall remain outstanding.




          (c) Notice by Agent. Agent shall give written notice to each holder of Subordinated
Notes of any Senior Note Covenant Default or Senior Note 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(a) or (b) immediately upon the occurrence or receipt thereof, as the case may be.




          13.3 Default in Respect of Senior Subordinated Notes.




          (a) Senior Subordinated Notes Payment Default. In the event of an Event of Default
pursuant to Section 8.1(a) with respect to any Senior Subordinated Note (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 by 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:





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               (i) commencing on the date notice of such Senior Subordinated Notes Payment Default shall have
been given to the Purchaser holding Junior Subordinated Notes by the Agent 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 Subordinated 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 an Event of Default
with respect to any Senior Subordinated Note other than pursuant to Section 8.1(a) (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 Loan Parties and to the Purchaser holding Junior Subordinated Notes by the Agent, provided that
only one (1) such Senior Subordinated Notes Blocking Notice shall be given pursuant to the terms of
this Section 13.3(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 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 Loan Parties
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 Loan Parties 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 13.3(b) while the
Junior Subordinated Notes shall remain outstanding.





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          (c) Notice by Agent. Agent shall give written notice to each holder of Junior
Subordinated Notes of any Senior Subordinated Notes Covenant Default or 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 13.3(a) or (b) immediately upon the occurrence or receipt
thereof, as the case may be.




          13.4 Insolvency, etc. In the event of:




          (a) any insolvency, bankruptcy, receivership, liquidation, reorganization, readjustment,
composition or other similar proceeding relating to any Loan Party;




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




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




          (d) any other marshalling of the assets of any Loan Party;




               (i) then, from the proceeds of all Accounts (as defined in the Security Agreement) and all
Inventory (as defined in the Security Agreement) and all Collateral (as defined in the Security
Agreement),



               first, all reasonable out-of-pocket costs and expenses (including, without limitation,
reasonable attorneys’ fees) of the Agent in connection with enforcing the rights of the Purchasers
under the Purchase Documents, shall be paid;



               second, all reasonable out-of-pocket costs and expenses (including, without
limitation, reasonable attorneys’ fees) of the Purchasers in connection with enforcing the rights
of the Purchasers under the Purchase Documents, shall be paid;



               third, all Senior Notes (on a ratable basis) shall be paid in full in cash before any
payment or distribution, whether in cash, securities (other than securities of any Loan Party 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, to the payment of all Senior
Notes 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 Notes;



               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 any Loan Party 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, 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;



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               and fifth, all Junior Subordinated Notes shall be paid in full in cash.



          13.5 Limited Suspension of Remedies of Holders of Subordinated Notes. At any time
during which payment on the Subordinated Notes shall be prohibited pursuant to the terms of
Sections 13.2 or 13.3, no holder of Subordinated Notes (or the Agent in respect thereof) may:




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




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



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 Agent or any holders of the
Senior Notes accelerates the maturity of the Senior Notes pursuant to Section 13.2 or, with respect
to the Junior Subordinated Notes, the date on which the holders of the Senior Subordinated Notes
accelerate the maturity of the Senior Subordinated Notes 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 the holders of the Subordinated Notes or by Agent to the holders of the Junior Subordinated
Notes, as the case may be, of the occurrence and continuance of a Default or Event of Default under
this Agreement.




          13.6 Proof of Claim. Each holder of Subordinated Notes irrevocably authorizes and
empowers the holders of Senior Notes 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 Loan Parties to file a proof of claim on behalf of such holder of
Subordinated Notes or Junior Subordinated Notes, as the case may be, with respect to the
Subordinated Notes 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 Notes 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 13.6, nor any other provisions hereof, shall be construed to give the holders of
Senior Notes any right to vote any Subordinated Notes 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.




          13.7 Acceleration of Subordinated Notes. In the event that any 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 13.2 do not prohibit
payment on Subordinated Notes, no payment shall be made in respect of any Subordinated Notes unless
and until all Senior 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. 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
13.3 do not prohibit




64









 







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.




