Document:

Exhibit 4.1

 

REGISTRATION
RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT, dated as of June 1,
2009, by and among TRC Companies, Inc., a Delaware corporation (the “Company”), and the persons
executing this Agreement as Purchasers (the “Purchasers”).

 

WHEREAS, the Company and the other parties hereto wish
to provide certain arrangements with respect to the registration of shares of
common stock, $0.10 par value, of the Company (the “Common Stock”)
under the Securities Act (as defined below);

 

WHEREAS, the Company and the Purchasers have entered
into a Series A Preferred Stock Purchase Agreement, dated as of June 1,
2009 (the “Purchase Agreement”), pursuant to
which the Company is issuing and selling to the Purchasers, and the Purchasers
are purchasing from the Company, shares of the Company’s Series A
Preferred Stock, par value $0.10 per share (the “Series A
Preferred Stock”), which are convertible into shares of the Company’s
Common Stock;

 

WHEREAS, it is a condition to the obligations of the
Purchasers under the Purchase Agreement that this Agreement be executed by the
parties hereto, and the parties are willing to execute this Agreement and to be
bound by the provisions hereof; and

 

NOW THEREFORE, for good and valuable consideration;
the receipt and adequacy of which is hereby acknowledged by the parties, the
parties hereby agree as follows:

 

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

 

“Common Stock”  shall have the meaning set forth in
the preamble hereof.

 

“Company”  shall have the meaning set forth in
the preamble hereof.

 

“Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended, or any similar
federal statute, and the rules and regulations of the SEC thereunder, all
as the same shall be in effect at the time.

 

 “Purchase Agreement”  shall have
the meaning set forth in the preamble hereof.

 

“Purchaser Permitted
Transferee” shall mean any affiliate of a Purchaser or any entity or
investment vehicle, including a partnership, in which a Purchaser and/or its
affiliates has a majority economic interest or which is managed by a Purchaser
or any of its affiliates.

 

“Purchasers”
shall have the meaning set forth in the preamble hereof.

 

 

“Registrable Stock”
shall mean (i) all shares of Common Stock issued or issuable upon the
conversion of the Series A Preferred Stock (or other equity securities
issued or issuable directly or indirectly with respect to such shares of Common
Stock by way of conversion or exchange thereof or share dividend or share split
or in connection with a combination of shares, recapitalization,
reclassification, merger, consolidation or other reorganization) and (ii) all
other shares of Common stock held by Purchasers or Purchaser Permitted
Transferees, excluding shares of Common Stock (or such other equity securities)
which (a) have been registered under the Securities Act pursuant to an
effective registration statement filed thereunder and disposed of in accordance
with the registration statement covering them, or (b) have been publicly
sold pursuant to Rule 144 under the Securities Act; provided, however,
that such shares shall cease to be Registrable Stock when they are able to be
sold by the holder thereof pursuant to Rule 144 without volume or
manner-of-sale restrictions and without the requirement for the Company to be
in compliance with the current public information requirement under Rule 144.

 

“Registration Expenses” shall mean all expenses incurred by
the Company in complying with Sections 2 and 3, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel and independent public accountants for the Company,
fees and expenses (including counsel fees) incurred in connection with
complying with state securities or “blue sky” laws, fees of the National
Association of Securities Dealers, Inc., transfer taxes, fees of transfer
agents and registrars and costs of insurance but excluding any Selling
Expenses.

 

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

 

“Securities Act”
shall mean the Securities Act of 1933, as amended, or any similar federal
statute, and the rules and regulations of the SEC thereunder, all as the
same shall be in effect at the time.

 

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

 

“Series A Preferred
Stock” shall have the meaning set forth in the preamble hereof.

 

“Standstill Notice”
shall have the meaning set forth in Section 4(e).

 

2.           Demand
Registration Rights.

 

(a)  At
any time following the date which is eighteen (18) months after the date
hereof, if the Company is eligible to use a registration statement on Form S-3
(or any successor short-form registration statement), the holders of
Registrable Stock shall have the right by delivering a written request to the
Company to require the Company to register under the Securities Act all or any
portion of the shares of Registrable Stock held by such requesting holder or
holders for sale in the manner specified in such request; provided that
the aggregate offering price, as such 

 

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amount is
determined on the cover page of the registration statement, shall not be
less than $2,500,000.  Such request shall
specify the intended method of disposition thereof by such holder or holders,
including whether (i) the registration requested is for an underwritten
offering or (ii) the registration statement covering such Registrable
Stock shall be a “shelf” and provide for the sale by the holder or holders
thereof of the Registrable Stock from time to time on a delayed or continuous
basis under Rule 415 under the Securities Act.  In the event that any registration pursuant
to this Section 2 shall be, in whole or in part, an underwritten public
offering of Registrable Stock, the number of shares of Registrable Stock to be
included in such an underwriting to be sold for the account of the requesting
holders may be reduced (pro rata among the requesting holders based upon the
number of shares of Registrable Stock requested to be so registered) if and to
the extent that the managing underwriter shall be of the opinion that such
inclusion would adversely affect the marketing of the securities to be sold
thereby.  The Company shall not include
in any registration pursuant to this Section 2 any securities to be sold
for the account of the Company or any persons other than the holders of
Registrable Stock without the prior written consent of the holders of
Registrable Stock requesting the registration.

 

(b)  Following receipt of any request under this Section 2,
the Company shall, within ten (10) days of receipt of such written
request, notify all holders of Registrable Stock from whom notice has not been
received and such holders may elect by notice given to the Company within ten (10) days
following receipt of the Company notice to include shares of Registrable Stock
held by such holders in such registration. 
The Company shall use its commercially reasonable best efforts to
effect, as soon as practicable, the registration under the Securities Act, for
public sale in accordance with the method of disposition specified in such
notice from requesting holders, the number of shares of Registrable Stock
specified in such notices.  If such
method of disposition shall be an underwritten public offering, the holders of
a majority of the shares of Registrable Stock to be sold in such offering may
designate the managing underwriter of such offering, subject to the approval of
the Company, which approval shall not be unreasonably withheld or delayed.  The Purchasers shall have an unlimited number
of demand registrations pursuant to this Section 2; provided, however,
that the Company shall not be obligated to effect more than two such
registrations in any twelve month period; and provided, further,
that such obligation shall be deemed satisfied only when a registration
statement covering all shares of Registrable Stock specified in notices
received as aforesaid, for sale in accordance with the method of disposition
specified by the requesting holders, shall have become effective.

 

(c)  From and after the date hereof, the Company
shall use its commercially reasonable best efforts to qualify under the
provisions of the Securities Act, and thereafter, to continue to qualify at all
times, for registration on Form S-3 or any successor thereto.

