Document:

Exhibit
10.20

 

REGISTRATION RIGHTS
AGREEMENT

REGISTRATION RIGHTS
AGREEMENT, dated as of April 30, 2001, by and among KTC/AMG Holdings Corp., a
Delaware corporation to be renamed The Kenan Advantage Group, Inc. (the “Company”),
and the persons listed on Schedule 1 to this Agreement (the “Investors”).

RECITALS:

WHEREAS, on the date
hereof each of the Investors is acquiring, through the merger of AMHC
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of the
Company, with and into Advantage Management Holdings Corp., a Delaware
corporation and the surviving corporation in the merger (“AMHC”), and/or
is agreeing to purchase, shares of the Company’s Series A Convertible Preferred
Stock, the Company’s Series B Convertible Preferred Stock, the Company’s Series
C Convertible Preferred Stock, the Company’s Common Stock or warrants to
purchase shares of the Company’s Series D Convertible Preferred Stock and,
under certain circumstances, Common Stock; and

WHEREAS, the Investors
wish to acquire, and the Company is willing to grant, certain registration
rights with respect to the shares of the Company’s Common Stock which such
Investors now or may hereafter own, which rights are set forth herein.

NOW, THEREFORE, in
consideration of the premises and mutual covenants and agreements of the
parties as set forth herein and other good and valuable consideration, receipt
of which is hereby acknowledged, the parties hereto agree as follows:

Section 1.               Definitions.  As used in this Agreement, the following
terms shall have the following respective meanings:

“Commission” shall
mean the Securities and Exchange Commission or any other federal agency at the
time administering the Securities Act.

“Common Stock”
shall mean the Company’s Common Stock, $.0001 par value per share.

“Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder, and shall include any successor statute.

“Holder” shall
mean any holder of outstanding Registrable Securities.

“Initiating Holders”
shall mean (a) with respect to the Sterling Investors’ request for registration
pursuant to Section 2 hereof, any Holder or group of Holders constituting
Sterling Investors who in the aggregate are Holders of sixty-six and two-thirds
percent (66.67%) or more of the shares of Common Stock then owned by the
Sterling Investors (excluding, in the case of the Warrant Investors, Warrant
Shares); (b) with respect to the MassMutual Investors’ request for registration
pursuant to Section 2 hereof, any Holder or group of Holders of sixty-six and
two-thirds percent (66.67%) or more of the MassMutual Warrant Shares and (c)
with respect to the Rice Investors’ request for registration pursuant to
Section 2 hereof, any Holder or group of Holders of sixty-six and two-thirds
percent (66.67%) or more of the Rice Warrant Shares.  For purposes of this definition, shares of Common Stock issuable
upon conversion of the Preferred Stock and/or upon exercise of the Warrants and
conversion of the Preferred Stock issuable thereunder shall be deemed shares of
Common Stock owned by such Investor.

 

 

“MassMutual Investors”
shall mean Massachusett Mutual Life Insurance Company, MassMutual Corporate
Investors and MassMutual Participation Investors, or their respective
assignee(s) under Section 11 hereof of the MassMutual Warrant Shares.

“MassMutual Warrants”
shall mean the Warrants to purchase shares of Series D Preferred Stock and,
under certain circumstances, Common Stock issued to the MassMutual Investors
pursuant to the Warrant Agreement.

“MassMutual Warrant
Shares” shall mean the shares of Series D Preferred Stock (including shares
of Common Stock issued or issuable upon conversion thereof) and, under certain
circumstances, Common Stock issued or issuable pursuant to the MassMutual Warrants.

“Other Stockholders”
shall have the meaning specified in the last paragraph of Section 2(a).

“Preferred Stock”
shall mean collectively the Series A Convertible Preferred Stock of the
Company, $.001 par value (“Series A Preferred Stock”), Series B Convertible
Preferred Stock of the Company, $.001 par value (“Series B Preferred Stock”),
Series C Convertible Preferred Stock of the Company, $.001 par value (“Series
C Preferred Stock”), and Series D Convertible Preferred Stock of the
Company, $.001 par value (“Series D Preferred Stock”).

“Qualifying Public
Offering” shall mean a firm commitment underwritten public offering of
Common Stock, pursuant to a registration statement filed with and declared
effective by the Commission, which results in (i) gross proceeds (before
underwriting discounts and commissions) to the Company of at least $25,000,000
from purchasers thereunder which are not Affiliates of the Company, (ii) an
aggregate valuation of all the outstanding shares of the Common Stock on a
Fully-diluted basis immediately prior to consummation of the offering of at
least $75,000,000, and (iii) each Holder of the Company’s Founders’ Preferred
Stock (as such term is defined in the Certificate of Designations of the
Powers, Preferences and Rights of the Preferred Stock (the “Certificate of
Designations”)) receiving, upon conversion of such Preferred Stock in
connection with such offering, a number of shares of Common Stock (exclusive of
shares of Common Stock representing dividends which are converted into Common
Stock) having a value, based on the initial public offering price, of at least
twice the aggregate Liquidation Amount (as such term is defined in the
Certificate of Designations) of such Holder’s Preferred Stock.

“Register,” “registered”
and “registration” shall refer to a registration effected by preparing
and filing a registration statement in compliance with the Securities Act, and
the declaration or ordering of the effectiveness of such registration
statement.

“Registered Securities”
shall mean Registrable Securities which have been registered under the
Securities Act pursuant to a registration statement filed with and declared
effective by the Commission.

“Registrable
Securities” shall mean issued shares of Common Stock or shares of Common
Stock then issuable (i) upon conversion of the Preferred Stock, (ii) upon
exercise of the Warrants and (iii) with respect to outstanding shares of Common
Stock, the Preferred Stock or the Warrants by way of any stock split, stock
dividend, recapitalization or similar event. 
For purposes of this Agreement, a Person shall be deemed to be a holder
of Registrable Securities, and the Registrable Securities shall be deemed to be
in existence, whenever such Person has the right to acquire directly or
indirectly such Registrable Securities (upon conversion or exercise, in
connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), 

 

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whether or not
such acquisition has actually been effected, and such Person shall be entitled
to exercise the rights of a holder of Registrable Securities hereunder,
subject, however, to the requirements of Section 13 hereof.  As to any particular Registrable Securities,
such securities will cease to be Registrable Securities when they have ceased
to be Restricted Securities; provided, however, that any securities which cease
to be Restricted Securities solely because they have become eligible for
transfer pursuant to Rule 144 will not cease to be Registrable Securities until
they have actually been sold in compliance with Rule 144.

“Registration Expenses”
shall mean all expenses incurred by the Company in compliance with Sections 2,
3, 5 and 6 hereof, including, without limitation, all registration, filing and
National Association of Securities Dealers fees, all fees and expenses of
complying with securities or blue sky laws, all word processing, duplicating
and printing expenses, messenger, telecommunications, mailing and delivery
expenses, the fees and disbursements of counsel for the Company and of its
independent public accountants, including the expenses of any special audits or
“cold comfort” letters required by or incident to such performance and compliance,
the fees and disbursements incurred by the holders of Registrable Securities to
be registered (including the fees and disbursements of one law firm and one
accounting firm retained by such Holders in accordance with Sections 2 or 3
hereof), premiums and other costs of policies of insurance against liabilities
arising out of the public offering of the Registrable Securities being
registered and any fees and disbursements of underwriters customarily paid by
issuers or sellers of securities, but excluding Selling Expenses, if any,
provided that, in any case where Registration Expenses are not to be borne by
the Company, such expenses shall not include salaries of Company personnel or
general overhead expenses of the Company, auditing fees, premiums or other expenses
relating to liability insurance required by underwriters of the Company or
other expenses for the preparation of financial statements or other data
normally prepared by the Company in the ordinary course of its business or
which the Company would have incurred in any event.

“Restricted Securities”
shall mean the securities of the Company required to bear or bearing the legend
set forth in (i) Section 4.7 of the Stockholders’ Agreement of even date
herewith by and among the Company and the Investors or (ii) Section 2.14 of the
Warrant Agreement relating to the Warrant Shares.

“Rice Investors”
shall mean RSTW Partners III, L.P., a Delaware limited partnership, or its
assignee(s) under Section 11 hereof of the Rice Warrant Shares.

“Rice Warrants”
shall mean the Warrants to purchase shares of Series D Preferred Stock and,
under certain circumstances, Common Stock issued to the Rice Investors pursuant
to the Warrant Agreement, including without limitation the amended and restated
Warrants issued pursuant to the Warrant Agreement.

“Rice Warrant Shares”
shall mean the shares of Series D Preferred Stock (including shares of Common
Stock issued or issuable upon conversion thereof) and, under certain
circumstances, Common Stock issued or issuable pursuant to the Rice Warrants.

“Rule 144” shall
mean Rule 144 promulgated under the Securities Act, or any successor rule then
in force.

“Securities Act”
shall mean the Securities Act of 1933, as amended, and the rules and
regulations thereunder, and shall include any successor statute.

“Selling Expenses”
shall mean all underwriting discounts and selling commissions applicable to the
sale of Registrable Securities.

 

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“Sterling Investors”
shall mean the Investors set forth in Schedule I or their respective assignees
under Section 11 hereof.

“Warrant Agreement”
shall mean that certain Warrant Purchase Agreement, dated as of the date
hereof, by and among the Company and each of the Warrant Investors.

“Warrant Investors”
shall mean collectively the MassMutual Investors and the Rice Investors.

“Warrants” shall
mean collectively the MassMutual Warrants and the Rice Warrants.

“Warrant Shares”
shall mean collectively the MassMutual Warrant Shares and the Rice Warrant
Shares.

Section 2.               Requested Registration.

(a)           Request for Registration.  If, (y) on or after the earlier of (i) six
months after the closing of the Company’s initial Qualifying Public Offering or
(ii) December 31, 2002, in the case of the Sterling Investors, or (z) on or
after six months after the closing of the Company’s initial Qualifying Public
Offering, in the case of the Warrant Investors, the Company shall receive from
any Initiating Holder entitled to make such request a written request that the
Company effect any registration with respect to all or part of the Registrable
Securities, provided such request and/or the registration referred to below
includes not less than 25% (50% in the case of the Warrant Investors) of the
Registrable Securities held by the Initiating Holders, the Company will:

(1)           promptly
give written notice of the proposed registration to (x) all other Sterling
Investors where the Initiating Holder is the Sterling Investors, (y) all other
MassMutual Investors where the Initiating Holder is the MassMutual Investors
and (z) all other Rice Investors where the Initiating Holder is the Rice
Investors; and

(2)           as
soon as practicable, use its diligent best efforts to effect such registration
(including, without limitation, the execution of an undertaking to file
post-effective amendments, appropriate qualification under applicable blue sky
or other state securities laws and appropriate compliance with the Securities
Act) as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are specified in
a written request given within twenty-five (25) days after receipt of such
written notice from the Company pursuant to Sections 2 or 3 hereof; provided,
however, that the Company shall not be obligated to effect, or to take any
action to effect, any such registration pursuant to this Section 2:

(A)          (i) With respect to a registration
requested by the Sterling Investors as the Initiating Holder, after the Company
has effected a total of two such registrations pursuant to this Section 2 upon
the request of the Sterling Investors as the Initiating Holder, (ii) with
respect to a registration requested by the MassMutual Investors as the
Initiating Holder, after the Company has effected one such registration
pursuant to this Section 2 upon the request of the MassMutual Investors as the
Initiating Holder and (iii) with respect to a registration requested by the
Rice Investors as the Initiating Holder, after the Company has effected one
such registration pursuant to this Section 2 upon the request of the Rice
Investors as the Initiating Holder, and all such registrations 

 

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have been declared or
ordered effective, maintained effective for at least 12 months (or less if all
the Registrable Securities included therein are sooner sold) and the sales of
not less than 80% of the Registrable Securities requested to be registered by
the Initiating Holder in each such request shall have closed;

(B)           If the Company has not yet sold its
Common Stock to the public pursuant to a registration statement filed with, and
declared effective by, the Commission under the Securities Act, and, within
thirty (30) days after receipt of a request pursuant to this Section 2, the
Company informs the Initiating Holder that in lieu of registering the
Registrable Securities of the Holders, the Company intends to register and sell
securities for its own account within four (4) months of receipt of such
request pursuant to this Section 2 and the Company gives the Holders the notice
required by Section 3(a)(i) of this Agreement, provided that the Company may
only exercise its right hereunder once, even if its own registration statement
does not become effective;

(C)           With respect to a request by either
the MassMutual Investors or the Rice Investors, if the Company has, within the
prior six (6) months, filed a registration statement which has been declared
effective at the request of the Rice Investors or the MassMutual Investors,
respectively, and such registration statement covered at least sixty-six and
two-thirds (66.67%) of the Registrable Securities which each of the MassMutual
Investors and the Rice Investors requested be included in such registration
statement; or

(D)          If such offering is the Company’s
initial public offering and is not a Qualifying Public Offering.

Nothing in clauses (A)(ii)
or (A)(iii) shall affect the right of any Warrant Investor to participate in
any registration for which the Sterling Investors, the MassMutual Investors or
the Rice Investors are the Initiating Holder or any other registration, in each
case pursuant to Section 3, and nothing in clause (A)(i) shall affect the right
of the Sterling Investors to participate in any registration for which the
Warrant Investors are the Initiating Holder or any other registration, in each
case pursuant to Section 3.  Subject to
the foregoing clauses (A), (B) and (C), the Company shall file a registration
statement covering the Registrable Securities so requested to be registered as
soon as practicable after receipt of the request or requests of the Initiating
Holders.  For purposes of a registration
under this Section 2, a majority-in-interest of the Initiating Holders
requesting any registration pursuant to this Section 2 shall have the right to
select the counsel for all of the selling Holders.

Notwithstanding the
foregoing, the Company may delay the filing of any registration statement
requested pursuant to this Section 2 for a reasonable period of time (not to
exceed 120 days) if within five days of the decision of the board of directors
of the Company to delay such filing, the Company provides the Initiating
Holders with a certificate signed by the Chairman of the Board of Directors of
the Company stating that, in the good faith judgment of the board of directors
of the Company, either (i) the filing of the registration statement would
require disclosure of information not otherwise then required to be disclosed
and that such disclosure would adversely affect any material business
opportunity, transaction or negotiation then contemplated by the Company or
(ii) such registration is not then in the best interests of the Company in the
event the Company has not yet completed a Qualifying Public Offering; provided,
however, that any decision pursuant to this clause (ii) must be made by
two-thirds of the directors.  The
Company shall give prompt notice to the Initiating Holders of the end of any
delay period under this subsection.

 

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The registration
statement filed pursuant to the request of the Initiating Holders may, subject
to the provisions of Section 2(b) below, include Registrable Securities for
which inclusion in the registration statement is requested pursuant to Section
3, securities (other than Registrable Securities) of the Company which are held
by officers or directors of the Company or which are held by persons who, by
virtue of agreements with the Company, are entitled to include their securities
in any such registration (the “Other Stockholders”), or securities of
the Company for its own account.

(b)           Underwriting.  If the Initiating Holders intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to Section 2 and the Company shall include such information in the
written notice referred to in Section 2(a)(1) above.  A majority-in-interest of the Initiating Holders included in any
registration pursuant to this Section 2 shall have the right to select the lead
investment banker and manager, and any co-managers, to administer the offering,
subject to the Company’s approval which will not be unreasonably withheld.  The right of any Holder to registration
pursuant to this Section 2 shall be conditioned upon such Holder’s
participation in such underwriting and the inclusion of such Holder’s
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority-in-interest of the Initiating Holders and such Holder with respect
to such participation and inclusion) to the extent provided herein.

If Holders (pursuant to
Section 3), officers or directors of the Company or Other Stockholders holding
securities of the Company shall request inclusion in any registration to be
effected pursuant to Section 2, the Initiating Holders shall offer to include
the securities of such Holders, officers, directors and Other Stockholders in
the underwriting and may condition such offer on their acceptance of the
further applicable provisions of this Agreement.  The Company shall (together with all Holders, officers, directors
and Other Stockholders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting.  Notwithstanding any other provision of this
Section 2, if the managing underwriter advises the Initiating Holders in
writing that marketing factors require a limitation on the number of shares to
be underwritten, the securities of the Company (other than Registrable
Securities) held by officers or directors of the Company shall be excluded from
such registration to the extent so required by such limitation (pro rata based
upon the number of securities requested to be included in such registration by
each such person), and if a further limitation of the number of shares is
required, the securities of the Company (other than Registrable Securities)
held by Other Stockholders shall be excluded from such registration to the
extent so required by such limitation (pro rata based upon the number of
securities requested to be included in such registration by each such person)
and if a further limitation of the number of shares is required, the Initiating
Holders shall so advise all Holders of Registrable Securities requesting
registration pursuant to this Section 2 and pursuant to Section 3, and the
number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all such Holders in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities which they had requested to be included in such registration at the
time of filing the registration statement. 
No Registrable Securities or any other securities excluded from the
underwriting by reason of the underwriter’s marketing limitation shall be
included in such registration.  If any
Holder of Registrable Securities, officer, director or Other Stockholder who
has requested inclusion in such registration as provided above disapproves of
the terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the managing underwriter and the Initiating
Holders.  The securities so withdrawn
shall also be withdrawn from registration. 
If the managing underwriter has not limited the number of Registrable
Securities or other securities to be underwritten, the Company may include its
securities for its own account in such registration if the managing underwriter
so agrees and if the number of Registrable Securities and other securities
which would otherwise have been included in such registration and underwriting
will not thereby be limited unless the inclusion of 

 

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Company securities
in such registration will, in the reasonable judgment of the managing
underwriter, have a material adverse effect on the anticipated offering price.

Section 3.               Piggyback Registration.

(a)           If the Company shall determine to
register any of its securities either for its own account or the account of a
security holder or holders exercising their respective demand registration
rights, including any rights granted pursuant to Section 2 hereof, other than a
registration on any form which does not permit secondary sales or does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of Registrable Securities, the
Company will:

(i)            promptly give to
each Holder written notice thereof (which shall include a list of the
jurisdictions in which the Company intends to attempt to qualify such
securities under the applicable blue sky or other state securities laws);
provided, however, that in the event the Company is registering shares for the
account of a Holder exercising its demand registration rights pursuant to
Section 2 hereof, such notice shall be given simultaneously with the notice
required by Section 2(a)(1); and

(ii)           include in such
registration (and any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all the Registrable
Securities specified in a written request or requests made by any Holder within
twenty-five (25) days after receipt of the written notice from the Company
described in clause (i) above, except as set forth in Section 3(b) below.  Such written request may specify all or a
part of a Holder’s Registrable Securities.

For purposes of any
registration pursuant to this Section 3 the Holders of a majority-in-interest
of the Registrable Securities to be registered shall choose the counsel for all
of the selling Holders; provided, however, that if such registration is a
registration initiated by Holders pursuant to Section 2, then such Initiating
Holders, pursuant to Section 2, rather than the Holders participating in such
registration pursuant to this Section 3, shall have the right to choose counsel
to represent all the selling Holders.