          13.8 Turnover of Payments.




          (a) If:




               (i) any payment or distribution shall be collected or received by any holders of 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 Notes at the time outstanding; and



               (ii) the Agent shall have notified such holders of 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 Subordinated Notes will deliver such payment or distribution, to the extent
necessary to pay all such Senior Notes in full in cash, to the holders of such Senior Notes and,
until so delivered, the same shall be held in trust by such holders of Subordinated Notes as the
property of the holders of such Senior Notes. If after any amount is delivered pursuant to this
Section 13.8(a), whether or not such amounts have been applied to the payment of the Senior Notes,
and the outstanding Senior Notes shall thereafter be paid in full in cash by the Loan Parties or
otherwise other than pursuant to this Section 13.8(a), the holders of Senior Notes shall return to
such holders of Subordinated Notes an amount equal to the amount delivered to such holders of
Senior Notes pursuant to this Section 13.8(a). Any optional prepayment made in respect of the
Subordinated Notes that violates this Agreement shall also be subject to this Section 13.8(a).



          (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
13.8(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 Loan
Parties or otherwise other than pursuant to this Section 13.8(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




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13.8(b).
Any optional prepayment made in respect of the Junior Subordinated Notes that violates this
Agreement shall also be subject to this Section 13.8(b).




          13.9 Obligations Not Impaired.




          (a) No Impairment of Senior Notes or Senior Subordinated Notes. No right of any
present or future holder of any Senior Notes 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 Loan Parties or by
any act or failure to act, in good faith, by any such holder, or by any non-compliance by the Loan
Parties 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 Notes. Nothing contained in this Article 13 shall
impair, as between the Loan Parties and any holder of Subordinated Notes, the obligation of the
Loan Parties 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 Notes from exercising all rights, powers
and remedies otherwise permitted by applicable law or under this Agreement all subject to the
rights of the holders of the Senior Notes to receive cash, securities or other property otherwise
payable or deliverable to the holders of Subordinated Notes.




          13.10 Payment of Debt; Subrogation. Upon the payment in full of all Senior Notes in
cash, the holders of Subordinated Notes shall be subrogated to all rights of any holder of Senior
Notes to receive any further payments or distributions applicable thereto until the Subordinated
Notes shall have been paid in full, and such payments or distributions received by the holders of
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 Notes, shall, as between the Loan
Parties and its creditors other than the holders of Senior Notes, on the one hand, and the holders
of Subordinated Notes, on the other hand, be deemed to be a payment by the Loan Parties on account
of Senior Notes and not on account of Subordinated Notes. 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 Loan Parties
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 Loan
Parties on account of Senior Subordinated Notes and not on account of Junior Subordinated Notes.




          13.11 Reliance of Holders of Senior Notes; Reliance of Holders of Senior Subordinated
Notes; Amendments.




          (a) Reliance of Holders of Senior Notes. Each holder of Subordinated Notes by its
acceptance thereof shall be deemed to acknowledge and agree that the foregoing subordination





66









 







provisions are, and are intended to be, an inducement to and a consideration of each holder of any
Senior Notes, whether such financing was created or acquired before or after the creation of
Subordinated Notes, to acquire and hold, or to continue to hold, such Senior Notes, and such holder
of Senior Notes shall be deemed conclusively to have relied on such subordination provisions in
acquiring and holding, or in continuing to hold, such Senior Notes.




          (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 Agent and all of the holders of Senior Notes
and Subordinated Notes outstanding at the time of such amendment, waiver or other modification.




ARTICLE 14

GUARANTEE




          14.1 Guaranty.




          (a) To induce the Purchasers to accept the Notes, Topco hereby absolutely, unconditionally and
irrevocably guarantees, as primary obligor and not merely as surety, the full and punctual payment
when due, whether at stated maturity or earlier, by reason of acceleration, mandatory prepayment or
otherwise, in accordance herewith, the Notes and any other Purchase Document, all of the
Obligations of the Loan Parties, whether or not from time to time reduced or extinguished or
hereafter increased or incurred, whether or not recovery may be or hereafter may become barred by
any statute of limitations, whether or not enforceable as against the Loan Parties, whether now or
hereafter existing, and whether due or to become due, including principal, interest (including
interest at the contract rate applicable upon default accrued or accruing after the commencement of
any proceeding under the Bankruptcy Code, whether or not such interest is an allowed claim in such
proceeding), fees and costs of collection. This Guaranty constitutes a guaranty of payment and not
of collection.