 

(d)  The Company may postpone for a period of up
to sixty (60) days the filing of any registration requested pursuant to this Section 2
if the Board of Directors of the Company in good faith determines that such
registration would require the public disclosure of any material non-public
information relating to any plan, proposal or agreement by the Company with
respect to any financing, acquisition, recapitalization, reorganization or
other material transaction, the disclosure of which would be materially adverse
to the Company’s ability to effect such plan, 

 

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proposal
or agreement if made at such time; provided, however, that the
Company may not exercise such right of postponement more frequently than twice
in any 12 month period and shall not register any securities for its own
account or that of any other stockholder during such sixty (60) day period
(except with respect to registration statements on Forms S-4, S-8 or
another form not available for registering the Registrable Stock for sale to
the public).

 

3.           Piggyback
Registration Rights.  If the Company
at any time following the date which is eighteen (18) months after the date
hereof proposes to register any of its securities under the Securities Act for
sale to the public (other than pursuant to Section 2), whether for its own
account or for the account of other security holders or both (except with
respect to registration statements on Forms S-4, S-8 or another form not
available for registering the Registrable Stock for sale to the public), each
such time it will give prompt written notice to all holders of outstanding
Registrable Stock of its intention to do so (but in no event less than ten (10) days
prior to the anticipated filing date). 
Upon the written request of any such holder, received by the Company
within ten (10) days after the giving of any such notice by the Company,
to register any of its Registrable Stock, the Company will use its commercially
reasonable best efforts to cause the Registrable Stock as to which registration
shall have been so requested to be included in the securities to be covered by
the registration statement proposed to be filed by the Company, all to the
extent required to permit the sale or other disposition by the holder of such
Registrable Stock so registered.  In the
event that any registration pursuant to this Section 3 shall be, in whole
or in part, an underwritten public offering of Registrable Stock, the number of
shares of Registrable Stock to be included in such an underwriting may be
reduced if and to the extent that the managing underwriter shall be of the
opinion that such inclusion would adversely affect the marketing of the
securities to be sold by the Company therein. 
In the event that the managing underwriter on behalf of all underwriters
limits the number of shares to be included in a registration pursuant to this Section 3,
or shall otherwise require a limitation of the number of shares to be included
in the registration, then the Company will include in such registration:

 

(i)         first, securities
proposed by the Company to be sold for its own account;

 

(ii)        second, shares of
Registrable Stock requested to be included by holders pursuant to this Section 3
(pro rata among the requesting holders based on the number of shares of
Registrable Stock requested to be so registered);

 

(iii)       third, securities
requested to be included by any other holders,

 

Notwithstanding
the foregoing provisions, the Company may withdraw any registration statement
referred to in this Section 3 without thereby incurring any liability to
the holders of Registrable Stock.

 

4.           Registration
Procedures.  If and whenever the
Company is required by the provisions of Sections 2 or 3 to use its
commercially reasonable best efforts to effect the 

 

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registration
of any shares of Registrable Stock under the Securities Act, the Company will,
as expeditiously as possible:

 

(a)        prepare
and promptly (and in any event within twenty (20) days after the request for
registration has been delivered to the Company pursuant to Section 2), file
with the SEC a registration statement with respect to such securities, make all
required filings with the National Association of Securities Dealers and the
Financial Industry Regulatory Authority and use its commercially reasonable
best efforts to cause such registration statement to become  effective as soon as reasonably practicable
and to remain effective for the period of the distribution contemplated thereby
(determined as hereinafter provided) or in the case of a registration requested
to be a “shelf,” until all Registrable Stock covered by such registration
statement has been sold, or may be sold without volume or manner-of-sale
restrictions pursuant to Rule 144, and without the requirement for the
Company to be in compliance with the current public information requirement
under Rule 144 (including re-filing any “shelf” registration statement
upon its expiration);

 

(b)        prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary
to keep such registration statement effective for the period specified in
paragraph (a) above and comply with the provisions of the Securities
Act with respect to the disposition of all Registrable Stock covered by such
registration statement in accordance with the holders’ intended method of
disposition set forth in such registration statement for such period;

 

(c)        furnish
to each holder of Registrable Stock and to each underwriter such number of
copies of the registration statement, each amendment and supplement thereto and
the prospectus included therein (including each preliminary prospectus), all
exhibits and other documents filed therewith and such other documents,
including transmittal letters and other correspondence to or received from the
SEC or any other governmental entity relating to such offer as such holders or
the managing underwriter of such offering may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Stock covered
by such registration statement;

 

(d)        register
or qualify the Registrable Stock covered by such registration statement under
the securities or “blue sky” laws of such jurisdictions as the holders of
Registrable Stock or, in the case of an underwritten public offering, the
managing underwriter reasonably shall request; provided, however,
that the Company shall not for any such purpose be required to qualify
generally to transact business as a foreign corporation in any jurisdiction
where it is not so qualified or to consent to general service of process in any
such jurisdiction;

 

(e)        notify
each holder of Registrable Stock included in such registration statement and
the managing underwriter, if any, in writing (a “Standstill
Notice”) upon the occurrence of any event or development as a result
of which the prospectus included in the registration statement, as then in
effect, contains an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not 

 

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misleading in light of the circumstances then existing, and as promptly
as practicable, prepare, file and furnish to such holders a reasonable number
of copies of a supplement or amendment to such prospectus as may be necessary
so that such prospectus does not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing; provided, however, that the Company may delay
preparing, filing and distributing any such supplement or amendment if the
Board of Directors of the Company in good faith determines that such supplement
or amendment would require the public disclosure of any material non-public
information relating to any plan, proposal or agreement by the Company with
respect to any financing, acquisition, recapitalization, reorganization or
other material transaction, the disclosure of which would be materially adverse
to the Company’s ability to effect such plan, proposal or agreement if made at
such time; and provided, further, that such delay shall not extend for a period
of more than 45 days without the written consent of the holders of a majority
of the Registrable Stock included in the registration statement, and the
Company shall not exercise such right more than once during any 12-month
period;

 

(f)         in
connection with the preparation and filing of each registration statement registering
Registrable Stock under the Securities Act, and before filing any such
registration statement or any other document in connection therewith, give the
participating holders and their underwriters, if any, and their respective
counsel and accountants, the opportunity to participate in the preparation of
such registration statement, each prospectus included therein or filed with the
SEC, each amendment thereof or supplement thereto and any related underwriting
agreement or other document to be filed, and give each of the aforementioned
persons such access to its books and records, including all financial and other
records, pertinent corporate documents and properties of the Company, and such
opportunities to discuss the business of the Company with its officers,
directors and employees and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of
such holders, underwriters, counsel or accountants, to conduct a reasonable
investigation within the meaning of the Securities Act; and

 

(g)        notify
each seller of Registrable Stock covered by such registration statement and the
managing underwriter, if any, (i) when such registration statement or the
prospectus or any prospectus supplement or post-effective amendment has been
filed and, with respect to such registration statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the
SEC for amendments or supplements to such registration statement or to amend or
to supplement such prospectus or for additional information, (iii) of the
issuance by the SEC of any stop order suspending the effectiveness of such
registration statement or the initiation of any proceedings for any such
purposes and (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Stock for sale in any jurisdiction, or the initiation
or threatening of any proceeding for such purpose;

 

