Document:

EX-10.1

 

EXHIBIT 10.1

 

NOTE PURCHASE AGREEMENT

by and among

ORION HEALTHCORP, INC.,

PHOENIX LIFE INSURANCE COMPANY,

BRANTLEY PARTNERS IV, L.P.

and

TERRENCE L. BAUER

Dated as of

September 21, 2007

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	ARTICLE 1 DEFINITIONS
	 	 	1	 
	1.1 Defined Terms
	 	 	1	 
	1.2 Terms Generally
	 	 	5	 
	1.3 Accounting Principles
	 	 	6	 
	 
	 	 	 	 
	ARTICLE 2 PURCHASE AND SALE OF NOTES
	 	 	6	 
	2.1 Evidence of Investment and Repayment
	 	 	6	 
	2.2 Optional Prepayment of Notes
	 	 	7	 
	2.3 Purpose and Use of Proceeds
	 	 	8	 
	2.4 Phoenix Consent
	 	 	8	 
	 
	 	 	 	 
	ARTICLE 3 REPRESENTATIONS AND WARRANTIES
	 	 	8	 
	3.1 The Company’s Representations
	 	 	8	 
	3.2 Investor’s Representations
	 	 	11	 
	 
	 	 	 	 
	ARTICLE 4 POST CLOSING COVENANTS AND AGREEMENTS
	 	 	13	 
	4.1 Payment of Obligations
	 	 	13	 
	4.2 Financial Statements and Other Reports
	 	 	13	 
	4.3 Maintenance of Books and Records; Inspection
	 	 	13	 
	4.4 Insurance
	 	 	13	 
	4.5 Taxes and Assessments
	 	 	14	 
	4.6 Corporate Existence
	 	 	14	 
	4.7 Compliance with Law and Other Agreements
	 	 	14	 
	4.8 Notice of Default
	 	 	14	 
	4.9 Notice of Litigation
	 	 	14	 
	4.10 Debt
	 	 	14	 
	4.11 Inconsistent Agreements
	 	 	15	 
	4.12 Modification of Charter
	 	 	15	 
	4.13 Limitations on Layering
	 	 	15	 
	4.14 Distributions
	 	 	15	 
	4.15 Affiliates
	 	 	16	 
	 
	ARTICLE 5 CLOSING; CONDITIONS TO CLOSING
	 	 	16	 
	5.1 Closing
	 	 	16	 
	5.2 Conditions to Investors’ Obligations
	 	 	16	 
	5.3 Conditions to the Company’s Obligations
	 	 	18	 
	 
	ARTICLE 6 DEFAULT AND REMEDIES
	 	 	19	 
	6.1 Events of Default
	 	 	19	 
	6.2 Acceleration of Maturity; Remedies
	 	 	20	 
	6.3 Remedies Cumulative; No Waiver
	 	 	21	 
	6.4 Proceeds of Remedies
	 	 	21	 

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	 	 	Page
	ARTICLE 7 INDEMNIFICATION; SURVIVAL
	 	 	22	 
	7.1 General Indemnification
	 	 	22	 
	7.2 Limitation of Damages
	 	 	23	 
	7.3 Survival
	 	 	23	 
	 
	 	 	 	 
	ARTICLE 8 TERMINATION
	 	 	23	 
	8.1 Termination
	 	 	23	 
	8.2 Effect of Termination
	 	 	23	 
	 
	 	 	 	 
	ARTICLE 9 MISCELLANEOUS
	 	 	24	 
	9.1 Successors and Assigns Included in Parties
	 	 	24	 
	9.2 Costs and Expenses
	 	 	24	 
	9.3 Assignment
	 	 	25	 
	9.4 Time of the Essence
	 	 	26	 
	9.5 Severability
	 	 	26	 
	9.6 Interest and Charges Not to Exceed Maximum Allowed by Law
	 	 	26	 
	9.7 Article and Section Headings; Defined Terms
	 	 	26	 
	9.8 Notices
	 	 	26	 
	9.9 Entire Agreement
	 	 	27	 
	9.10 Governing Law; Amendment or Waiver
	 	 	27	 
	9.11 Counterparts
	 	 	28	 
	9.12 Construction and Interpretation
	 	 	28	 
	9.13 Consent to Jurisdiction; Exclusive Venue
	 	 	28	 
	9.14 Waiver of Trial by Jury
	 	 	28	 
	9.15 No Setoffs, etc.
	 	 	28	 

EXHIBITS

Exhibit A            Form of Note

ii

 

NOTE PURCHASE AGREEMENT

     THIS NOTE PURCHASE AGREEMENT (“Agreement”), dated as of the 21st day of
September, 2007, is made and entered into on the terms and conditions hereinafter set forth, by and
among ORION HEALTHCORP, INC., a Delaware corporation (the “Company”), PHOENIX LIFE
INSURANCE COMPANY, a New York corporation (“Phoenix”), BRANTLEY PARTNERS IV, L.P., a
Delaware limited liability company (“Brantley IV”) and TERRENCE L. BAUER, an individual
residing in Georgia (“Bauer”). Each of Phoenix, Brantley IV and Bauer are referred to as
an “Investor” and collectively as “Investors”.

RECITALS:

     1. The Company is a healthcare services organization that provides outsourced business
services to physicians.

     2. Investors desires to make investments in the Company in the form of senior subordinated
unsecured promissory notes in the aggregate original principal amount of $1,000,000 on the terms
and conditions hereinafter set forth, and for the purpose hereinafter set forth.

AGREEMENT:

     NOW, THEREFORE, in consideration of the agreement of Investors to acquire the Notes, the
mutual covenants and agreements hereinafter set forth, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto covenant and agree
as follows:

ARTICLE 1

DEFINITIONS

     1.1 Defined Terms. As used in this Agreement, the following terms have the meanings
specified below:

     “2006 Phoenix Note” means that certain 14% Unsubordinated Unsecured Promissory Note
due December 1, 2011 issued by the Company on December 1, 2006 in favor of Phoenix, in the
aggregate principal amount of $3,350,000.

     “Agreement” has the meaning set forth in the Preamble.

     “Business Day” means any day other than a Saturday, Sunday or day on which banks in
New York City are authorized or required by law to close.

     “Capital Stock” means any and all shares, interests or equivalents in capital stock
(whether voting or nonvoting, and whether common or preferred) of a Person, including any and all
warrants, rights or options to purchase any of the foregoing.

     “Closing” has the meaning set forth in Section 5.1.

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     “Closing Date” has the meaning set forth in Section 5.1.

     “Class A Common Stock” means the Class A Common Stock, par value $0.001, of the
Company.

     “Commission” means the Securities and Exchange Commission or any similar agency then
having jurisdiction to enforce the Securities Act or the Exchange Act.

     “Company SEC Documents” has the meaning set forth in Section 3.1(f).

     “Default” means any event or condition that constitutes an Event of Default or that
with the giving of notice, the passage of time, or both, would be an Event of Default.

     “Event of Default” means the events specified in Section 6.1.

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

     “Financial Statements” has the meaning set forth in Section 3.1(f).

     “Fiscal Year” means the Company’s Fiscal Year, which is the period of twelve
consecutive calendar months ending on December 31.

     “GAAP” means generally accepted accounting principles in the United States applied on
a consistent basis.

     “Going Private Transaction” shall mean a 2,500 for 1 reverse stock split of the
Company’s Class A Common Stock immediately followed by a 1 for 2,500 forward stock split of the
Company’s Class A Common Stock.

     “Governmental Authority” means any federal, state, municipal, national, foreign or
other governmental department, commission, board, bureau, court, agency or instrumentality or
political subdivision thereof or any entity or officer exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to any government or any court, in each
case whether associated with a state of the United States, the District of Columbia or a foreign
entity or government.

     “Guaranty Obligations” means, without duplication, any obligations of the Company
(other than endorsements in the ordinary course of business of negotiable instruments for deposit
or collection) guaranteeing or intended to guarantee any Indebtedness of any other Person in any
manner, whether direct or indirect, and including without limitation any obligation, whether or not
contingent, (i) to purchase any such Indebtedness or any property constituting security therefor,
(ii) to advance or provide funds or other support for the payment or purchase of any such
Indebtedness or to maintain working capital, solvency or other balance sheet condition of such
other Person (including without limitation keep well agreements, maintenance agreements, comfort
letters or similar agreements or arrangements) for the benefit of any holder of Indebtedness of
such other Person, (iii) to lease or purchase property, securities or services

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primarily for the purpose of assuring the holder of such Indebtedness, or (iv) to otherwise
assure or hold harmless the holder of such Indebtedness against loss in respect thereof.

     “Indebtedness” means, without duplication, (a) all obligations of the Company for
borrowed money, (b) all obligations of the Company evidenced by bonds, debentures, notes or similar
instruments, or upon which interest payments are customarily made, (c) all obligations of the
Company under conditional sale or other title retention agreements relating to property purchased
by the Company (other than customary reservations or retentions of title under agreements with
suppliers entered into in the ordinary course of business), (d) all obligations of the Company
issued or assumed as the deferred purchase price of property or services purchased by such Person
which appear as liabilities on the balance sheet of the Company (other than trade debt incurred in
the ordinary course of business), (e) all obligations of the Company under any take or pay or
similar arrangements or under commodities agreements, (f) the implied principal component of all
obligations of the Company under capitalized leases, (g) all obligations of the Company under any
interest rate protection agreement or foreign currency exchange agreement, (h) the principal
portion of all obligations of the Company as an account party in respect of letters of credit
(other than trade letters of credit) and bankers’ acceptances, including, without duplication, all
unreimbursed drafts drawn thereunder (less the amount of any cash collateral securing any such
letters of credit and bankers’ acceptances), (i) the principal portion of all obligations of the
Company under synthetic leases, (j) all obligations of the Company to repurchase any securities
issued by the Company at any time prior to 51/2 years from the Closing Date which repurchase
obligations are related to the issuance thereof, including, without limitation, obligations
commonly known as residual equity appreciation potential shares, (k) the aggregate amount of
uncollected accounts receivable of the Company subject at such time to a sale of receivables (or
similar transaction) to the extent such transaction is effected with recourse to the Company
(whether or not such transaction would be reflected on the balance sheet of the Company in
accordance with GAAP), (l) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on, or
payable out of the proceeds of production from, property owned or acquired by the Company, whether
or not the obligations secured thereby have been assumed, (m) all Guaranty Obligations of the
Company with respect to Indebtedness of another Person, (n) all accounts payable to trade creditors
which are more than 60 days past due, other than those being Properly Contested, and (o) the
Indebtedness of any partnership or unincorporated joint venture in which the Company is a general
partner or a joint venturer to the extent such Indebtedness is recourse to the Company.

     “Indemnified Party” has the meaning set forth in Section 7.1(a).

     “Intercreditor Agreement” means one or more agreements among the Company, the Senior
Lenders, the Investors and the holders of certain Junior Indebtedness setting forth the
subordination of the Obligations to the Senior Indebtedness and the priority of the Obligations to
such Junior Indebtedness.

     “Investor” and “Investors” have the meanings set forth in the Preamble.

     “Junior Indebtedness” shall mean the following Indebtedness (i) all amounts owed to
USBPS pursuant to the terms of (A) that certain Unsecured Subordinated Promissory Note dated

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December 1, 2006 executed by the Company in favor of USBPS in the original principal amount of
$2,750,000 and (B) that certain Restructured Loan Agreement, dated December 1, 2006, as the same
may be amended from time to time, by and between the Company and USBPS, (ii) all amounts owed under
the various Amended and Restated Subordinated Notes Due December 15, 2008 issued by the Company to
the former owners of Medical Billing Solutions, Inc. and Dennis Cain Physician Solutions, Ltd.,
(iii) all amounts owed to Marvin I. Retsky pursuant to the terms of (A) that certain Subordinated
Promissory Note dated December 1, 2006 executed by the Company in favor of Dr. Retsky and (B) that
certain Stock Purchase Agreement dated as of September 8, 2006 by and among the Company, Rand
Medical Billing, Inc. and Dr. Retsky; and (iv) all amounts owed to Carolyn F. Suffich or William J.
Suffich Jr. pursuant to the terms of (A) that certain Subordinated Promissory Note dated December
1, 2006 executed by the Company in favor of Mrs. Suffich, (B) that certain Subordinated Promissory
Note dated December 1, 2006 executed by the Company in favor of Mr. Suffich, and (C) that certain
Stock Purchase Agreement dated as of September 8, 2006 by and among the Company, On Line
Alternatives, Inc., On Line Payroll Services, Inc, Mr. Suffich and Mrs. Suffich.