          (b) Topco further agrees that, if (i) any payment made by the Loan Parties and applied to the
Obligations is at any time annulled, avoided, set aside, rescinded, invalidated, declared to be
fraudulent or preferential or otherwise required to be refunded or repaid, or (ii) the
proceeds of Collateral (as defined in the security Agreement) are required to be returned by
Agent or any Purchaser to any Loan Party, its estate, trustee, receiver or any other party,
including Topco, under any bankruptcy law, equitable cause or any other requirement of any
applicable Law, then, to the extent of such payment or repayment, Topco’s liability hereunder (and
any Lien or other Collateral securing such liability) shall be and remain in full force and effect,
as fully as if such




67









 







payment had never been made. If, prior to any of the foregoing, this Guaranty
shall have been cancelled or surrendered (and if any Lien or other Collateral securing Topco’s
liability hereunder shall have been released or terminated by virtue of such cancellation or
surrender), this Guaranty (and such Lien or other Collateral) shall be reinstated in full force and
effect, and such prior cancellation or surrender shall not diminish, release, discharge, impair or
otherwise affect the obligations of Topco in respect of the amount of such payment (or any Lien or
other Collateral securing such obligation).




          14.2 Guaranty Absolute and Unconditional. Topco hereby waives any defense of a surety
or guarantor or any other obligor on any obligations arising in connection with or in respect of
any of the following and hereby agrees that its obligations under this Guaranty are absolute and
unconditional and shall not be discharged or otherwise affected as a result of any of the
following:




          (a) the invalidity or unenforceability of any Loan Party’s obligations under the Purchase
Agreement, the Notes or any other agreement or instrument relating thereto, or any security for, or
other guaranty of the Obligations of any Loan Party or any part of them, or the lack of perfection
or continuing perfection or failure of priority of any security for the Obligations of any Loan
Party or any part of them;




          (b) the absence of any attempt to collect the Obligations or any part of them from the Loan
Parties or other action to enforce the same;




          (c) failure by Agent or any Purchaser to take any steps to perfect and maintain any Lien on,
or to preserve any rights to, any Collateral;




          (d) the Agent’s or any Purchaser’s election, in any proceeding instituted under chapter 11 of
the Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code;




          (e) any borrowing or grant of a Lien by a Loan Party, as debtor-in-possession, or extension of
credit, under Section 364 of the Bankruptcy Code;




          (f) the disallowance, under Section 502 of the Bankruptcy Code, of all or any portion of the
Agent’s or any Purchaser’s claim (or claims) for repayment of the Obligations;




          (g) any use of cash collateral under Section 363 of the Bankruptcy Code;




          (h) any agreement or stipulation as to the provision of adequate protection in any bankruptcy
proceeding;




          (i) the avoidance of any Lien in favor of the Agent or any Purchaser for any reason;




          (j) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, liquidation
or dissolution proceeding commenced by or against any Loan Party, or any of any Loan Party’s other
Subsidiaries, including any discharge of, or bar or stay against collecting, any Obligation (or any
part of them or interest thereon) in or as a result of any such proceeding;





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          (k) failure by the Agent or any Purchaser to file or enforce a claim against any Loan Party or
its estate in any bankruptcy or insolvency case or proceeding;




          (l) any action taken by the Agent or any Purchaser if such action is authorized hereby;




          (m) any election following the occurrence of an Event of Default by the Agent or any Purchaser
to proceed separately against the personal property Collateral in accordance with the Agent’s or
any Purchaser’s rights under the Uniform Commercial Code or, if the Collateral consists of both
personal and real property, to proceed against such personal and real property in accordance with
the Agent’s or any Purchaser’s rights with respect to such real property; or




          (n) any other circumstance that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor or any other obligor on any obligations, other than the payment in
full of the Obligations.