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(h)        cause
or Registrable Stock to be listed on each securities exchange on which similar
securities issued by the Company are then listed;

 

(i)         enter
into customary agreements, including underwriting agreements, and take all such
other customary actions as the requesting holders or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Stock, including making members of management and executives of the
Company available to participate in “road show”, similar sales events and other
marketing activities; provided that the Company shall not be required to
make members of management and executives of the Company so available for more
than five (5) consecutive days or more than ten (10) days in any
three hundred sixty five (365) day period;

 

(j)         in
the case of certificated Registrable Stock, cooperate with the sellers of such
Registrable Stock and the managing underwriter, if any, to facilitate the
timely preparation and delivery of certificates (not bearing any legends)
representing Registrable Stock to be sold after receiving written
representations from each seller that the Registrable Stock represented by the
certificates so delivered by such seller will be transferred in accordance with
the registration statement and enable such Registrable Stock to be in such
denominations and registered in such names as the sellers or managing
underwriter, if any, may request at least two (2) days prior to any sale
of Registrable Stock;

 

(k)        in the
event of the issuance of any stop order suspending the effectiveness of a
registration statement, or of any order suspending or preventing the use of any
related prospectus or ceasing trading of any securities included in such
registration statement for sale in any jurisdiction, promptly obtain the
withdrawal of such order;

 

(l)         obtain
one (1) or more comfort letters, addressed to the underwriters, if any,
dated the effective date of such registration statement and the date of the
closing under the underwriting agreement for such offering, signed by the
Company’s independent public accountants (and if necessary, any other
independent certified public accountants of any business acquired by the
Company for which financial statements and financial data are, or are required
to be, included in the registration statement) in customary form and covering
such matters of the type customarily covered by comfort letters as such
underwriters shall reasonably request;

 

(m)       provide
legal opinions of the Company’s counsel, addressed to the underwriters, if any,
dated the date of the closing under the underwriting agreement, with respect to
the registration statement, each amendment and supplement thereto (including
the preliminary prospectus) and such other documents relating thereto as the
underwriter shall reasonably request in customary form and covering such
matters of the type customarily covered by legal opinions of such nature; and

 

(n)        otherwise
use its commercially reasonable best efforts to comply with the Securities Act,
the Exchange Act and any other applicable rules and regulations of the
SEC, and make available to its securities holders, as soon as reasonably
practicable, an earnings statement 

 

7

 

covering the period of at least 12 months after the effective date of
such registration statement, which earning statement shall satisfy Section 11(a) of
the Securities Act and any applicable regulations thereunder, including Rule 158.

 

In connection with each registration hereunder, the
holders of Registrable Stock will furnish to the Company in writing such
information with respect to themselves and the proposed distribution by them as
reasonably shall be necessary in order to assure compliance with federal and
applicable state securities laws.

 

5.           Expenses.  The Company will pay all Registration
Expenses.  All Selling Expenses shall be
borne by the participating sellers in proportion to the number of shares sold
by each, or by such participating sellers as they may agree.

 

6.           Indemnification
and Contribution.  (a)  In
the event of a registration of any of the Registrable Stock under the
Securities Act pursuant to Sections 2 or 3, the Company will indemnify and hold
harmless each seller of Registrable Stock thereunder, each underwriter of such
Registrable Stock thereunder and each other person, if any, who controls or is
alleged to control such seller or underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such seller, underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such Registrable Stock was
registered under the Securities Act pursuant to Sections 2 or 3, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or arises out of or
are based upon any violation or alleged violation of any federal, state or
other law, rule or regulation relating to any action or inaction in
connection therewith, and will reimburse each such seller, each such
underwriter and each such controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however,
that the Company will not be liable to any such indemnitee if and to the extent
that any such loss, claim, damage or liability arises solely out of or is based
solely upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information with respect to such
indemnitee furnished by such indemnitee in writing specifically for use in such
registration statement or prospectus. 
The indemnities of the Company contained in this Section 6 shall
remain in full force and effect regardless of any investigation made by or on
behalf of such indemnified person and shall survive any transfer of Registrable
Stock.

 

(b)  In the event of a registration of any of the
Registrable Stock under the Securities Act pursuant to Sections 2 or 3, each
seller of such Registrable Stock thereunder, severally and not jointly, will
indemnify and hold harmless the Company, each person, if any, who controls the
Company within the meaning of the Securities Act, each officer of the Company
who signs the registration statement, each director of the Company, each
underwriter and each person who 

 

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controls
any underwriter within the meaning of the Securities Act, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
officer, director, underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the registration statement under which such Registrable Stock was registered
under the Securities Act pursuant to Sections 2 or 3, any preliminary
prospectus or final prospectus contained therein, or any amendment or
supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company and each such officer, director, underwriter and controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action; provided,
however, that such seller will be liable hereunder in any such case if
and only to the extent that any such loss, claim, damage or liability arises
solely out of or is based solely upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with information pertaining to such seller, as such, furnished in
writing to the Company by such seller specifically for use in such registration
statement or prospectus; and provided, further, however,
that the liability of each seller hereunder shall be limited to the proportion
of any such loss, claim, damage, liability or expense which is equal to the
proportion that the public offering price of the shares sold by such seller
under such registration statement bears to the total public offering price of
all securities sold thereunder, but not in any event to exceed the net proceeds
received by such seller from the sale of Registrable Stock covered by such
registration statement (after deduction of all underwriters’ discounts and
commissions and all other expenses paid by such seller in connection with the
registration in question).  Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any such director, officer, underwriter
or controlling person and shall survive any transfer of Registrable Stock.

 

(c)  Promptly after receipt by an indemnified
party hereunder of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party in writing thereof,
but the omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to such indemnified party other than under this
Section 6 and shall only relieve it from any liability which it may have to
such indemnified party under this Section 6 if and to the extent the
indemnifying party is prejudiced by such omission.  In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
in and, to the extent it shall wish, to assume and undertake the defense
thereof with counsel satisfactory to such indemnified party, and, after notice
from the indemnifying party to such indemnified party of its election so to
assume and undertake the defense thereof, the indemnifying party shall not be
liable to such indemnified party under this Section 6 for any legal
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation and of liaison
with counsel so selected; provided, however, that, if the
defendants in 

 

9

 

any
such action include both the indemnified party and the indemnifying party and
the indemnified party shall have reasonably concluded that there may be
reasonable defenses available to it which are different from or additional to
those available to the indemnifying party or if the interests of the
indemnified party reasonably may be deemed to conflict with the interests of
the indemnifying party, the indemnified party shall have the right to select a
separate counsel and to assume such legal defenses and otherwise to participate
in the defense of such action, with the expenses and fees of such separate
counsel and other expenses related to such participation to be reimbursed by
the indemnifying party as incurred.  No
indemnifying party, in the defense of any such claim or litigation, shall,
except with the consent of each indemnified party, consent to entry of any
judgment or enter into any settlement unless such judgment or settlement
includes as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation, includes only money damages (as opposed to
equitable relief) and does not include any statement as to the fault or
culpability of such indemnified party.