     “Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
security interest, encumbrance, lien (statutory or otherwise), preference, priority or charge of
any kind (including any agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any financing or similar statement or notice filed under the Uniform
Commercial Code as adopted and in effect in the relevant jurisdiction or other similar recording or
notice statute, and any lease in the nature thereof).

     “Loan Document(s)” has the meaning set forth in Section 2.1(b).

     “Losses” has the meaning set forth in Section 7.1(a).

     “Material Adverse Change” or “Material Adverse Effect” means (a) a material
adverse change in, or a material adverse effect upon, the business, assets, liabilities (actual or
contingent), operations or financial condition of a Person and its Subsidiaries, taken as a whole;
(b) a material adverse change in, or a material adverse effect upon, the ability of a Person and
its Subsidiaries, taken as a whole, to perform the material obligations under any Loan Document; or
(c) a material adverse change in, or a material adverse effect upon the legality, validity, binding
effect or enforceability against such Person of any Loan Document (other than Uniform Commercial
Code filing statements) to which it is a party.

     “Notes” means each of (a) that certain 14% Unsubordinated Unsecured Promissory Note
due December 1, 2011 issued by the Company in favor of Phoenix, in the principal amount of
$700,000, (b) that certain 14% Unsubordinated Unsecured Promissory Note due December 1, 2011 issued
by the Company in favor of Brantley IV, in the principal amount of $250,000 and (c) that certain
14% Unsubordinated Unsecured Promissory Note due December 1, 2011 issued by the Company in favor of
Bauer, in the principal amount of $50,000, in each case together with any replacements or
substitutions thereof, any additions or allonges thereto and any amendments, restatements or other
modifications thereto from time to time.

     “Obligations” has the meaning set forth in Section 2.1(b).

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     “Person” means any corporation, association, joint venture, partnership, limited
liability company, organization, business, individual, trust, government or agency or political
subdivision thereof or any other legal entity.

     “Properly Contested” means, in the case of any Indebtedness of the Company (including
any taxes) that is not paid as and when due or payable by reason of the Company’s bona fide dispute
concerning its liability to pay same or concerning the amount thereof, (i) such Indebtedness is
being properly contested in good faith by appropriate proceedings promptly instituted and
diligently conducted; (ii) the Company has established appropriate reserves as shall be required in
conformity with GAAP; (iii) the non-payment of such Indebtedness will not have a Material Adverse
Effect on the Company; (iv) if the Indebtedness results from, or is determined by the entry,
rendition or issuance against the Company or any of its assets of a judgment, writ, order or
decree, execution on such judgment, writ, order or decree is stayed pending a timely appeal or
other judicial review; and (vi) if such contest is abandoned, settled or determined adversely (in
whole or in part) to the Company, the Company forthwith pays such Indebtedness and all penalties,
interest and other amounts due in connection therewith.

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

     “Senior Indebtedness” means all amounts owing pursuant to the terms of that certain
Credit Agreement, dated December 1, 2006, among the Company, Integrated Physician Solutions, Inc.,
Medical Billing Services, Inc., On Line Alternatives, Inc., On Line Payroll Services, Inc., Rand
Medical Billing, Inc., the lenders party thereto and Wells Fargo Foothill, Inc. as administrative
agent, (as the same may be amended, modified, renewed, extended, or replaced at any time or from
time to time).

     “Senior Lender” means any Person that holds Senior Indebtedness.

     “Subsidiary” means any corporation or other entity of which more than fifty percent
(50%) of the issued and outstanding Capital Stock entitled to vote for the election of directors or
persons performing similar functions (other than by reason of default in the payment of dividends
or other distributions) is at the time owned directly or indirectly by a Person and/or any
Subsidiary of such Person.

     “USBPS” means Lyon Financial Services, Inc. dba U.S. Bank Portfolio Services, as
successor servicer for DVI Financial Services, Inc. for the benefit of DVI Receivables XIII, LLC,
DVI Receivables XIV, LLC, DVI Receivables XVI, LLC, DVI Receivables XVII, LLC, and DVI Receivables
XIX, LLC.

     1.2 Terms Generally. The definitions in Section 1.1 apply equally to both the
singular and plural forms of the terms defined. Whenever the context may require, any pronoun
includes the corresponding masculine, feminine and neuter forms. The words “include,” “includes”
and “including” are deemed to be followed by the phrase “without limitation.” All references
herein to Articles, Sections, Exhibits and Schedules are deemed references to Articles and Sections
of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require.
Except as otherwise
expressly provided herein, any reference in this

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Agreement to any Loan Document means such
document as amended, restated, supplemented or otherwise modified from time to time.

     1.3 Accounting Principles. Unless otherwise specified herein, all accounting terms
used herein shall be interpreted, all accounting determinations hereunder shall be made, and all
financial statements required to be delivered hereunder after the Closing Date shall be prepared in
accordance with GAAP applied on a basis consistent with the most recent audited financial
statements of the Company delivered to Investors.

ARTICLE 2

PURCHASE AND SALE OF NOTES

     2.1 Evidence of Investment and Repayment.

     (a) Subject to the terms contained herein and the satisfaction of the conditions
precedent set forth in Section 5.2 or elsewhere herein or in the other Loan
Documents, on the Closing Date subject to the satisfaction of the conditions precedents set
forth in Section 5.3 hereof (i) Phoenix shall purchase a Note from the Company by
wire transfer of immediately available funds in the amount of Seven Hundred Thousand Dollars
($700,000) to an account designated by the Company prior to Closing and the Company shall
sell the Note to Phoenix, (ii) Brantley IV shall purchase a Note from the Company by wire
transfer of immediately available funds in the amount of Two Hundred Fifty Thousand Dollars
($250,000) to an account designated by the Company prior to Closing and the Company shall
sell the Note to Brantley IV and (iii) Bauer shall purchase a Note from the Company by wire
transfer of immediately available funds in the amount of Fifty Thousand Dollars ($50,000) to
an account designated by the Company prior to Closing and the Company shall sell the Note to
Bauer. The Notes shall be executed by the Company in favor of each Investor in identical
forms and substantially in the form of Exhibit A attached hereto.

     (b) The Note, this Agreement, and any Intercreditor Agreement to which the Company and
the Investors are parties, and any other instruments and documents executed by the Company,
now or hereafter evidencing or in any way related to the Indebtedness evidenced by the Notes
are herein individually referred to as a “Loan Document” and collectively referred
to as the “Loan Documents”. The term “Obligations” as used herein shall
refer to (i) the Notes, and any renewals or extensions thereof, (ii) the full and prompt
payment and performance of any and all other Indebtedness and other obligations of the
Company to Investors under the Loan Documents, direct or contingent (including but not
limited to obligations incurred as endorser, guarantor or surety and including, without
limitation, accrued and unpaid interest, capitalized interest, prepayment premiums and all
costs, fees and expenses provided for hereunder), however evidenced or denominated, and
however and whenever incurred, including but not limited to Indebtedness incurred pursuant
to any present or
future commitment of Investors to the Company under the Loan Documents and (iii) all
future advances made by Investors for taxes, levies, and insurance and all reasonable
attorneys’ fees, court costs and expenses of whatever kind incident to the collection of

6

 

any
of said Indebtedness or other obligations and the enforcement and protection of the security
interest created hereby or by the other Loan Documents.

     (c) All payments of principal and interest due from the Company hereunder shall be due,
without any presentment thereof, directly to Investors, at each Investor’s address set forth
in Section 9.8 or such other address as any Investor may from time to time designate
in writing to the Company or, if a bank account with a United States bank is designated by
any Investor for or in any written notice to the Company from such Investor, the Company
will make such payments in immediately available funds to such bank account, no later than
2:00 p.m. New York City local time on the date due, marked for attention as indicated, or in
such other manner or to such other account in any United States bank as such Investor may
from time to time direct in writing.

     2.2 Optional Prepayment of Notes. Subject to any terms as may be set forth in an
Intercreditor Agreement from time to time, on and after the first (1st) anniversary of
the Closing Date the Company shall have the right at any time and from time to time, upon the
notice provided for below, to prepay the Notes in whole or in part (and, if prepaid in part, in a
minimum amount of $50,000); provided, however, that any prepayment on the Notes must be made (a)
pro-rata on all Notes and (b) concurrent with a prepayment on the 2006 Phoenix Note. In the event
of an optional prepayment made under this Section 2.2, the Company shall give each Investor
written notice of such prepayment not less than 30 nor more than 60 days prior to the prepayment
date, specifying (i) such prepayment date, (ii) the aggregate principal amount of the Notes to be
prepaid on such date, and the amount of such prepayment applicable to such Investor’s Note , and
(iii) the accrued interest applicable to the prepayment, and stating that such prepayment is to be
made pursuant to this Section 2.2. The price of the Notes payable upon an optional
prepayment pursuant to this Section 2.2 shall be an amount, as determined on the date of
prepayment, equal to (x) the then-outstanding principal amount of the Notes being redeemed
multiplied by (y) the applicable price percentage set forth below, as such amount may be reduced by
Investors, plus (z) all accrued and unpaid interest on the principal redeemed:

	 	 	 
	Date of Prepayment	 	Prepayment Price Percentage
	The first (1st) anniversary of
the Closing Date through, but not including
the second (2nd) anniversary of
the Closing Date
	 	103%
	 
	 	 
	The second (2nd) anniversary of
the Closing Date through, but not including
the third (3rd) anniversary of
the Closing Date
	 	102%
	 
	 	 
	The third (3rd)anniversary of the
Closing Date through, but not including the
fourth (4th) anniversary of the
Closing Date
	 	101%
	 
	 	 
	The fourth (4th) anniversary of
the Closing Date and thereafter
	 	100%

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All optional prepayments under this Section 2.2 shall be applied first to all costs,
expenses, indemnities and other amounts payable hereunder and under the Notes, then to payment of
default interest, if any, then to payment of accrued interest and thereafter to payment of
principal. Any portion of the Notes which has been prepaid may not be reborrowed.

     2.3 Purpose and Use of Proceeds. The purpose of the sale of the Notes by the Company
and the intended use of proceeds shall be to finance the cash-out of shares of Class A Common Stock
in connection with the Going Private Transaction (to be consummated contemporaneously or
substantially contemporaneously with the Closing) and for working capital purposes and related
closing costs.

     2.4 Phoenix Consent. Phoenix hereby consents to the issuance of the Notes and waives
violation of any covenant contained in the 2006 Phoenix Note or the loan documents related thereto
that would occur as a result of the issuance of the Notes.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

     3.1 The Company’s Representations. In order to induce Investors to enter into this
Agreement, the Company hereby represents and warrants to each Investor that as of the date hereof,
and, immediately after giving effect to the transactions contemplated by this Agreement and the
other Loan Documents, as of the Closing Date:

     (a) Legal Status. The Company is a corporation duly formed and validly
existing under the laws of the State of Delaware. The Company has the corporate power to
own and operate its properties, to carry on its business as now conducted and to enter into
and to perform its obligations under this Agreement and the other Loan Documents to which it
is a party. The Company is duly qualified to do business and in good standing in each state
in which a failure to be so qualified would reasonably be expected to have a Material
Adverse Effect on the Company.

     (b) Authorization. The Company has the requisite corporate power and authority
to conduct its business and affairs as currently conducted. The Company has the requisite
corporate power and authority to enter into and perform its obligations under the Loan
Documents, without the consent or approval of any other person, firm, governmental agency or
other legal entity. The execution and delivery of this Agreement, the borrowing hereunder,
the execution and delivery of each Loan Document
to which the Company is a party, and the performance by the Company of its obligations
thereunder are within the corporate powers of the Company and have been duly authorized by
all necessary corporate action properly taken, and the Company has received all necessary
governmental approvals, if any, that are required. The officer(s) executing this Agreement,
the Notes and all of the other documents to be delivered pursuant to the Loan Documents to
which the Company is a party are duly authorized to act on behalf of the Company.

     (c) Validity and Binding Effect. This Agreement and the other Loan Documents
are the legal, valid and binding obligations of the Company enforceable in

8

 

accordance with
their respective terms, subject to limitations imposed by bankruptcy, insolvency, moratorium
or other similar laws affecting the rights of creditors generally or the application of
general equitable principles.