          14.3 Waivers. Topco hereby waives diligence, promptness, presentment, demand for
payment or performance and protest and notice of protest, notice of acceptance and any other notice
in respect of the Obligations or any part of them, and any defense arising by reason of any
disability or other defense of any Loan Party. Topco shall not, until the Obligations are
irrevocably paid in full and have been terminated, assert any claim or counterclaim it may have
against any Loan Party or set off any of its obligations to any Loan Party against any obligations
of any Loan Party to it. In connection with the foregoing, Topco covenants that its obligations
hereunder shall not be discharged, except by complete performance.




          14.4 Reliance Topco hereby assumes responsibility for keeping itself informed of the
financial condition of the Loan Parties and any endorser and other guarantor of all or any part of
the Obligations, and of all other circumstances bearing upon the risk of nonpayment of the
Obligations, or any part thereof, that diligent inquiry would reveal, and Topco hereby agrees that
the Agent or any Purchaser shall have no duty to advise Topco of information known to it regarding
such condition or any such circumstances. In the event the Agent or any Purchaser, in its sole
discretion, undertakes at any time or from time to time to provide any such information to Topco,
the Agent or any Purchaser shall be under no obligation (a) to undertake any investigation not a
part of its regular business routine, (b) to disclose any information that the Agent or any
Purchaser, pursuant to accepted or reasonable commercial finance or banking practices, wishes to
maintain confidential or (c) to make any other or future disclosures of such information or any
other information to Topco.




          14.5 Waiver of Subrogation and Contribution Rights. Until the Obligations have been
irrevocably paid in full and have been terminated, Topco shall not enforce or otherwise exercise
any right of subrogation to any of the rights of the Agent or any Purchaser or any part of them
against the Loan Parties or any right of reimbursement or contribution or similar right against the
Loan Parties by reason of this Agreement or by any payment made by Topco in respect of the
Obligations.




          14.6 Default; Remedies. The obligations of Topco in this Section 14 are independent
of and separate from the Obligations. If any Obligation is not paid when due, or upon




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any Event of
Default hereunder or upon any default by the Loan Parties as provided in any other instrument or
document evidencing all or any part of the Obligations, the Agent or any Purchaser may, at its sole
election, proceed directly and at once, without notice, against Topco to collect and recover the
full amount or any portion of the Obligations then due, without first proceeding against the Loan
Parties, or against any Collateral under the Purchase Documents or joining the Loan Parties in any
proceeding against Topco. At any time after maturity of the Obligations, the Agent or any
Purchaser or any Affiliate thereof may (unless the Obligations have been indefeasibly and
irrevocably paid in full), without notice to Topco and regardless of the acceptance of any
Collateral for the payment thereof, appropriate and apply toward the payment of the Obligations (a)
any indebtedness due or to become due from the Agent or any Purchaser or any Affiliate thereof to
Topco and (b) any moneys, credits or other property belonging to Topco at any time held by or
coming into the possession of the Agent or any Purchaser or any of its respective Affiliates.




          14.7 Irrevocability. This Guaranty shall be irrevocable as to the Obligations (or any
part thereof) until all monetary Obligations then outstanding have been irrevocably repaid in cash,
at which time this Guaranty shall automatically be cancelled. Upon such cancellation and at the
written request of Topco or its successors or assigns, and at the cost and expense of Topco or its
successors or assigns, the Agent or any Purchaser shall execute in a timely manner a satisfaction
of this Guaranty and such instruments, documents or agreements as are necessary or desirable to
evidence the termination of this Guaranty.




          14.8 Setoff. Upon the occurrence and during the continuance of an Event of Default,
the Agent or any Purchaser and each Affiliate of thereof may, without notice to Topco and
regardless of the acceptance of any security or collateral for the payment thereof, appropriate and
apply toward the payment of all or any part of the Obligations (a) any indebtedness due or to
become due from the Agent or any Purchaser or Affiliate to Topco and (b) any moneys, credits or
other property belonging to Topco, at any time held by, or coming into, the possession of such
Agent or any Purchaser or Affiliate.