 

(d)  In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
either (i) any holder of Registrable Stock exercising rights under this
Agreement, or any controlling person of any such holder, makes a claim for
indemnification pursuant to this Section 6 but it is judicially determined
(by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 6 provides for indemnification
in such case, or (ii) contribution under the Securities Act may be
required on the part of any such selling holder or any such controlling person
in circumstances for which indemnification is provided under this Section 6;
then, and in each such case, the Company and such holder will contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that such holder is
responsible for the portion represented by the percentage that the aggregate
public offering price of its Registrable Stock offered by the registration
statement bears to the aggregate public offering price of all securities
offered by such registration statement, and the Company is responsible for the
remaining portion; provided, however, that, in any such case, (A) no
such holder will be required to contribute any amount in excess of the net
proceeds received by it from the sale of all such Registrable Stock offered by
it pursuant to such registration statement (after deduction of all underwriters’
discounts and commissions and all other damages and expenses paid by such
seller in connection with the registration in question); and (B) no person
or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) will be entitled to contribution from any person or entity
who was not guilty of such fraudulent misrepresentation.

 

7.           Changes
in Common Stock.  If, and as often
as, there is any change in the Common Stock by way of a stock split, stock
dividend, combination or reclassification, or through a merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof so that the rights and
privileges granted hereby shall continue with respect to the Common Stock as so
changed.

 

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8.           Rule 144
Reporting.  With a view to making
available the benefits of certain rules and regulations of the SEC which
may at any time permit the sale of the Registrable Stock to the public without
registration, the Company agrees to:

 

(a)        make
and keep public information available, as those terms are understood and
defined in Rule 144 under the Securities Act;

 

(b)        use
its best efforts to file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act; and

 

(c)        furnish
to each holder of Registrable Stock forthwith upon request a written statement
by the Company as to its compliance with the reporting requirements of such Rule 144
and of the Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
so filed by the Company as such holder may reasonably request in availing
itself of any rule or regulation of the SEC allowing such holder to sell
any Registrable Stock without registration.

 

9.           Miscellaneous.

 

(a)        Successors
and Assigns.  All covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto (including without limitation transferees of
Registrable Stock), whether so expressed or not; provided, however,
that the rights conferred herein on the holders of Registrable Stock to require
the registration of shares of Registrable Stock shall only inure to the benefit
of a transferee of or Registrable Stock if (i) there is transferred to
such transferee shares representing at least one percent (1%) of the
outstanding shares of Registrable Stock or (ii) such transferee is a
Purchaser Permitted Transferee or a partner, shareholder or affiliate of a
party hereto.  The holder shall give the
Company written notice at the time of or within a reasonable time after such
transfer or assignment, stating the name and address of such transferee or
assignee and identifying the Registrable Stock with respect to which
registration rights are being transferred or assigned.  Transfer of registration rights to a
Purchaser Permitted Transferee or to a partner, member or shareholder of any
Purchaser will be without restriction as to minimum shareholding.   Any transferee to
whom rights under this Agreement are transferred shall (i) as a condition
to such transfer, deliver to the Company a written instrument by which such
transferee agrees to be bound by the obligations imposed upon holders under
this Agreement to the same extent as if such transferee were a holder under
this Agreement and (ii) be deemed to be a holder hereunder.

 

(b)        Notices.  All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered in person,
by overnight express courier or mailed by certified or registered mail, return
receipt requested, addressed as follows:

 

11

 

(i)         if to the Company or
any Purchaser, at the address of such party set forth in the Purchase
Agreement;

 

(ii)        if to any subsequent
holder of Registrable Stock, to it at such address as may have been furnished
to the Company in writing by such holder;

 

or, in
any case, at such other address or addresses as shall have been furnished in
writing to the Company (in the case of a holder of Registrable Stock) or to the
holders of Registrable Stock (in the case of the Company) in accordance with
the provisions of this paragraph.

 

(c)        Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to its conflict of law principles.

 

(d)        Amendments,
Waivers and Consents.  This Agreement
may not be amended or modified, and no provision hereof may be waived, without
the written consent of the Company and the holders of at least fifty percent
(50%) of the outstanding shares of Registrable Stock; provided, however,
that, without a holder’s consent, any such amendment or waiver shall not treat
such holder differently from any other holder. 
The Company shall deliver copies of such consent to any holders who did
not execute the same.  Neither this
Agreement, nor any provision hereof, may be changed, waived, discharged or
terminated orally or by course of dealing, but only by an instrument in
writing.

 

(e)        No
Waivers.  No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or remedies
provided by law.

 

(f)         Headings.  The headings of the Sections and paragraphs
of this Agreement have been inserted for convenience of reference only and do
not constitute a part of this Agreement.

 

(g)        Counterparts.  This Agreement may be executed in one (1) or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

(h)        Cumulative
Remedies.  None of the rights, powers
or remedies conferred upon the Purchasers on the one hand or the Company on the
other hand shall be mutually exclusive, and each such right, power or remedy
shall be cumulative and in addition to every other right, power or remedy,
whether conferred by this Agreement or now or hereafter available at law, in
equity, by statute or otherwise.  In
addition to being entitled to exercise all rights provided herein or granted by
law, including recovery of damages, each of the Purchasers and the Company will
be entitled to specific performance under this Agreement. The parties agree
that monetary 

 

12

 

damages may not be adequate compensation for any loss incurred by
reason of any breach of obligations contained in this Agreement and hereby
agrees to waive and not to assert in any action for specific performance of any
such obligation the defense that a remedy at law would be adequate.

 

(i)         Jurisdiction.  Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby shall
be brought in any federal or state court located in the Borough of Manhattan in
the State of New York, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts therefrom)
in any such suit, action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to
the laying of the venue of any such suit, action or proceeding in any such
court or that any such suit, action or proceeding which is brought in any such
court has been brought in an inconvenient forum.  Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the jurisdiction of any such court. 
Without limiting the foregoing, each party agrees that service of
process on such party as provided in Section 9(b) shall be deemed
effective service of process on such party.

 

(j)         Severability.  If any provision of this Agreement shall be
held to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any
manner affect or render illegal, invalid or unenforceable any other provision
of this Agreement, and this Agreement shall be carried out as if any such
illegal, invalid or unenforceable provision were not contained herein.

 

(k)        WAIVER OF JURY TRIAL.  IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE
LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES
FOREVER TRIAL BY JURY.

 

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

 

	
   

  	
  THE COMPANY:

  
	
   

  	
   

  
	
   

  	
  TRC COMPANIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Christopher P.
  Vincze

  
	
   

  	
   

  	
  Name: Christopher P.
  Vincze

  
	
   

  	
   

  	
  Title: Chief Executive
  Officer

  

 

13

 

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

 

	
   

  	
  THE PURCHASERS:

  
	
   

  	
   

  
	
   

  	
  FEDERAL PARTNERS, L.P.