     (d) No Conflicts. Except for the consents of the Senior Lender, consummation
of the transactions contemplated hereby and the performance of the Obligations of the
Company under and by virtue of the Loan Documents do not conflict with, and will not result
in any breach of, or constitute a default or trigger a Lien under, any mortgage, security
deed or agreement, deed of trust, lease, bank loan or credit agreement, corporate charter or
bylaws, agreement or certificate of limited partnership, limited liability company
agreement, license, franchise or any other material instrument or agreement to which the
Company or any of its Subsidiaries is a party or by which the Company, any of its
Subsidiaries or their respective properties may be bound or affected or to which the Company
or any of its Subsidiaries has not obtained an effective waiver, except where such event
would not reasonably be expected to have a Material Adverse Effect on the Company.

     (e) Litigation. There are no actions, suits, investigations, criminal
prosecutions, civil investigative demands, impositions of civil fines or penalties,
arbitrations, administrative hearings or other proceedings pending, or, to the knowledge of
the Company, threatened against or affecting the Company, any of the Company’s property, any
of its Subsidiaries or any property of any of such Subsidiaries, which, if adversely
determined, would reasonably be expected to have a Material Adverse Effect on the Company,
or involving the validity or enforceability of any of the Loan Documents at law or in
equity, or before any Governmental Authority. Neither the Company nor any Subsidiary is
subject to any order, writ, injunction, decree or demand of any court or any Governmental
Authority.

     (f) SEC Filings. The Company has furnished or made available to Investors true
and complete copies of all reports or registration statements it has filed with the
Commission under the Securities Act and the Exchange Act for all periods subsequent to
December 14, 2004, all in the form so filed (collectively, the “Company SEC
Documents”). As of their respective filing dates, the Company SEC Documents complied in
all material respects with the requirements of the Securities Act or the Exchange Act, as
applicable, and, as of its respective filing date, no Company SEC Document filed under the
Exchange Act contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances in which they were made, not
misleading, except to the extent corrected by a subsequently filed document with the
Commission. No Company SEC Document filed under the Securities Act contained an untrue
statement of material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading at the time such Company SEC
Documents became effective under the Securities Act. The Company’s financial statements,
including the notes thereto, included in the Company SEC Documents (the “Financial
Statements”) comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission with respect
thereto, have been prepared in accordance with GAAP and

9

 

present fairly the Company’s
consolidated financial position at the dates thereof and of its operations and cash flows
for the periods specified (subject, in the case of unaudited statements, to normal audit
adjustments and footnote disclosures). Since the date of the most recent Company SEC
Document, the Company has not effected any change in any method of accounting or accounting
practice, except for any such change required because of a concurrent change in GAAP.

     (g) No Defaults. Neither the Company nor any of its Subsidiaries is in default
in the performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument material to its business to which it is
a party, including but not limited to this Agreement and the other Loan Documents, which
would reasonably be expected to result in a Material Adverse Change to the Company, and no
other default or event has occurred and is continuing that with notice or the passage of
time or both would constitute a default or event of default under any of the same.

     (h) Compliance With Law. The Company and each of its Subsidiaries have
obtained all licenses, permits, approvals and authorizations necessary or required in order
to conduct their respective business and affairs as heretofore conducted (other than where
the failure to so obtain would not reasonably be expected to have a Material Adverse Effect
on the Company) and has ensured that all required licenses are in full force and effect on
the Closing Date and have not been revoked, suspended or otherwise limited. The Company and
each of its Subsidiaries is in compliance with all laws, regulations, decrees and orders
applicable to it (including but not limited to laws, regulations, decrees and orders
relating to environmental, occupational, and health standards and controls, antitrust,
monopoly, restraint of trade or unfair competition), except to the extent that any
noncompliance, in the aggregate, cannot reasonably be expected to have a Material Adverse
Effect on the Company.

     (i) Statements Not False or Misleading. No representation or warranty given as
of the date hereof by the Company contained in this Agreement or any schedule attached
hereto or any statement in any document, certificate or other instrument furnished or to be
furnished by the Company to any Investor pursuant hereto, taken as a whole, contains or will
(as of the time so furnished) contain any untrue statement of a material fact, or omits or
will (as of the time so furnished) omit to state any material fact which is necessary in
order to make the statements contained therein not misleading.

     (j) Margin Regulations. The Company is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock. No proceeds
received pursuant to this Agreement will be used to purchase for the purpose of investment
or carry any equity security of a class which is registered pursuant to Section 12 of the
Exchange Act.

     (k) Fees/Commissions. The Company has not agreed to pay any finder’s fee,
commission, origination fee or other fee or charge to any person or entity with respect to
the sale of the Notes or other transactions contemplated hereunder.

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     (l) Limited Offering of Notes. Assuming the accuracy of the representations
and warranties of each Investor contained in Section 3.2 hereof, the offer and sale
of the Notes is not required to be registered pursuant to the provisions of Section 6 of the
Securities Act or the registration or qualification provisions of the blue sky laws of any
state. Neither the Company nor any agent on its behalf has solicited or will solicit any
offers to sell or has offered to sell or will offer to sell all or any part of the Notes to
any Person so as to bring the sale of the Notes and/or the Warrant by the Company within the
registration provisions of the Securities Act or any state securities laws.

     (m) Debt. Neither the Company nor any Subsidiary has incurred or become
obligated on any material amount of Indebtedness since December 1, 2006.

     (n) Foreign Assets Control Regulations, Etc.

     (i) Except as a result of the identity or status of any Investor, neither the
sale of the Notes by the Company hereunder nor its use of the proceeds thereof will
violate the Trading with the Enemy Act, as amended, or any of the foreign assets
control regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto.

     (ii) Neither the Company nor any of its Subsidiaries is a Person described or
designated in the Specially Designated Nationals and Blocked Persons List of the
Office of Foreign Assets Control or in Section 1 of Executive Order No. 13,224 of
September 24, 2001, Blocking Property and Prohibiting Transactions with Persons Who
Commit, Threaten to Commit or Support Terrorism, 66 U.S. Fed. Reg. 49, 079 (2001),
as amended and is not a Person that, to its knowledge, engages in any dealings or
transactions with any such Person.

     (o) Status under 1940 Act. The Company is not subject to regulation under
the Investment Company Act of 1940, as amended.

     3.2 Investor’s Representations. Each Investor, severally and not jointly, represents
and warrants to the Company that as of the date hereof, and, immediately after giving effect to the
transactions contemplated by this Agreement and the other Loan Documents, as of the Closing Date:

     (a) Legal Status; Authorization. If such Investor is an entity, it is (a)
either a corporation duly incorporated, validly existing and in good standing under the laws
of its jurisdiction of incorporation or a limited partnership duly formed, validly existing
and in good standing under the laws of its jurisdiction of incorporation and (b) has the
full power and authority to execute, deliver and perform its obligations under this
Agreement and the other Loan Documents and to consummate the transactions contemplated by
this Agreement and the other Loan Documents. The execution, delivery and performance by it
of this Agreement and the other Loan Documents (a) has been duly authorized by all necessary
action and (b) does not contravene the terms of its organizational documents, or any
amendment thereof.

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     (b) Validity and Binding Effect. This Agreement and the other Loan Documents
are the legal, valid and binding obligations of such Investor enforceable in accordance with
their respective terms, subject to limitations imposed by bankruptcy, insolvency, moratorium
or other similar laws affecting the rights of creditors generally or the application of
general equitable principles.

     (c) Fees/Commissions. Such Investor has not agreed to pay any finder’s fee,
commission, origination fee or other fee or charge to any person or entity with respect to
the purchase of the Note by such Investor.

     (d) Accredited Investor; Purchase Entirely for Own Account. Such Investor is
an “accredited investor” as that term is defined in Rule 501 of the Securities Act and, in
making the purchase contemplated herein, it is specifically understood and agreed that such
Investor is acquiring the Note for the purpose of investment and not with a view towards the
sale or distribution thereof within the meaning of the Securities Act.

     (e) Restricted Securities. Such Investor understands that the Note will not be
registered under the Securities Act, by reason of its issuance by the Company in a
transaction exempt from the registration requirements of the Securities Act, and that he or
it must hold the Note indefinitely unless a subsequent disposition thereof is registered
under the Securities Act and applicable state securities laws or is exempt from
registration.

     (f) Receipt of Information. Such Investor has received all the information he
or it considers necessary or appropriate for deciding whether to purchase the Note. Such
Investor further represents that he or it has had an opportunity to ask questions and
receive answers from the Company regarding the terms and conditions of the offering of the
Note, the business, properties, prospects and financial condition of the Company and to
obtain additional information (to the extent the Company possessed such information or could
acquire it without unreasonable effort or expense) necessary to verify the accuracy of any
information furnished to he or it or to which he or it had access. The foregoing, however,
does not limit or modify the representations and warranties of the Company in Section
3.1 of this Agreement or the right of such Investor to rely thereon. Such Investor
learned of this investment opportunity as a result of direct contact by the Company or an
agent of the Company and not by means of advertising, publication or other written
materials.

     (g) Investment Experience. Such Investor is experienced in evaluating and
investing in securities, of companies in the development state and acknowledges that he or
it is able to fend for himself or itself, can bear the economic risk of his or its
investment, and has such knowledge and experience in financial and business matters that he
or it is capable of evaluating the merits and risks of the investment in the Note. To the
extent such Investor is an entity, it also represents that it has not been organized for the
purpose of purchasing the Note.

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ARTICLE 4

POST CLOSING COVENANTS AND AGREEMENTS

     The Company hereby covenants and agrees, that on the Closing Date and thereafter for so long
as this Agreement is in effect and until the payment in full of all principal and interest under
the Notes together with all other Obligations under the Loan Documents:

     4.1 Payment of Obligations. The Company shall pay the Indebtedness evidenced by the
Notes according to the terms thereof, and shall timely pay or perform, as the case may be, all of
the other Obligations of the Company to Investors, together with interest thereon, and any
extensions, modifications, consolidations and/or renewals thereof and any notes given in payment
thereof.

     4.2 Financial Statements and Other Reports. The Company shall furnish to Investors
(a) not later than such time as provided to the Senior Lenders, such reports delivered by the
Company to the Senior Lenders and (b) a copy of each financial statement and report that the
Company files with the Commission or any stock exchange. The Company shall furnish to Investors,
with reasonable promptness, such other data and information relating to the business, operations,
affairs, financial condition, assets or properties of the Company and its Subsidiaries or relating
to the ability of the Company to perform its obligations hereunder, under the Notes or under the
other Loan Documents, as from time to time may be reasonably requested, in writing, by any
Investor.

     4.3 Maintenance of Books and Records; Inspection. The Company shall, and shall cause
each of its Subsidiaries to, maintain its books, accounts and records in accordance with GAAP, and
after reasonable notice from any Investor, permit such Investor, its officers and employees and any
professionals designated by such Investor in writing, at the Company’s expense, to visit and
inspect any of its or its Subsidiaries’ properties, corporate books and financial records, and to
discuss its and its Subsidiaries’ accounts, affairs and finances with the Company or the principal
officers of the Company or any Subsidiary during reasonable business hours, all at such times as
such Investor may reasonably request; provided that no such inspection shall materially
interfere with the conduct of the Company’s or any Subsidiary’s business, and that prior to an
Event of Default, the Company shall not be responsible for the expenses of more than two such
audits in the aggregate from all Investors each Fiscal Year.

     4.4 Insurance.
Without limiting any of the requirements of any of the other Loan Documents, the Company
shall, and shall cause each of its Subsidiaries to, maintain, in such form, written by such
companies, in such amounts, for such period, and against such risks as is customary for entities
engaged in comparable business activities or as otherwise may be reasonably acceptable to each
Investor, including, without limitation, (a) to the extent required by applicable law, worker’s
compensation insurance (or a legally sufficient amount of self insurance against worker’s
compensation liabilities, with adequate reserves, under a plan approved by each Investor, such
approval not to be unreasonably withheld or delayed), (b) fire and “all risk” casualty insurance on
all its real and personal property, (c) public liability insurance, and (d) business interruption
insurance. At the request of any Investor, the Company will deliver forthwith a certificate
specifying the details of such insurance in effect. The

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Company shall promptly provide written
notice, in reasonable detail, to each Investor whenever there is any material change to the
Company’s or any Subsidiary’s insurance coverage.