          14.9 No Marshalling. Topco consents and agrees that neither the Agent or any
Purchaser or any Affiliate thereof nor any Person acting for or on behalf of such Person shall be
under any obligation to marshal any assets in favor of Topco or against or in payment of any or all
of the Obligations.




          14.10 Collateral. Topco hereby acknowledges and agrees that its obligations under
this Guaranty are secured pursuant to the terms and provisions of the Security Documents executed
by it in favor of the Agent, for the benefit of the Purchasers, and covenants
that it shall not grant any Lien (other than Permitted Liens) with respect to the Collateral
in favor, or for the benefit, of any Person other than the Agent, for the benefit of the
Purchasers, and any senior lender contemplated by the terms thereof.




          14.11 Waiver of Consequential Damages. Topco hereby irrevocably and unconditionally
waives, to the maximum extent not prohibited by law, any right it may have to claim or recover any
special, exemplary, punitive or consequential damage in any legal action or proceeding in respect
of this Guaranty or the Purchase Documents.





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ARTICLE 15

MISCELLANEOUS




          15.1 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) neither
the Loan Parties nor Topco may assign or transfer their rights hereunder or any interest herein or
delegate their duties hereunder and (ii) Purchasers shall have the right to assign their rights
hereunder and under the Securities in accordance with Article 6.




          15.2 Modifications and Amendments. The provisions of this Agreement may be modified,
waived or amended, but only by a written instrument signed by Topco and each of the Loan Parties 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 9.10 and (ii) to the Company Warrants or the Underlying Common
Stock, such instrument must be executed by the holders of a seventy-five percent (75%) of the
Warrant Shares.




          15.3 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, 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 9.10 and shall be effective only to
the extent in such writing specifically set forth.




          15.4 Reimbursement of Expenses. The Loan Parties and Topco jointly and severally
agree to pay or reimburse Agent and Purchasers upon demand for all fees and expenses incurred or
payable by Agent or Purchasers (including, without limitation, reasonable fees and expenses of
special counsel for Agent or any Purchaser and charges for services performed for Purchasers by
Agents’ internal auditing staff), from time to time (i) arising in connection with the negotiation,
preparation and execution of this Agreement, the Notes, the other Purchase 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, waivers or
consents pursuant to the provisions hereof or thereof, and (iii) arising in connection with the
enforcement of this Agreement or collection of any Note.




          15.5 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 that 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.




          15.6 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





71









 







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 Loan Parties or Topco:



MGP Instruments, Inc.

c/o American Capital Strategies, Ltd.,

461 Fifth Avenue, 26th Floor,

New York, New York 10017

Attn: Robert Klein



Chairman



Facsimile: (212) 213-2060






with a copy to:



MGP Instruments, Inc.

5000 Highlands Parkway, Suite 150

Smyrna, Georgia 30082



Attn: Michael S. Wilson

Facsimile: (770) 432-9179



to Agent:



American Capital Strategies, Ltd.

2 Bethesda Metro Center, 14th Floor

Bethesda, Maryland 20814

Attn: Compliance Officer

Facsimile: (301) 654-6714



with a copy to:



American Capital Strategies, Ltd.,

461 Fifth Avenue, 26th Floor,

New York, New York 10017



Attn: Robert Klein



Managing Director and Principal



Facsimile: (212) 213-2060



with a copy to:



Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York 10153

Attn: Christopher Aidun, Esq.

Facsimile: (212) 310-8127




72









 







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.




          15.7 Survival. All representations, warranties, covenants and agreements of the Loan
Parties and Topco contained herein or made in writing in connection herewith shall survive the
execution and delivery of this Agreement and the purchase of the Notes and shall continue in full
force and effect so long as any Securities are outstanding and until payment in full of all of the
Loan Parties’ and Topco’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.




          15.8 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.




