AND (B) CAPITALSOURCE AND THE COMPANY SHALL HAVE
EXECUTED THE CAPITALSOURCE EIGHTH AMENDMENT.
3.
WAIVERS.
THE PURCHASER HEREBY ACKNOWLEDGES THAT THE COMPANY IS
IN BREACH OF ONE OR MORE FINANCIAL COVENANTS CONTAINED IN SUBPARAGRAPH 2(D)(B)
OF THE AGREEMENT FOR THE FISCAL PERIODS ENDED SEPTEMBER 30, 2004 AND DECEMBER
31, 2004.
THE PURCHASER HEREBY WAIVES ALL EVENTS OF DEFAULT RESULTING FROM
BREACHES AND NONCOMPLIANCE BY THE COMPANY WITH SUBPARAGRAPH 2(D)(B) FOR THE
FISCAL PERIODS ENDING SEPTEMBER 30, 2004 AND DECEMBER 31, 2004.
THIS WAIVER
DOES NOT APPLY TO ANY BREACH OR EVENT OF DEFAULT UNDER THE AGREEMENT OR THE
CONVERTIBLE NOTES TO THE EXTENT IT RELATES TO ANY OTHER FISCAL PERIOD.
4.
RATIFICATION OF AGREEMENT.
(A)
TO INDUCE THE PURCHASER TO ENTER INTO THIS AMENDMENT, THE COMPANY
REPRESENTS AND WARRANTS THAT, AFTER GIVING EFFECT TO THIS AMENDMENT, NO
VIOLATION OF THE TERMS OF THE AGREEMENT EXIST AND ALL REPRESENTATIONS AND
WARRANTIES CONTAINED IN THE AGREEMENT ARE TRUE, CORRECT, AND COMPLETE IN ALL
MATERIAL RESPECTS ON AND AS OF THE DATE HEREOF EXCEPT AS (I) REFLECTED IN ANY
SCHEDULE TO THE SENIOR CREDIT AGREEMENT, AS UPDATED UNDER THE TERMS OF SECTION
4(A)(II) OF THE EIGHTH AMENDMENT (II) DISCLOSED IN THE COMPANY'S REPORTS FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION, OR (III) DISCLOSED TO PURCHASER'S
REPRESENTATIVE ON THE BOARD DURING A MEETING OF THE BOARD, AND EXCEPT TO THE
EXTENT SUCH REPRESENTATIONS AND WARRANTIES SPECIFICALLY RELATE TO AN EARLIER
DATE IN WHICH CASE THEY WERE TRUE, CORRECT, AND COMPLETE IN ALL MATERIAL
RESPECTS ON AND AS OF SUCH EARLIER DATE.
(B)
TO FURTHER INDUCE PURCHASER TO ENTER INTO THIS AMENDMENT, THE
COMPANY ACKNOWLEDGES AND AGREES THAT, AS OF JANUARY 31, 2005, THE AMOUNT
OUTSTANDING UNDER THIS AGREEMENT AND CONVERTIBLE NOTE (INCLUDING ACCRUED
INTEREST AND FEES) IS:
(I)
$16, 905,643 OF PRINCIPAL, (II) $4,088,770 OF
ACCRUED INTEREST, (III) $3,381,129 OF EXIT FEE ON PRINCIPAL, AND (IV) THE EXIT
FEE TO BE CALCULATED AT AN AMOUNT EQUAL TO TWENTY PERCENT (20%) OF THE ACCRUED
AND UNPAID INTEREST.
THE COMPANY HEREBY ACKNOWLEDGES AND AGREES IT HAS NO
DEFENSE, COUNTERCLAIM, OFFSET, CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR
NATURE WHATSOEVER ORIGINATING ON OR BEFORE THE DATE THIS AMENDMENT IS EXECUTED
THAT CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS LIABILITY TO
REPAY THE INDEBTEDNESS EVIDENCED BY THE AGREEMENT AND CONVERTIBLE NOTE.
Except as expressly set forth in this Amendment, the terms, provisions and
conditions of the Agreement and the Investment Documents as previously amended
are unchanged, and said agreements, as amended, shall remain in full force and
effect and are hereby confirmed and ratified.
2
5.
TOTAL DEBT RATIO FEE.
IN ADDITION TO AND NOTWITHSTANDING ANY
OTHER PROVISION OF THE AGREEMENT, COMMENCING WITH THE QUARTERLY TEST PERIOD
ENDING SEPTEMBER 30, 2005 AND CONTINUING FOR EACH QUARTERLY TEST PERIOD
THEREAFTER, COMPANY SHALL PAY TO PURCHASER THE FEES SPECIFIED BELOW (EACH
INSTALLMENT OF SUCH FEES, INDIVIDUALLY AND COLLECTIVELY, THE "TOTAL DEBT RATIO
FEE") IF COMPANY'S TOTAL DEBT RATIO FOR SUCH QUARTERLY TEST