     4.5 Taxes and Assessments. The Company shall, and shall cause each of its
Subsidiaries to, (a) file all tax returns and appropriate schedules thereto that are required to be
filed under applicable law, prior to the date of delinquency, (b) pay and discharge all taxes,
assessments and governmental charges or levies imposed upon the Company or any Subsidiary upon its
income and profits or upon any properties belonging to it, prior to the date on which penalties
attach thereto, and (c) pay all taxes, assessments and governmental charges or levies that, if
unpaid, would reasonably be expected to result in a Lien or charge upon any of its properties;
provided, however, that the Company or any Subsidiary in good faith may Properly
Contest any such tax, assessment, governmental charge or levy described in the foregoing clauses
(b) and (c).

     4.6 Corporate Existence. The Company shall, and shall cause each of its Subsidiaries
to, maintain its legal existence and good standing in the state of its formation, and its
qualification and good standing as a foreign entity in each jurisdiction in which such
qualification is necessary pursuant to applicable law except where the failure to be qualified and
in good standing as a foreign corporation would not reasonably be expected to result in a Material
Adverse Change to the Company.

     4.7 Compliance with Law and Other Agreements. Except where the failure to do so would
not reasonably be expected to have a Material Adverse Effect on the Company, the Company shall, and
shall cause each of its Subsidiaries to, maintain its business operations and property owned or
used in connection therewith in compliance with (a) all applicable federal, state and local laws,
regulations and ordinances governing such business operations and the use and ownership of such
property, and (b) all agreements, licenses, franchises, indentures and mortgages to which the
Company or any of its Subsidiaries is a party or by which the Company, any of its Subsidiaries or
any of their respective properties is bound.

     4.8 Notice of Default.
The Company shall give written notice to each Investor of the occurrence of any Default or
Event of Default under this Agreement or any default or event of default under any other Loan
Document promptly upon the occurrence thereof.

     4.9 Notice of Litigation. The Company shall give notice, in writing, to each Investor
of (a) any actions, suits or proceedings, instituted by any Person against the Company or any of
its Subsidiaries or affecting any of the assets of the Company of any of its Subsidiaries wherein
the amount at issue is in excess of $500,000 and after any such action, suit or proceeding is
instituted, information reasonably related thereto as reasonably requested from time to time by any
Investor, and (b) any dispute, investigation, claim, imposition of criminal or civil fines and
penalties or civil investigative demands, not resolved within 30 days of the commencement thereof,
between the Company or any of its Subsidiaries on the one hand and any governmental regulatory body
on the other hand, which dispute would reasonably be expected to materially interfere with the
normal operations of the Company and its Subsidiaries.

     4.10 Debt. Without the prior written consent of all Investors, the Company shall not
create, incur, assume or suffer to exist Indebtedness of any description whatsoever, excluding:

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     (a) the Indebtedness evidenced by the Notes and the other Loan Documents;

     (b) the endorsement of negotiable instruments payable to the Company for deposit or
collection in the ordinary course of business;

     (c) trade payables incurred in the ordinary course of business;

     (d) the Indebtedness existing on or before December 1, 2006 hereto and any
refinancings, refundings, renewals or extensions thereof, which do not increase the
principal amount or shorten the maturity thereof, and the interest thereon;

     (e) purchase money Indebtedness hereafter incurred by the Company to finance the
purchase of fixed assets used in the Company’s business; provided that (i) the total
of all such Indebtedness for all such Persons taken together shall not exceed an aggregate
principal amount of $250,000 at any one time outstanding; (ii) such Indebtedness when
incurred shall not exceed the purchase price of the asset(s) financed; and (iii) no such
Indebtedness shall be refinanced for a principal amount in excess of the principal balance
outstanding thereon at the time of such refinancing; and

     (f) other Indebtedness relating to capitalized leases, financing of insurance premiums,
capital expenditures and other unsecured Indebtedness incurred in the ordinary course of
business, in an aggregate amount not to exceed, at any time, $500,000.

Without the prior written consent of each Investor, the Company shall not permit any of its
Subsidiaries to create, incur, assume or suffer to exist indebtedness of any description
whatsoever.

     4.11 Inconsistent Agreements. Without the prior written consent of each Investor, the
Company shall not enter into, or permit any of its Subsidiaries to enter into, any agreement
material in amount containing any provision which would be violated or breached by the performance
by the Company of its respective Obligations hereunder or under any of the Loan Documents.

     4.12 Modification of Charter. Without the prior written consent of each Investor, the
Company will not amend, modify or change any provision of its certificate of incorporation, bylaws,
or the terms of any class or series of its Capital Stock, other than in a manner that could not
reasonably be expected to adversely affect such Investor in its capacity as a holder of the Note.

     4.13 Limitations on Layering. Notwithstanding the provisions of Section 4.10,
the Company shall not incur, or permit to exist, any Indebtedness that is subordinate or junior in
right of payment to any Senior Indebtedness and senior in any respect in right of payment to any
Indebtedness arising under this Agreement and the Note.

     4.14 Distributions. Except for the cash-out of shares of Class A Common Stock in
connection with the Going Private Transaction, the Company will not, at any time, declare or make
or incur any liability to declare or make any Distribution and will not permit any of its
Subsidiaries to incur any liability with respect to any such Distributions. “Distribution” means

15

 

(a) dividends or other distributions or payments on Capital Stock of the Company or (b) the
redemption or acquisition of such Capital Stock (except when solely in exchange for such Capital
Stock), unless made, contemporaneously, from the net cash proceeds of a sale of such Capital Stock;
provided, however, that nothing herein shall prevent or prohibit the payment of “payable in kind”
distributions on the Capital Stock of the Company as set forth in the Company’s certificate of
incorporation. The Company will not permit any of its Subsidiaries to declare or pay dividends or
other distributions or payments on its Capital Stock except to the Company. The Company will not
permit any of its Subsidiaries to redeem or otherwise acquire any of its Capital Stock.

     4.15 Affiliates. The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly enter into any material transaction or material group of related
transactions (including, without limitation, the purchase, lease, sale or exchange of properties of
any kind or the rendering of any service) with any affiliate, except in the ordinary course and
pursuant to the reasonable requirements of the Company’s and such Subsidiary’s business and upon
fair and reasonable terms no less favorable to the Company or such Subsidiary than would be
obtainable in a comparable arm’s-length transaction with a Person not an affiliate.

ARTICLE 5

CLOSING; CONDITIONS TO CLOSING

     5.1 Closing. The purchase and sale of the Note shall take place at the offices of the
Company, 1805 Old Alabama Road, Suite 350, Roswell, Georgia 33076 (the “Closing”) on the
third (3rd) Business Day after the satisfaction or waiver of the conditions set forth in
this Article 5 (other than any such conditions that by their terms cannot be satisfied
until the Closing Date, which conditions shall be required to be so satisfied or waived on the
Closing Date), unless another time or date is agreed to in writing by the parties hereto (the
“Closing Date”). Conditions precedent set forth in Section 5.2 below may be
waived solely by all Investor in their sole discretion. Conditions precedent set forth in
Section 5.3 below may be waived solely by the Company in its sole discretion. If the
Agreement shall have been terminated pursuant to Section 8.1 hereof prior to the Closing
Date, no Closing shall occur.

     5.2 Conditions to Investors’ Obligations. Each Investor’s obligation to purchase and
pay for the Note at the Closing are subject to all Investors determining, in their good faith
discretion, that the following conditions have been satisfied (or all Investors waiving in their
sole discretion in writing the conditions that they have determined have not been satisfied), on or
before the Closing Date:

     (a) No Material Adverse Change. Since June 30, 2007, there has not occurred a
Material Adverse Change to the Company.

     (b) Representations, Warranties and Covenants. The representations and
warranties of the Company contained in Article 3 shall be true and correct in all
material respects (without duplication of materiality qualifiers) on and as of the date when
made and on and as of the Closing Date. In addition, the Company will have performed, or
shall have caused to be performed, all agreements, obligations and covenants required

16

 

herein
to be performed by it on or prior to the Closing Date. No Default or Event of Default
occurring as a result of a breach of any covenant set forth in Article 4 shall exist
as of the Closing Date determined as if this Agreement had been in full force and effect at
all times from and after June 30, 2007.

     (c) Consummation of the Going Private Transaction. On or prior to the Closing
Date, the Going Private Transaction shall have been consummated in accordance with all
applicable laws. On or prior to the Closing Date, the Company shall have delivered to the
Investors pro forma financial statements of the Company and its Subsidiaries giving effect
to the consummation of the Going Private Transaction and the sale of the Notes, and such pro
forma financial statements shall be satisfactory to the Investors.

     (d) Consent of Third Parties, Governmental Authorities, etc. The Company shall
have presented evidence satisfactory to all Investors to the effect that (i) all consents,
waivers and amendments required in connection with the consummation of the transactions
related to this Agreement and the other Loan Documents and the transactions
contemplated hereby and thereby have been obtained, (ii) the transactions related to
the Loan Documents shall not violate, or constitute or trigger the occurrence of a default
or an event of default with respect to, any contractual obligations of the Company or any of
its Subsidiaries and (iii) neither the Company nor any of its Subsidiaries is in violation
of or default under or with respect to any of its material contractual obligations.

     (e) Intercreditor Agreements. On or prior to the Closing Date, the Company and
each Investor shall have entered into one or more Intercreditor Agreements with the Senior
Lenders and the holders of certain Junior Indebtedness, on terms satisfactory to each
Investor, and each of the same shall be in full force and effect.

     (f) Certain Documents. Each Investor shall have received the following closing
documents, in form and substance satisfactory to all Investors, all of which shall, except
as specified below, be fully executed originals, and shall be in full force and effect:

     (i) a Note, duly executed by the Company, in form and substance satisfactory to
each Investor; a Private Placement Number issued by Standard & Poor’s CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for each Note;

     (ii) an opinion of the Company’s counsel, dated the Closing Date, as to the
Loan Documents, in form and substance reasonably satisfactory to each Investor;

     (iii) a certificate of the Secretary of State of Delaware as to the good
standing of the Company in such jurisdiction dated as of a date within five (5)
Business Days prior to the Closing Date;

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     (iv) a certificate, dated as of the Closing Date, of the secretary of the
Company certifying (A) that the copies of the certificate of incorporation and the
bylaws of the Company, attached thereto and as amended to date, are true, complete
and correct, (B) that the copies of the resolutions of the directors of the Company,
authorizing the transactions contemplated by this Agreement and each of the Loan
Documents (including the issuance of the Note) are true, complete and correct, (C)
as to the incumbency of each Person executing this Agreement and each of the Loan
Documents on behalf of the Company, and (D) as to any other matters reasonably
requested by any Investor;

     (vii) a certificate from an officer of the Company, in form and substance
satisfactory to the Investor, with respect to the satisfaction of the requirements
under Sections 5.2(a), (b), (c) and (e) above; and

     (v) such other documents as any Investor may reasonably request in connection
with this Agreement, and each such document shall be in form and substance
reasonably satisfactory to all Investors. All fees and expenses of Investors
required to be paid pursuant to Section 9.2 hereof shall have been paid.

     5.3 Conditions to the Company’s Obligations. The Company’s obligations to issue and
sell the Notes at the Closing are subject to the Company determining, in its reasonable discretion,
that the following conditions have been satisfied (or the Company waiving in writing the conditions
that it has determined have not been satisfied), on or before the Closing Date:

     (a) Representations, Warranties and Covenants. The representations and
warranties of each Investor contained in Article 3 shall be true and correct in all
material respects (without duplication of materiality qualifiers) on and as of the Closing
Date. In addition, each Investor will have performed, or shall have caused to be performed,
all agreements, obligations and covenants required herein to be performed by he or it on or
prior to the Closing Date.

     (b) Consummation of the Going Private Transaction. On or prior to the Closing
Date, the Going Private Transaction shall have been consummated in accordance with all
applicable laws.

     (c) Consent of Third Parties, Governmental Authorities, etc. The Company shall
have received evidence reasonably satisfactory to it to the effect that (i) all material
consents, waivers and amendments required in connection with the consummation of the
transactions related to this Agreement and the other Loan Documents and the transactions
contemplated hereby and thereby have been obtained, (ii) the transactions related to the
Loan Documents shall not violate, or constitute or trigger the occurrence of an event of
default with respect to, any contractual obligations of the Company or any of its
Subsidiaries and (iii) neither the Company nor any of its Subsidiaries is in violation of or
default under or with respect to any of its material contractual obligations.