          15.9 Jurisdiction, Consent to Service of Process.




          (a) THE LOAN PARTIES AND TOPCO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMIT, FOR THEMSELVES
AND THEIR PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT
OF THE UNITED STATES OF AMERICA SITTING IN THE STATE OF NEW YORK, COUNTY 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
SITTING IN THE COUNTY OF NEW YORK. 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 AND PURCHASERS MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT, THE NOTES OR ANY OTHER PURCHASE DOCUMENT AGAINST THE LOAN PARTIES AND TOPCO OR
THEIR PROPERTIES IN THE COURTS OF ANY JURISDICTION.




          (b) THE LOAN PARTIES AND TOPCO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE, TO THE FULLEST
EXTENT THEY MAY LEGALLY AND




73









 







EFFECTIVELY DO SO, ANY OBJECTION THAT THEY 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 SITTING IN THE COUNTY OF NEW YORK. 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 15.6 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.




          15.10 Jury Trial Waiver. THE LOAN PARTIES AND TOPCO 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.




          15.11 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.




          15.12 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.




          15.13 Indemnity. The Loan Parties and Topco hereby agree 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 (or actions in respect thereof), including reasonable attorneys’
fees, to which Agent or any Purchaser may become subject (other than as a result of the gross
negligence or willful misconduct of any such Person), insofar as such losses, claims, damages,
liabilities or expenses (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 Synodys Companies or their Affiliates or any officer, director, employee, agent or
representative of the Synodys Companies or their Affiliates with respect to the Transactions, the
Securities, Charter Documents, the Bylaws 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. To the
extent that the




74









 







foregoing undertakings may be unenforceable for any reason, the Loan Parties agree to make the
maximum contribution to the payment and satisfaction of indemnified liabilities set forth in this
Section 15.13 that is permissible under applicable law.




          15.14 Environmental Indemnity. The Loan Parties and Topco, and their successors and
assigns, hereby release and discharge, and agree to jointly and severally 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 Loan Parties;
(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 Closing Date, (I) acquired, held,
sold, owned, operated, leased, managed, or divested by, or otherwise associated with, (A) the
Synodys Companies, (B) any of the Synodys Companies’ 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 activities for, with, or on behalf of the Synodys
Companies; (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 spill, release, discharge or emission affecting the past and present
properties and facilities, whether or not the same originates or emanates from such properties and
facilities or 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 Loan Parties or Topco 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 that might otherwise constitute a legal or equitable release or discharge,
in whole or in part, of the Loan Parties under the Notes.




          15.15 Counterparts. This Agreement may be executed in any number of counterparts and
by any 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.




75









 








          15.16 Integration. This Agreement and the other Purchase 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.




          15.17 Federal Income Tax Treatment. Solely for U.S. federal income tax purposes, the
parties acknowledge that Borrower is acting as agent for Holdco and that the true lender to Holdco
is ACFS.




* * *




76









 








SIGNATURE PAGE TO

NOTE AND EQUITY PURCHASE AGREEMENT




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




	 	 	 	 	 
	 	LOAN PARTIES:



MGP INSTRUMENTS, INC.

 	 
	 	By:  	/s/ Michael S. Wilson	 
	 	 	Name:  	Michael S. Wilson	 
	 	 	Title:  	Vice President & CEO	 
	 
	 	DOSIMETRY ACQUISITIONS (U.S.), INC.

 	 
	 	By:  	/s/ Robert Klein	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	AMERICAN CAPITAL FINANCIAL
SERVICES, INC.

 	 
	 	By:  	/s/ Robert Klein	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	PURCHASERS:


AMERICAN CAPITAL STRATEGIES, LTD.

 	 
	 	By:  	/s/ Robert Klein	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



77









 






	 	 	 	 	 



ANNEX




	 	 	 
	Annex A

	 	Purchasers and Payment Information
	Annex B

	 	Purchaser Allocations
	Annex C

	 	Maximum Debt to EBITDA Ratio
	Annex D

	 	Minimum Interest Coverage Ratio
	Annex E

	 	Minimum EBITDA






SCHEDULES




	 	 	 
	“Organizational Schedule”

	 	(Schedule 5.1(a))
	“Capitalization Schedule”

	 	(Schedule 5.1(d)(ii))
	“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))
	“Undisclosed Liabilities Schedule”