(b)           Underwriting.  If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 3(a)(i).  All
Holders proposing to distribute their securities through such underwriting
shall (together with the Company and the Other Stockholders distributing their
securities through such underwriting) enter into an underwriting agreement
mutually agreeable to the underwriter or underwriters selected by the Company
and each selling Holder, it being understood that the Company shall have no
liability to any selling Holder which cannot reach agreeable terms with the
underwriter(s) and the sole remedy available to any selling Holder which does
not agree with the terms of the underwriting agreement is to not participate in
such underwriting.  Notwithstanding any
other provision of this Section 3, if the managing underwriter advises the
Company that marketing factors require a limitation on the number of shares to
be underwritten, the Company shall so advise all holders of securities
requesting registration, and the number of shares that are entitled to be
included in the registration and underwriting shall be allocated in the
following manner:  the securities of the
Company (other than Registrable Securities) held by officers and directors of
the Company shall be excluded from such registration and underwriting to the
extent required by such limitation (pro rata based upon the number of
securities requested to be included in such registration by each such person),
and, if a further limitation on the number of shares is required, the
securities of the Company (other than Registrable Securities) held by Other
Stockholders shall be excluded from such registration to the extent required by
such limitation (pro rata based upon the number of securities requested to be
included in such registration 

 

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by each such person), and
if a further limitation on the number of shares is required, the number of
shares that may be included in the registration and underwriting shall be
allocated among the Holders of Registrable Securities requesting inclusion in
the registration pursuant to this Section 3 and pursuant to Section 2 in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities which they had requested to be included in such registration at the
time of filing the registration statement. 
If any Holder of Registrable Securities or any officer or director of
the Company or Other Stockholder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to the
Company and the managing underwriter. 
Any Registrable Securities or other securities excluded or withdrawn
from such underwriting shall be withdrawn from such registration.  Any registration solely pursuant to this
Section 3 shall not constitute a demand registration under Section 2(a)(2)(A)
hereof.

Section 4.               Expenses of Registration.  All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to this
Agreement shall be borne by the Company, and all Selling Expenses shall be
borne by the Holders of the securities so registered pro rata on the basis of
the number of their shares so registered; provided, however, that the Company
shall not be required to pay any Registration Expenses if, as a result of the
withdrawal of a request for registration by a majority-in-interest of the
Initiating Holders (other than as a result of a material adverse change in the
Company’s business, financial condition or operating results or the market for
the Company’s stock or as a result of an event which materially and adversely
affects the Holders’ ability to sell their shares in compliance with the
Federal securities laws), the registration statement does not become effective,
in which case the Initiating Holders (other than Holders requesting inclusion
in such registration pursuant to Section 3) and Other Stockholders requesting
registration shall bear such Registration Expenses pro rata on the basis of the
number of their shares so included in the registration request, and provided,
further, that such registration shall not be counted as a registration pursuant
to Section 2(a)(2)(A).  Notwithstanding
the proviso in the preceding sentence, the Initiating Holders may elect to have
such withdrawn registration count as a registration pursuant to Section
2(a)(2)(A), in which event the Company shall bear all Registration Expenses
relating to such withdrawn registration.

Section 5.               Registration on Form S-3.  After the Company has qualified for the use
of Form S-3 or any successor form, in addition to the rights contained in the
foregoing provisions of this Agreement, the Holders of Registrable Securities
shall have the right to request registrations on Form S-3 (such requests shall
be in writing and shall state the number of shares of Registrable Securities to
be disposed of and the intended methods of disposition of such shares by such
Holder or Holders); provided, however, that the Company shall not be obligated
to file more than one Form S-3 in any six-month period.  Any such registration shall not be counted
as a registration pursuant to Section 2(a)(2)(A).

Notwithstanding the
foregoing, the Company shall not be required to effect registration under this
Section 5 if counsel for the Company, reasonably acceptable to the Holders
requesting registration, shall deliver an opinion reasonably acceptable to the
Holders requesting registration that, pursuant to Rule 144 under the Securities
Act or otherwise, such Holders can publicly sell the Registrable Securities as
to which registration has been requested without registration under the
Securities Act and without any limitation with respect to offerees, manner of
offering or the size of the transaction.

Section 6.               Registration Procedures.  In the case of each registration effected by
the Company pursuant to this Agreement, the Company will keep each Holder
advised in writing as to the initiation of each registration and as to the
completion thereof.  Whenever the
holders of Registrable Securities have requested that any Registrable
Securities be registered pursuant to this Agreement, the Company will use its
best efforts to effect the registration and the sale of such Registrable
Securities in accordance with the intended method of disposition thereof, and
pursuant thereto the Company will at its expense and as expeditiously as
possible:

 

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(a)           Prepare and file with the Commission
a registration statement with respect to such Registrable Securities and use
its best efforts to cause such registration statement to become effective;
provided that before filing a registration statement or prospectus or any
amendment or supplement thereto, including documents incorporated by reference
after the initial filing of any registration statement, the Company shall
furnish to the Holders of the Registrable Securities covered by such
registration statement and the underwriters, if any, copies of all such
documents proposed to be filed, which documents will be subject to the review
of such Holders and underwriters;

(b)           Prepare and file with the Commission
such amendments and post-effective amendments to a registration statement as
may be necessary to keep such registration effective for a period of twelve
(12) months or until the Holder or Holders have completed the distribution
described in the registration statement relating thereto, whichever first
occurs; provided, however, that the Company, in good faith, may delay the
filing of any amendment or supplement to the Registration Statement for a
reasonable period of time, not to exceed 120 days, in order to permit the
Company (A) to effect disclosure or disposition or consummation of any
transaction requiring confidential treatment which is being actively pursued at
such time and which would require disclosure in the Registration Statement or
(B) to negotiate, effect or complete any transaction which the Company
reasonably believes might be jeopardized, delayed or made more costly to the
Company by disclosure in the Registration Statement; and provided further,
however, that (i) such 12 month period shall be extended for a period of time
equal to the period the Holder refrains from selling any securities included in
such registration in accordance with the provisions of Section 12 hereof; (ii)
such 12 month period shall be extended by the number of days during the period
from and including the date of the giving of notice pursuant to Section 6(e)
hereof to and including the date when each Holder of Registrable Securities covered
by such registration statement shall have received the copies of the
supplemented or amended prospectus contemplated by Section 6(e) hereof; and
(iii) in the case of any registration of Registrable Securities on Form S-3
which are intended to be offered on a continuous or delayed basis, such 12
month period shall be extended, if necessary, to keep the registration
statement effective until all such Registrable Securities are sold, provided
that Rule 415, or any successor rule under the Securities Act, permits an
offering on a continuous or delayed basis, and provided further that applicable
rules under the Securities Act governing the obligation to file a
post-effective amendment permit, in lieu of filing a post-effective amendment
which (y) includes any prospectus required by Section 10(a)(3) of the
Securities Act or (z) reflects facts or events representing a material or
fundamental change in the information set forth in the registration statement,
the incorporation by reference in the registration statement of periodic
reports filed pursuant to Section 13 or 15(d) of the Exchange Act that contain
the information required to be included in (y) and (z) above;

(c)           Cause the related prospectus to be
supplemented by any required prospectus supplement, and, as so supplemented, to
be filed pursuant to Rule 424 under the Securities Act; and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement or supplement to such prospectus;

(d)           Furnish such number of prospectuses
and other documents incident thereto, including any amendment of or supplement
to the prospectus as a Holder from time to time may reasonably request;

 

9

 

(e)           Notify each seller of Registered
Securities covered by such registration statement 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, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and at the request of any such
seller, prepare and furnish to such seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such shares, such prospectus shall
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading;

(f)            Cause all such Registered Securities
to be listed on each securities exchange on which similar securities issued by
the Company are then listed or, if not then listed, cause such Registered
Securities to be included on whatever exchange or national automated quotation
system the Board of Directors determines is appropriate;

(g)           Provide a transfer agent and
registrar for all Registered Securities and a CUSIP number for all such
Registered Securities, in each case not later than the effective date of such
registration;

(h)           Make available for inspection during
regular business hours 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 (collectively, the “Inspectors”), all financial and other
records, pertinent corporate documents and properties of the Company
(collectively the “Records”) as shall be reasonably necessary to enable
them to exercise their due diligence responsibility, and cause the Company’s
officers, directors, employees and independent accountants to supply all
information reasonably requested by such seller, underwriter, attorney or
accountant in connection with such registration statement.  Records which the Company determines, in
good faith, to be confidential and which it notifies the Inspectors are
confidential shall not be disclosed by the Inspectors unless (A) the disclosure
of such Records is, in the opinion of counsel for the selling Holders,
reasonably necessary to avoid or correct any misstatement or omission in the
registration statement, (B) the release of such Records is ordered pursuant to
a subpoena or other order from a court of competent jurisdiction, or (C) the
disclosure of such Records is required by any governmental regulatory body with
jurisdiction over any seller of Registrable Securities.  Such seller, upon learning that disclosure
of such Records is sought in a court of competent jurisdiction, shall notify
the Company and allow the Company, at its expense, to undertake appropriate
action to prevent disclosure of the Records deemed confidential;

(i)            Cooperate with the sellers of
Registered Securities and the managing underwriter(s), if any, to facilitate
the timely preparation and delivery of certificates representing the Registered
Securities to be sold, without any restrictive legends, in such denominations
and registered in such names as the managing underwriter(s) may request at
least two business days prior to any sale thereof to the underwriters, if
applicable;

(j)            Obtain from its accountants
“cold-comfort” letters, dated the effective date of the registration statement
and the date of the closing of the sale of the Registered Securities, and
addressed to the Company and the selling Holders, in form and substance as are
customarily issued in connection with underwritten public offerings and
otherwise reasonably 

 

10

 

satisfactory to the
Company and a majority-in-interest of (i) the Initiating Holders if the
registration is pursuant to Section 2 or (ii) the selling Holders in all other
cases;

(k)           Obtain from its counsel an opinion,
addressed to the selling Holders, with respect to the offering in form and
substance reasonably satisfactory to a majority-in-interest of (i) the
Initiating Holders if the registration is pursuant to Section 2 or (ii) the
selling Holders in all other cases;

(l)            Otherwise use its best efforts to
comply with all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first month after the effective date
of the Registration Statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act;

(m)          In connection with any underwritten
offering pursuant to a registration statement filed pursuant to Section 2
hereof, the Company will enter into any underwriting agreement reasonably
necessary to effect the offer and sale of Common Stock, provided such
underwriting agreement contains customary underwriting, indemnification and
contribution provisions, which indemnification and contribution provisions
shall be in all material respects similar to the provisions of Section 7
hereof; provided, however, that no Holder will be liable for indemnification or
contribution in excess of the net proceeds such Holder received in the
offering;

(n)           Use its best efforts to register or
qualify such Registrable Securities under such other securities or blue sky
laws of such jurisdictions as any seller reasonably requests and do any and all
other acts and things which may be reasonably necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller (provided that the Company will not be required
to (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii) subject itself
to taxation in any such jurisdiction or (iii) consent to general service of
process in any such jurisdiction);

(o)           Use its best efforts to cause such
Registrable Securities covered by such registration statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to enable the sellers thereof to consummate the disposition of such
Registrable Securities; and

(p)           Take all such other actions as the
underwriters, if any, and a majority-in-interest of (i) the Initiating Holders
if the registration is pursuant to Section 2 or (ii) the selling Holders in all
other cases reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including, without limitation,
effecting a stock split or combination of shares).

Section 7.               Indemnification; Contribution.

(a)           To the extent permitted by law, the
Company will indemnify each Holder, each of its officers, directors, members
and partners, and each person controlling such Holder, with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, each director and controlling person of the Company and each officer
of the Company who signed the registration statement, and each underwriter, if
any, and each person who controls any underwriter, against all claims, losses,
damages and liabilities (or actions, proceedings or settlements, if such 

 

11

 

settlements are effected
with the written consent of the Company, in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other document (including any
related registration statement, notification or the like) incident to any such
registration, qualification or compliance, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any violation by the
Company of the Securities Act or the Exchange Act or any rule or regulation
thereunder applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration, qualification
or compliance, and will reimburse each such Holder, each of its officers,
directors, members and partners, and each person controlling such Holder, each
such director, controlling person and officer, each such underwriter and each
person who controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating and defending or settling
any such claim, loss, damage, liability, action or proceeding; provided,
however, that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder or
underwriter and stated to be specifically for use therein.

(b)           To the extent permitted by law, each
Holder will, if Registrable Securities held by such Holder are included in the
securities as to which such registration, qualification or compliance is being
effected, indemnify the Company, each of its directors, officers and
controlling persons, and each underwriter, if any, of the Company’s securities
covered by such a registration statement, each person who controls the Company
or such underwriter within the meaning of the Securities Act or the Exchange
Act or the rules and regulations thereunder, each other such Holder and Other
Stockholder (if and to the extent such Other Stockholder has agreed to indemnify
the Holders as set forth in this clause (b)) including Registrable Securities
and other securities in the securities as to which such registration,
qualification or compliance is being effected, and each of their officers,
directors, members and partners, and each person controlling such Holder or
Other Stockholder, against all claims, losses, damages and liabilities (or
actions, proceedings or settlements in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company and such Holders, Other
Stockholders, directors, officers, members, partners, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating and defending or settling any such claim, loss,
damage, liability, action or proceeding, in each case to the extent, but only
to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by such Holder and
stated to be specifically for use therein; provided, however, that the
obligations of each such Holder hereunder shall be limited to an amount equal
to the net proceeds to each such Holder of securities sold as contemplated
herein.

(c)           Each party entitled to
indemnification under this Section 7 (the “Indemnified Party”) shall
give notice to the party required to provide indemnification (the “Indemnifying
Party”) promptly after such Indemnified Party has actual knowledge of any
claim as to which indemnity may be sought, and shall permit the Indemnifying
Party to assume the defense of any such claim or any litigation resulting
therefrom, provided that counsel for the Indemnifying Party, who shall conduct
the defense of such claim or any litigation resulting therefrom, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party’s expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement, unless 

 

 

12

 

such failure to notify
materially adversely affects the Indemnifying Party’s ability to defend such
action.  No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving
by the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect of such claim or litigation.  Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with the defense
of such claim and litigation resulting therefrom.

(d)           If the indemnification provided for
in this Section 7 shall for any reason be unenforceable by an Indemnified
Party, although otherwise available in accordance with its terms, then each
Indemnifying Party shall, in lieu of indemnifying such Indemnified Party,
contribute to the amount paid or payable by such Indemnified Party as a result
of the losses, claims, damages, liabilities or expenses with respect to which
such Indemnified Party has claimed indemnification, in such proportion as is
appropriate to reflect the relative fault of the Indemnified Party on the one
hand and the Indemnifying Party on the other in connection with the statements
or omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations.  The relative fault, in the case of an untrue
statement, alleged untrue statement, omission or alleged omission, shall be
determined by, among other things, whether such statement, alleged statement,
omission or alleged omission relates to information supplied by the
Indemnifying Party or the Indemnified Party, and such parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement, alleged statement, omission or alleged omission.  The Company and each Holder agree that it
would not be just and equitable if contribution pursuant hereto were to be
determined by pro rata allocation or by any other method of allocation which
does not take into account such equitable considerations.  The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages, liabilities or expenses
referred to herein shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending against any action or claim which is the subject hereof.  In no case, however, shall a Holder be responsible
for a portion of the contribution obligation in excess of the net proceeds to
such Holder of securities sold as contemplated herein.  No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation.

(e)           Anything to the contrary contained in
this Section 7 notwithstanding, (i) no Holder shall be liable for any
indemnification or contribution in excess of the net proceeds received by it
from any sale of Registrable Securities which has been registered hereunder and
(ii) all indemnification and contribution obligations of the Holders shall be
several and not joint.

Section 8.               Obligations of Holder.

(a)           Each Holder of Registrable Securities
included in any registration shall furnish to the Company such information
regarding such Holder and the distribution proposed by such Holder as the
Company may reasonably request in writing and as shall be reasonably required
in connection with any registration, qualification or compliance referred to in
this Agreement.

(b)           Each Holder of the Registrable
Securities agrees by acquisition of such Registrable Securities that upon
receipt of any notice from the Company pursuant to Section 6(e), such Holder
will forthwith discontinue such Holder’s disposition of Registered Securities
pursuant to the registration statement relating to such Registered Securities
until such Holder’s receipt of the copies of the supplemented or amended
prospectus contemplated by Section 6(e) and, if so directed by the Company,
will deliver to the Company (at the Company’s expense) all copies, other than
permanent file 

 

13

 

copies, then in such
Holder’s possession of the prospectus relating to such Registered Securities at
the time of receipt of such notice.

Section 9.               Limitations on Registration of
Issues of Securities.  Any right
given by the Company to any holder or prospective holder of the Company’s
securities in connection with the registration of securities shall be
conditioned such that it shall be consistent with the rights of the Holders
provided in this Agreement.  Except
pursuant to this Agreement, no holder of the Company’s securities owns or
possesses any registration rights with respect to any of the Company’s
securities.  The Company shall not, and
shall not permit any of its subsidiaries to, register or grant any registration
rights with respect to the securities of any such subsidiary other than in
connection with the pledge of such subsidiary’s securities to the Company’s or
its subsidiaries’ lenders.

Section 10.             Rule 144 Reporting.  With a view to making available to the
Holders the benefits of certain rules and regulations of the Commission which
may permit a Holder to sell securities of the Company to the public without
registration, the Company agrees to:

(a)           Make and keep public information
available, as those terms are understood and defined in Rule 144 under the
Securities Act, at all times following the effective date of the first
registration under the Securities Act filed by the Company for an offering of
its securities to the general public;

(b)           Use its best efforts to file with the
Commission in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act at any time following
registration of any of its securities under the Securities Act or Exchange Act;
and

(c)           So long as a Holder owns any
Registrable Securities, furnish to such Holder forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements
of Rule 144 (at any time following the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act following registration
of any of its securities under the Securities Act or Exchange Act, a copy of
the most recent annual or quarterly report of the Company, and such other
reports and documents so filed as a Holder may reasonably request in availing
itself of any rule or regulation of the Commission allowing a Holder to sell
any such securities without registration.

Section 11.             Transfer or Assignment of
Registration Rights.  The rights to
cause the Company to register the securities granted to the Investors by the
Company under Sections 2, 3 and 5 may be transferred or assigned by an Investor
to a transferee or assignee of any of such Investor’s Registrable Securities;
provided, however, that such transfer or assignment of Registrable Securities
was permitted under that certain Stockholders’ Agreement, dated as of the date
hereof, among the Company and the Investors (as amended, modified and
supplemented from time to time); provided, further, that the Company is given
written notice by such Investor at the time of or within a reasonable time
after said transfer or assignment, stating the name and address of said
transferee or assignee and identifying the securities with respect to which
such registration rights are being transferred or assigned; and provided,
further, that the transferee or assignee of such rights assumes the obligations
of such Investor under this Agreement.

 

 

14

 

Section 12.             “Market Stand-off” Agreement.

(a)           Each Holder agrees, if requested by
the Company and an underwriter of Common Stock (or other securities) of the
Company, not to sell or otherwise transfer or dispose of any Common Stock (or
other securities) of the Company held by such Holder in the public market
during the period required by such underwriter (up to a maximum of 180 days)
following the effective date of a registration statement of the Company filed
under the Securities Act without the prior consent of such underwriter; provided,
however, that all Holders, Other Stockholders and officers and directors of the
Company enter into similar agreements on substantially similar terms.

(b)           In the event of an underwritten
public offering of Registrable Securities pursuant to Section 2 hereof, the
Company agrees, if requested by the underwriter(s) of such offering, not to
sell in the public market any Common Stock (or other securities convertible
into or exchangeable for Common Stock) of the Company during the period
required by such underwriter following the effective date of the registration
statement relating to such offering filed under the Securities Act without the
prior consent of such underwriter; provided, however, that such period shall
not exceed 180 days or, if reasonably requested by such underwriter, such
longer period as is then customary.

(c)           Such agreement shall be in writing in
a form reasonably satisfactory to the Company and such underwriter.  The Company may impose stop-transfer
instructions with respect to the shares (or securities) subject to the
foregoing restriction until the end of said period.