     (d) Certain Documents. The Company shall have received such other documents as
the Company may reasonably request in connection with this Agreement,

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and each such document
shall be in form and substance reasonably satisfactory to the Company.

ARTICLE 6

DEFAULT AND REMEDIES

     6.1 Events of Default. The occurrence of any of the following shall constitute an
Event of Default hereunder:

     (a) Default in the payment of:

     (i) Any principal of or premium on the Notes when and as the same shall become
due and payable, whether at the due date thereof or at a date fixed for prepayment
thereof or by acceleration thereof or otherwise, and such Default continues
unremedied for a period of three (3) Business Days; or

     (ii) Any interest on the Notes or any other amount (other than an amount
referred to in (i) above) due under any of the Loan Documents, when and as the same
becomes due and payable, and such Default continues unremedied for a period of three
(5) Business Days;

     (b) Any representation or warranty by the Company as to any matter hereunder or under
any of the other Loan Documents, or delivery by any of the Company of any schedule,
statement, resolution, report, certificate, notice, instruction or writing to or furnished
to any Investor is untrue in any material respect on the date as of which the facts set
forth therein are stated or certified;

     (c) Default shall occur in the performance of (i) any of the covenants or agreements of
the Company contained in Sections 4.2, 4.6, 4.8, or 4.12 or (ii) any other
covenants or agreements of the Company contained herein or in any of the other Loan
Documents and, in the case of clause (ii) above, such failure shall continue for 30 days
after the earlier of (a) written notice thereof has been given by any Investor to the
Company and (b) any officer of the Company knows or reasonably should have known of such
failure;

     (d) Any of the following events shall have occurred with respect to the Company or any
of its Subsidiaries: (i) the Company or any of its Subsidiaries shall have made an
assignment for the benefit of its creditors; (ii) the Company or any of its Subsidiaries
shall have admitted in writing its inability to pay its debts as they become due; (iii) the
Company or any of its Subsidiaries shall have filed a voluntary petition in bankruptcy; (iv)
the Company or any of its Subsidiaries shall have been adjudicated bankrupt or insolvent;
(v) the Company or any of its Subsidiaries shall have filed any petition or answer seeking
for itself any reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any present or future applicable law pertinent to such
circumstances; (vi) the Company or any of its Subsidiaries shall have filed or shall file
any answer admitting or not contesting the material allegations of a bankruptcy, insolvency
or similar petition filed against the Company; (vii) the Company or any of its Subsidiaries
shall have sought or consented to,

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or acquiesced in, the appointment of any trustee,
receiver, or liquidator of it or of all or any substantial part of its properties; (viii) 60
days shall have elapsed after the commencement of an action against the Company or any of
its Subsidiaries seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any present or future applicable law
without such action having been dismissed or without all orders or proceedings thereunder
affecting the operations or the business of the Company or such Subsidiary having been
stayed, or if a stay of any such order or proceedings shall thereafter be set aside and the
action setting it aside shall not be timely appealed; or (ix) 60 days shall have expired
after the appointment, without the consent or acquiescence of the Company or any of its
Subsidiaries, of any trustee, receiver or liquidator of the Company or such Subsidiary or of
all or any substantial part of the assets and properties of the Company or such Subsidiary
without such appointment having been vacated.

     (e) The occurrence with respect to the Company or any of its Subsidiaries of any action
initiating, or any event that results in, the dissolution, liquidation, winding up or
termination of the Company or such Subsidiary;

     (f) Any judgment in excess of $500,000, to the extent not fully paid or discharged
(excluding any portion thereof that is covered by an insurance policy issued by an insurance
company of recognized standing and creditworthiness which has acknowledged the coverage of
such policy with respect to such judgment) is rendered against the Company or any of its
Subsidiaries, and the same shall remain undischarged for a period of 21 consecutive days
during which execution is not effectively stayed, or any action is legally taken by a
judgment creditor to levy upon assets or properties of the Company or any of its
Subsidiaries to enforce any such judgment;

     (g) Any event of default shall occur under the documents or instruments evidencing (i)
the Senior Indebtedness, where such event of default results in the acceleration of the
Senior Indebtedness; (ii) the 2006 Phoenix Note, where such event of default results in the
acceleration of the Indebtedness thereunder; or (iii) the Junior Indebtedness or any other
Indebtedness (other than Senior Indebtedness or the 2006 Phoenix Note), which Junior
Indebtedness or other Indebtedness has an aggregate outstanding principal amount of at least
$250,000, and such default shall have continued beyond the expiration of any applicable
grace period provided for in the documents evidencing such Junior Indebtedness or such other
Indebtedness.

     6.2 Acceleration of Maturity; Remedies. Upon the occurrence and during the
continuance of any Event of Default (a) specified in Sections 6.1(d) or 6.1(e), all
the Notes shall automatically become immediately due and payable, together with interest accrued
thereon, without presentment, demand, protest or notice of any kind, all of which are hereby waived
by the Company, (b) specified in Section 6.1(a), any Investor may, at his or its option,
declare by notice in writing to the Company that all the Notes are, and the Notes shall thereupon
be and become, immediately due and payable, together with interest accrued thereon without
presentment, demand, protest or other notice of any kind, all of which are hereby waived by the
Company and (c) if such event is an Event of Default (other than under an Event of Default under
any of Sections 6.1(a), 6.1(d) or 6.1(e)), any Investor may, at his or its option,
declare by

20

 

notice in writing to the Company all the Notes are, and the Notes shall thereupon be and
become, immediately due and payable, together with interest accrued thereon without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by the Company. Upon
the occurrence of any such Event of Default and the acceleration of the maturity of the
Indebtedness evidenced by the Notes:

     (a) Investors shall be immediately entitled to exercise any and all rights and remedies
possessed by Investors pursuant to the terms of the Notes and all of the other Loan
Documents; and

     (b) Investors shall have any and all other rights and remedies that Investors may now
or hereafter possess at law, in equity or by statute.

     6.3 Remedies Cumulative; No Waiver. No right, power or remedy conferred upon or
reserved to Investors by this Agreement or any of the other Loan Documents is intended to be
exclusive of any other right, power or remedy, but each and every such right, power and remedy
shall be cumulative and concurrent and shall be in addition to any other right, power and remedy
given hereunder, under any of the other Loan Documents or now or hereafter existing at law, in
equity or by statute. No delay or omission by any Investor to exercise any right, power or remedy
accruing upon the occurrence and during the continuance of any Event of Default shall exhaust or
impair any such right, power or remedy or shall be construed to be a waiver of any such Event of
Default or an acquiescence therein, and every right, power and remedy given by this Agreement and
the other Loan Documents to Investors may be exercised from time to time and as often as may be
deemed expedient by Investors.

     6.4 Proceeds of Remedies. Any or all proceeds resulting from the exercise of any or
all of the foregoing remedies shall be applied as set forth in the Loan Document(s) providing the
remedy or remedies exercised, if none is specified, or if the remedy is provided by this Agreement,
then as follows:

     First, to the costs and expenses, including without limitation reasonable
attorneys’ fees and disbursements, incurred by Investors in connection with the
exercise of their remedies;

     Second, to the reasonable expenses of curing the Default that has occurred, in
the event that Investors elect, in their sole discretion, to cure the Default that
has occurred;

     Third, to the payment of the Obligations under the Loan Documents of the
Company, including but not limited to the payment of the principal of and interest
on the Indebtedness evidenced by the Notes, in such order of priority as Investors
shall determine in their sole discretion; provided, however, that any payment of the
Obligations must be made pro-rata among the Investors and pari passu with payment of
the obligations of the Company under the 2006 Phoenix Note; and

     Fourth, the remainder, if any, to the Company or to any other Person lawfully
thereunto entitled.

21

 

ARTICLE 7

INDEMNIFICATION; SURVIVAL

7.1 General Indemnification.

           (a) The Company, without limitation as to time, will defend and indemnify each Investor
and its respective heirs, representatives, executors, officers, directors, managers,
employees, attorneys and agents (each, an “Indemnified Party”) against, and
hold each Indemnified Party harmless from, all losses, claims, damages, liabilities,
costs (including the costs of preparation and attorneys’ fees and expenses) (collectively,
the “Losses”) incurred by any Indemnified Party as a result of, or arising out of,
or relating to (A) any misrepresentation or breach of any representation or warranty made by
the Company herein or (B) any breach of any covenant, agreement or Obligation of the Company
contained in any of the Loan Documents, other than in either case any Losses resulting from
action on the part of such Indemnified Party to the extent they are a result of such party’s
gross negligence or willful misconduct. The Company agrees to reimburse each Indemnified
Party promptly for all such Losses as they are incurred by such Indemnified Party in
connection with the investigation of, preparation for or defense of any pending or
threatened claim or any action or proceeding arising therefrom. The obligations of the
Company under this paragraph will survive any transfer of the Note and the termination of
this Agreement. In the event that the foregoing indemnity is unavailable or insufficient to
hold an Indemnified Party harmless, then the Company will contribute to amounts paid or
payable by such Indemnified Party in respect of such Indemnified Party’s Losses in such
proportions as appropriately reflect the relative benefits received by and fault of the
Company and such Indemnified Party in connection with the matters as to which such Losses
relate and other equitable considerations.

          (b) If any action, proceeding or investigation is commenced, as to which any
Indemnified Party proposes to demand indemnification, it shall notify the Company with
reasonable promptness; provided, however, that any failure by such Indemnified Party to
notify the Company shall not relieve the Company from its obligations hereunder except to
the extent the Company is prejudiced thereby. The Company shall be entitled to assume the
defense of any such action, proceeding or investigation, including the employment of counsel
and the payment of all fees and expenses. The Indemnified Party shall have the right to
employ separate counsel in connection with any such action, proceeding or investigation and
to participate in the defense thereof, but the fees and expenses of such counsel shall be
paid by the Indemnified Party, unless (A) the Company has failed to assume the defense and
employ counsel as provided herein, (B) the Company has agreed in writing to pay such fees
and expenses of separate counsel or (C) an action, proceeding, or investigation has been
commenced against both the Indemnified Party and/or the Company and representation of both
the Company and the Indemnified Party by the same counsel would be inappropriate because of
actual or potential conflicts of interest between the parties. In the case of any
circumstance described in clauses (A), (B) or (C) of the immediately preceding sentence, the
Company shall be responsible for the reasonable fees and expenses of such separate counsel;
provided, however, that the Company shall not in any event be required to pay the fees and
expenses of more than one separate counsel (and, if deemed necessary by such separate
counsel, appropriate

22

 

local counsel who shall report to such separate counsel) for all
Indemnified Parties. The Company shall be liable only for settlement of any claim against
an Indemnified Party made with the Company’s written consent. Nothing in this Section
7.1 shall affect, limit or prejudice the obligations, undertakings and liabilities of
the Company to pay all amounts owing under the Notes and all other Obligations under this
Agreement and the other Loan Documents in accordance with the terms thereof and hereof.

     7.2 Limitation of Damages.
Neither any Investor, on the one hand, nor the Company, on the other hand, shall in any
event be liable to the other party for special or consequential damages arising from this Agreement
or otherwise related to the Obligations under the Loan Documents.

     7.3 Survival. All representations, warranties, covenants and agreements contained
herein or made in writing by the Company or Investor in connection herewith (except as specifically
set forth herein) shall survive the execution and delivery of this Agreement and other Loan
Documents.

ARTICLE 8

TERMINATION

     8.1 Termination. This Agreement and the transactions contemplated under it may be
terminated and abandoned at any time prior to the Closing:

     (a) by mutual consent in writing of the Company and each Investor;

     (b) (i) by any Investor, if there has been a breach of any covenant of the Company
hereunder, or a breach of any of the representations and warranties of the Company made in
Section 3.1 of this Agreement, or the failure of any condition to Closing set forth
in Section 5.2 hereof, or (ii) by the Company if there has been a breach of any
covenant of any Investor hereunder, a breach of any of the representations and warranties of
any Investor made in Section 3.2 of this Agreement or a failure of any of the
conditions to Closing set forth in Section 5.3 hereof;

     (c) by the Company or any Investor, if there shall be any law of any competent
Governmental Authority that makes consummation of the transactions contemplated hereby,
illegal or otherwise prohibited or if any order of any competent Governmental Authority
prohibiting such transactions is entered and such order shall become final and
non-appealable; and

     (e) by any Investor if the Closing shall have not occurred on or prior to December 31,
2006 for any reason whatsoever other than any Investor breaching any of his or its
undertakings hereunder or acting in bad faith.