  
	
   

  	
  By: Ninth Floor
  Corporation, its General Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen M. Duff

  
	
   

  	
   

  	
  Name: Stephen M. Duff

  
	
   

  	
   

  	
  Title: Chief Investment
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Edward Jepsen

  
	
   

  	
  Edward Jepsen

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  IAT REINSURANCE
  COMPANY, LTD

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter R. Kellogg

  
	
   

  	
   

  	
  Name: Peter R. Kellogg

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Peter R. Kellogg

  
	
   

  	
  Peter R. Kellogg

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BERMUDA PARTNERS

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter R. Kellogg

  
	
   

  	
   

  	
  Name: Peter R. Kellogg

  
	
   

  	
   

  	
  Title: Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NON-MARITAL TRUST F/B/O PETER R. KELLOGG

  
	
   

  	
  U/W/O JAMES C. KELLOGG, III

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Peter R. Kellogg

  
	
   

  	
   

  	
  Name: Peter R. Kellogg

  
	
   

  	
   

  	
  Title: Trustee and Not
  Individually

  
				

 

Signature Page to
Registration Rights AgreementExhibit 10.1

 

 

SERIES A PREFERRED STOCK PURCHASE AGREEMENT

 

BETWEEN

 

TRC COMPANIES, INC.,

 

AND

 

THE PURCHASERS NAMED ON SCHEDULE I HERETO

 

DATED AS OF JUNE 1, 2009

 

 

 

TABLE OF CONTENTS

 

	
  1.

  	
  Sale and Purchase of Preferred Stock

  	
  1

  
	
   

  	
   

  	
   

  
	
   

  	
  1.1.

  	
  Sale and
  Purchase; Purchase Price

  	
  1

  
	
   

  	
  1.2.

  	
  Closing

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Required Stockholder Approval

  	
  2

  
	
   

  	
   

  	
   

  
	
  3.

  	
  Representations and Warranties of the Purchasers

  	
  3

  
	
   

  	
   

  	
   

  
	
   

  	
  3.1.

  	
  Organization
  and Power and Authority; Legal Capacity

  	
  3

  
	
   

  	
  3.2.

  	
  Validity

  	
  3

  
	
   

  	
  3.3.

  	
  No
  Brokers

  	
  3

  
	
   

  	
  3.4.

  	
  Acquisition
  for Own Account

  	
  4

  
	
   

  	
  3.5.

  	
  Ability
  to Protect Own Interests and Bear Economic Risks

  	
  4

  
	
   

  	
  3.6.

  	
  Accredited
  Investor

  	
  4

  
	
   

  	
  3.7.

  	
  Access to
  Information

  	
  4

  
	
   

  	
  3.8.

  	
  No
  General Solicitation

  	
  4

  
	
   

  	
  3.9.

  	
  Sales and
  Confidentiality Prior to the Date Hereof

  	
  5

  
	
   

  	
  3.10.

  	
  Residence

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Representations and Warranties by the Company

  	
  5

  
	
   

  	
   

  	
   

  
	
   

  	
  4.1.

  	
  Organization
  and Qualification

  	
  5

  
	
   

  	
  4.2.

  	
  Capitalization

  	
  6

  
	
   

  	
  4.3.

  	
  Authority;
  Valid Issuance of Shares

  	
  6

  
	
   

  	
  4.4.

  	
  Consents
  and Approvals; No Violation

  	
  7

  
	
   

  	
  4.5.

  	
  SEC
  Reports; Financial Statements

  	
  8

  
	
   

  	
  4.6.

  	
  Litigation

  	
  9

  
	
   

  	
  4.7.

  	
  Compliance
  with Law; No Default

  	
  9

  
	
   

  	
  4.8.

  	
  Absence
  of Certain Changes

  	
  9

  
	
   

  	
  4.9.

  	
  Exemption
  from Registration

  	
  9

  
	
   

  	
  4.10.

  	
  No
  Brokers

  	
  10

  
	
   

  	
  4.11.

  	
  Title

  	
  10

  
	
   

  	
  4.12.

  	
  Patents
  and Trademarks

  	
  10

  
	
   

  	
  4.13.

  	
  Labor
  Relations

  	
  10

  
	
   

  	
  4.14.

  	
  Exchange
  Act Registration

  	
  11

  
	
   

  	
  4.15.

  	
  Application
  of Takeover Protections

  	
  11

  
	
   

  	
  4.16.

  	
  Insurance

  	
  11

  
	
   

  	
  4.17.

  	
  Regulatory
  Permits

  	
  11

  
	
   

  	
  4.18.

  	
  Environmental
  Laws

  	
  11

  
	
   

  	
  4.19.

  	
  Investment
  Company

  	
  12

  
	
   

  	
  4.20.

  	
  Offering
  of Securities

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Conditions of Parties’ Obligations

  	
  12

  
	
   

  	
   

  	
   

  
	
   

  	
  5.1.

  	
  Conditions
  of the Purchasers’ Obligations

  	
  12

  

 

i

 

	
   

  	
  5.2.

  	
  Conditions
  of the Company’s Obligations

  	
  13

  
	
   

  	
  5.3.

  	
  Conditions
  of Each Party’s Obligations

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Covenants

  	
  15

  
	
   

  	
   

  	
   

  
	
   

  	
  6.1.

  	
  Transfer
  Restrictions; Legend

  	
  15

  
	
   

  	
  6.2.

  	
  Reporting
  Requirements

  	
  16

  
	
   

  	
  6.3.

  	
  Reasonable
  Best Efforts; Consents and Governmental Approvals

  	
  16

  
	
   

  	
  6.4.

  	
  Integration

  	
  16

  
	
   

  	
  6.5.

  	
  Securities
  Laws Disclosure; Publicity

  	
  17

  
	
   

  	
  6.6.

  	
  Non-Public
  Information

  	
  17

  
	
   

  	
  6.7.

  	
  Listing
  of Common Stock

  	
  17

  
	
   

  	
  6.8.

  	
  Use of
  Proceeds

  	
  18

  
	
   

  	
  6.9.

  	
  Indemnification
  of Purchasers

  	
  18

  
	
   

  	
  6.10.

  	
  Form D;
  Blue Sky Filings

  	
  19

  
	
   

  	
  6.11.

  	
  Sale
  Restriction

  	
  19

  
	
   

  	
  6.12.

  	
  Expenses
  of Purchasers

  	
  19

  
	
   

  	
  6.13.

  	
  Board of
  Directors

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  PREEMPTIVE RIGHTS

  	
  19

  
	
   

  	
   

  	
   

  
	
   

  	
  7.1.

  	
  New
  Issuances; Preemptive Rights

  	
  19

  
	
   

  	
  7.2.

  	
  Right to
  Purchase Offered Securities

  	
  19

  
	
   

  	
  7.3.

  	
  Sale of
  Offered Securities

  	
  20

  
	
   

  	
  7.4.

  	
  Exempt
  Issuances

  	
  21

  
	
   

  	
  7.5.

  	
  Termination

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Miscellaneous

  	
  21

  
	
   

  	
   

  	
   

  
	
   

  	
  8.1.