Section 13.             Participation in Registrations.  No Holder of Preferred Stock may include
shares of Common Stock issuable upon conversion of such Holder’s Preferred
Stock in any registration, and no Holder of Warrants may include shares of
Common Stock issuable upon conversion of the Series D Preferred Stock issuable
upon exercise of such Warrants and/or shares of Common Stock issuable upon
exercise of such Warrants, as the case may be, in any registration, unless such
Holder, prior to the effective date of the registration statement either (i)
converts such Preferred Stock, or exercises the Warrant (and converts the
Series D Preferred Stock issuable upon exercise thereof), as the case may be,
relating to the shares of Common Stock to be included in the registration
statement, or (ii) executes and delivers to the Company a binding commitment
reasonably satisfactory in form and substance to the Company and the
underwriters, if any, to convert the Preferred Stock or to exercise the Warrant
(and convert the Series D Preferred Stock issuable upon exercise thereof), as
the case may be, relating to the shares of Common Stock to be included in the
registration, on or before the closing of the sale of the shares to which the
registration relates, which commitment may specify a minimum sale price as a
condition to conversion or exercise. 
Notwithstanding the foregoing, in an underwritten registration, a Holder
of the Warrants may, with the underwriters’ consent, elect to sell such
Warrants to the underwriters, who would then exercise the Warrants in
connection with the offering.

Section 14.             Adjustments Affecting
Registrable Securities.  The Company
will not take any action, or permit any change to occur, with respect to the
Registrable Securities which would adversely affect the ability of the Holders
of Registrable Securities to include such Registrable Securities in a
registration undertaken pursuant to this Agreement or which would adversely affect
the marketability of such Registrable Securities in any such registration.

Section 15.             Governing Law; Consent to
Jurisdiction.  All questions
concerning the construction, validity and interpretation of this Agreement and
the performance of the obligations imposed by this Agreement shall be governed
by and construed in accordance with the laws of the State of New York, without
application of the conflicts of laws principles thereof.  The Company and each Investor hereby
consents and agrees that the state or federal courts located in New York
County, City of New York, New York shall have exclusive jurisdiction to hear
and determine any claims or disputes 

 

 

15

 

between the parties
pertaining to this Agreement or to any matter arising out of or relating to
this Agreement; provided that the parties acknowledge that any appeals from
those courts may have to be heard by a court located outside of New York
County.  The Company and each Investor
expressly submits and consents in advance to such jurisdiction in any action or
suit commenced in any such court, and each party hereby waives any objection
that such credit party may have based upon lack of personal jurisdiction,
improper venue or forum non conveniens and hereby consents to the
granting of such legal or equitable relief as is deemed appropriate by such
court.  The Company and each Investor
hereby waives personal service of the summons, complaint and other process
issued in any such action or suit and agrees that service of such summons,
complaint and other process may be made by registered or certified mail
addressed to such  party at the address
specified in Section 19 of this Agreement and that service so made shall be
deemed completed upon such party’s actual receipt thereof.  Because disputes arising in connection with
complex financial transactions are most quickly and economically resolved by an
experienced and expert person and the parties wish applicable state and federal
laws to apply (rather than arbitration rules), the parties desire that their
disputes be resolved by a judge applying such applicable laws.  Therefore, to achieve the best combination
of the benefits of the judicial system and of arbitration, THE PARTIES HERETO
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO
RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE, AMONG ANY
PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR THE
TRANSACTIONS RELATED HERETO.

Section 16.             Successors and Assigns.  This Agreement shall be binding upon, and
inure to the benefit of, the successors, assigns, heirs, executors and
administrators of the parties hereto.

Section 17.             Entire Agreement; Amendment.  This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subjects hereof.  Neither this Agreement
nor any term hereof may be amended, waived, discharged or terminated, except by
a written instrument signed by the Company and the Holders of not less than a
majority-in-interest of the Registrable Securities.  Notwithstanding the foregoing, (a) this Agreement may not be
amended to reduce the number of demand registrations and “piggy-back”
registrations granted pursuant to Sections 2, 3 and 5, except by a written
instrument signed by the Company and a majority-in-interest of the Sterling
Investors, in the case of the rights of the Sterling Investors, a
majority-in-interest of the MassMutual Investors, in the case of the MassMutual
Warrant Shares and a majority-in-interest of the Rice Investors, in the case of
the Rice Warrant Shares, and (b) no amendment, modification, supplement or
waiver of, or departure from, Section 7 or this sentence of this Section 17
shall be effective without the written consent of all Investors then holding
Registrable Securities.

Section 18.             Attorney’s Fees.  In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof or
thereof is validly asserted as a defense, the successful party shall be
entitled to recover reasonable attorney’s fees in addition to any other
available remedy.

Section 19.             Notices, etc.  All notices or other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally or sent by telex, telefax or telegraphic communication, by
recognized overnight courier marked for overnight delivery, or by registered or
certified mail, postage prepaid, addressed as follows: (a) if to an Investor,
as indicated on Schedule 1 attached hereto, or at such other address as such
Investor shall have furnished to the Company in writing, or (b) if to any other
holder of any shares of Common Stock at such address as such holder shall have
furnished the Company in writing, or, until any such holder so furnishes an
address to the Company, then to and at the address of the last holder thereof
who has so furnished an address to the 

 

16

 

Company, or (c) if to the
Company, 4895 Dressler Road, N.W., Canton, Ohio,  44718 Attention: Chairman of the Board, or such other addresses
as shall be furnished by like notice by such party.  All such notices and communications shall, when telexed (provided
the correct answerback has been received) or telefaxed (immediately thereafter
confirmed by telephone) or telegraphed, be effective when telexed, telefaxed or
delivered to the telegraph company, respectively, or if sent by nationally recognized
overnight courier service, be effective one Business Day after the same has
been delivered to such courier service marked for overnight delivery, or, if
mailed, be effective when received.

Section 20.             Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner so as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement.  If any provision contained in this Agreement is determined to be
invalid, illegal or unenforceable as written, a court of competent jurisdiction
shall, at any party’s request, reform the terms of this Agreement to the extent
necessary to cause such otherwise invalid provisions to be enforceable under
applicable law.

Section 21.             Titles and Subtitles.  The titles of the sections, paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.

Section 22.             Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

Section 23.             Termination of Holdings
Registration Rights Agreement.  Each
Holder who is a party to that certain Registration Rights Agreement, dated as
of December 31, 1998, by and among Advantage Management Holdings Corp. and each
of the signatories thereto, hereby agrees that such Registration Rights
Agreement is hereby terminated and of no further force and effect.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

17

 

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

	
   

  	
  KTC/AMG HOLDINGS CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  AZALEA MALL, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  AETNA LIFE INSURANCE COMPANY 

  
	
   

  	
   

  	
  Its Sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  ANTARES CAPITAL CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  KEIBREAUX ASSOCIATES

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  
	
   

  	
   

  	
  Ed Levy

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  
	
   

  	
   

  	
  M. William Macey, Jr.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  
	
   

  	
   

  	
  Sharon Macey

  

 

 

18

 

	
   

  	
  MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  David L. Babson & Company Inc.,

  
	
   

  	
   

  	
  its Investment Adviser

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  MASSMUTUAL CORPORATE INVESTORS

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  The foregoing is executed on behalf of MassMutual
  Corporate Investors, organized under a Declaration of Trust, dated September
  13, 1985, as amended from time to time. 
  The obligations of such Trust are not personally binding upon, nor
  shall resort be had to the property of, any of the Trustees, shareholders,
  officers, employees or agents of such Trust, but the Trust’s property only
  shall be bound.

  
	
   

  	
   

  	
   

  
	
   

  	
  MASSMUTUAL PARTICIPATION INVESTORS

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  The foregoing is executed on behalf of MassMutual
  Participation Investors, organized under a Declaration of Trust, dated April
  7, 1988, as amended from time to time. 
  The obligations of such Trust are not personally binding upon, nor
  shall resort be had to the property of, any of the Trustees, shareholders,
  officers, employees or agents of such Trust, but the Trust’s property only
  shall be bound.

  

 

 

 

19

 

 

	
   

  	
  JAMES H. McDANIEL
  REVOCABLE TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
  Name:  James H. McDaniel

  
	
   

  	
   

  	
  Title:  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
  JERRY L. McDANIEL REVOCABLE TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
  Name:  Jerry
  L. McDaniel

  
	
   

  	
   

  	
  Title: 
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  
	
   

  	
   

  	
  Dennis Nash

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  
	
   

  	
   

  	
  Douglas L. Newhouse

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  
	
   

  	
   

  	
  James Newhouse

  
	
   

  	
   

  	
   

  
	
   

  	
  RFE INVESTMENT PARTNERS VI, L.P.

  
	
   

  	
  By:  

  	
  RFE Associates VI, LLC, its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title: 
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
  RFE VI SBIC, L.P.

  
	
   

  	
  By:

  	
  RFE Associates VI SBIC, LLC, its General  Partner

  
	
   

  	
  By:

  	
  RFE Investment Partners VI, L.P., its sole member

  
	
   

  	
  By:

  	
  RFE Associates VI, LLC, its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title: 
  Managing Member

  

 

 

20

 

 

	
   

  	
  RSTW PARTNERS III, L.P.

  	 

	
   

  	
  By:

  	
  RSTW Management, L.P., its

  	 

	
   

  	
   

  	
  general partner

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
  Rice Mezzanine Corporation, its

  	 

	
   

  	
   

  	
  general partner

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/

  	 

	
   

  	
   

  	
  Name:  Kurt
  G. Keene

  	 

	
   

  	
   

  	
  Title: 
  Managing Director

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  /s/

  	 

	
   

  	
   

  	
  Charles W. Santoro

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  /s/

  	 

	
   

  	
   

  	
  William L. Selden

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  /s/

  	 

	
   

  	
   

  	
  Lee Shaffer

  	 

	
   

  	
   

  
	
   

  	
  STERLING INVESTMENT
  PARTNERS, L.P.

  
	
   

  	
   

  	
   

  	 

	
   

  	
  By

  	
  Sterling Investment
  Partners Management, L.L.C.

  	 

	
   

  	
   

  	
  Its General Partner

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/

  	 

	
   

  	
   

  	
  Name:

  	 

	
   

  	
   

  	
  Title:  Managing Member

  	 

	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  /s/

  	 

	
   

  	
   

  	
  Carl Young

  	 

	
   

  	
   

  
	
   

  	
  SHAFFER FAMILY LLC

  
	
   

  	
   

  	
   

  	 

	
   

  	
  By:

  	
  /s/

  	 

	
   

  	
   

  	
  Name:

  	 

	
   

  	
   

  	
  Title:

  	 

					

 

 

21

 

 

SCHEDULE 1

Sterling Investors

	
  Azalea Mall, L.L.C.

  
	
  Keibreaux Associates

  
	
  Edward Levy

  
	
  M. William Macey, Jr.

  
	
  Sharon Macey

  
	
  Massachusetts Mutual Life Insurance Company

  
	
  MassMutual Corporate Investors

  
	
  MassMutual Participation Investors

  
	
  Dennis Nash

  
	
  Douglas L. Newhouse

  
	
  James Newhouse

  
	
  RFE Investment Partners VI, L.P.

  
	
  RFE VI SBIC, L.P.

  
	
  RSTW Partners III, L.P.

  
	
  Charles W. Santoro

  
	
  William L. Selden

  
	
  Lee Shaffer

  
	
  Shaffer Family LLC

  
	
  Sterling Investment
  Partners L.P.

  
	
  Carl Young

  

 

 

22Exhibit
10.21

 

STOCKHOLDERS’ AGREEMENT

STOCKHOLDERS’
AGREEMENT, dated as of this 30th day of April, 2001, by and among
KTC/AMG Holdings Corp., a Delaware corporation to be renamed The Kenan
Advantage Group, Inc. (the “Company”), and each of the signatories hereto
(collectively, the “Stockholders” and each individually a “Stockholder”).

RECITALS:

WHEREAS, each of
the Stockholders is acquiring, through the merger (the “Merger”) of AMHC
Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of the
Company, with and into Advantage Management Holdings Corp., a Delaware
corporation and the surviving corporation in the merger (“AMHC”), and/or
is agreeing to purchase securities of the Company (the “Stock Purchase”
and, together with the Merger, the “Transaction”) in connection with the
acquisition by the Company of Kenan Transport Company, a North Carolina
corporation (“KTC”), through the merger of KTC Acquisition Corp., a
newly-formed wholly-owned subsidiary of the Company, with and into KTC, with KTC
being the surviving corporation; and

WHEREAS, for
federal income tax purposes, it is intended that the Transaction shall be
treated as a transaction which meets the requirements of Section 351 of the
Internal Revenue Code of 1986, as amended (the “Code”); and

WHEREAS, the
Stockholders will be in control (within the meaning of Section 368(c) of the
Code) of the Company following the Transaction; and

WHEREAS, each of
the Stockholders desires to promote the interests of the Company and the mutual
interests of the Stockholders by establishing herein certain terms and
conditions upon which the Company’s Preferred Stock and Common Stock will be
held and voted by the Stockholders, including certain provisions relating to
the election of directors and the sale or other disposition of the Warrants,
Preferred Stock and Common Stock.

NOW, THEREFORE, in
consideration of the premises and of the mutual covenants and agreements herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

ARTICLE I

DEFINITIONS

Section 1.1.            Definitions.  As used herein, the following terms, unless
the context clearly indicates otherwise, shall have the following meanings:

“Acquired
Companies” shall mean, collectively, AMHC, KTC and their respective
subsidiaries.

“Aetna”
shall mean Aetna Life Insurance Company and its Affiliates, successors and
assigns.

“Affiliate”
or “affiliate” shall mean, with respect to any Person, any other Person
that, directly or indirectly, controls or is controlled by or is under common
control with such Person.  As used in
this definition of “Affiliate”, the term “control” and any
derivatives thereof mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through ownership of voting securities, by contract, or otherwise.  For the avoidance of doubt,

 

1

 

limited
partners of Sterling and RFE Investment Partners shall not be deemed
“Affiliates” of Sterling and RFE Investment Partners, respectively.

“AMG” shall
mean Advantage Management Group, Inc., an Ohio corporation and a wholly-owned
subsidiary of AMHC.

“AMG Merger
Agreement” shall mean the Agreement and Plan of Reorganization, dated as of
April 19, 2001, among the Company, AMHC and AMHC Acquisition Corp.

“Business Day”
shall mean any day, other than a Saturday, Sunday or legal holiday under the
Federal laws of the United States.

“Certificate of
Designations” has the meaning given such term in Section 2.1.

“Common Stock”
shall mean the Common Stock of the Company, $.0001 par value per share.

“Contingent
Options” shall mean the contingent options to purchase up to 161,000 shares
of Common Stock issued to each of Messrs. Nash and Young and up to 21,400
shares issued to Jerry L. McDaniel on the date hereof, in each case upon
conversion, pursuant to the terms of the AMG Merger Agreement, of contingent
options to purchase 1,610 shares of AMHC common stock issued to each of Messrs.
Nash and Young on December 31, 1998 and 214 shares of AMHC common stock issued
to Jerry L. McDaniel on February 29, 2000, respectively.

“Exchange Act”
means the Securities Exchange Act of 1934, as amended, or any similar Federal
law then in force as a replacement or successor to such law.

“Excused
Transfer” shall mean a Transfer (i) pursuant to a public offering
registered under the Securities Act, (ii) pursuant to Rule 144 (except those
transactions described in Rule 144(k) if the Company’s shares have not become
publicly traded), (iii) to a Permitted Transferee, or (iv) pursuant to a sale
of the Company in which all holders of Common Stock are entitled to receive the
same form and amount of per-share consideration (whether by sale of all the
outstanding stock or merger or consolidation whereby the Stockholders and their
Affiliates immediately after such merger or consolidation own less than a
majority of the outstanding voting securities of the surviving or new corporation).

“Fully-diluted
basis” shall mean the number of shares of Common Stock outstanding
(including without limitation the Warrant Shares) assuming the conversion or
exchange of all outstanding convertible or exchangeable securities (including
the conversion of the Preferred Stock into Common Stock) and the exercise of
all outstanding warrants, options or other rights to subscribe for or purchase
any shares of Common Stock (including without limitation the Warrants).

“GCL” shall
mean the General Corporation Law of the State of Delaware.

“Holder”
shall mean any holder (including, without limitation, a Permitted Transferee)
of outstanding Common Stock or Preferred Stock which has not been sold pursuant
to (i) a registration statement filed with, and declared effective by, the
Securities and Exchange Commission under the Securities Act or (ii) a Transfer
under Rule 144 (except those transactions described in Rule 144(k) if the
Company’s shares have not become publicly traded).

“Immediate
family” shall mean any ancestor, descendant (adopted or natural), sibling
or spouse of a Stockholder, or of the spouse of such Stockholder, or any
custodian or trustee for the account or benefit of such person.

 

2

 

“Independent
Third Party” shall mean any Person (including any affiliated group of
Persons) who, immediately prior to the contemplated transaction, owns less than
5% of the Common Stock on a Fully-diluted basis (a “5% Owner”), who is
not controlling, controlled by or under common control with any such 5% Owner
and who is not the spouse of or of common ancestry (by birth or adoption) with
any such 5% Owner or a trust for the benefit of such 5% Owner and/or such other
Persons.

“KTC Merger
Agreement” shall mean the Agreement and Plan of Merger, dated as of January
25, 2001, among the Company, KTC and KTC Acquisition Corp.

“Management
Agreement” shall mean, collectively, (i) that certain Amended and Restated
Management Agreement, dated as of April 30, 2001, by and among Sterling
Ventures Limited, the Company, AMG and KTC Acquisition Corp., (ii) that certain
Management Agreement, dated as of April 30, 2001, by and among Sterling
Investment Partners Advisors, LLC, the Company, AMG and KTC Acquisition Corp.
and (iii) that certain Management Agreement, dated as of April 30, 2001, by and
among RFE Management Corporation, the Company, AMG and KTC Acquisition Corp.

“Management
Options” shall mean the (i) options outstanding on the date hereof to
purchase 200,600 shares of Common Stock issued pursuant to the Company’s stock
option plan, (ii) options to purchase up to an aggregate of 390,589 shares of
Common Stock to be issued to Company employees from time to time after the date
hereof and (iii) the Contingent Options.

“Note Agreement”
shall mean that certain Note Purchase Agreement, dated as of the date hereof,
among the Company, KTC Acquisition Corp., AMG and each of the Warrant
Investors.

“Permitted
Transferee” shall mean (a) in the case of an individual, the Immediate
family of such person, a trust solely for the benefit of such person or his
Immediate family, the estate or legal representatives of such person and any
partnership, corporation or other entity wholly-owned by such person or his
Immediate family, (b) in the case of a partnership, any of its partners
(limited or general), the estates of such partners, any liquidating trust for
the benefit of the partners of such partnership and any partnership,
corporation or other entity wholly-owned by such partnership (and, if any
partner is itself a partnership, its partners (limited and general), and if any
such partner is itself a corporation or limited liability company, its
stockholders or members, respectively), (c) in the case of a holder of
Preferred Stock (other than Sterling (or any of its successors or assigns)),
any other Person who holds Preferred Stock, (d) in the case of a limited
liability company, any of its members or economic owners, (e) in the case of
RFE Investment Partners, members of its advisory board, up to a maximum of 150
shares of Series B Preferred Stock, (f) in the case of a corporation, any
entity (1) wholly-owned by such corporation, (2) wholly-owing such corporation
or (3) wholly-owned by the same entity which wholly-owns the corporation, (g)
only for purposes of a Transfer under Section 2.7(e) and the related right of
first offer under Section 4.3, an Affiliate of RFE Investment Partners, (h) any
individual serving as a director of the Company, except that Sterling may
Transfer no more than five percent (5%) of its Shares in aggregate pursuant to
this clause (h), and (i) in the case of any Warrant Investor, (1) any other
Warrant Investor, any Affiliate of any Warrant Investor or any Person for whom
any Warrant Investor or any Affiliate of any Warrant Investor acts as
investment advisor or manager and (2) any Person in connection with the
Transfer of Notes (as defined in the Note Agreement) to such Person.