     8.2 Effect of Termination. In the event of the termination of this Agreement pursuant
to Section 8.1, this Agreement, except for the provisions of this Section 8.2,
Article 7 and Section 9.2, shall become void and have no effect, without any
liability on the party of any party to this Agreement or their respective directors, officers, or
stockholders. Notwithstanding the foregoing, nothing in this Section 8.2 shall relieve any
party to this Agreement of liability for

23

 

willful breach; provided, however, that if it shall be
finally judicially determined that termination of this Agreement was caused by a willful breach of
this Agreement, then, as the sole remedy of any party aggrieved by such breach (all other liability
being hereby irrevocably waived by such aggrieved party and such
aggrieved party hereby agrees not to assert any such other liability or any claim in
connection therewith), the party to this Agreement found to have intentionally breached this
Agreement shall indemnify and hold harmless such aggrieved party for the out-of-pocket costs, fees
and expenses of its counsel, accountants, financial advisors and other experts and advisors
incurred in connection with, as well as its other out-of-pocket fees and expenses directly incident
to, the negotiation, preparation and execution of this Agreement and related documentation and the
stockholders’ meeting for the Going Private Transaction.

ARTICLE 9

MISCELLANEOUS

     9.1 Successors and Assigns Included in Parties. Whenever in this Agreement one of the
parties hereto is named or referred to, the heirs, legal representatives, successors, successors in
title and assigns of such parties shall be included, and all covenants and agreements contained in
this Agreement by or on behalf of the Company or by or on behalf of any Investor shall bind and
inure to the benefit of their respective heirs, legal representatives, successors in title and
assigns, whether so expressed or not.

     9.2 Costs and Expenses. The Company agrees (a) to pay upon demand all reasonable
out-of-pocket costs and expenses of each Investor in connection with (i) such Investor’s due
diligence investigation in connection with, and the preparation, negotiation, execution, delivery
of, this Agreement and the other Loan Documents, and any amendment, modification or waiver hereof
or thereof or consent with respect hereto or thereto and (ii) the administration, monitoring and
review of the Notes (including, without limitation, reasonable out-of-pocket expenses for travel,
meals, long distance telephone calls, wire transfers, facsimile transmissions and copying and with
respect to the engagement of appraisers, consultants, auditors or similar Persons by any Investor
at any time, whether before or after the Closing Date, to render opinions concerning the Company’s
financial condition), (b) to pay upon demand all reasonable out of pocket costs and expenses of
each Investor in connection with (x) any refinancing or restructuring of the Notes, whether in the
nature of a “work out,” in any insolvency or bankruptcy proceeding or otherwise and whether or not
consummated, and (y) any amendments, waivers, or extensions and (z) the enforcement, attempted
enforcement or preservation of any rights or remedies under this Agreement or any of the other Loan
Documents, whether in any action, suit or proceeding (including any bankruptcy or insolvency
proceeding) or otherwise, and (c) to pay and hold each Investor harmless from and against all
liability for any intangibles, documentary, stamp or other similar taxes, fees and excises, if any,
including any interest and penalties, and any finder’s or brokerage fees, commissions and expenses
(other than any fees, commissions or expenses of finders or brokers engaged by Investor), that may
be payable in connection with the transactions contemplated by this Agreement and the other Loan
Documents. All such costs or expenses shall constitute a part of the Obligations under the Loan
Documents.

24

 

9.3 Assignment.

           (a) No Investor may assign this Agreement or any rights or obligations hereunder, other
than to affiliates of such Investor, without the prior written consent of the Company, such
consent not to be unreasonably withheld, conditioned or delayed, provided that any permitted
transferee shall agree in writing to be bound, with respect to the transferred securities,
by the provisions hereof that apply to such Investor. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written consent of each
Investor, except pursuant to a merger, recapitalization or other business combination
transaction in which the surviving entity is a United States entity and agrees in writing to
assume all of the covenants, liabilities and obligations of the Company hereunder and with
respect to which each Investor shall have reasonably determined that such surviving entity
has the same or better credit standing than the Company and provided that, in any case, no
other Default or Event of Default shall then exist and no blockage, standstill or other
similar event shall have been thereby triggered and still exist in any Intercreditor
Agreement with respect to any Senior Indebtedness. Any assignment contrary to the terms
hereof is null and void and of no force and effect. Notwithstanding the foregoing, nothing
in this Agreement is intended to give any Person not named herein the benefit of any legal
or equitable right, remedy or claim under this Agreement, except as expressly provided
herein.

           (b) The Company shall keep at its principal executive office a register for the
registration of transfers of the Notes. The name and address of the holder of a Note, each
transfer thereof and the name and address of each transferee thereof shall be registered in
such register. Prior to due presentment for registration of transfer, the Person in whose
name a Note shall be registered shall be deemed and treated as the owner and holder thereof
for all purposes hereof, and the Company shall not be affected by any notice or knowledge to
the contrary. Subject to compliance with applicable restrictions on transfer pursuant to
federal and state securities laws, upon surrender of such Note at the principal executive
office of the Company for registration of transfer (duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of such Note or its
attorney duly authorized in writing and accompanied by the address for notices of the
transferee of such Note or part thereof), the Company shall execute and deliver, at the
Company’s expense (except as provided below), a new Note (as requested by the holder
thereof) in exchange therefor, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note (which shall include all capitalized interest with
respect thereto to the extent such interest has not already been represented by the issuance
of a new Note). Subject to the requirements set forth above in this Section 9.3,
each such new Note shall be payable to such Person as such holder may request and shall be
substantially in the form of the old Note being so replaced. Each such new Note shall be
dated and bear interest from the date to which interest shall have been paid on the
surrendered Note or dated the date of the surrendered Note if no interest shall have been
paid thereon. The Company may require payment of a sum sufficient to cover any stamp tax or
governmental charge imposed in respect of any such transfer of the Note.

25

 

     9.4 Time of the Essence.
Time is of the essence with respect to each and every covenant, agreement and Obligation of
the Company hereunder and under all of the other Loan Documents.

     9.5 Severability. If any provision(s) of this Agreement or the application thereof to
any Person or circumstance shall be invalid or unenforceable to any extent, the remainder of this
Agreement and the application of such provisions to other Persons or circumstances shall not be
affected thereby and shall be enforced to the greatest extent permitted by law.

     9.6 Interest and Charges Not to Exceed Maximum Allowed by Law. Anything in this
Agreement, the Notes or any of the other Loan Documents to the contrary notwithstanding, in no
event whatsoever, whether by reason of advancement of proceeds of the Notes, acceleration of the
maturity of the unpaid balance of the Notes or otherwise, shall the interest and other charges
agreed to be paid to each Investor for the use of the money advanced or to be advanced hereunder
exceed the maximum amounts collectible under applicable laws in effect from time to time. It is
understood and agreed by the parties that, if for any reason whatsoever the interest or loan
charges paid or contracted to be paid by the Company in respect of the Indebtedness evidenced by
the Notes shall exceed the maximum amounts collectible under applicable laws in effect from time to
time, then ipso facto, the obligation to pay such interest and/or loan charges shall be
reduced to the maximum amounts collectible under applicable laws in effect from time to time, and
any amounts collected by any Investor that exceed such maximum amounts shall be applied to the
reduction of the principal balance of the Indebtedness evidenced by the Notes and/or refunded to
the Company so that at no time shall the interest or loan charges paid or payable in respect of the
Indebtedness evidenced by the Notes exceed the maximum amounts permitted from time to time by
applicable law.

     9.7 Article and Section Headings; Defined Terms. Numbered and titled article and
section headings and defined terms are for convenience only and shall not be construed as
amplifying or limiting any of the provisions of this Agreement.

     9.8 Notices. Any and all notices, elections or demands permitted or required to be
made under this Agreement shall be in writing, signed by the party giving such notice, election or
demand and shall be delivered personally, telecopied, or sent by certified mail or overnight via
nationally recognized courier service (such as Federal Express), to the other party at the address
set forth below, or at such other address as may be supplied in writing and of which receipt has
been acknowledged in writing. The date of personal delivery or telecopy (delivery receipt
confirmed) or two (2) Business Days after the date of mailing (or the next Business Day after
delivery to such courier service), as the case may be, shall be the date of such notice, election
or demand. For the purposes of this Agreement:

	 	 	 
	The address of Phoenix is:

	 	Phoenix Life Insurance Company
	 

	 	c/o Phoenix Investment Management, LLC
	 

	 	56 Prospect Street
	 

	 	Hartford, CT 06115
	 

	 	Attention: Paul Chute, Managing Director
	 

	 	Facsimile: (860) 403-7248

26

 

	 	 	 
	The address of Brantley is:

	 	Brantley Partners IV, L.P.
	 

	 	Lakepoint
	 

	 	3201 Enterprise Parkway, Suite 350
	 

	 	Attention: Paul H. Cascio
	 

	 	Facsimile: (216) 464-8405
	 
	 	 
	The address of Bauer is:

	 	Terrence L. Bauer
	 

	 	Orion HealthCorp, Inc.
	 

	 	1805 Old Alabama Road, Suite 350
	 

	 	Roswell, Georgia 33076
	 

	 	Facsimile: (678) 832-1888
	 
	 	 
	The address of the Company is:

	 	Orion HealthCorp, Inc.
	 

	 	1805 Old Alabama Road, Suite 350
	 

	 	Roswell, Georgia 33076
	 

	 	Attention: Terrence L. Bauer
	 

	 	Facsimile: (678) 832-1888
	 
	 	 
	with a copy to:

	 	Benesch Friedlander Coplan & Aronoff LLP
	 

	 	2300 BP Tower
	 

	 	200 Public Square
	 

	 	Cleveland, Ohio 44114
	 

	 	Attention: Ira C. Kaplan, Esq.
	 

	 	Facsimile: (216) 363-4588

     9.9 Entire Agreement. This Agreement and the other written agreements between the
Company and Investors represent the entire agreement between the parties concerning the subject
matter hereof, and all oral discussions and prior agreements are merged herein; provided, if there
is a conflict between this Agreement and any other document executed contemporaneously herewith
with respect to the Obligations under the Loan Documents, the provision of this Agreement shall
control. The execution and delivery of this Agreement and the other Loan Documents by the Company
were not based upon any fact or material provided by any Investor, nor was the Company induced or
influenced to enter into this Agreement or the other Loan Documents by any representation,
statement, analysis or promise by any Investor.

     9.10 Governing Law; Amendment or Waiver.

     (a) This Agreement shall be construed and enforced under the laws of the State of New
York without regard to conflicts of laws.

     (b) This Agreement may be amended, and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it, if the Company
shall obtain the prior written consent of each Investor to such amendment, action or
omission to act.

27

 

     9.11 Counterparts. This Agreement may be executed in any number of counterparts
(including by facsimile and by PDF transmission), each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the same Agreement.

     9.12 Construction and Interpretation. Should any provision of this Agreement require
judicial interpretation, the parties hereto agree that the court interpreting or construing the
same shall not apply a presumption that the terms hereof shall be more strictly construed against
one party by reason of the rule of construction that a document is to be more strictly construed
against the party that itself or through its agent prepared the same, it being agreed that the
Company, each Investor and their respective agents have participated in the preparation hereof.

     9.13 Consent to Jurisdiction; Exclusive Venue. THE COMPANY HEREBY IRREVOCABLY
CONSENTS TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW
YORK, AND ALL STATE COURTS SITTING IN NEW YORK CITY FOR THE PURPOSE OF ANY LITIGATION TO WHICH ANY
INVESTOR MAY BE A PARTY AND WHICH CONCERNS THIS AGREEMENT OR THE OBLIGATIONS UNDER THE LOAN
DOCUMENTS. IT IS FURTHER AGREED THAT VENUE FOR ANY SUCH ACTION SHALL LIE EXCLUSIVELY WITH COURTS
SITTING IN NEW YORK CITY, UNLESS SUCH INVESTOR AGREES TO THE CONTRARY IN WRITING. THE COMPANY
WAIVES ANY OBJECTION BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON
CONVENIENS. THE COMPANY HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREE THAT SERVICE OF SUCH SUMMONS, COMPLAINT AND OTHER
PROCESS MAY BE MADE BY COMPLYING WITH THE PROVISIONS FOR GIVING NOTICE AS SET FORTH IN THIS
AGREEMENT. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT THE RIGHT OF ANY
INVESTOR TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR TO PRECLUDE THE
ENFORCEMENT BY ANY INVESTOR OF ANY JUDGMENT OR ORDER OBTAINED IN SUCH FORUM OR
THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN ANY OTHER APPROPRIATE FORUM
OR JURISDICTION.