  	
  Entire
  Agreement; Amendments and Waivers

  	
  21

  
	
   

  	
  8.2.

  	
  Notices

  	
  22

  
	
   

  	
  8.3.

  	
  Remedies

  	
  23

  
	
   

  	
  8.4.

  	
  Successors
  and Assigns

  	
  23

  
	
   

  	
  8.5.

  	
  No
  Third-Party Beneficiaries

  	
  23

  
	
   

  	
  8.6.

  	
  Headings

  	
  23

  
	
   

  	
  8.7.

  	
  Governing
  Law

  	
  24

  
	
   

  	
  8.8.

  	
  Independent
  Nature of Purchasers’ Obligations and Rights

  	
  24

  
	
   

  	
  8.9.

  	
  Jurisdiction

  	
  24

  
	
   

  	
  8.10.

  	
  Counterparts

  	
  24

  
	
   

  	
  8.11.

  	
  Severability

  	
  24

  
	
   

  	
  8.12.

  	
  WAIVER OF
  JURY TRIAL

  	
  25

  

 

APPENDIX
A:  Definitions

SCHEDULE I:  List of Purchasers

 

	
  LIST
  OF EXHIBITS

  
	
  EXHIBIT
  A

  	
  Certificate
  of Designation

  

 

ii

 

	
  EXHIBIT
  B

  	
  Registration
  Rights Agreement

  

 

iii

 

SERIES A PREFERRED STOCK PURCHASE AGREEMENT

 

This
SERIES A PREFERRED STOCK PURCHASE AGREEMENT (“this  Agreement”) is made and entered into this 1st day of June, 2009 by and between TRC Companies, Inc.,
a Delaware corporation (the “Company”), on
the one hand, and the entities and individuals as listed on Schedule I
attached hereto, as such Schedule I may be amended from time to time as
set forth herein (the “Purchasers”),
on the other hand.  Certain terms used
and not otherwise defined in the text of this Agreement are defined in Appendix
A hereof.

 

W I T N E S S E T H

 

WHEREAS,
the Company desires to issue and to sell to the Purchasers, and the Purchasers
desire to purchase from the Company, shares of a newly created series of the
Company’s preferred stock, to be designated as Series A Convertible
Preferred Stock, par value $0.10 per share (“Series A
Preferred Stock”), convertible into shares of the Company’s common
stock, $0.10 par value per share (“Common Stock”),
all in accordance with the terms and provisions of this Agreement;

 

NOW,
THEREFORE, in consideration of the foregoing and the mutual representations,
warranties and covenants herein contained, the parties hereto, intending to be
bound, hereby agree as follows:

 

1.                                       Sale and
Purchase of Preferred Stock.

 

1.1.          Sale
and Purchase; Purchase Price.  Upon
the terms and subject to the conditions herein contained, the Company agrees to
sell to each Purchaser and, subject to the terms and conditions contained
herein, each Purchaser agrees, severally and not jointly, to purchase from the
Company, that number of duly authorized, validly issued, fully paid and
non-assessable shares of Series A Preferred Stock (each, a “Share” and, collectively, the “Shares”) set forth on Schedule I
hereto opposite such Purchaser’s name, as such Schedule I may be amended
from time to time in accordance with the provisions of Section 1.2
hereof.  The purchase price per Share
shall be $2,150.00, being the equivalent on an as-if-converted basis as of the
Closing Date of $2.15 per share of Common Stock (the “Purchase Price”).  The rights, preferences, privileges and
restrictions of Series A Preferred Stock shall be as set forth in a
Certificate of Designation, the form of which shall be as set forth as Exhibit A hereto (the “Certificate of Designation”).

 

1.2.          Closing.  A closing of the transactions contemplated
hereby (the “Closing”) shall take
place on such date and at such time and place as shall be mutually acceptable
to the Company and the Purchasers, immediately after the execution and delivery
of this Agreement and the satisfaction or waiver of the conditions set forth in
Section 5 hereof.  At the Closing, (x) the
Company shall deliver to each Purchaser participating in the Closing
certificates representing the number of Shares set forth opposite such
Purchaser’s name on Schedule I hereto and (y) each Purchaser shall
pay, in immediately available funds, by wire 

 

 

transfer to the Company’s account, notice of which shall have been given
to the Purchasers not less than two (2) Business Days prior to the Closing
Date, the amount set forth on Schedule I hereto opposite such Purchaser’s
name, representing an aggregate investment amount for all Purchasers of
$15,500,000 (the “ Commitment Amount”).  The date of the Closing is referred to herein
as the “Closing Date”.

 

2.                                       Required
Stockholder Approval and Issuance Authorization.

 

As soon as practicable, and
in any event within ten (10) Business Days, after the Closing Date, the
Company shall cause to be prepared and filed with the SEC a preliminary proxy
statement relating to a special meeting of the Company’s stockholders (the “Special Meeting”) to be duly called and held for the Company’s
stockholders to consider and act upon (a) a proposal the requisite
affirmative vote of the Company’s stockholders for which is necessary to
approve the issuance of shares of Common Stock upon conversion of the Shares in
satisfaction of the requirements of Sections 312.03(b) and (c) of the
NYSE Listed Company Manual (the “Required Stockholder
Approval”), (b) a proposal to increase the number of shares of
authorized Common Stock to permit the full conversion of the Shares (the “Increase Authorization”) and (c) a proposal to amend
the Company Plans so as to enable the repricing or replacement of existing
stock options and shares of restricted stock and the grant of new stock options
and shares of restricted stock in order to provide equity incentives to
participants in such plans as the Board may determine to be in the best
interests of the Company from time to time. 
The Company shall notify each Purchaser promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to such proxy statement or for additional
information and will supply each Purchaser with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to such proxy statement.  Upon resolution of all comments by the SEC on
such preliminary proxy statement to the Company’s reasonable satisfaction or,
if the SEC does not review such preliminary proxy statement, after the
expiration of ten (10) calendar days following the filing of such
preliminary proxy statement, the Company shall establish the date of, shall
establish the record date for stockholders of the Company eligible to attend
and vote at, shall call, and shall file with the SEC and disseminate to such
eligible stockholders a definitive proxy statement relating to the Special
Meeting and such proposals.  If the
Required Stockholder Approval and the Increase Authorization are not obtained
at the Special Meeting, unless the holders of a majority of the then
outstanding Shares otherwise notify the Company, the Company shall propose that
the Required Stockholder Approval and the Increase Authorization be obtained at
each subsequent special or annual meeting of the Company’s stockholders until
they are obtained; provided that any such meeting shall occur no less than once
in each subsequent six-month period commencing on the Closing Date.  Subject to applicable fiduciary duties,
unless the holders of a majority of the then outstanding Shares have notified
the Company that the Company is not required to propose that the Required
Stockholder Approval and the Increase Authorization be obtained, the Board of
Directors of the Company (the “Board”),
subject to their fiduciary duties, shall recommend to the Company’s
stockholders that they approve the proposals for the Required Stockholder
Approval and the Increase 

 

2

 

Authorization and shall not
withdraw such recommendation.  Each
Purchaser hereby agrees to vote all shares of Common Stock that such Purchaser
holds and is entitled to vote in favor of the proposals for the Required
Stockholder Approval and the Increase Authorization at the Special Meeting or,
if such proposals are not approved at the Special Meeting and unless the
holders of a majority of the then outstanding Shares have notified the Company
that the Company is not required to propose that the Required Stockholder
Approval and the Increase Authorization be obtained, then at each subsequent
special meeting or annual meeting of stockholders of the Company until such
proposals shall have been approved by the Company’s stockholders.