“Person”
shall mean an individual, corporation, limited liability company, partnership,
joint venture, trust or unincorporated organization, or a government or any
agency or political subdivision thereof.

“Preferred
Stock” shall mean the Series A Convertible Preferred Stock of the Company,
$.001 par value per share (“Series A Preferred Stock”), Series B
Convertible Preferred Stock of the Company, $.001

 

3

 

par
value per share (“Series B Preferred Stock”), Series C Convertible
Preferred Stock of the Company, $.001 par value per share (“Series C
Preferred Stock”) and Series D Convertible Preferred Stock of the Company,
$.001 par value per share (“Series D Preferred Stock”).

“Purchasers”
shall mean those Persons purchasing Shares pursuant to Section 2.2 hereof.

“Qualifying
Public Offering” shall mean a firm commitment underwritten public offering
of Common Stock, pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission, which results in (i) gross
proceeds (before underwriting discounts and commissions) to the Company of at
least $25,000,000 from purchasers thereunder which are not Affiliates of the
Company, (ii) an aggregate valuation of all the outstanding shares of Parent’s
Common Stock on a Fully-diluted basis immediately prior to consummation of the
offering of at least $75,000,000 and (iii) each Holder of Founders’ Preferred
Stock (as such term is defined in the Certificate of Designations) receiving,
upon conversion of such Preferred Stock in connection with such offering, a
number of shares of Common Stock (exclusive of shares of Common Stock
representing dividends which are converted into Common Stock) having a value,
based on the initial public offering price, of at least twice the aggregate
Liquidation Amount (as such term is defined in the Certificate of Designations)
of such Holder’s Preferred Stock.

“Restricted
Securities” shall mean (i) the Preferred Stock, (ii) the shares of Common
Stock issued or issuable upon conversion of the Preferred Stock, (iii) the
Warrants, (iv) the Warrant Shares, (v) the Management Options, (vi) the shares
of Common Stock issued upon exercise of the Management Options and
(vii) any securities issued with respect to the securities referred to in
clauses (i), (ii), (iii), (iv), (v) and (vi) above by way of a stock dividend,
stock split or in connection with a stock combination, recapitalization,
merger, consolidation or other reorganization. 
As to any particular Restricted Securities, such securities will cease
to be Restricted Securities when they have (a) been effectively registered
under the Securities Act and disposed of in accordance with the registration
statement covering them or (b) disposed of pursuant to Rule 144 (except in a
disposition described in Rule 144(k) if the Company’s shares have not become
publicly traded).  Whenever any
particular securities cease to be Restricted Securities, the holder thereof
will be entitled to receive from the Company, without expense, new securities
of like tenor not bearing a Securities Act Legend of the character set forth in
Section 4.7.

“RFE Investment
Partners” shall mean collectively RFE Investment Partners VI, L.P. (“RFE
VI”) and RFE VI SBIC, L.P.  (“RFE
VI SBIC”), and their respective successors and assigns.

“Rule 144”
shall mean Rule 144, as amended, promulgated under the Securities Act, or any
similar rule or regulation promulgated as a replacement or successor to such
rule.

“Rule 144A”
shall mean Rule 144A, as amended, promulgated under the Securities Act, or any
similar rule or regulation promulgated as a replacement or successor to such
rule.

“Sale of the
Company” means one or more of the following effected in a single
transaction or series of transactions, whether or not related, with one or more
Independent Third Parties:  (i) the sale
of all or substantially all of the Company’s assets (including the shares of
the Company’s subsidiaries) or the assets of the Company’s subsidiaries, on a
consolidated basis; (ii) the sale of all of the issued and outstanding
securities of the Company; (iii) the merger or consolidation of the Company or
substantially all of its subsidiaries with one or more of the third parties in
a transaction in which such third party(ies) thereafter control, directly or
indirectly, the business and affairs of the Company or the subsidiaries party
to such transaction; or (iv) an initial public offering of securities of the
Company, or of the securities of any subsidiary, registered under the
Securities Act.

 

4

 

“Securities Act”
shall mean the Securities Act of 1933, as amended, or any similar Federal law
then in force as a replacement or successor to such law.

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

“Sellers”
shall mean Dennis Nash and Carl Young.

“Senior Credit
Agreement” shall mean the Amended and Restated Credit Agreement, dated as
of April 30, 2001, among AMG, KTC Acquisition Corp., the Company, the several
lenders from time to time parties thereto, CIBC World Markets Corp., as sole
lead arranger and book manager, and Canadian Imperial Bank of Commerce, as
administrative agent.

“Shares”
shall mean shares of Common Stock and Preferred Stock.

“Significant
Issuer Transaction” shall mean any (i) sale of all or substantially all of
the assets of the Company, (ii) merger of the Company with or into any other
Person or other form of corporate reorganization (other than a mere
re-incorporation transaction) in which outstanding shares of the Company are
exchanged for securities or other consideration, or (iii) transaction in which
the Company is the surviving entity but the shares of the Company’s capital
stock outstanding immediately prior to the transaction are exchanged or
converted by virtue of the transaction into other property, whether in the form
of securities, cash, a combination thereof or otherwise.

“Sterling”
shall mean Sterling Investment Partners, L.P., a Delaware limited partnership,
and its successors and assigns.

“Transfer”
shall mean any transfer, sale, assignment, pledge, hypothecation or other
disposition.

“Warrant
Agreement” shall mean that certain Warrant Purchase Agreement, dated as of
the date hereof, by and among the Company and each Warrant Investor, as
amended, modified or supplemented from time to time.

“Warrant
Investors” shall mean Massachusetts Mutual Life Insurance Company (“MMLIC”),
MassMutual Corporate Investors (“MMCI”), MassMutual Participation
Investors (together with MMLIC and MMCI the “MassMutual Investors”) and
RSTW Partners III, L.P. (“RSTW”), in their capacity as holders of
Warrants and Warrant Shares and not in their capacity as holders of Restricted
Securities which are not Warrants or Warrant Shares, and any person to whom
Warrant Shares which constitute Restricted Securities are Transferred pursuant
to Section 4.1(a).

“Warrant Shares”
shall mean shares of  Series D Preferred
Stock (including shares of Common Stock issued or issuable upon conversion
thereof) and, under certain circumstances, Common Stock issued or issuable
pursuant to the Warrants.

“Warrants”
shall mean the warrant to purchase shares of Series D Preferred Stock and,
under certain circumstances, Common Stock issued to the Warrant Investors
pursuant to the Warrant Agreement.

 

5

 

ARTICLE
II

SUBSCRIPTION FOR SHARES

Section 2.1.            Authorization.  The Company has authorized the sale and
issuance of the Shares having the rights, preferences, privileges and
restrictions set forth in the Company’s Certificate of Incorporation, including
the Certificate of the Designations, Powers, Preferences and Rights of the
Series A Convertible Preferred Stock, Series B Convertible Preferred Stock,
Series C Convertible Preferred Stock and Series D Convertible Preferred Stock,
a copy of which is attached to this Agreement as Exhibit 2.1 (the “Certificate
of Designations”).

Section 2.2.            Issuance, Sale and Delivery of
the Shares.  The Company agrees to
issue and sell to each Purchaser, and each Purchaser, severally and not
jointly, hereby agrees to purchase from the Company, the number and class of
Shares set forth opposite the name of such Purchaser under the heading “Number
of Shares to be Purchased” on the Schedule of Purchasers attached hereto, at
the aggregate purchase price set forth opposite the name of such Purchaser under
the heading “Aggregate Purchase Price for Shares” on the Schedule of
Purchasers.

Section 2.3.            Closing.  The closing shall take place at the offices
of Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York 10103,
at 9:00 a.m., New York time, simultaneously with the closing under the AMG
Merger Agreement and immediately prior to the closing under the KTC Merger
Agreement, or at such other location, date and time as may be agreed upon
between the Purchasers and the Company (such closing being called the “Closing”
and such date and time being called the “Closing Date”).  It shall be a condition to the Closing
hereunder that all conditions precedent to the consummation of the acquisition
of (i) AMHC by the Company pursuant to the AMG Merger Agreement and (ii) KTC by
the Company pursuant to the KTC Merger Agreement and the financing thereof
pursuant to the Senior Credit Agreement and the Note Agreement shall have been
satisfied or waived.  At the Closing,
the Company shall issue and deliver to each Purchaser a stock certificate or
certificates in definitive form, registered in the name of such Purchaser,
representing the Shares being purchased by it at the Closing.  As payment in full for the Shares being
purchased by it under this Agreement, and against delivery of the stock
certificate or certificates therefor as aforesaid, on the Closing Date each
Purchaser shall deliver to the Company (i) by wire transfer of immediately
available funds the amount set forth opposite the name of such Purchaser under
the heading “Aggregate Purchase Price for Shares” on the Schedule of
Purchasers, or (ii) 47,886 shares of KTC common stock having a value (based
on a price per share of KTC common stock of $35.00) equal to the amount set
forth opposite the name of such Purchaser under the heading “Aggregate Purchase
Price for Shares” on the Schedule of Purchasers.

Section 2.4.            Representations and Warranties of
the Purchasers.  Each Purchaser,
severally and not jointly, represents and warrants to the Company that:

(a)   Purchaser acknowledges that
Purchaser’s representations and warranties contained herein are being relied
upon by the Company as a basis for the exemption of the sale of the Shares from
the registration requirements of the Securities Act and any applicable state securities
laws.

(b)   Purchaser understands that
(i) the Shares have not been registered under the Securities Act or any state
securities laws by reason of their issuance in a transaction exempt from the
registration requirements of the Securities Act and applicable state securities
laws, (ii) the Shares must be held indefinitely unless a subsequent disposition
thereof is registered under the Securities Act and applicable state securities
laws or is exempt from such registration, (iii) the Shares will bear a legend
to such effect and (iv) the Company will make a notation on its transfer books
to such effect.  Purchaser is aware that
the provisions of Rule 144, which permits limited

 

6

 

resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions, is not now, and may not become, available for resale of the Shares.

(c)   Purchaser is purchasing the
Shares for its own account with the intent of holding the Shares for investment
and without the intent of participating directly or indirectly in a
distribution thereof.

(d)   Purchaser and its attorneys,
accountants, investment and financial advisors, if any, have had the
opportunity to review the books and records of the Company and the Acquired
Companies and have been furnished or provided access to such information as
Purchaser or its advisors, if any, have requested.  Purchaser has had the opportunity to discuss the Company’s and
the Acquired Companies’ business, management and financial affairs, and all
documents affecting the Company and the Acquired Companies generally, with the
Company’s or the Acquired Companies’ management.

(e)   Purchaser or its investment
advisor, if any, is familiar with the business of the Company and the Acquired
Companies and realizes that the Shares are a speculative investment involving a
high degree of risk for which there is no assurance of any return.  Purchaser has such knowledge and experience
in financial and business affairs, including investing in companies similar to
the Company and the Acquired Companies and is capable of determining the
information necessary to make an informed investment decision, of requesting
such information from the Company and the Acquired Companies, and of utilizing
the information that Purchaser has received from the Company and the Acquired
Companies to evaluate the merits and risks of Purchaser’s investment in the
Shares.  Purchaser is able to bear the
economic risk of its investment in the Shares, and understands that it must do
so for an indefinite period of time.

(f)    Purchaser is or, in the
case of Shaffer Family LLC, the person making the investment decision is, an
“accredited investor”.  For purposes
hereof, an “accredited investor” means: 
(1) any bank as defined in section 3(a)(2) of the Securities Act, or any
savings and loan association or other institution as defined in section
3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary
capacity; any broker or dealer registered pursuant to section 15 of the
Exchange Act; any insurance company as defined in section 2(13) of the
Securities Act; any investment company registered under the Investment Company
Act of 1940 or a business development company as defined in section 2(a)(48) of
that Act; any Small Business Investment Company licensed by the U.S. Small
Business Administration (the “SBA”) under section 301(c) or (d) of the
Small Business Investment Act of 1958; any plan established and maintained by a
state, its political subdivisions, or any agency or instrumentality of a state
or its political subdivisions, for the benefit of its employees if such plan
has total assets in excess of $5,000,000; any employee benefit plan within the
meaning of the Employee Retirement Income Security Act of 1974 if the
investment decision is made by a plan fiduciary, as defined in section 3(21) of
such Act, which is either a bank, savings and loan association, insurance
company, or registered investment adviser, or if the employee benefit plan has
total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors; (2)
any private business development company as defined in section 202(a)(22) of
the Investment Advisers Act of 1940; (3) any organization described in section
501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific purpose of
acquiring the Shares, with total assets in excess of $5,000,000; (4) any director
or executive officer of the Company; (5) any natural person whose individual
net worth, or joint net worth with that person’s spouse, at the time of his
purchase exceeds $1,000,000; (6) any natural person who had an individual
income in excess of $200,000 in each of the two most recent years or joint
income with that person’s spouse in excess of $300,000 in each of those

 

7

 

years and has a
reasonable expectation of reaching the same income level in the current year;
(7) any trust, with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the Shares, whose purchase is directed by a
sophisticated person who has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of the
prospective investment as described in Rule 506(b)(2)(ii) of the Securities
Act; and (8) any entity in which all of the equity owners are accredited
investors.

Section 2.5.            Registration Rights Agreement.  The Company and each of the Stockholders
agrees to enter into a registration rights agreement, substantially in the form
of Exhibit 2.5 hereto, at the Closing.

Section 2.6.            Representations and Warranties of
the Company.  The Company represents
and warrants to each Stockholder that:

(a)   The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware.  The Company has full
corporate power and authority to conduct its business as it is proposed to be
conducted (which business is the ownership of the stock of the Acquired
Companies) and to enter into this Agreement and to carry out its obligations
hereunder.  The execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
by the Company, including without limitation the issuance and sale of the
Shares, have been duly authorized by all appropriate corporate action, and this
Agreement constitutes the valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.

(b)   The execution and delivery
of this Agreement by the Company does not, and the consummation by it of the
transactions contemplated hereby will not, (i) conflict with any provision
of its Certificate of Incorporation or By-laws, (ii) violate any
law, rule or regulation, or any judgment, decree or order of any court or other
governmental entity to which the Company or any of its properties and assets is
subject, or (iii) any agreement or instrument to which the Company or any of
its properties and assets is subject.

(c)   The authorized capital stock
of the Company consists of 7,060,000 shares of stock, consisting of (a)
7,000,000 shares of Common Stock, and (b) 60,000 shares of preferred stock,
$.001 par value, of which 3,352 shares are designated as Series A Convertible
Preferred Stock, 40,000 shares are designated as Series B Convertible Preferred
Stock, 1,280 shares are designated as Series C Convertible Preferred Stock,
8,000 shares are designated as Series D Convertible Preferred Stock and 7,368
shares are undesignated.  Prior to the
Closing, the issued and outstanding shares of Common Stock and Preferred Stock,
and the issued and outstanding options and warrants to purchase Preferred Stock
and Common Stock, are as set forth on Schedule 2.6(c) hereto.  At the Closing, shares of Series B Preferred
Stock and Warrants to purchase Series D Preferred Stock and, under certain
circumstances, Common Stock, will be issued in accordance with Section 2.2
hereof and the Warrant Agreement, respectively.  Immediately after the Closing, the issued and outstanding shares
of Common Stock and Preferred Stock, and the issued and outstanding options and
warrants to purchase Preferred Stock and Common Stock, will be as set forth on Schedule
2.6(c) hereto.  The designations,
powers, preferences, rights, qualifications, limitations and restrictions in
respect of each class and series of authorized capital stock of the Company are
as set forth in the Company’s Certificate of Incorporation, including the
Certificate of Designations, and all such designations, powers, preferences,
rights, qualifications, limitations and restrictions are valid, binding and
enforceable and in accordance with all applicable laws.  The Shares, when issued, sold and delivered
in accordance with the terms and for the consideration expressed in this
Agreement, will be validly issued, fully paid and non-assessable.

 

8

 

Except as provided
herein, in the Warrant Agreement and the Warrants and for the Management
Options, there are no outstanding options, warrants, convertible securities,
calls, rights, stock appreciation, phantom equity or similar rights,
commitments, preemptive rights or agreements or instruments of any character to
which the Company is a party or by which the Company is bound, obligating the
Company to issue, deliver or sell, or cause to be issued, delivered or sold,
contingently or otherwise, additional shares of capital stock of the Company or
any securities or obligations convertible into or exchangeable for such shares
or to grant, extend or enter into any such option, warrant, convertible
security, call, right, commitment, preemptive right or agreement.

(d)   The Company was incorporated
under the laws of the State of Delaware on January 25, 2001, and since such
date the Company has not (i) engaged in any business, (ii) entered into any
agreements, contracts, guarantees, understandings or other commitments (written
or oral) or (iii) incurred any liabilities or become subject to any obligations
of any nature (matured or unmatured, fixed or contingent), other than, in each
case, pursuant to this Agreement, the KTC Merger Agreement, the AMG Merger
Agreement, the Warrant Agreement, the Note Agreement, the Senior Credit
Agreement, that certain Registration Rights Agreement, dated the date hereof,
among the Company and the Stockholders, and the other agreements to be executed
at or prior to Closing contemplated by each of the foregoing agreements.

(e)   The Company hereby
represents and warrants that each of the representations and warranties set
forth on Exhibit 2.6(e)  (i) that is qualified by materiality
is true and correct in all respects and (ii) that is not so qualified is true
and correct in all material respects.

Section 2.7             SBIC Regulatory Provisions.

(a)           Number of Stockholders.  As long as RFE Investment Partners hold any
securities purchased hereunder or issued by the Company with respect thereto,
the Company shall notify RFE Investment Partners (a) at least 15 days prior to
taking any action after which the number of record holders of the Company’s
voting stock would be increased from fewer than 50 to 50 or more, and (b) of
any other action or occurrence after which the number of record holders of the
Company’s voting stock was increased (or would increase) from fewer than 50 to
50 or more, as soon as practicable after the Company becomes aware that such
other action or occurrence has occurred or is proposed to occur.

(b)   Use of Proceeds.  At the same time the Company delivers its
2001 annual audited financials hereunder and at such other times as RFE
Investment Partners may reasonably request, the Company shall deliver to RFE
Investment Partners a written statement certified by the Company’s president or
chief financial officer describing in reasonable detail the use of the proceeds
of the financing hereunder (and under prior financings) by the Company and the
Company’s subsidiaries.  In addition to
any other rights granted hereunder, the Company shall grant RFE Investment
Partners and the SBA access to the Company’s books and records for the purpose
of verifying the use of such proceeds and verifying the certifications made by
the Company and its subsidiaries in SBA Forms 480 and 652 and for the purpose
of determining whether the principal business activity of the Company and the
Company’s subsidiaries continues to constitute an eligible business activity
(within the meaning of the regulations under the Small Business Investment Act
of 1958, including Title 13, Code of Federal Regulations, §107.720 (the “SBIC
Regulations”)).

(c)   Economic Impact
Information.  Promptly after the end
of each fiscal year, the Company shall deliver to RFE Investment Partners a
written assessment of the economic impact

 

9

 

of such
Purchaser’s investment in the Company, specifying the full-time equivalent jobs
created or retained in connection with the investment, the impact of such
Purchaser’s financing on the revenues and profits of the Company and the
Company’s subsidiaries and on taxes paid by the Company and its employees.