     9.14 Waiver of Trial by Jury. EACH INVESTOR AND THE COMPANY HEREBY KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COUNSEL WAIVE TRIAL BY JURY IN ANY ACTIONS, PROCEEDINGS, CLAIMS OR
COUNTERCLAIMS, WHETHER IN CONTRACT OR TORT OR OTHERWISE, AT LAW OR IN EQUITY, ARISING OUT OF OR IN
ANY WAY RELATING TO THIS AGREEMENT OR THE LOAN DOCUMENTS.

     9.15 No Setoffs, etc. All payments hereunder and under the Notes shall be made by the
Company without setoff, offset, deduction or counterclaim, free and clear of all taxes, levies,
imports, duties, fees and charges, and without any withholding, restriction or conditions imposed
by any Governmental Authority. If the Company shall be required by any law to deduct, setoff or
withhold any amount from or in respect of any payment to any Investor hereunder or under the Notes,
then the amount so payable to such Investor shall be increased as may be necessary so

28

 

that, after
making all required deductions, setoffs and withholdings, such Investor shall receive an amount
equal to the sum it would have received had no such deductions, setoffs or withholding been made.

[Signature Page to Follow]

29

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly
authorized officers, as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	THE COMPANY: 	 	 
	 
	 	 	 	 	 	 
	 	 	ORION HEALTHCORP, INC., a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Terrence L. Bauer	 	 
	 

	 	 	 	 

	 	 
	 	 	Name: Terrence L. Bauer	 	 
	 	 	Title: President and Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	INVESTORS:	 	 
	 
	 	 	 	 	 	 
	 	 	PHOENIX LIFE INSURANCE COMPANY, a New York corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ John H. Beers	 	 
	 

	 	 	 	 	 	 
	 	 	Name: John H. Beers	 	 
	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	BRANTLEY PARTNERS IV, L.P., a Delaware limited partnership	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Brantley Venture Management IV, L.P.,	 	 
	 

	 	 	 	its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Paul H. Cascio	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Paul H. Cascio	 	 
	 	 	Title: General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ Terrence L. Bauer	 	 
	 	 	 	 	 
	 	 	TERRENCE L. BAUER, individuallykmaglobal8k091307ex41.htm

    
       

      Exhibit
        4.1

      

      WARRANT

      

      THIS
        WARRANT (THIS “WARRANT”) HAS NOT BEEN REGISTERED UNDER THE
        SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), ANY
        STATE SECURITIES LAW OR THE SECURITIES LAWS OF ANY COUNTRY.  NEITHER
        THIS WARRANT NOR ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF
        NOR
        ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED,
        MORTGAGED, PLEDGED, HYPOTHECATED, ENCUMBERED OR OTHERWISE TRANSFERRED EXCEPT
        IN
        COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES
        LAWS.

       

      

       

      KMA
        GLOBAL SOLUTIONS INTERNATIONAL, INC.

       

      

       

      WARRANT

       

      

      Warrant
        No.
        ___                                                                                                                             Original
        Issue Date:
        September 21, 2007

      

       This
        Warrant is issued in connection with and pursuant to that certain Securities
        Purchase Agreement (the "Purchase Agreement”) dated as of
        September 21, 2007, by and between KMA GLOBAL SOLUTIONS INTERNATIONAL,
        INC., a Nevada corporation (the “Company”) and
_________________________________, a ____
        corporation.

      

                 FOR
        VALUE RECEIVED, __________________________, the registered holder
        hereof, or its permitted assigns (the “Holder”), is entitled to purchase from
        the Company, during the period specified in this Warrant, _______________
        fully
        paid and non-assessable shares (subject to adjustment as hereinafter provided)
        of Common Stock (the "Warrant Shares"), of the Company at the
        purchase price per share provided in Section 1.2 of this Warrant (the
"Warrant Exercise Price"), all subject to the terms and
        conditions set forth in this Warrant.  All terms not otherwise defined
        herein shall have the meaning ascribed to them in the Purchase
        Agreement.

      

      

      Section
        1.                      Period
        for Exercise and Exercise Price.

      

      1.1           Period
        for Exercise.  The right to purchase shares of Warrant Shares
        represented by this Warrant shall be immediately exercisable, and shall expire
        at 5:00 p.m., Ontario local time, September 21, 2009 (the "Expiration
        Date").  From and after the Expiration Date this Warrant
        shall be null and void and of no further force or effect
        whatsoever.

      

      1.2           Warrant
        Exercise Price.  The Warrant Exercise Price per share of
        Warrant Shares shall be $0.30 per share (subject to adjustment as hereinafter
        provided).

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
 

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      

      Section
        2.                      Exercise
        of Warrant.

      

      2.1           Manner
        of Exercise.   The Holder may exercise this Warrant, in
        whole or in part, immediately, but not after the Expiration Date, during
        normal
        business hours on any business day by surrendering this Warrant to the Company
        at the principal office of the Company, accompanied by a Warrant Exercise
        Form
        in substantially the form annexed hereto duly executed by the Holder and
        by
        payment of the Warrant Exercise Price for the number of shares of Warrant
        Shares
        for which this Warrant is then exercisable, either (i) in immediately available
        funds, (ii) the Company to the Holder in the appropriate amount, (iii) by
        authorizing the Company to retain shares of Common Stock which would otherwise
        be issuable upon exercise of this Warrant having a fair market value (defined
        as
        the average of the last reported Closing Sale Price of the Common Stock for
        the
        thirty (30) days immediately preceding the date of the Warrant Exercise notice)
        on the date of delivery equal to the aggregate Warrant Exercise Price, or
        (iv)
        in a combination of (i), (ii) or (iii) above, provided, however, that in
        no
        event shall the Holder be entitled to exercise this Warrant for a number
        of
        Warrant Shares in excess of that number of Warrant Shares which, upon giving
        effect to such exercise, would cause the aggregate number of shares of Common
        Stock beneficially owned by the Holder and its affiliates to exceed 4.99%
        of the
        outstanding shares of the Common Stock following such exercise.  For
        purposes of the foregoing proviso, the aggregate number of shares of Common
        Stock beneficially owned by the Holder and its affiliates shall include the
        number of shares of Common Stock issuable upon exercise of this Warrant with
        respect to which determination of such proviso is being made, but shall exclude
        the shares of Common Stock which would be issuable upon (i) exercise of the
        remaining, unexercised Warrants beneficially owned by the Holder and its
        affiliates and (ii) exercise or conversion of the unexercised or unconverted
        portion of any other securities of the Company beneficially owned by the
        Holder
        and its affiliates subject to a limitation on conversion or exercise analogous
        to the limitation contained herein.  Except as set forth in the
        preceding sentence, for purposes of this paragraph, beneficial ownership
        shall
        be calculated in accordance with Section 13(d) of the Securities Exchange
        Act of
        1934, as amended (the "Exchange Act").  The Holder may waive the
        foregoing limitation by written notice to the Company upon not less than
        61 days
        prior written notice (with such waiver taking effect only upon the expiration
        of
        such 61 day notice period).

       

      

      2.2           When
        Exercise Effective.  Each exercise of this Warrant shall be
        deemed to have been effected on the day on which all requirements of Section
        2.1
        shall have been met with respect to such exercise.  At such time the
        person in whose name any certificate for shares of Warrant Shares shall be
        issuable upon such exercise shall be deemed for all corporate purposes to
        have
        become the Holder of record of such shares, regardless of the actual delivery
        of
        certificates evidencing such shares.

      

      2.3           Delivery
        of Stock Certificates.  As soon as practicable after each
        exercise of this Warrant, and in any event no later than 3 Trading Days after
        such exercise, the Company at its expense will issue Warrant Shares via credit
        to the Holder's account with DTC for the number of Warrant Shares to which
        such
        Holder is entitled upon such Holder's submission of the applicable Warrant
        Exercise Form or, if the Transfer Agent is not participating in The DTC Fast
        Automated Securities Transfer Program and DWAC system, issue and surrender
        to
        the address as specified in the Warrant Exercise Form,, a certificate,
        registered in the name of the Holder or its designee, for the number of shares
        of Common Stock to which the Holder shall be entitled to upon such
        exercise.  

      

      Section
        3. Adjustment of Purchase Price and Number of Shares.  The
        Warrant Exercise Price and the kind of securities issuable upon exercise
        of the
        Warrant shall be adjusted from time to time as follows:

      

      3.1           Subdivision
        or Combination of Shares (Stock Splits).  If the Company at
        any time effects a subdivision or combination of the outstanding Common Stock
        (through a stock split or otherwise), the number of shares of Warrant Shares
        shall be increased, in the case of a subdivision, or the number of shares
        of
        Warrant Shares shall be decreased, in the case of a combination, in the same
        proportions as the Common Stock is subdivided or combined, in each case
        effective automatically upon, and simultaneously with, the effectiveness
        of the
        subdivision or combination which gives rise to the adjustment.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      3.2           Stock
        Dividends.  If the Company at any time pays a dividend, or
        makes any other distribution, to holders of Common Stock payable in shares
        of
        Common Stock, or fixes a record date for the determination of holders of
        Common
        Stock entitled to receive a dividend or other distribution payable in shares
        of
        Common Stock, then the number of shares of Warrant Shares in effect immediately
        prior to such action shall be proportionately increased so that the Holder
        hereof may receive upon exercise of the Warrant the aggregate number of shares
        of Common Stock which he or it would have owned immediately following such
        action if the Warrant had been exercised immediately prior to such
        action.  The adjustment shall become effective immediately as of the
        date the Company shall take a record of the holders of its Common Stock for
        the
        purpose of receiving such dividend or distribution (or if no such record
        is
        taken, as of the effectiveness of such dividend or distribution).

      

      3.3           Reclassification,
        Consolidation or Merger.  If at any time, as a result
        of:

      

      (a)  
a
        capital
        reorganization or reclassification (other than a subdivision, combination
        or
        dividend provided for elsewhere in this Section 3), or

      

      (b)           a
        merger or consolidation of the Company with another corporation (whether
        or not
        the Company is the surviving corporation), the Common Stock issuable upon
        exercise of the Warrants shall be changed into or exchanged for the same
        or a
        different number of shares of any class or classes of stock of the Company
        or
        any other corporation, or other securities convertible into such shares,
        then,
        as a part of such reorganization, reclassification, merger or consolidation,
        appropriate adjustments shall be made in the terms of the Warrants (or of
        any
        securities into which the Warrants are exercised or for which the Warrants
        are
        exchanged), so that:

      

      (c)           the
        Holders of Warrants or of such substitute securities shall thereafter be
        entitled to receive, upon exercise of the Warrants or of such substitute
        securities, the kind and amount of shares of stock, other securities, money
        and
        property which such Holders would have received at the time of such capital
        reorganization, reclassification, merger, or consolidation, if such Holders
        had
        exercised their Warrants immediately prior to such capital reorganization,
        reclassification, merger, or consolidation, and

      

      (d)           the
        Warrants or such substitute securities shall thereafter be adjusted on terms
        as
        nearly equivalent as may be practicable to the adjustments theretofore provided
        in this Section 3.3.

      

      No
        consolidation or merger in which the Company is not the surviving corporation
        shall be consummated unless the surviving corporation shall agree, in writing,
        to the provisions of this Section 3.3. The provisions of this Section 3.3
        shall
        similarly apply to successive capital reorganizations, reclassifications,
        mergers and consolidations. 

       

       

      3.4           Other
        Action Affecting Common Stock.  If at any time the Company
        takes any action affecting its Common Stock, other than an action described
        in
        any of Sections 3.1 through 3.3 which, in the opinion of the Board of Directors
        of the Company (the “Board”), would have an adverse effect upon
        the exercise rights of the Warrants, the Warrant Exercise Price or the kind
        of
        securities issuable upon exercise of the Warrants, or both, shall be adjusted
        in
        such manner and at such time as the Board may in good faith determine to
        be
        equitable in the circumstances; provided, however, that the purpose of this
        Section is to prevent the Company from taking any action which has the effect
        of
        diluting the number of shares of Warrant Shares issuable upon exercise of
        this
        Warrant.