 

3.                                       Representations
and Warranties of the Purchasers.  Each Purchaser, severally as to such
Purchaser and not jointly, represents and warrants to the Company as follows:

 

3.1.          Organization
and Power and Authority; Legal Capacity. 
The Purchaser, if other than a natural person, is duly formed or
organized, validly existing and in good standing under the Laws of its
jurisdiction of organization or formation, and has all requisite corporate,
limited liability company, partnership or trust (as the case may be) power and
authority to enter into this Agreement and the other Transaction Documents and
instruments referred to herein to which it is a party and to consummate the
transactions contemplated hereby and thereby. 
The Purchaser, if a natural person, has full legal capacity to enter
into this Agreement and the other Transaction Documents and instruments
referred to herein to which he or she is a party and to consummate the
transactions contemplated hereby and thereby.

 

3.2.          Validity.   If such Purchaser is other than a natural
person, the execution, delivery and performance of this Agreement and the other
Transaction Documents and instruments referred to herein, in each case to which
such Purchaser is a party, and the consummation by such Purchaser of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary action on the part of such Purchaser. 
This Agreement has been duly executed and delivered by such Purchaser,
the other Transaction Documents and instruments referred to herein to which
such Purchaser is a party, have been duly executed and delivered by such
Purchaser and, assuming the due authorization, execution and delivery by the
Company, each such agreement constitutes and will constitute a valid and
binding obligation of such Purchaser enforceable against such Purchaser in
accordance with its terms, except: (i) as may be limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other Laws of
general application affecting enforcement of creditors’ rights generally, (ii) as
may be limited by Laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable Law.

 

3.3.          No
Brokers.  There is no broker,
investment banker, financial advisor, finder or other Person which has been
retained by or is authorized to act on behalf of such Purchaser who might be
entitled to any fee or commission for which the Company will be liable in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.

 

3

 

3.4.          Acquisition
for Own Account.  Such Purchaser understands that the Shares are “restricted
securities” and their offering, issuance and sale have not been registered
under the Securities Act or any applicable state or other securities Law.  Such Purchaser is acquiring the Shares as
principal for such Purchaser’s own account and not with a view to or for
distributing or reselling such Shares or any part thereof in violation of the
Securities Act or any applicable state or other securities Law, has no present
intention of distributing any of such Shares in violation of the Securities Act
or any applicable state or other securities Law, and has no direct or indirect
arrangement or understandings with any other Person or Persons to distribute or
regarding the distribution of such Shares in violation of the Securities Act or
any applicable state or other securities Law. 
Such Purchaser acknowledges that, except as set forth in the
Registration Rights Agreement, the form of which is attached hereto as Exhibit B
(the “Registration Rights Agreement”),
the Company has no obligation to register or qualify the Shares for
resale.  Such Purchaser, if other than a natural person, is acquiring
the Shares hereunder in the ordinary course of its business or investment
activity.

 

3.5.          Ability
to Protect Own Interests and Bear Economic Risks.  Such Purchaser, by reason of the business and
financial experience of its own management if such Purchaser is other than a
natural person or by reason of his or her own business and financial experience
if such Purchaser is a natural person, has the capacity to protect such
Purchaser’s own interests in connection with the transactions contemplated by
this Agreement and the other Transaction Documents.  Such Purchaser is able to bear the economic
risk of an investment in the Shares and is able to sustain a loss of all of
such Purchaser’s investment in the Shares without economic hardship if such a
loss should occur.

 

3.6.          Accredited
Investor.  Such Purchaser is an “accredited
investor” as that term is defined in Regulation D promulgated under the
Securities Act.

 

3.7.          Access
to Information.  Such Purchaser has
been given access to such Company documents, records, and other information,
and has had such opportunity to ask such questions of and receive answers from
the Company’s officers, employees, agents, accountants, and representatives
concerning the Company’s business, operations, financial condition, assets,
liabilities, and all other matters relevant to its investment in the Shares as
such Purchaser has determined sufficient for such Purchaser to make an informed
decision to purchase the Shares.  The
representations and warranties of Purchasers contained in this Section 3.7
shall not affect the Purchasers’ reliance on the representations and warranties
made by the Company pursuant to Section 4 hereof.

 

3.8.          No General Solicitation.  Such
Purchaser is not purchasing the Shares as a result of any advertisement,
article, notice or other communication regarding the Shares published in any
newspaper, magazine or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or general
advertisement.

 

4

 

3.9.          Sales and Confidentiality Prior to the Date
Hereof.  Other than consummating the transactions
contemplated hereunder, such Purchaser has not directly or indirectly, nor has
any Person acting on behalf of or pursuant to any understanding with such
Purchaser, executed any purchases or sales, including short sales (as defined in Rule 200
of Regulation SHO under the Exchange Act), of the securities of the Company during the period
commencing from the time that such Purchaser first became aware of the
transactions contemplated hereby until the date hereof, and such Purchaser
shall not do so until the transactions contemplated hereby are publicly
disclosed in accordance with Section 6.6 hereof.  Notwithstanding the foregoing, in the case of
a Purchaser that is a multi-managed investment vehicle whereby separate
portfolio managers manage separate portions of such Purchaser’s assets and the
portfolio managers have no direct knowledge of the investment decisions made by
the portfolio managers managing other portions of such Purchaser’s assets, the
representation set forth above shall only apply with respect to the portion of
assets managed by the portfolio manager that made the investment decision to
purchase the Shares under this Agreement. 
Other than to any other Person who is a party to this Agreement or to
such Purchaser’s legal or financial advisors who have been informed by such
Purchaser’s confidentiality obligations hereunder, such Purchaser has
maintained the confidentiality of the existence and terms of the transactions
contemplated hereby, and shall continue to do so until such transactions are
publicly disclosed in accordance with Section 6.6 hereof.

 

3.10.        Residence.  The office or offices of such Purchaser in
which such Purchaser’s investment decision was made, and which is such
principal place of business if such Purchaser is other than a natural person or
is such Purchaser’s residence if such Purchaser is a natural person, is located
at the address or addresses of such Purchaser set forth on Schedule I
hereto.