(d)   Regulatory Compliance
Cooperation.

(i)            In the event that
RFE Investment Partners reasonably determines that it has a Regulatory Problem
(as defined below), RFE Investment Partners shall have the right to transfer
its Shares without regard to any restriction on transfer set forth in this
Agreement other than the securities laws restrictions set forth in Section 4.1
hereof (provided that the transferee agrees to become a party to this Agreement
as a Stockholder) and the right of first offer set forth in Section 4.3
(provided that if RFE Investment Partners reasonably determines in good faith
that complying with the full notice period set forth in Section 4.3 will
materially adversely affect its ability to cure such Regulatory Problem, it
shall be entitled to shorten such period, provided further that RFE Investment
Partners shall notify the Company if it believes a Regulatory Problem is
likely), and the Company shall take all such actions as are reasonably
requested by RFE Investment Partners in order to (1) effectuate and facilitate
any transfer by RFE Investment Partners of any securities of the Company then
held by RFE Investment Partners to any Person designated by RFE Investment
Partners, (2) permit RFE Investment Partners (or any of its Affiliates) to
exchange all or any portion of any voting security then held by it on a
share-for-share basis for shares of a nonvoting security of the Company, which
nonvoting security shall be identical in all respects to the voting security
exchanged for it, except that it shall be nonvoting and shall be convertible
into a voting security on such terms as are reasonably requested by RFE
Investment Partners in light of regulatory considerations then prevailing, (3)
continue and preserve the respective allocations of the voting interests with
respect to the Company arising out of RFE Investment Partners’ ownership of
voting securities and/or provided in this Agreement before the transfers and
amendments referred to above (including entering into such additional
agreements as are reasonably requested by RFE Investment Partners to permit any
Person(s) designated by RFE Investment Partners to exercise any voting power which
is relinquished by RFE Investment Partners) and (4) amend this Agreement, the
Certificate of Incorporation, the Bylaws and related agreements and instruments
to effectuate and reflect the foregoing.

(ii)           For purposes of this Agreement, a “Regulatory
Problem” means any set of facts or circumstances wherein it has been
asserted by any governmental regulatory agency (or RFE Investment Partners
reasonably believes, in good faith based upon all attendant circumstances,
including notices (if any) from governmental regulatory agencies, advice of
counsel and the like, that there is a substantial risk of such assertion) that
RFE Investment Partners is not entitled to hold, or exercise any significant
right with respect to, the Shares.

(iii)          Each Stockholder agrees to cooperate
with the Company in all reasonable respects at no additional cost to such
Stockholder in complying with the terms and provisions of this
Section 2.7(d), including without limitation voting to approve amending
the Certificate of Incorporation, the Bylaws or this Agreement in a manner
reasonably acceptable to the Stockholders and RFE Investment Partners in order
to remedy a Regulatory Problem. 
Anything contained in this Section 2.7(d)(iii) to the contrary
notwithstanding, no Stockholder shall be required under this
Section 2.7(d) to take any action that would adversely affect in any
material respect such Stockholder’s rights under this Agreement or as a
stockholder of the Company or would adversely affect or impair the value of the
securities of the Company held by such Stockholder, would require such
Stockholder to obtain any consent, make any filing or take any

 

10

 

other action under any
law, statute, rule or regulation applicable to it, or would interfere with such
Stockholder’s ability to hold the Shares.

Section 2.8.            Management Agreement.  The Company hereby agrees that it will not,
and will not permit AMG or KTC to, amend the Management Agreement without the
prior consent of a majority-in-interest of the Stockholders other than (a)
Sterling and its Affiliates in the case of the Management Agreement with
Sterling Ventures Limited and Sterling Investment Partners Advisors, LLC and
(b) RFE Investment Partners and its Affiliates in the case of the Management
Agreement with RFE Management Corporation.

Section 2.9             Limitation on Series A Preferred
Stock.  Sellers agree that upon any
event specified in Sections 2 or 3 of the Certificate of Designations, they
(and their Permitted Transferees, but only with respect to Shares transferred
by Sellers to such Persons) will in no event accept in respect of the shares of
Series A Preferred Stock owned by Sellers more than 20.0% of the total
consideration paid in respect of the shares of Common Stock and Preferred Stock
issued pursuant to that certain Stockholders’ Agreement, dated as of December
31, 1998, by and among AMHC and each of the signatories thereto.

ARTICLE
III

CORPORATE GOVERNANCE

Section 3.1.            Board of Directors.  Pursuant to the By-Laws of the Company, the
number of directors comprising the Company’s Board of Directors (the “Board”)
shall be no more than seven (subject to increase under Section 4.5(d) hereof)
and shall be fixed by the Board from time to time. During the term of this
Agreement, all the Shares held by the Stockholders, whether owned now or
hereafter acquired, shall be voted in accordance with the provisions hereof on
all of the following matters on which the stockholders of the Company vote:

(a)   Immediately upon receiving
notice of any stockholders’ meeting at which members of the Board are to be
elected, Sterling shall have the right to designate two candidates, each of RFE
VI and RFE VI SBIC shall have the right to designate one candidate (for a total
of two candidates in aggregate by RFE Investment Partners), and each of Dennis
Nash, Carl Young and Lee Shaffer shall, as long as he is an officer and
employee of the Company, be nominated for election as a director; provided,
however, that if (i) neither Messrs. Nash nor Young is employed by the Company
and (ii) Messrs. Nash and Young then beneficially own (as determined in
accordance with Rule 13(d)-3 under the Exchange Act) at least 10% of the
outstanding Common Stock (on an as converted Fully-diluted basis), then Messrs.
Nash and Young may nominate one of them to be elected as a director so long as
that nominee does not work for a person reasonably determined by the Board to
be a competitor of the Company.  In the
event Lee Shaffer is no longer serving as Chairman of the Board of Directors,
the candidate designated by Sterling shall serve as Chairman of the Board of
Directors.  Each Stockholder hereby
agrees (x) to be present in person or by proxy at any meeting of stockholders
to elect directors for purposes of establishing a quorum and (y) to vote his or
its Shares for, or give his or its written consent to, the election of Messrs.
Nash, Young and Shaffer, if they are nominated for election as a director
pursuant to the first sentence of this clause (a), each of the candidates
designated by RFE VI, RFE VI SBIC and Sterling pursuant to this paragraph and
any other persons nominated by the Board pursuant to this paragraph.

(b)   In the event any director
elected to the Board after being designated as a candidate for membership by
one of the Persons entitled to designate candidates pursuant to this Agreement
dies, resigns, is removed or otherwise ceases to serve as a member of the
Board, the Company

 

11

 

shall give notice
thereof to the Person entitled to designate such candidate and such Person(s)
shall promptly designate a successor and notify the Board of its selection, and
the Board shall act promptly to fill the vacancy with such designee in
accordance with Section 223 of the GCL.

(c)   Within five (5) days after a
record date is set for any annual meeting for the election of directors or for
the mailing of any consent solicited for such purpose, the Secretary of the
Company shall notify each Person entitled to designate candidates of the upcoming
election and anticipated date thereof and request that each Person entitled to
designate candidates take all necessary action to designate its
candidate(s).  Each Person entitled to
designate candidates shall notify the Secretary of the Company at least fifteen
(15) days before such election of such Person’s respective candidate(s) or such
other date as the Board may designate if the Company is then subject to Section
14 of the Exchange Act.  A failure by a
Person entitled to designate candidates to provide such notification shall be
deemed to be a designation by such Person of the same candidates as were last
designated by such Person.  Any
designation pursuant to this Article 3 shall be made in writing.

(d)   The parties hereto agree to
cast their votes for, or give their written consent to, the removal of a
designee on the Board at any time upon receipt of instructions in writing to
such effect, signed by the Person entitled to designate that candidate, in
accordance with Section 141(k) of the GCL.

(e)   The Board shall have no
right to fill any vacancy on the Board for which any Person has the right to
designate a candidate unless such vacancy is filled by the designee of the
Person having the right to designate such director.

(f)    Each of the parties hereto
hereby consents to and agrees that the following persons shall be the initial
directors of the Company: Dennis Kupchik, M. William Macey, Jr., Dennis Nash,
Douglas L. Newhouse, James Parsons, Lee Shaffer (Chairman of the Board) and
Carl Young. Mr. Kupchik is the nominee of RFE VI SBIC, Mr. Parsons is the
nominee of RFE VI and Messrs. Macey and Newhouse are the nominees of Sterling.

Section 3.2.            Public Offering.  In the event of any underwritten public
offering of the Common Stock pursuant to a registration statement under the
Securities Act, each Stockholder hereby agrees to vote to increase the number
of authorized shares of Common Stock and, if necessary, increase the number of
issued and outstanding shares of Common Stock, whether by stock split, stock dividend
or otherwise, or change in its par value in connection therewith, as
recommended by the Board to facilitate such public offering.

Section 3.3.            Issuance of Capital Stock.  During the term of this Agreement, the
Company shall not issue any shares of capital stock to any Person (including
without limitation issuances pursuant to any stock option or stock purchase
plan adopted by the Company) unless such Person agrees to vote his shares in
accordance with this Article III; provided, however, that this Section 3.3
shall not apply to any issuance of Common Stock to the public in a Qualifying
Public Offering.

Section 3.4.            Directors of Subsidiaries.  The Company and the Stockholders shall take
all such action as may be necessary to cause the Persons who are directors of
the Company to be elected as the directors of each subsidiary of the Company,
including without limitation AMG and KTC.

Section 3.5.            Expenses.  The Company will reimburse each director for
his or her reasonable out-of-pocket travel expenses incurred in attending any
meeting of the Board of Directors.

 

12

 

Section 3.6.            Committees of the Board.  The Company and the Stockholders shall take
all such action as may be necessary to cause the Board to maintain an audit
committee and compensation committee, and to cause at least one director
designated by each of RFE Investment Partners and Sterling to be a member of
each such committee of the Board as well as any other committees of the Board.  All decisions regarding any increase in
Management Options and any grant of Management Options must first be approved
by the compensation committee of the Board.

Section 3.7             Board Observation Rights.

(a)                   Each Stockholder hereby
acknowledges and consents to the board and board committee observation rights
granted to the Warrant Investors under the Note Agreement and the Warrant
Agreement.

(b)                   The Company will give to
Aetna notice of all regular meetings and all special meetings of the Company’s
Board of Directors at the time notice is given to the directors, and will
permit one representative of Aetna to attend such meetings as an observer (but
with no voting rights), and will provide such representatives with all
information provided to directors of the Company at the time such information
is provided to the directors.  Aetna’s
rights under this Section 3.7 shall automatically terminate when Aetna ceases
to beneficially own, on a Fully-diluted basis (but excluding, for purposes of
this computation, shares of Common Stock issued in transactions in which
Stockholders did not have the right to purchase shares of Common Stock (or
securities convertible into or exercisable or exchangeable for, Common Stock)),
at least five percent (5%) of the outstanding Common Stock.

Section 3.8.            Arrangements with Sterling.  The Company and Sterling agree that they
will not amend, modify or supplement the terms of the Management Agreement with
Sterling Ventures Limited and Sterling Investment Partners Advisors, LLC, or
enter into (or permit any Sterling Affiliate to enter into) any transaction
that will result, directly or indirectly, in Sterling’s or any of its
Affiliate’s receipt of benefits that are not received, on the same basis (but
taking into account the different rights and preferences of the shares as set
forth in the Company’s Certificate of Incorporation (including the Certificate
of Designations)), by all of the other Stockholders of the Company, other than
benefits and transactions provided for in the Management Agreement, this Agreement
or the Registration Rights Agreement, dated as of the date hereof, among the
Company and the other signatories thereto, unless one of the directors
designated by RFE Investment Partners and a majority-in-interest of the
Stockholders other than Sterling and its Affiliates have each voted in favor of
such matter.

ARTICLE
IV

TRANSFER OF SHARES

Section 4.1.            Transfer
of Restricted Securities.

(a)                   Restricted Securities are
transferable (i) pursuant to public offerings registered under the Securities
Act, (ii) pursuant to Rule 144 (except pursuant to Rule 144(k) if the Company’s
shares have not become publicly traded) if such rule is available, (iii)
subject to the conditions specified in paragraph (b) below, to a Permitted
Transferee, (iv) subject to the conditions specified in paragraphs (b) and (c)
below and in Sections 4.2 and 4.3, any other legally available means of
Transfer; provided, however, that in no event may any Stockholder Transfer
Restricted Securities pursuant to this clause (iv) to any Person (or an
Affiliate of such Person) which competes materially and directly with the
Company in a material service line and market of the Company (but no bank,
insurance company or other similar institutional investor shall be deemed to be
such a competitor) and (v) subject to the conditions specified in paragraph (b)
below, a Warrant Investor may transfer Restricted Securities to any Person at
any time when there 

 

13

 

exists either (i) an
event of default under Section 8.1(a) of the Note Agreement (other than a
default by the Company in its obligation to purchase all or a portion of the
Put Shares (as such term is defined in the Warrant Agreement) in a circumstance
which does not constitute a Put Event Exercise Payment Default (as defined in
the Warrant Agreement)) or Section 8.1(g) of the Note Agreement or (ii) a Put
Event Exercise Payment Default.

(b)                   In connection with the
Transfer of any Restricted Securities (other than a Transfer described in
subparagraph (a)(i) or (ii) above), the holder thereof will deliver written
notice to the Company describing in reasonable detail the Transfer or proposed
Transfer, together with an opinion (reasonably acceptable in form and substance
to the Company) of counsel (which may be in-house counsel) which (to the
Company’s reasonable satisfaction) is knowledgeable in securities law matters
to the effect that such Transfer of Restricted Securities may be effected
without registration under the Securities Act or any applicable state
securities laws, and with written confirmation from the prospective transferee
of its agreement to be bound by the conditions contained in this Agreement and
the other restrictions on Transfer imposed by the Securities Act or any
applicable state securities laws; provided, however, that no such opinion of
counsel shall be required for a distribution of Restricted Securities by a
partnership to all its partners, to a liquidating trust for the benefit of its
partners, to a retired partner of such partnership who retires after the date
of this Agreement, or to the estate of any such partner or retired person, by a
limited liability company to its members, by a Stockholder to an Affiliate or
by RFE Investment Partners to a member of its advisory board.

(c)                   It shall be a condition to
the Transfer of any Restricted Securities that the transferee thereof
(including, without limitation, a Permitted Transferee) agrees to be bound by
the provisions of this Agreement by executing a Transferee Agreement in the form
of Annex I hereto), and upon such Transfer shall be a Stockholder for
all purposes hereunder.  Upon execution
and delivery of a Transferee Agreement, the Company agrees promptly to effect
the re-registration of any transferred Shares in the name of such transferee
(upon submission of certificates for the Shares to be transferred, accompanied
by properly completed and executed stock powers).

(d)                   Notwithstanding anything
herein to the contrary, neither Sellers nor Lee Shaffer shall be entitled to
Transfer Restricted Securities, except to a Permitted Transferee who shall,
among other things, agree to be bound by this Section 4.1, prior to January 1,
2003, except pursuant to Sections 4.2 or 4.4.

Section 4.2.            Tag-along Rights.  In the event a Stockholder is permitted,
pursuant to Section 4.1(a)(iv) hereof (but subject to the provisions of Section
4.3(f)), to Transfer any or all of its Restricted Securities, other than
pursuant to an Excused Transfer, such Stockholder (other than a holder of
Warrant Shares) shall deliver a written notice (the “Sale Notice”) to
each other Stockholder and the Company. 
Such Sale Notice shall contain a complete description of the terms of
the proposed Transfer, including without limitation the number of Restricted
Securities to be transferred, identity of the proposed transferee, purchase
price offered, terms of payment and time for performance, as well as copies of
any document, including if applicable any letter of intent, relating to such
proposed Transfer.  Each Stockholder may
elect to participate in the contemplated Transfer by delivering written notice
to the Stockholder(s) initiating the Sale Notice (the “Selling
Stockholder(s)”) and the Company within 30 days after receipt by the
Stockholders of the Sale Notice, which notice shall indicate the number of
Restricted Securities desired to be sold by such electing Stockholder (the “Participating
Stockholder”).  Each Selling
Stockholder and each Participating Stockholder will be entitled to sell in the
contemplated sale, at the same price and on the same terms (including the
making of the same representations and warranties (but no Stockholder will be
required to enter into indemnification or contribution obligations that are
joint and several with any other Person)), the number of Restricted Securities
equal to the product of (i) the quotient determined by dividing the number of
Restricted Securities (on a Fully-diluted basis) desired to

 

14

 

be sold
by such Stockholder by the aggregate number of Restricted Securities (on a
Fully-diluted basis) desired to be sold by the Selling Stockholder(s) and all
Participating Stockholders, and (ii) the number of Restricted Securities to be
sold in the contemplated Transfer.  Each
Selling Stockholder agrees to use reasonable best efforts to obtain the
agreement of the prospective transferee(s) to the participation of the
Participating Stockholders in the contemplated transfer, and each Selling
Stockholder agrees not to transfer any Restricted Securities to the prospective
transferee(s) if any such transferee declines to allow the participation of the
Participating Stockholders in accordance with the terms of this Section
4.2.  Notwithstanding anything to the
contrary in this Section 4.2, no Stockholder shall have a right to participate
in any sale of Restricted Securities to the extent a Selling Stockholder is
selling Restricted Securities to one or more other Stockholders and/or the
Company in accordance with Section 4.3 hereof, provided that Sterling may not
sell Restricted Securities to the Company pursuant to Section 4.3 without
complying with this Section 4.2.

Section 4.3.            Right
of First Offer.

(a)   No Stockholder may Transfer any of its
interest in any Restricted Securities, except pursuant to an Excused Transfer,
without first offering to sell the Restricted Securities pursuant to the
provisions of this Section 4.3.

(b)           Any Stockholder wishing to transfer
all or any of its Restricted Securities (the “Offering Stockholder”),
other than pursuant to an Excused Transfer, shall deliver a written notice (an
“Offer Notice”) to the Company, which shall deliver a copy of the Offer
Notice to each other Stockholder.  The
Offer Notice will describe in reasonable detail the number of Restricted
Securities being offered, the purchase price requested (all of which shall be
payable in cash) and all other material terms and conditions of the proposed
Transfer.

(c)           Upon receipt of an Offer Notice, the
Stockholders (other than the Offering Stockholder) shall collectively have the
option to purchase all of the Restricted Securities being offered (with each of
the Stockholders electing to purchase Restricted Securities pursuant to this
Section 4.3 having the independent right to purchase that portion thereof that
is pro rata based upon the number of Restricted Securities (on a Fully-diluted
basis) held by each Stockholder electing to purchase Restricted Securities
pursuant to this Section 4.3).  Within
12 Business Days after receipt of the Offer Notice, each Stockholder desiring
to purchase the Restricted Securities being offered shall notify the Offering
Stockholder and the Company of the number of Restricted Securities being
offered which it desires to purchase and whether it desires to purchase its pro
rata share of any Restricted Securities which other Stockholders are entitled
to purchase but do not subscribe for hereunder.

(d)           If for any reason the Stockholders do
not elect to purchase all the Restricted Securities offered pursuant to the
Offer Notice, the Company shall have the right to purchase all, but not less
than all, the Restricted Securities offered pursuant to the Offer Notice which
the Stockholders have not elected to purchase. 
Within 12 Business Days after receipt of the Offer Notice, the Company
shall notify the Offering Stockholder whether it will purchase all of the
Restricted Securities being offered which the Stockholders have not elected to
purchase.