      

      3.5           Notice
        of Adjustments.  Whenever the kind or number of securities
        issuable upon exercise of the Warrants, or both, shall be adjusted pursuant
        to
        Section 3, the Company shall deliver a certificate signed by its Chief Executive
        Officer and by its Chief Financial Officer, setting forth, in reasonable
        detail,
        the event requiring the adjustment, the amount of the adjustment, the method
        by
        which such adjustment was calculated (including a description of the basis
        on
        which the Board made any determination hereunder), and the Warrant Exercise
        Price and the kind of securities issuable upon exercise of the Warrants after
        giving effect to such adjustment, and shall cause copies of such certificate
        to
        be mailed (by first class mail postage prepaid) to each Warrant Holder promptly
        after each adjustment.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      Section
        4.                      Reservation
        of Stock, etc.  The Company covenants and agrees that it will
        at all times have authorized, reserve and keep available, solely for issuance
        and delivery upon the exercise of this Warrant, the number of shares of Warrant
        Shares from time to time issuable upon the exercise of this
        Warrant.  The Company further covenants and agrees that this Warrant
        is, and any Warrants issued in substitution for or replacement of this Warrant
        and all Warrant Shares, will upon issuance be duly authorized and validly
        issued
        and, in the case of Warrant Shares, upon issuance will be fully paid and
        non-assessable and free from all preemptive rights of any
        stockholder, and from all taxes, liens and charges with respect to the issue
        thereof (other than transfer taxes) and, if the Common Stock of the Company
        is
        then listed on any national securities exchanges (as defined in the Exchange
        Act) or quoted on NASDAQ, shall be, subject to the restrictions set forth
        in
        Section 5, duly listed or quoted thereon, as the case may be. In the event
        that
        the number of authorized but unissued shares of such Common Stock shall not
        be
        sufficient to effect the exercise of this entire Warrant into Warrant Shares,
        then in addition to such other remedies as shall be available to the Holder
        of
        this Warrant, the Company shall promptly take such corporate action as may
        be
        necessary to increase its authorized but unissued shares of Common Stock
        to such
        number of shares as shall be sufficient for such purpose.

      

      Section
        5.                      Ownership,
        Transfer and Substitution of Warrants.

      

      5.1           Ownership
        of Warrants.  The Company may treat the person in whose name
        this Warrant is registered on the register kept at the principal office of
        the
        Company as the owner and Holder thereof for all purposes, notwithstanding
        any
        notice to the contrary, but in all events recognizing any transfers made
        in
        accordance with the terms of this Warrant.

      

      5.2           Transfer
        and Exchange of Warrants.  Upon the surrender of this
        Warrant, properly endorsed, for registration of transfer or for exchange
        at the
        principal office of the Company, the Company at its expense will execute
        and
        deliver to the Holder thereof, upon the order of such Holder, a new Warrant
        or
        Warrants of like tenor, in the name of such Holder or as such Holder may
        direct,
        for such number of shares with respect to each such Warrant, the aggregate
        number of shares in any event not to exceed the number of shares for which
        the
        Warrant so surrendered had not been exercised.

      

      5.3           Registrations.  The
        holder of this Warrant is entitled to certain registration rights with respect
        to the Warrant Shares issuable upon exercise thereof.  Said
        registration rights are set forth in a Registration Rights Agreement dated
        as of
        September 21, 2007, by and between the Holder and the Company.

      

      5.4           Exemption
        from Registration.  If an opinion of counsel reasonable
        satisfactory to the Company provides that registration is not required for
        the
        proposed exercise or transfer of this Warrant or the proposed transfer of
        the
        Warrant Shares and that the proposed exercise or transfer in the absence
        of
        registration would require the Company to take any action including executing
        and filing forms or other documents with the United States
        Securities and Exchange Commission (the “SEC”) or any state
        securities agency, or delivering to the Holder any form or document in order
        to
        establish the right of the Holder to effectuate the proposed exercise or
        transfer, the Company agrees promptly, at its expense, to take any such action;
        and provided, further, that the Company will reimburse the Holder in full
        for
        any reasonable expenses (including but not limited to the fees and disbursements
        of such counsel, but excluding brokers' commissions) incurred by the Holder
        or
        owner of Warrant Shares on his, her or its behalf in connection with such
        exercise or transfer of the Warrant or transfer of Warrant Shares.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      Section
        6.                      No
        Rights or Liabilities as Shareholder.  Nothing contained in
        this Warrant shall be construed as conferring upon the Holder hereof any
        rights
        as a shareholder of the Company or as imposing any liabilities on such holder
        to
        purchase any securities or as a shareholder of the Company, whether such
        liabilities are asserted by the Company or by creditors of the
        Company.

      

      Section
        7.                      Miscellaneous.

      

      7.1           Amendment
        and Waiver.  This Warrant may be amended with, and only with,
        the written consent of the Company and the Holder.  Any waiver of any
        term, covenant, agreement or condition contained in this Warrant shall not
        be
        deemed a waiver of any other term, covenant, agreement or condition, and
        any
        waiver of any default in any such term, covenant, agreement or condition
        shall
        not be deemed a waiver of any later default thereof or of any default of
        any
        other term, covenant, agreement or condition.

      

      7.2           Representations
        and Warranties to Survive Closing.  All representations,
        warranties and covenants contained herein shall survive the execution and
        delivery of this Warrant and the issuance of any Warrant Shares upon the
        exercise hereof.

      

      7.3           Severability.  In
        the event that any court or any governmental authority or agency declares
        all or
        any part of any Section of this Warrant to be unlawful or invalid, such
        unlawfulness or invalidity shall not serve to invalidate any other Section
        of
        this Warrant, and in the event that only a portion of any Section is so declared
        to be unlawful or invalid, such unlawfulness or invalidity shall not serve
        to
        invalidate the balance of such Section.

      

      7.4           Binding
        Effect; No Third Party Beneficiaries.  All provisions of this
        Warrant shall be binding upon and inure to the benefit of the parties and
        their
        respective heirs, legatees, executors, administrators, legal representatives,
        successors, and permitted transferees and assigns.  No person other
        than the holder of this Warrant and the Company shall have any legal or
        equitable right, remedy or claim under or in respect of, this
        Warrant.

      

      7.5           Notices.  Any
        notices, consents, waivers or other communications required or permitted
        to be
        given under the terms of this Warrant must be in writing and will be deemed
        to
        have been delivered: (i) upon receipt, when delivered personally; (ii) upon
        receipt, when sent by facsimile (provided confirmation of transmission is
        mechanically or electronically generated and kept on file by the sending
        party);
        or (iii) one Trading Day after deposit with a nationally recognized overnight
        delivery service, in each case properly addressed to the party to receive
        the
        same.  The addresses and facsimile numbers for such communications
        shall be:

       

       

       

       

       

       

       

       

      
 

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      

      

      If
        to the
        Company:

      

      KMA
        Global Solutions International, Inc. 

      5570A
        Kennedy Road

      Mississauga,
        Ontario, Canada L4Z 2A9

      Telephone:      905-568-5220

      Facsimile:         905-568-4446

      Attention:        Jeffrey
        D. Reid     

       

      

      With
        a
        copy to (which shall not constitute notice):

      Baker,
        Donelson, Bearman, Caldwell & Berkowitz, P.C.

      Suite
        1000, 211 Commerce Street

      Nashville,
        TN  37201

      Telephone:       (615)
        726-5763

      Facsimile:          (615)
        744-5763

      Attention:         Gary
        M. Brown

      

      If
        to the
        Holder:

      ___________________

      c/o
        Incendia Management Group Inc.

      111
        Grangeway Avenue, Suite 404

      Toronto,
        Ontario  M1H 3E9

      Telephone:        416-289-0440

      Facsimile:           416-289-7440

      Attention:          Angelo
        Boujos

      

      If
        to the
        Transfer Agent:

      American
        Registrar & Transfer Co.

      342
        East
        900 South

      Salt
        Lake
        City, UT 84111

      Telephone:         801-363-9065

      Facsimile:            801-363-9066

      Attention:           Patrick
        Day or Linda
        Nonu                                                      

      

      or
        at
        such other address and/or facsimile number and/or to the attention of such
        other
        person as the recipient party has specified by written notice given to each
        other party three (3) Trading Days prior to the effectiveness of such
        change.  Written confirmation of receipt (A) given by the recipient of
        such notice, consent, waiver or other communication, (B) mechanically or
        electronically generated by the sender's facsimile machine containing the
        time,
        date, and recipient facsimile number or (C) provided by a nationally recognized
        overnight delivery service, shall be rebuttable evidence of personal service,
        receipt by facsimile or receipt from a nationally recognized overnight delivery
        service in accordance with clause (i), (ii) or (iii) above,
        respectively.

      

      7.6           Taxes,
        Costs and Expenses. The Company covenants and agrees that it will pay
        when due and payable any and all federal, state and local taxes (other than
        income taxes) and any other costs and expenses which may be payable in respect
        of the preparation, issuance, delivery, exercise, surrender or transfer of
        this
        Warrant pursuant to the terms of this Warrant or the issuance of any shares
        of
        Warrant Shares as a result thereof. If any suit or action
        is instituted or attorneys employed to enforce this Warrant or any part thereof,
        the non-prevailing party in such suit or action promises and agrees to pay
        all
        costs and expenses associated therewith, including reasonable attorneys’ fees
        and court costs.

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      7.7           
        Governing Law; Jurisdiction; Jury Trial.  The corporate laws
        of the State of Nevada shall govern all issues concerning the relative rights
        of
        the Company and its shareholders. All other questions concerning the
        construction, validity, enforcement and interpretation of this Warrant shall
        be
        governed by the internal laws of the State of Nevada, without giving effect
        to
        any choice of law or conflict of law provision or rule (whether of the State
        of
        Nevada or any other jurisdictions) that would cause the application of the
        laws
        of any jurisdictions other than the State of Nevada.  Each party
        hereby irrevocably submits to the exclusive jurisdiction of the state and
        federal courts sitting in the City of Las Vegas, for the adjudication of
        any
        dispute hereunder or under the other Transaction Documents or in connection
        herewith or therewith, or with any transaction contemplated hereby or discussed
        herein, and hereby irrevocably waives, and agrees not to assert in any suit,
        action or proceeding, any claim that it is not personally subject to the
        jurisdiction of any such court, that such suit, action or proceeding is brought
        in an inconvenient forum or that the venue of such suit, action or proceeding
        is
        improper.  Each party hereby irrevocably waives personal service of
        process and consents to process being served in any such suit, action or
        proceeding by mailing a copy thereof to such party at the address for such
        notices to it under this Agreement and agrees that such service shall constitute
        good and sufficient service of process and notice thereof.  Nothing
        contained herein shall be deemed to limit in any way any right to serve process
        in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY
        WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR
        THE
        ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING
        OUT
        OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

      

      7.8           Loss
        of Warrant.  Upon receipt by the Company of evidence
        reasonably satisfactory to it of the loss, theft, destruction or mutilation
        of
        this Warrant, and (in the case of loss, theft or destruction) of indemnification
        in form and substance acceptable to the Company in its reasonable discretion,
        and upon surrender and cancellation of this Warrant, if mutilated, the Company
        shall execute and deliver a new Warrant of like tenor and
        date. 

      

      7.9           Entire
        Agreement. This Warrant, the Purchase Agreement and the Registration
        Rights Agreement of even date herewith represent the entire agreement and
        understanding between the parties concerning the subject matter hereof and
        supercede all prior and contemporaneous agreements, understandings,
        representations and warranties with respect thereto.

      

      7.10           Headings.
        The headings used herein are used for convenience only and are not to be
        considered in construing or interpreting this Warrant.

       

       

       

       

       

       

       

       

       

       

       

       

       

       

      
 

       

      

      
        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

      

      

                 IN
        WITNESS WHEREOF, the Company has caused this Warrant to be duly
        executed by its authorized officer as of the date first indicated
        above.

       

      

      KMA
        GLOBAL SOLUTIONS INTERNATIONAL, INC.

      

                                                             
        By:           /s/
        Jeffrey D.
        Reid                                                              

                                                                      Jeffrey
        D.
        Reid                                                              

      Chief
        Executive Officer

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