	 	(Schedule 5.1(w))
	“Permitted Indebtedness Schedule”

	 	(Schedule 7.2(a))
	“Permitted Encumbrances Schedule”

	 	(Schedule 7.2(b))






EXHIBITS




	 	 	 
	EXHIBIT A-1

	 	Form of Senior Term B Note
	EXHIBIT A-2

	 	Form of Senior Subordinated Note
	EXHIBIT A-3

	 	Form of Junior Subordinated Note
	EXHIBIT A-4

	 	Form of Revolving Note
	EXHIBIT B

	 	Form of Security Agreement
	EXHIBIT C

	 	Form of Collateral Assignment
	EXHIBIT D

	 	Form of Pledge Agreements
	EXHIBIT E

	 	Form of Compliance Certificate






78









 






	 	 	 
	EXHIBIT F

	 	Form of Investment Banking Agreement
	EXHIBIT G

	 	Request for Borrowing






79









 






ANNEX A

INFORMATION RELATING TO PURCHASERS





80









 








ANNEX B




Purchaser Allocations




	 	 	 
	Purchaser	 	Allocation
	 
	 	 
	American Capital Strategies, Ltd.
	 	100%






81









 






ANNEX C




Maximum Debt to EBITDA Ratio




	 	 	 	 	 
	Sept. 04
	 	 	6.35	 
	Dec. 04
	 	 	6.35	 
	Mar. 05
	 	 	6.10	 
	June 05
	 	 	5.85	 
	 
	 	 	 	 
	Sept. 05
	 	 	5.60	 
	Dec. 05
	 	 	5.35	 
	Mar. 06
	 	 	5.35	 
	June 06
	 	 	5.10	 
	 
	 	 	 	 
	Sept. 06
	 	 	5.10	 
	Dec. 06
	 	 	4.85	 
	Mar. 07
	 	 	4.85	 
	June 07
	 	 	4.60	 
	 
	 	 	 	 
	Sept. 07
	 	 	4.60	 
	Dec. 07
	 	 	4.35	 
	Mar. 08
	 	 	4.10	 
	June 08
	 	 	4.10	 






82









 






ANNEX D




Minimum Interest Coverage Ratio




	 	 	 	 	 
	Sept. 04
	 	 	1.90	 
	Dec. 04
	 	 	1.90	 
	Mar. 05
	 	 	1.90	 
	June 05
	 	 	1.90	 
	 
	 	 	 	 
	Sept. 05
	 	 	1.90	 
	Dec. 05
	 	 	2.00	 
	Mar. 06
	 	 	2.10	 
	June 06
	 	 	2.20	 
	 
	 	 	 	 
	Sept. 06
	 	 	2.40	 
	Dec. 06
	 	 	2.40	 
	Mar. 07
	 	 	2.40	 
	June 07
	 	 	2.65	 
	 
	 	 	 	 
	Sept. 07
	 	 	2.65	 
	Dec. 07
	 	 	2.90	 
	Mar. 08
	 	 	2.90	 
	June 08
	 	 	2.90	 






83









 






ANNEX E




Minimum EBITDA




	 	 	 	 	 
	Sept. 04
	 	 	1,500,000	1
	Dec. 04
	 	 	3,500,000	 
	Mar. 05
	 	 	5,000,000	 
	June 05
	 	 	7,000,000	 
	 
	 	 	 	 
	Sept. 05
	 	 	7,000,000	 
	Dec. 05
	 	 	7,000,000	 
	Mar. 06
	 	 	8,000,000	 
	June 06
	 	 	8,000,000	 
	 
	 	 	 	 
	Sept. 06
	 	 	8,000,000	 
	Dec. 06
	 	 	8,500,000	 
	Mar. 07
	 	 	8,500,000	 
	June 07
	 	 	8,500,000	 
	 
	 	 	 	 
	Sept. 07
	 	 	9,000,000	 
	Dec. 07
	 	 	9,000,000	 
	Mar. 08
	 	 	9,500,000	 
	June 08
	 	 	9,500,000	 








 




			
	1	 	All amounts are in Euros.




84