(e)           Within two (2) Business Days after
the expiration of the 12-Business Day response period provided to the
Stockholders pursuant to Section 4.3(c), the Company shall promptly notify the
Offering Stockholder and each such participating Stockholder whether all the
Restricted Securities being offered have been subscribed for and, if so, the
date of closing of the purchase of such Restricted Securities and the number of
Restricted Securities to be purchased by each participating Stockholder and, if
applicable, the Company.  The purchase
of the Restricted Securities pursuant to this Section 4.3 shall be closed at the
Company’s executive offices within five (5) Business Days after the 

 

15

 

expiration of the 12-Business Day response period
provided to the Stockholders pursuant to Section 4.3(c).  At the closing, the purchasers will pay the
Offering Stockholder the purchase price for the Restricted Securities as set
forth in the Offer Notice, and the Offering Stockholder will execute and
deliver the certificate(s) evidencing such Restricted Securities to the
purchaser or purchasers or their nominees. 
The purchasers of the Restricted Securities hereunder will be entitled
to receive customary representations and warranties from the Offering
Stockholder regarding the sale of the Restricted Securities.  In the event the Restricted Securities are
purchased by one or more purchasers, the purchase price will be allocated among
the parties purchasing the Restricted Securities on the basis of the number of
Restricted Securities (on a Fully-diluted basis) being so purchased.

(f)            In the event that the Stockholders
and/or the Company have not elected to purchase all of the Restricted
Securities offered pursuant to the Offer Notice, the Offering Stockholder may,
subject to the provisions of Sections 4.1 and 4.2 hereof, Transfer the Restricted
Securities specified in the Offer Notice at a price which is no less than the
price per Restricted Security specified in the Offer Notice and on other terms
no more favorable to the transferee(s) thereof than those specified in the
Offer Notice during the 90-day period immediately following the last date on
which the Stockholders could elect to purchase the Restricted Securities.  Any Restricted Securities not transferred
within such 90-day period must be reoffered to the Stockholders and the Company
pursuant to the provisions of this Section 4.3, and to the extent applicable,
comply with Sections 4.1 and 4.2, upon any proposed subsequent Transfer (other
than an Excused Transfer).

(g)           If any participating Stockholder (a “Defaulting
Party”) fails to pay the applicable consideration for the portion of
Restricted Securities it has agreed to purchase under this Section 4.3 within
the time period specified pursuant to Section 4.3(e), the Offering Stockholder
shall immediately notify the Company, which shall immediately notify the
remaining participating Stockholders who together with the Company shall then
have the right to elect to purchase all, but not less than all, of the
Defaulting Party’s unpurchased portion of the Restricted Securities by notifying
the Offering Stockholder and the Company within two (2) Business Days of
receiving the Company’s notice.  In the
event that more than one of the remaining participating Stockholders and/or the
Company indicate that they wish to purchase such securities, such securities
shall be allocated pro rata among those wishing to purchase, in the proportion
that the number of shares (on a Fully-diluted basis) owned by each such
participating Stockholder wishing to purchase bears to the total number of
shares (on a Fully-diluted basis) owned by all the participating Stockholders
that have indicated that they wish to purchase, with the remainder, if any
allocated to the Company.  Purchases
under this subsection shall be consummated within five (5) Business Days of the
notice being sent to the Offering Stockholder.

(h)           In the event that the participating
stockholders (other than the Defaulting Party) and/or the Company do not
purchase all Restricted Securities that were to be purchased by the Defaulting
Party, then the Offering Stockholder may sell the Restricted Securities in
accordance with Section 4.3(f).  Nothing
in this Section 4.3 shall relieve a Defaulting Party from any liability it may
have to an Offering Stockholder caused by the Defaulting Party’s failure to pay
the applicable consideration for the portion of Restricted Securities it had
agreed to purchase under this Section 4.3.

Section 4.4.            Take-Along
Rights.

(a)           If the Board of Directors (including
at least one of the directors designated by RFE Investment Partners) at any
time approves a Significant Issuer Transaction with an Independent Third Party
(an “Approved Sale”), each Stockholder, solely in its capacity as a
holder of Shares, shall vote for, consent to and raise no objections against
such Approved Sale.  If the Approved
Sale is structured as a (i) merger or consolidation, each Stockholder shall
waive any dissenters’ rights, appraisal rights or similar stock related rights
in connection with such merger or consolidation or (ii) sale of stock, 

 

16

 

each Stockholder shall agree to sell all of his or its
Shares and rights to acquire Shares on the terms and conditions approved by the
Board of Directors.  Each Stockholder,
solely in its capacity as a holder of Shares, shall take all necessary or
desirable actions in connection with the consummation of the Approved Sale as
requested by, and at the expense of, the Company.

(b)           The obligations of the Stockholders
with respect to the Approved Sale of the Company are subject to the
satisfaction of the following conditions: (i) upon the consummation of the
Approved Sale, each Stockholder shall, subject to the provisions of Sections 2
and 3 of the Certificate of Designations, receive the same form of
consideration and the same amount of consideration per share of Common Stock
(it being understood and agreed that a Stockholder who is an employee of the
Company and receives an employment agreement containing reasonable terms and
which agreement has been expressly approved by the Board of Directors in
connection with such Approved Sale shall not be deemed to have received a
different form or amount of consideration); (ii) if a Stockholder is given an
option as to the form and amount of consideration to be received, each Stockholder
shall be given the same option; (iii) each holder of then currently exercisable
rights to acquire shares of a class of Common Stock shall be given an
opportunity to either (A) exercise such rights prior to the consummation of the
Approved Sale and participate in such sale as holders of such class of Common
Stock or (B) upon the consummation of the Approved Sale, receive in exchange
for such rights consideration equal to the amount determined by multiplying (1)
the same amount of consideration per share of a class of Common Stock received
by holders of such class of Common Stock in connection with the Approved Sale
less the exercise price per share of such class of Common Stock of such rights
to acquire such class of Common Stock by (2) the number of shares of such class
of Common Stock represented by such rights; and (iv) each Stockholder shall
have received a copy of a fairness opinion from an investment banking or
valuation firm addressed to the Board to the effect that the consideration to
be received in connection with the Approved Sale is fair to the Stockholders
from a financial point of view.

(c)           Nothing in this Section 4.4 shall be
deemed to modify the Warrant Investors’ Put Option (as that term is defined in
the Warrant Agreement) in respect of the Warrant Shares or prevent the Warrant
Investors from exercising the Put Option prior to the consummation of the
Approved Sale and, notwithstanding the foregoing, if the Warrant Investors
exercise such Put Option, the Warrant Investors shall be entitled to receive
the consideration set forth in Section 2.10 of the Warrant Agreement.

(d)           Notwithstanding anything contained in
this Agreement to the contrary and subject to the provisions of this
Section 4.4(d), in no event will any Stockholder be required to make any
representations or warranties in connection with an Approved Sale that are
joint and several with any other Stockholder(s) or that pertain to matters
other than to title to the Common Stock or other securities held by such
Stockholder, such Stockholder’s capacity, authority or power to consummate or
participate in the transaction in question and other matters peculiar to such
Stockholder and customary for the type of transaction being consummated.  In addition, in no event will any
Stockholder be required to incur indemnification or contribution obligations
that are joint and several with any Person by this Section 4.4.  For purposes of determining the obligations
described in this Section 4.4(d), (i) all securities of the same type
shall be similarly treated and (ii) the amount of each Stockholder’s
obligation shall not exceed the aggregate consideration received thereby in
respect of the transaction in question (after aggregate taxes and expenses
allocable to the transaction).

(e)           If any Stockholder (a “Non-Complying
Holder”) fails to deliver any certificate or certificates evidencing shares
of Common Stock, Preferred Stock, Warrants or other rights that may be required
to be transferred pursuant to Section 4.4 in accordance with the terms
hereof, the Company or other Person entitled to purchase or require the
transfer of such securities may, at its option, in addition to all other
remedies it may have, deposit the purchase price for such shares of Common
Stock, Preferred Stock, Warrants or other rights with any national bank or
trust company having combined capital, surplus 

 

17

 

and undivided profits in excess of $100,000,000 and
which has agreed to act as escrow agent in the manner contemplated by this
Section 4.4(e) and thereupon the Company shall cancel on its books the
certificate or certificates representing such shares of Common Stock, Preferred
Stock, Warrants or other rights, as applicable, and, in the case of any such
transfer of shares of Common Stock, Preferred Stock, Warrants or other rights
to a Person other than the Company issue, in lieu thereof and in the name of
such Person, a new certificate or certificates representing such shares of
Common Stock, Preferred Stock, Warrants or other rights and thereupon all of
the Non-Complying Holder’s rights in and to such shares of Common Stock,
Preferred Stock, Warrants or other rights shall terminate.  Thereafter, upon delivery to the Company by
such Non-Complying Holder of the certificate or certificates evidencing such
shares of Common Stock, Preferred Stock, Warrants or other rights (duly
endorsed, or with stock powers or other appropriate instruments of transfer
duly endorsed, for transfer, with signature guaranteed, free and clear of any
liens or encumbrances, and with all applicable stock transfer tax stamps
affixed), the Company shall instruct the escrow agent referred to above to
deliver the purchase price (without any interest from the date of the closing
to the date of such delivery, any such interest to accrue to the Person who
deposited the purchase price for such shares of Common Stock, Preferred Stock,
Warrants or other rights) to such Non-Complying Holder.

(f)            If the Company and any of its
Stockholders or their representatives enter into any negotiation or transaction
for which Rule 506 under the Securities Act (or any similar rule then in
effect) may be available with respect to such negotiation or transaction
(including a merger, consolidation or other reorganization), each Stockholder
who is not an “accredited investor” (as such term is defined in Rule 501(a)
under the Securities Act) will, at the request of the Company, appoint a
purchaser representative (as such term is defined in Rule 501(a) under the
Securities Act) reasonably acceptable to the Company and such non-accredited
Stockholder.

(g)           If the Warrant Investors exercise
their right pursuant to Section 2.10.3(c) of the Warrant Agreement to require a
sale of the Company, then each Stockholder shall be obligated to comply with the
provisions of Section 4.4(a), (b), (d), (e) and (f) as if such sale were an
Approved Sale.

Section 4.5.            Sale
of the Company.

(a)           If the Company has not completed a
Qualifying Public Offering by January 1, 2007, then either RFE Investment
Partners or Sterling (an “Electing Stockholder”) may require, by
delivering a written notice to the Company (such notice being referred to as an
“Exit Instruction Notice”), a Sale of the Company yielding consideration
to the Company or the stockholders consisting of at least 90% cash or readily
marketable securities, whereupon the primary mandate and duty of the Company’s
Board and stockholders shall be to effect a sale of the Company to an
Independent Third Party or other Person reasonably acceptable to the Electing Stockholder.  If the Company fails to enter into one or
more definitive agreements with an Independent Third Party or other Person
contemplating a Sale of the Company on or before the 180th day
following the delivery of the Exit Instruction Notice or if such definitive
agreements shall have been terminated, then the Electing Stockholder shall have
all requisite right, power and authority, as the Company’s agent, to bind the
Company and effect a Sale of the Company. 
If either RFE Investment Partners or Sterling delivers an Exit
Instruction Notice to the Company, the other may elect, by written notice given
within thirty (30) days after the Company’s receipt of the Exit Instruction
Notice, to also deliver an Exit Instruction Notice, in which event RFE Investment
Partners and Sterling shall jointly act as the Electing Stockholder.

(b)           In exercising its rights to effect a
Sale of the Company, the Electing Stockholder shall have full and plenary power
and authority, as the agent of the Company, to cause the Company to enter into
a transaction providing for a Sale of the Company (an “Exit Transaction”)
and to take any and all such further action in connection therewith as the
Electing Stockholder may deem necessary or 

 

18

 

appropriate in order to consummate any such Exit
Transaction.  The Electing Stockholder,
in exercising its rights under this Section, shall have complete discretion
over the terms and conditions of any Exit Transaction effected thereby,
including, without limitation, price, nature of consideration, payment terms,
conditions to closing, representations, warranties, affirmative covenants,
negative covenants, indemnification, holdbacks and escrows; provided, however,
that the terms and conditions applicable to the holders of each class, series
and type of Company securities apply to all holders of such class, series and
type of Company securities; and provided further that the provisions of Section
4.4(a), (b), (d), (e) and (f) shall also apply to any Exit Transaction under
this Section 4.5.  Without limitation of
the foregoing, the Electing Stockholder may execute on behalf of the Company
any such agreements, documents, applications, authorizations and instruments as
it shall deem necessary or appropriate in connection with any Exit Transaction,
and each third party with whom the Electing Stockholder contracts on behalf of
the Company or any subsidiary may rely on the authority vested in the Electing
Stockholder under this Section for all purposes.  Any Sale of the Company will be effected in accordance with
Sections 2 and 3 of the Certificate of Designations.

(c)           In conducting an Exit Transaction,
the Electing Stockholder shall be guided by corporate law principles and
decisions governing the sale of a Delaware corporation or its assets with a
goal of maximizing such corporation’s value at a sale or liquidation for its
stockholders’ benefit.  Without
limitation of the foregoing, the Electing Stockholder shall enjoy the benefit
of the business judgment rule and other protections afforded directors under
Delaware law with respect to all of its decisions and actions in connection
with any Exit Transaction to the maximum extent permitted by law.

(d)           If the Electing Stockholder exercises
its rights to effect a Sale of the Company, the Stockholders shall, if
requested by the Electing Stockholder, vote their Shares to increase the number
of directors and to elect such additional persons as nominated by the Electing
Stockholder such that the persons nominated as directors by the Electing
Stockholder shall constitute a majority of the directors in office.

(e)           Nothing in this Section 4.5 shall be
deemed to modify the Warrant Investors’ Put Option (as that term is defined in
the Warrant Agreement) in respect of the Warrant Shares or prevent the Warrant
Investors from exercising the Put Option prior to the consummation of the
Approved Sale and, notwithstanding the foregoing, if the Warrant Investors
exercise such Put Option, the Warrant Investors shall be entitled to receive
the consideration set forth in Section 2.10 of the Warrant Agreement.

Section 4.6.            Right
of First Refusal for New Securities.

(a)           The Company hereby grants to each of
the Stockholders that is an “accredited investor” (as such term is defined in
Rule 501(a) of the Securities Act), or a family-investment vehicle wholly-owned
by a Stockholder or his immediate family and the person making investment
decisions is an “accredited investor”, as of the time of any offer or sale of
New Securities (as defined below) to such Stockholder) a right of first refusal
to purchase any New Securities that the Company may, from time to time, propose
to issue and sell.  Such right of first
refusal shall allow each Stockholder to purchase its Pro Rata Share (as defined
below) of the New Securities proposed to be issued.  In the event a Stockholder does not purchase any or all of its
Pro Rata Share of New Securities, each of the remaining Stockholders shall have
the right to purchase its Pro Rata Share (determined at such time) of such
unpurchased New Securities until all of the New Securities are purchased, or
until no other Stockholder desires to purchase any additional New Securities,
in which case the Company may sell such unpurchased New Securities to
prospective purchasers on the terms described in the New Issue Notice (as
defined below) for a period of 120 days, but thereafter may sell additional New
Securities only after delivering another New Issue Notice as described in
Section 4.6(c) below.  The right of
first refusal granted hereunder with respect to 

 

19

 

an issue of New Securities (but no subsequent issue of
New Securities) shall terminate if unexercised within 15 calendar days after
receipt of the notice described in Section 4.6(c) below.

(b)           “New  Securities” shall mean
any (i) authorized but unissued shares, and any treasury shares, of Common
Stock, Preferred Stock or other security of the Company, (ii) any security
convertible, with or without consideration, into any Common Stock, Preferred
Stock or other security (including any option to purchase such a convertible
security), (iii) any security carrying any warrant or right to subscribe to or
purchase any Common Stock, Preferred Stock or other security or (iv) any such warrant
or right; provided, however, that the term “New Securities” does not include
(1) the issuance of any shares of Preferred Stock or Common Stock upon the
exercise of the Warrants; (2) the issuance of Common Stock upon conversion of
Preferred Stock; (3) stock options, or other rights to purchase or acquire
shares of Common Stock, or “phantom” stock or stock appreciation rights,
granted pursuant to any stock option plan, restricted stock plan or other plan
adopted for the benefit of officers, directors and employees of the Company and
its Subsidiaries and approved by the Board of Directors, including without
limitation the Management Options, and shares of Common Stock issued upon the
exercise of such options or rights or otherwise issued pursuant to any such
plan; (4) securities issued as consideration in the acquisition of another
Person by the Company by merger, purchase of all or substantially all of the
assets of such Person or other transaction whereby the Company shall become
directly or indirectly the owner of more than 50% of the voting power of such
Person; (5) securities issued pursuant to any equipment leasing or loan
arrangement, or debt financing from a bank or similar financial or lending
institution approved by the Board of Directors; (6) shares of Common Stock or
Preferred Stock issued pursuant to any pro rata stock split or stock dividend;
(7) shares of Common Stock issued pursuant to any Qualified Public Offering;
(8) shares of Preferred Stock being sold pursuant to Section 2.2 hereof; and
(9) shares of Common Stock sold, at a price of $12.00 per share, pursuant to
Section 2.3(c) of that certain Agreement for Purchase of Assets, dated as of
July 17, 2000, as amended, of Emery Transportation, Inc. by Advantage Tank
Lines, Inc., as such agreement is in effect on the date hereof.

(c)           In the event that the Company
proposes to undertake an issuance of New Securities, it shall give each
Stockholder written notice of its intention (“New Issue Notice”),
describing the class and number of securities it intends to issue as New
Securities, the purchase price therefor (which shall be payable solely in cash)
and the terms upon which the Company proposes to issue the same.  Each Stockholder shall have 15 calendar days
from the date the New Issue Notice is received by it to elect to purchase all
or any portion of the Stockholder’s Pro Rata Share of such New Securities for
the purchase price and upon the terms specified in the New Issue Notice by
giving written notice to the Company, stating therein the quantity of New
Securities to be purchased.  Any
Stockholder that is a holder of Warrants shall be entitled, to the extent
practicable (in lieu of purchasing such New Securities, unless the New
Securities are themselves warrants or options to acquire shares of Capital
Stock), to acquire warrants for such New Securities exercisable at a nominal
exercise price (but at a purchase price, for such warrants, equal to the
purchase price for such New Securities) so that the Company and such
Stockholder are in substantially the same position as if such Stockholder had
acquired such New Securities, but permitting such Stockholder to acquire
warrants for such New Securities in lieu thereof.

(d)           The Company may condition the
participation of Stockholders in any issuance of New Securities upon the
purchase by such Stockholder of any securities (including, without limitation,
debt securities) other than New Securities in the event that the participation
of the prospective subscribers in such issuance of New Securities is so conditioned.

(e)           In the event that the participation
in an issuance of New Securities by a Stockholder would require under
applicable securities law (i) the registration or qualification of such
securities or of any person as a broker or dealer or agent with respect to such
securities or (ii) the provision of any information, pursuant to Regulation D
of the Securities Act or comparable securities

 

20

 

laws, regarding the Company or the securities to any
participant, the provision of which would impose a substantial burden or
expense on the Company, such Stockholder shall not have the right to
participate in such issuance of New Securities.

(f)            For purposes of this Section, a
Stockholder’s Pro Rata Share shall be the ratio of (i) the number of shares of
Common Stock held by such Stockholder on a Fully-diluted basis (excluding
Management Options) to (ii) the total number of shares of Common Stock then
held by all Stockholders having rights under this Section 4.6 on a
Fully-diluted basis (excluding Management Options).

(g)           The rights of a Stockholder who is an
employee of the Company or one of its subsidiaries under this Section 4.6 shall
automatically terminate upon termination of such Stockholder’s employment with the
Company and its subsidiaries for any reason, whether with or without cause.

Section 4.7.            Legends.  Each certificate for the Restricted
Securities will be imprinted with a legend substantially in the following form
(the “Securities Act Legend”) until such securities have ceased to be
Restricted Securities:

“The securities
represented by this certificate have not been registered under the Securities
Act of 1933, as amended, or under any state securities laws.  The securities represented by this
certificate are subject to certain restrictions on transfer, voting agreements,
drag-along rights and other conditions specified in a Stockholders’ Agreement,
dated as of April 30, 2001, among the issuer (the “Company”) and certain
investors of the Company, and the Company reserves the right to refuse the
transfer of such securities until such conditions have been fulfilled with
respect to such transfer.  A copy of
such conditions will be furnished by the Company to the Stockholder hereof upon
written request and without charge.”

Section 4.8.            Violations of this Agreement.  For purposes of this Article IV, any
Stockholder who has failed to give notice of the election of an option
hereunder within the specified time period will be deemed to have waived its or
his rights in such option on the day after the last day of such period;
provided, however, that such failure to give notice of election shall not be
construed to constitute a waiver of any future right to participate under
Sections 4.2, 4.3 or 4.6.  Any Transfer
made in violation of Article IV of this Agreement shall be null and void.  The Company shall not be required (a) to
transfer on its books any securities of the Company transferred in violation of
any provisions of this Agreement or (b) to treat as owner of such securities,
or to accord the right to vote as such owner, or to pay dividends to, any
transferee to whom such securities are transferred in violation of this
Agreement.

Section 4.9.            Rule 144A.  The Company agrees that, upon the request of
any Stockholder or any prospective purchaser of Restricted Securities, the
Company will promptly provide (but in any case within fifteen (15) days of a
request) to such Stockholder or potential purchaser, the following information:

(a)   a brief statement of the
nature of the business of the Company and any subsidiaries and the products and
services they offer;

(b)   the most recent consolidated
balance sheets and statements of income and retained earnings, and similar
financial statements of the Company for such part of the two preceding fiscal
years prior to such request as the Company has been in operation (such
financial information will be audited, to the extent reasonably available); and

 

21

 

(c)   such other information about
the Company, any subsidiaries and their business, financial condition and
results of operations as the requesting Stockholder or purchaser of such
Restricted Securities requests in order to comply with Rule 144A and the
antifraud provisions of the federal and state securities laws.

The Company hereby
represents and warrants to any such requesting Stockholder and any prospective
purchaser of Restricted Securities from such Stockholder that the information
provided by the Company pursuant to this Section 4.9 will not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements made, in light of the circumstances under which
they were made, not misleading.  For
purposes of paragraphs (b) and (c), the term “Company” shall include any entity
to which the Company has succeeded by operation of law and any entity
controlled by the Company.

ARTICLE
V

COVENANTS

Section 5.1.            Inspection Rights.  Each Stockholder that holds 5% or more of
the Common Stock (on a Fully-diluted basis but excluding, for purposes of this
computation, shares of Common Stock issued in transactions in which
Stockholders did not have the right to purchase shares of Common Stock (or
securities convertible into or exercisable or exchangeable for, Common Stock))
pursuant to Section 4.6 hereof) at the time outstanding, shall have the right,
upon reasonable prior notice to the Company, to visit and inspect the
properties of the Company and its subsidiaries and to examine and copy (at its own
expense) their books of record and accounts, and to discuss their affairs,
finances and accounts with their officers and their current and prior
independent public accountants, all at such times (during normal business
hours) as such Stockholder may reasonably request.

Section 5.2.            Financial Information.  The Company agrees to furnish to each
Stockholder the following financial statements and other information:

(a)   as soon as available and in
any event within 45 days after the end of each quarterly fiscal period of
each fiscal year of the Company, a consolidated and consolidating statement of
income, retained earnings and cash flows of the Company and its subsidiaries
for such period and for the period from the beginning of the respective fiscal
year to the end of such period, and the related consolidated and consolidating
balance sheet of the Company and its subsidiaries as at the end of such period,
setting forth in comparative form the corresponding consolidated and
consolidating figures for the respective period during the prior fiscal year
(except that, in the case of balance sheets, such comparison shall be to the
last day of the prior fiscal year) and from the budget for such period,
accompanied by a certificate of a senior financial officer of the Company,
which certificate shall state that said consolidated and consolidating
financial statements fairly present the consolidated and consolidating
financial condition and results of operations of the Company and its
subsidiaries, in accordance with U.S. generally accepted accounting principles
(“GAAP”), as at the end of, and for, such period (subject to normal
year-end audit adjustments), together with a brief management’s discussion and
analysis of the Company’s financial condition and results of operations for the
period; and

(b)   as soon as available and in
any event within 120 days after the end of each fiscal year of the
Company, a consolidated statement of income, retained earnings and cash flows
for such fiscal year and the related consolidated balance sheet of the Company
and its subsidiaries as at the end of such fiscal year, setting forth in
comparative form the corresponding consolidated figures for the respective
period during the prior fiscal year (except that, in the case of balance
sheets, 

 

22

 

such comparison
shall be to the last day of the prior fiscal year), and accompanied (i) in
the case of said consolidated statements and balance sheet of the Company, by
an opinion thereon of independent certified public accountants of recognized
national standing, which opinion shall state that said consolidated financial
statements fairly present the consolidated financial condition and results of
operations of the Company and its subsidiaries as at the end of, and for, such
fiscal year in accordance with GAAP, and (ii) a brief management’s discussion
and analysis of the Company’s financial condition and results of operations for
the fiscal year.

Section 5.3.            Confidentiality.  All materials and information obtained by
any Stockholder pursuant to Sections 5.1 or 5.2 shall be kept confidential
and shall not be disclosed to any third party except (a) as has become
generally available to the public (other than through disclosure by such
Stockholder in contravention of this Agreement), (b) to such Stockholder’s
directors, officers, trustees, stockholders, partners, employees, agents and
professional consultants on a need to know basis, (c) to any other holder
of Common Stock, Preferred Stock or Warrants, (d) to any Person to which
such Stockholder offers to sell or Transfer any shares of Common Stock,
Preferred Stock or Warrants, provided that the prospective transferee shall
agree to be bound by the provisions of this Section 5.3, (e) in any
report, statement, testimony or other submission to any governmental authority
having or claiming to have jurisdiction over such Stockholder, or to the
National Association of Insurance Commissioners or any similar organization,
including self-regulatory organizations (such as securities exchanges),
(f) in order to comply with any law, rule, regulation or order applicable
to such Stockholder or (g) in connection with any litigation to which any
Stockholder is a party or formal or any informal investigative demand issued to
such Stockholder in the course of any litigation, investigation or
administrative proceeding; provided that, any Stockholder disclosing pursuant
to subsections (e), (f) or (g) of this Section 5.3 shall, to the
extent it may lawfully do so, notify the Company promptly of any such
disclosure.

ARTICLE
VI

EFFECTIVE DATE AND TERM OF AGREEMENT

Section 6.1.            Effective Date.  The effective date of this Agreement shall
be the date set forth in the first sentence of this Agreement.

Section 6.2             Term.  Except to the extent provided herein, and
except for the right to specific performance specified in Section 7.1 of this
Agreement and any other rights arising out of the failure of any party to
perform any of its rights under this Agreement, this Agreement shall continue
in effect from and after the date set forth in the first sentence hereof until
the earliest of (a) the date the Company is merged or consolidated into a new
or surviving company and the Stockholders, together with their Affiliates (on a
Fully-diluted basis), immediately prior to the merger or consolidation own less
than a majority of the ordinary voting power to elect directors of the new or
surviving company (on a Fully-diluted basis), (b) the date there is a sale of
all of the Company’s capital stock in any transaction or series of related
transactions, or (c) the closing of a Qualifying Public Offering.  Notwithstanding the foregoing or any other
provision of this Agreement, this Agreement shall in any event terminate with
respect to any Stockholder when such Stockholder no longer owns any shares of
Common Stock, Preferred Stock or Warrants.

ARTICLE
VII

MISCELLANEOUS

Section 7.1.            Specific Performance.  The parties hereby declare that it is
impossible to measure in money the damages which will accrue to a party hereto
by reason of a failure to perform any of the 

 

23

 

obligations
under this Agreement.  Therefore, all
parties hereto shall have the right to specific performance of the obligations
of the other parties under this Agreement, and if any party hereto shall
institute any action or proceeding to enforce the provisions hereof, any person
(including the Company) against whom such action or proceeding is brought
hereby waives the claim or defense therein that such party has or have an
adequate remedy at law, and such person shall not urge in any such action or
proceeding the claim or defense that such remedy at law exists.

Section 7.2.            Notices.  All notices or other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered personally or sent by telex, telefax or telegraphic communication, by
recognized overnight courier marked for overnight delivery, or by registered or
certified mail, postage prepaid, addressed as follows: (a) if to a Stockholder,
as indicated on Schedule I attached hereto, or at such other address as such
Stockholder shall have furnished to the Company in writing, or (b) if to any
other holder of any shares of Restricted Securities at such address as such
holder shall have furnished the Company in writing, or, until any such holder
so furnishes an address to the Company, then to and at the address of the last
holder thereof who has so furnished an address to the Company, or (c) if to the
Company, at 4895 Dressler Road, N.W., #100, Canton, Ohio,  44718 Attention: Chairman of the Board, or
such other addresses as shall be furnished by like notice by such party.  All such notices and communications shall,
when telexed (provided the correct answerback has been received) or telefaxed
(immediately thereafter confirmed by telephone) or telegraphed, be effective
when telexed, telefaxed or delivered to the telegraph company, respectively, or
if sent by nationally recognized overnight courier service, be effective one
Business Day after the same has been delivered to such courier service marked
for overnight delivery, or, if mailed, be effective when received.

Section 7.3.            Effective Agreement.  This Agreement shall be binding on and
enforceable against each Stockholder and his or its respective successors and
assigns.  No Stockholder may assign any
of its rights hereunder to any Person other than a transferee that has complied
in all respects with the requirements of this Agreement (including, without
limitation, the execution of a Transferee Agreement in the form of Annex I
hereto).  If any transferee of any
Stockholder shall acquire any shares of Common Stock, Preferred Stock or other
rights in any manner, whether by operation of law or otherwise, such shares
shall be held subject to all of the terms of this Agreement, and by taking and
holding such shares such Person shall be entitled to receive the benefits of
and be conclusively deemed to have agreed to be bound by and to comply with all
of the terms and provisions of this Agreement.

Section 7.4.            Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner so as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect any other provision of this Agreement.  If any provision contained in this Agreement is determined to be
invalid, illegal or unenforceable as written, a court of competent jurisdiction
shall, at any party’s request, reform the terms of this Agreement to the extent
necessary to cause such otherwise invalid provisions to be enforceable under
applicable law.

Section 7.5.            Amendment and Waiver.  This Agreement may be amended only by
written instruments signed by the Company and Stockholders owning at least
two-thirds of the Common Stock (on a Fully-diluted basis but excluding any
Common Stock owned by persons who are not parties to or bound by this
Agreement); provided, however, that (i) this Agreement may not be amended to
deprive Sterling, RFE VI and RFE VI SBIC, without their consent, of their
respective rights to designate nominees for election as directors and to
require the Stockholders to vote their shares in favor of the election of such
nominees, (ii) this Agreement may not be amended to deprive Messrs. Nash, Young
and Shaffer of their right to serve as directors as set forth in Section 3.1
and to require the Stockholders to vote their shares in favor of the election
of Messrs. Nash, Young and Shaffer, (iii) Sections 2.7 and 4.4(a)

 

24

 

may not
be amended without the consent of RFE Investment Partners, (iv) Section 3.8 may
not be amended without the consent of a majority-in-interest of the
Stockholders other than Sterling and its Affiliates, (v) Sections 3.6 and 4.5
(other than Section 4.5(e) and (f)) may not be amended to deprive RFE
Investment Partners or Sterling of their respective rights thereunder without
the consent of RFE Investment Partners and/or Sterling, as the case may be,
(vi) this Agreement may not be amended, without consent of a
majority-in-interest of the Warrant Investors (based on Warrant Share ownership
on a Fully-diluted basis), to (a) further restrict the Warrant Investors’
ability to Transfer Restricted Securities, (b) modify or eliminate the Warrant
Investors’ rights under Sections 4.2, 4.3 and 4.6 or (c) amend Sections 4.4(c)
and (g) and 4.5(e), (vii) Section 4.1 through 4.6 may not be amended without
the consent of Stockholders owning at least 75% of the outstanding Common Stock
(on a Fully-diluted basis but excluding any Common Stock owned by Persons who
are not parties to or bound by this Agreement), (viii) Section 3.7(b) may
not be amended without the consent of Aetna, (ix) Article V may not be amended
without the consent of each Stockholder holding 5% or more of the Common Stock
(on a Fully-diluted basis but excluding any Common Stock owned by Persons who
are not parties to or bound by this Agreement) and (x) Sections 7.14 and 7.16
and this sentence and the next sentence of Section 7.5 may not be amended
without the prior consent of all Stockholders. 
No waiver of any right or remedy provided for in this Agreement shall be
effective unless it is set forth in writing signed by Stockholders owning at
least a majority of the Common Stock (on a Fully-diluted basis but excluding
any Common Stock owned by Persons who are not parties to or bound by this
Agreement) affected thereby; provided, however, that no waiver of any right set
forth in Sections 4.2, 4.3 and 4.6 or Article V of this Agreement shall be
effective against any Stockholder which has not waived any of its rights under
such Sections.  No waiver of any right
or remedy granted in one instance shall be deemed to be a continuing waiver
under the same or similar circumstances thereafter arising.

Section 7.6.            Further Documentation.  Each Stockholder shall execute and deliver
such other agreements and instruments as from time to time may be deemed
advisable or appropriate to effect the intent and purpose of this Agreement.

Section 7.7.            Section Headings.  The captions to the Sections in this
Agreement are for reference only and shall not affect the meaning or
interpretation hereof.

Section 7.8.            Choice of Law.  All questions concerning the construction,
validity and interpretation of this Agreement and the performance of the
obligations imposed by this Agreement shall be governed by and construed in
accordance with the laws of the State of New York (except with respect to
matters involving corporate formation, good standing and other corporate
procedural matters, which shall be governed by the laws of the State of
Delaware), without application of the conflicts of laws principles
thereof.  The Company and each
Stockholder hereby consents and agrees that the state or federal courts located
in New York County, City of New York, New York shall have exclusive
jurisdiction to hear and determine any claims or disputes between the parties
pertaining to this Agreement or to any matter arising out of or relating to
this Agreement; provided, that the parties acknowledge that any appeals from
those courts may have to be heard by a court located outside of New York
County.  The Company and each
Stockholder expressly submits and consents in advance to such jurisdiction in
any action or suit commenced in any such court, and each party hereby waives
any objection that such credit party may have based upon lack of personal
jurisdiction, improper venue or forum non conveniens and hereby consents
to the granting of such legal or equitable relief as is deemed appropriate by
such court.  The Company and each
Stockholder hereby waives personal service of the summons, complaint and other
process issued in any such action or suit and agrees that service of such
summons, complaint and other process may be made by registered or certified
mail addressed to such  party at the
address specified in Section 7.2 of this Agreement and that service so made
shall be deemed completed upon such party’s actual receipt thereof.  Because disputes arising in connection with
complex financial transactions are most quickly and economically resolved by an
experienced and expert person and the parties wish

 

25

 

applicable
state and federal laws to apply (rather than arbitration rules), the parties
desire that their disputes be resolved by a judge applying such applicable
laws.  Therefore, to achieve the best
combination of the benefits of the judicial system and of arbitration, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT
OR OTHERWISE, AMONG ANY PARTY ARISING OUT OF, CONNECTED WITH, RELATED TO, OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS
AGREEMENT OR THE TRANSACTIONS RELATED HERETO.

Section 7.9.            Multiple Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which will
constitute one and the same instrument.

Section 7.10.          Complete Agreement.  Except as set forth herein, this Agreement
contains the complete agreement between the parties and controls and supersedes
any prior understandings, agreements or representations by or between the
parties, written or oral, which conflicts with, or may have related to, the
subject matter hereof in any way, including without limitation those certain
commitment letters, accepted by the Company and KTC Acquisition Corp. as of
January 25, 2001, made by each Stockholder purchasing Shares pursuant to
Section 2.2 hereof.  Notwithstanding the
foregoing, this Agreement is not intended to supersede the Note Agreement, the
Warrant Agreement or affect any of the rights of the Warrant Investors
thereunder or under the Notes (as defined in the Note Agreement) or the
Warrants.  Each Stockholder and the
Company agrees that it shall not enter into agreement, proxy, voting trust or
other arrangement of any kind with any other Stockholder or any other Person
with respect to the Common Stock, the Preferred Stock, the Warrants or other
rights on terms inconsistent with the provisions of this Agreement, including
(without limitation) agreements or arrangements with respect to the acquisition
or disposition of securities of the Company in a manner that is inconsistent
with this Agreement.

Section 7.11.          No Right to Continued Employment.  This Agreement shall not confer upon any
employee any right with respect to continuance of employment by the Company or
any Affiliate thereof, nor shall it interfere in any way with the right of the
Company or any Affiliate thereof to terminate any employee’s employment at any
time.

Section 7.12.          Expenses; Transaction Fees.  At the Closing, the Company shall reimburse,
or shall cause AMG and KTC to reimburse, each of Sterling and RFE Investment
Partners for their reasonable, out-of-pocket expenses (including reasonable
fees and disbursements of counsel) incurred by Sterling and RFE Investment
Partners, respectively, in connection with the transactions contemplated by
this Agreement, the Purchase Agreement and the financing of the transactions
contemplated hereby.  In addition, at
the Closing the Company shall pay, or shall cause AMG and KTC to pay, to each
of Sterling Investment Partners Advisors, L.L.C. and RFE Management Corporation
a transaction fee of $875,000.

Section 7.13.          Exculpation Among Stockholders.  Each Stockholder acknowledges that it is not
relying upon any Person, firm or corporation (including without limitation any
other Stockholder), other than the Company and its officers and directors, in
making its investment or decision to invest in the Company.  Each Stockholder agrees that no other
Stockholder nor the respective controlling person, officers, directors,
partners, agents or employees of any other Stockholder shall be liable to such
Stockholder for any losses incurred by such Stockholder in connection with its
investment in the Company.

Section 7.14.          Like Treatment of Holders.  Neither the Company nor any of its
Affiliates shall, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee, payment

 

26

 

for the
redemption or exchange of capital stock, or otherwise, to any holder of capital
stock for or as an inducement to, or in connection with solicitation of, any
consent, waiver or amendment of any terms or provisions of the capital stock or
this Agreement or the Registration Rights Agreement, unless such consideration
is paid to all holders of capital stock bound by such consent, waiver or
amendment, whether or not such holders so consent, waive or agree to amend and
whether or not such holders tender their capital stock for redemption or
exchange.

Section 7.15           Repurchases, Recapitalizations,
etc.

(a)                   Except as otherwise
specifically provided herein or in Sections 2.10 and 4.04 of the Warrant
Agreement with respect to the Warrants and the Warrant Shares, the Company
shall not effect any repurchase, recapitalization, reorganization,
reclassification, merger, consolidation, share exchange, liquidation, spin-off,
stock split, dividend, distribution or stock consolidation, subdivision or combination
that would not afford to each Stockholder the same type and amount of
consideration per security of the Company (after taking into account any
exercise price or similar fee necessary to convert a Warrant or other right
into capital stock of the Company and the preferences and other provisions of
Sections 2 and 3 of the Certificate of Designations).

(b)                   Except as otherwise
specifically provided herein and except for repurchases of Shares approved by
the Board of Directors from any Stockholder upon termination of employment, the
Company shall not effect any repurchase or redemption of Shares from any
Stockholder and shall cause its subsidiaries not to effect any repurchase or
redemption of Shares from any Stockholder, other than on a pro rata basis from all
Stockholders participating in such repurchase or redemption at the same type
and amount of consideration.

Section 7.16.          No Discriminatory Treatment.  Notwithstanding any provision contained
herein that may be to the contrary, (a) in no event shall the Company
and/or the Stockholders effect any amendment to the Company’s Certificate of
Incorporation or By-Laws that would treat any Stockholder, in its capacity as a
Stockholder, in a non-ratable, discriminatory manner with respect to securities
of the Company of the same class and series held by it without the prior
written consent of such Stockholder and (b) in no event shall the Company
declare or pay any dividend or distribution with respect to any class of
capital stock of the Company that would treat any Stockholder, in its capacity
as a Stockholder, in a non-ratable, discriminatory manner with respect to
securities of the Company held by it without the prior written consent of such
Stockholder.

Section 7.17.          No Effect Upon Lending
Relationships.  Notwithstanding
anything herein to the contrary, nothing contained in this Agreement shall
affect, limit or impair the rights and remedies of any lender in their capacity
as a lender(s) to the Company or any of its subsidiaries pursuant to any
agreement under which the Company or any of its subsidiaries has borrowed
money.  Without limiting the generality
of the foregoing, any such Person, in exercising its rights as a lender,
including making its decision on whether to foreclose on any collateral
security, will have no duty to consider (a) its status as a stockholder of the
Company, (b) the interests of the Company or (c) any duty it may have to any
other stockholder of the Company, except as may be required under the
applicable loan documents or by commercial law applicable to creditors
generally.

Section 7.18           Warrantholder Payment
Acknowledgment.  Each of the Company
and each Stockholder acknowledges and agrees that the Company will be obligated
to make payments to the holders of the Warrants under certain circumstances set
forth in the Warrant Agreement.

Section 7.19           Termination of Holdings
Stockholders’ Agreement.  Each
Stockholder who is a party to that certain Stockholders’ Agreement, dated as of
December 31, 1998, by and among Advantage

 

27

 

Management
Holdings Corp. and each of the signatories thereto, hereby agrees that such
Stockholders’ Agreement is hereby terminated and of no further force and effect
as of the date hereof.

 

[REMAINDER OF THIS PAGE
INTENTIONALLY LEFT BLANK]

 

28

 

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

	
   

  	
  KTC/AMG HOLDINGS CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  AZALEA MALL, L.L.C.

  
	
   

  	
  By:  AETNA LIFE INSURANCE COMPANY

  
	
   

  	
  Its Sole Member

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  ANTARES CAPITAL
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  KEIBREAUX ASSOCIATES

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/

  
	
   

  	
   

  	
  Ed Levy

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/

  
	
   

  	
   

  	
  M. William Macey, Jr.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/

  
	
   

  	
   

  	
  Sharon Macey

  	
   

  
						

 

 

29

 

	
   

  	
  MASSACHUSETTS MUTUAL
  LIFE INSURANCE  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  David L. Babson &
  Company Inc.,

  
	
   

  	
   

  	
  its Investment Adviser

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  MASSMUTUAL CORPORATE
  INVESTORS

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  The foregoing is
  executed on behalf of MassMutual Corporate Investors, organized under a
  Declaration of Trust, dated September 13, 1985, as amended from time to
  time.  The obligations of such Trust
  are not personally binding upon, nor shall resort be had to the property of,
  any of the Trustees, shareholders, officers, employees or agents of such
  Trust, but the Trust’s property only shall be bound.

  
	
   

  	
   

  	
   

  
	
   

  	
  MASSMUTUAL
  PARTICIPATION INVESTORS

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  The foregoing is
  executed on behalf of MassMutual Participation Investors, organized under a
  Declaration of Trust, dated April 7, 1988, as amended from time to time.  The obligations of such Trust are not
  personally binding upon, nor shall resort be had to the property of, any of
  the Trustees, shareholders, officers, employees or agents of such Trust, but
  the Trust’s property only shall be bound.

  

 

 

30

 

	
   

  	
   

  	
  JAMES H. McDANIEL
  REVOCABLE TRUST

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  James H. McDaniel

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  JERRY L. McDANIEL
  REVOCABLE TRUST

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Jerry L. McDaniel

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Trustee

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Dennis Nash

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Douglas L. Newhouse

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  James Newhouse

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RFE INVESTMENT PARTNERS
  VI, L.P.

  	
   

  
	
   

  	
   

  	
  By:

  	
  RFE Associates VI, LLC,
  its General Partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Managing Member

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  RFE VI SBIC, L.P.

  	
   

  
	
   

  	
   

  	
  By:

  	
  RFE Associates VI SBIC,
  LLC, its General Partner

  	
   

  
	
   

  	
   

  	
  By:

  	
  RFE Investment Partners
  VI, L.P., its sole member

  	
   

  
	
   

  	
   

  	
  By:

  	
  RFE Associates VI, LLC,
  its General Partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Managing Member

  	
   

  
							

 

31

 

 

	
   

  	
   

  	
  RSTW PARTNERS III, L.P.

  
	
   

  	
   

  	
  By:

  	
  RSTW Management, L.P.,
  its

  
	
   

  	
   

  	
   

  	
  general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Rice Mezzanine
  Corporation, its

  
	
   

  	
   

  	
   

  	
  general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Kurt G. Keene

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/

  
	
   

  	
   

  	
   

  	
  Charles W. Santoro

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/

  
	
   

  	
   

  	
  

  	
  William L. Selden

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/

  
	
   

  	
   

  	
   

  	
  Lee Shaffer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  STERLING INVESTMENT
  PARTNERS, L.P.

  
	
   

  	
   

  	
  By:

  	
  Sterling Investment
  Partners Management, L.L.C., its

  
	
   

  	
   

  	
   

  	
  General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Managing Member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/

  
	
   

  	
   

  	
   

  	
  Carl Young

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SHAFFER FAMILY LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  

 

32

Schedule
of Purchasers

SERIES B PREFERRED STOCK

 

	
   

  Name and
  Address

  	
   

  	
  Number of
  Shares

  to be Purchased

  	
   

  	
  Aggregate
  Purchase

  Price for Shares

  
	
  Azalea Mall, L.L.C.

  Aetna Life Insurance Company

  151 Farmington Avenue

  Hartford, CT  06156

  Attn:  Allan J. Vartelas

  	
   

  	
  4,000

  	
   

  	
  $4,000,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Antares Capital Corporation

  311 South Wacker Drive, Suite 6400

  Chicago, IL 
  60606

  	
   

  	
  200

  	
   

  	
  $200,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Massachusetts Mutual

         Life Insurance Company

  1295 State Street

  Springfield, MA 
  01111

  Attn:  Robert
  Shettle

  	
   

  	
  1,730

  	
   

  	
  1,730,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MassMutual Corporate
  Investors

  1295 State Street

  Springfield, MA 
  01111

  Attn:  Robert
  Shettle

  	
   

  	
  307

  	
   

  	
  307,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MassMutual Participation Investors

  1295 State Street

  Springfield, MA 
  01111

  Attn:  Robert
  Shettle

  	
   

  	
  163

  	
   

  	
  163,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RFE Investment Partners VI, L.P.

  36 Grove Street

  New Canaan, CT  06840

  Attn:  James Parsons

  	
   

  	
  7,000

  	
   

  	
  $7,000,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RSTW Partners III, L.P.

  c/o Rice Sangalis Toole & Wilson

  5847 San Felipe, Suite 4350

  Houston, TX 
  77057

  Attn:  Kurt
  G. Keene

  	
   

  	
  2,200

  	
   

  	
  $2,200,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lee Shaffer

  Shaffer Family LLC

  3822 Nottaway Road

  Durham, NC 
  27707

  	
   

  	
  1,089

  587

  	
   

  	
  $1,089,000*

  $587,000*

  

 

*Being paid through the contribution of
47,886 shares of common stock of Kenan Transport Company, valued at $35.00 per
share.

 

33

 

	
  Sterling Investment Partners, L.P.

  276 Post Road West

  Westport, CT 
  06880

  Attn:  M.
  William Macey, Jr.

  	
   

  	
  9,000

  	
   

  	
  $9,000,000

  

 

 

34

 

ANNEX I

 

FORM OF TRANSFEREE
AGREEMENT

This Transferee
Agreement (“Agreement”) is executed by the transferee whose signature
appears below (“Transferee”) pursuant to the terms of the Stockholders’
Agreement (the “Stockholders’ Agreement”) dated as of April __, 2000 by
and among KTC/AMG Holdings Corp., a Delaware corporation (the “Company”),
and certain of its stockholders and warrant holders, a copy of which is
attached hereto and is incorporated herein by reference.  By execution of this Agreement, Transferee
hereby agrees as follows:

                1.             Acknowledgment.  Transferee acknowledges (a) that Transferee
is acquiring certain securities of the Company from
[                         ]
subject to the terms and conditions of the Stockholders’ Agreement and
(b) that Transferee is an assignee of
[                        ]
and that for purposes of the Stockholders’ Agreement, Transferee shall be deemed
a/an
[                         ].1

                2.             Agreement.  Transferee (a) agrees that such
securities of the Company to be acquired by Transferee shall be bound by and
subject to the terms of the Stockholders’ Agreement pursuant to the terms
thereof and (b) hereby adopts the Stockholders’ Agreement with the same force
and effect as if Transferee was originally a party thereto.

                3.             Notice.  Any notice required by the Stockholders’
Agreement shall be given to Transferee at the address listed below Transferee’s
signature below.

EXECUTED AND DATED this
the ____ day of _________, 2____.

 

	
   

  	
   

  	
  TRANSFEREE:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Address

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

1Fill in as appropriate

 

35

 

Schedule 2.6(c)

Pre Closing Stock Ownership

	
   

  	
   

  	
  No. of Shares

  	
   

  	
  No. of
  Shares of Common Stock on an As Converted Basis

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Issued
  and Outstanding

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Common
  Stock

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  M. William Macey, Jr.

  	
   

  	
  25,100

  	
   

  	
  25,100

  	
   

  
	
  Sharon Macey

  	
   

  	
  25,100

  	
   

  	
  25,100

  	
   

  
	
  Douglas L. Newhouse

  	
   

  	
  50,200

  	
   

  	
  50,200

  	
   

  
	
  Charles Santoro

  	
   

  	
  50,200

  	
   

  	
  50,200

  	
   

  
	
  William L. Selden

  	
   

  	
  50,200

  	
   

  	
  50,200

  	
   

  
	
   

  	
   

  	
  200,800

  	
   

  	
  200,800

  	
   

  
	
  Series
  A Preferred

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dennis Nash

  	
   

  	
  1,676

  	
   

  	
  167,600

  	
   

  
	
  Carl Young

  	
   

  	
  1,676

  	
   

  	
  167,600

  	
   

  
	
   

  	
   

  	
  3,352

  	
   

  	
  335,200

  	
   

  
	
  Series
  B Preferred

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Keibreaux Associates

  	
   

  	
  100

  	
   

  	
  10,000

  	
   

  
	
  Ed Levy

  	
   

  	
  50

  	
   

  	
  5,000

  	
   

  
	
  M. William Macey, Jr.

  	
   

  	
  75

  	
   

  	
  7,500

  	
   

  
	
  Sharon Macey

  	
   

  	
  75

  	
   

  	
  7,500

  	
   

  
	
  Douglas L. Newhouse

  	
   

  	
  150

  	
   

  	
  15,000

  	
   

  
	
  James Newhouse

  	
   

  	
  50

  	
   

  	
  5,000

  	
   

  
	
  RFE Investment Partners
  VI, L.P.

  	
   

  	
  2,600

  	
   

  	
  260,000

  	
   

  
	
  RFE VI SBIC, L.P.

  	
   

  	
  10,000

  	
   

  	
  1,000,000

  	
   

  
	
  RSTW Partners III, L.P.

  	
   

  	
  250

  	
   

  	
  25,000

  	
   

  
	
  Charles W. Santoro

  	
   

  	
  150

  	
   

  	
  15,000

  	
   

  
	
  William L. Selden

  	
   

  	
  150

  	
   

  	
  15,000

  	
   

  
	
   

  	
   

  	
  13,650

  	
   

  	
  1,365,000

  	
   

  
	
  Series
  C Preferred

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  James H. McDaniel
  Revocable Trust

  	
   

  	
  640

  	
   

  	
  64,000

  	
   

  
	
  Jerry L. McDaniel
  Revocable Trust

  	
   

  	
  640

  	
   

  	
  64,000

  	
   

  
	
   

  	
   

  	
  1,280

  	
   

  	
  128,000

  	
   

  
	
  Options

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Management Options
  Outstanding

  	
   

  	
  200,600

  	
   

  	
  200,600

  	
   

  
	
  Management Options
  Reserved

  	
   

  	
  390,589

  	
   

  	
  390,589

  	
   

  
	
  Contingent Options

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Jerry L. McDaniel

  	
   

  	
  21,400  

  	
   

  	
  21,400

  	
   

  
	
  Dennis Nash

  	
   

  	
  161,000

  	
   

  	
  161,000

  	
   

  
	
  Carl Young

  	
   

  	
  161,000

  	
   

  	
  161,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Warrants

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Warrants for Series D
  Preferred

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RSTW Partners III, L.P.

  	
   

  	
  2,887

  	
   

  	
  288,700

  	
   

  
	
  Contingent Warrants for
  Common Stock

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  RSTW Partners III, L.P.

  	
   

  	
  18,888

  	
   

  	
  18,888

  	
   

  

 

36

 

Post Closing Stock Ownership

	
   

  	
   

  	
  No. of
  Shares

  	
   

  	
  No. of
  Shares of Common Stock on an As Converted Basis

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Issued
  and Outstanding

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Common
  Stock

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  M. William Macey, Jr.

  	
   

  	
  25,100

  	
   

  	
  25,100

  	
   

  
	
  Sharon Macey

  	
   

  	
  25,100

  	
   

  	
  25,100

  	
   

  
	
  Douglas L. Newhouse

  	
   

  	
  50,200

  	
   

  	
  50,200

  	
   

  
	
  Charles Santoro

  	
   

  	
  50,200

  	
   

  	
  50,200

  	
   

  
	
  William L. Selden

  	
   

  	
  50,200

  	
   

  	
  50,200

  	
   

  
	
   

  	
   

  	
  200,800

  	
   

  	
  200,800

  	
   

  
	
  Series
  A Preferred

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dennis Nash

  	
   

  	
  1,676

  	
   

  	
  167,600

  	
   

  
	
  Carl Young

  	
   

  	
  1,676

  	
   

  	
  167,600

  	
   

  
	
   

  	
   

  	
  3,352

  	
   

  	
  335,200

  	
   

  
	
  Series
  B Preferred

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Azalea Mall, L.L.C.

  	
   

  	
  4,000

  	
   

  	
  400,000

  	
   

  
	
  Antares Capital
  Corporation

  	
   

  	
  200

  	
   

  	
  20,000

  	
   

  
	
  Keibreaux Associates

  	
   

  	
  100

  	
   

  	
  10,000

  	
   

  
	
  Ed Levy

  	
   

  	
  50

  	
   

  	
  5,000

  	
   

  
	
  M. William Macey, Jr.

  	
   

  	
  75

  	
   

  	
  7,500

  	
   

  
	
  Sharon Macey

  	
   

  	
  75

  	
   

  	
  7,500

  	
   

  
	
  Massachusetts Mutual
  Life InsuranceCompany

  	
   

  	
  1,730

  	
   

  	
  173,000

  	
   

  
	
  MassMutual Corporate
  Investor

  	
   

  	
  307

  	
   

  	
  30,700

  	
   

  
	
  MassMutual
  Participation Investors

  	
   

  	
  163

  	
   

  	
  16,300

  	
   

  
	
  Douglas L. Newhouse

  	
   

  	
  150

  	
   

  	
  15,000

  	
   

  
	
  James Newhouse

  	
   

  	
  50

  	
   

  	
  5,000

  	
   

  
	
  RFE Investment Partners
  VI, L.P.

  	
   

  	
  9,600

  	
   

  	
  960,000

  	
   

  
	
  RFE VI SBIC, L.P.

  	
   

  	
  10,000

  	
   

  	
  1,000,000

  	
   

  
	
  RSTW Partners III, L.P.

  	
   

  	
  2,450

  	
   

  	
  245,000

  	
   

  
	
  Charles W. Santoro

  	
   

  	
  150

  	
   

  	
  15,000

  	
   

  
	
  William L. Selden

  	
   

  	
  150

  	
   

  	
  15,000

  	
   

  
	
  Lee Shaffer

  	
   

  	
  1,089

  	
   

  	
  108,900

  	
   

  
	
  Shaffer Family LLC

  	
   

  	
  587

  	
   

  	
  58,700

  	
   

  
	
  Sterling Investment
  Partners, L.P.

  	
   

  	
  9,000

  	
   

  	
  900,000

  	
   

  
	
   

  	
   

  	
  39,926

  	
   

  	
  3,992,600

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Series
  C Preferred

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  James H. McDaniel
  Revocable Trust

  	
   

  	
  640

  	
   

  	
  64,000

  	
   

  
	
  Jerry L. McDaniel
  Revocable Trust

  	
   

  	
  640

  	
   

  	
  64,000

  	
   

  
	
   

  	
   

  	
  1,280

  	
   

  	
  128,000

  	
   

  

 

37

 

 

	
  Options

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Management Options Outstanding1

  	
   

  	
  200,600

  	
   

  	
  200,600

  
	
  Management Options Reserved1

  	
   

  	
  390,589

  	
   

  	
  390,589

  
	
  Contingent Options

  	
   

  	
   

  	
   

  	
   

  
	
  Jerry L. McDaniel 
  

  	
   

  	
  21,400 

  	
   

  	
  21,400

  
	
  Dennis Nash

  	
   

  	
  161,000

  	
   

  	
  161,000

  
	
  Carl Young

  	
   

  	
  161,000

  	
   

  	
  161,000

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Warrants

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Warrants for Series D Preferred

  	
   

  	
   

  	
   

  	
   

  
	
  Massachusetts Mutual Life Insurance 

  Company

  	
   

  	
  1,511

  	
   

  	
  151,100

  
	
  MassMutual Corporate Investor

  	
   

  	
  269

  	
   

  	
  26,900

  
	
  MassMutual Participation Investors

  	
   

  	
  142

  	
   

  	
  14,200

  
	
  RSTW Partners III, L.P.

  	
   

  	
  4,809

  	
   

  	
  480,900

  
	
  Contingent Warrants for Common Stock

  	
   

  	
   

  	
   

  	
   

  
	
  Massachusetts Mutual Life Insurance

  Company

  	
   

  	
  9,886

  	
   

  	
  9,886

  
	
  MassMutual Corporate Investor

  	
   

  	
  1,758

  	
   

  	
  1,758

  
	
  MassMutual Participation Investors

  	
   

  	
  931

  	
   

  	
  931

  
	
  RSTW Partners III, L.P.

  	
   

  	
  31,462

  	
   

  	
  31,462

  

 

1Does not give effect to options to purchase an aggregate of 245,000
shares of Common Stock granted on the closing date under the Company’s 2001
Equity Incentive Plan.

38

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00069-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00069-of-00352.parquet"}]]