 

4.                                       Representations
and Warranties by the Company.  Except as set forth in the SEC Reports or in
the disclosure schedules attached hereto (the “Disclosure
Schedules”), the Company represents and warrants to each Purchaser
as follows:

 

4.1.          Organization
and Qualification.  The Company and
each of its Subsidiaries: (a) is duly organized, validly existing and in
good standing (in such jurisdictions where the concept of “good standing” is
recognized) under the Laws of the jurisdiction in which it is incorporated or
organized; and (b) has full power and authority and the legal right to own
or license and operate its property and assets and to carry on its business as
it is now being conducted and as contemplated in this Agreement.  The Company and
each of its Subsidiaries is duly qualified and in good standing (in such
jurisdictions where the concept of “good standing” is recognized) as a foreign corporation authorized to do business in
each of the jurisdictions in which the character of the properties owned or
held under lease by it or the nature of the business transacted by it makes
such qualification necessary and where the failure to be so qualified
and in good standing as a foreign corporation authorized to do business would
reasonably be expected to have a Material Adverse Effect.

 

5

 

4.2.          Capitalization.  The authorized capital stock of the Company
consists of 30,000,000 shares of Common Stock and 500,000 shares of preferred
stock, par value $0.10 per share, of the Company.  As of the date of this Agreement, (i) 19,351,365
shares of Common Stock are issued and outstanding (including 157,806 shares as
restricted stock units), (ii) no shares of preferred stock are issued and
outstanding; and (iii) 3,482 shares of Common Stock are held in
treasury.  As of the date of this
Agreement, there are 2,857,514 shares of Common Stock authorized and reserved
for future issuance under the Company’s Restated Stock Option Plan, as amended
on November 22, 2002, and the Company’s 2007 Equity Incentive Plan
(collectively, the “Company Plans”) (including, as of the
date of this Agreement, outstanding Company Options to purchase 1,979,626
shares of Common Stock and 877,888 shares of unvested restricted stock.  As of the date of this Agreement, there are
110,493 shares of Common Stock authorized and reserved for future issuance
under outstanding warrants.  Except as
set forth above, as of the date of this Agreement, no shares of capital stock
of, or other equity or voting interests in, the Company, or options, warrants
or other rights to acquire any such stock or securities are issued, reserved
for issuance or outstanding.  All
outstanding shares of capital stock of the Company are, and all shares that may
be issued pursuant to the Company Plans or outstanding warrants will be, when
issued in accordance with the terms thereof, duly authorized, validly issued,
fully paid and non assessable and not subject to preemptive rights.

 

4.3.          Authority;
Valid Issuance of Shares

 

(a)           The Company has all necessary corporate power and
authority to enter into this Agreement and the other Transaction Documents and
to perform its obligations hereunder and thereunder.  The Company has taken all necessary action on
its part required to authorize the execution and delivery of this Agreement and
the other Transaction Documents and the performance of its obligations
hereunder and thereunder, except that the Required Stockholder Approval is and
the Increase Authorization may be required for the full conversion of the
Shares into shares of Common Stock.  Each
of this Agreement and the other Transaction Documents has been duly executed
and delivered by the Company and, assuming the due authorization, execution and
delivery by the Purchasers, constitutes a valid and binding agreement of the
Company and is enforceable against the Company in accordance with its terms,
except: (i) as may be limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other Laws of
general application affecting enforcement of creditors’ rights generally, (ii) as
may be limited by Laws relating to the availability of specific performance,
injunctive relief or other equitable remedies and (iii) insofar as
indemnification and contribution provisions may be limited by applicable Law.

 

(b)           The
issuance of the Shares has been duly authorized by all requisite corporate
action.  When the Shares are issued, sold
and delivered following the filing of the Certificate of Designation with the
Secretary of State of the State of Delaware and in accordance with the terms of
this Agreement for the consideration expressed herein, the Shares will be duly
and validly issued and outstanding, fully paid, and nonassessable, and will be
free of restrictions on transfer other than restrictions on transfer under this
Agreement, the Certificate of

 

6

 

Designation
and applicable United States federal and state or other securities Laws and,
except as otherwise set forth herein, the Purchasers shall be entitled to all
rights accorded to a holder of Series A Preferred Stock.

 

(c)           The shares of Common Stock issuable
upon the conversion of the Shares, upon receipt of the Required Stockholder
Approval and the Increase Authorization, the filing of the related Certificate
of Designation with the Secretary of State of the State of Delaware and the
filing of an amendment to the Company’s Restated Certificate of Incorporation
to increase the number of authorized shares of Common Stock pursuant to the
Increase Authorization, will have been duly authorized by all necessary
corporate action and when so issued upon such conversion will be validly
issued, fully paid and nonassessable, will not subject the holders thereof to
personal liability and will not be subject to preemptive rights of any other
stockholder of the Company.

 

4.4.          Consents and Approvals; No Violation.

 

(a)           Neither the execution and delivery of this Agreement by
the Company nor the consummation of the transactions contemplated hereby by the
Company will: (i) assuming the Required Stockholder Approval and the
Increase Authorization are obtained, conflict with or violate the Restated
Certificate of Incorporation or bylaws (or equivalent organizational and
governing documents) of the Company or any of its Subsidiaries; (ii) assuming
all consents, approvals, authorizations and permits contemplated by clause (b) of
this Section 4.4 have been obtained, and all filings and notifications
described in such clause have been made, conflict with or violate any Laws; (iii) violate
or conflict with, or result in a breach of any provision of, or require any
consent, waiver or approval or result in a default or give rise to any right of
termination, cancellation, modification or acceleration (or an event that, with
the giving of notice, the passage of time or otherwise, would constitute a
default or give rise to any such right) under, any of the terms, conditions or
provisions of any note, bond, mortgage, lease, license, agreement, contract,
indenture or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries or
any of their respective properties or assets may be bound; (iv) result
(or, with the giving of notice, the passage of time or otherwise, would result)
in the creation or imposition of any lien on any asset of the Company or any of
its Subsidiaries; or (v) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company or any of its
Subsidiaries or by which any of their respective properties or assets are
bound, except, in case of clauses (ii), (iii), (iv) and (v), any such
conflict, violation, breach, default or lien as have not had and would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.

 

(b)           The execution, delivery and performance of this Agreement
and the other Transaction Documents by the Company and the consummation of the
transactions contemplated hereby and thereby by the Company do not and will not
require any consent, approval, authorization or permit of, or filing with or
notification to, any Person or Governmental Entity, except (i) the
applicable requirements of the Exchange Act, and the rules

 

7

 

and regulations promulgated thereunder, (ii) approvals
and filings in connection with the Required Stockholder Approval and the
Increase Authorization, (iii) as required by the NYSE, and (iv) any
such consent, approval, authorization, permit, filing or notification the
failure of which to make or obtain has not had and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect. 
The only vote of the stockholders of the Company required to approve (i) the
conversion of the Shares into Common Stock for purposes of Section Sections
312.03(b) and (c) of the NYSE Listed Company Manual is a majority of
the votes cast on such proposal by holders of Common Stock who are entitled to
vote such shares on such proposal, provided that the total vote cast on the
proposal represents over 50% in interest of all securities entitle to vote on
the proposal, and (ii) the amendment of the Company’s Restated Certificate
of Incorporation to increase the number of authorized shares of Common Stock to
at least such number as will be sufficient to permit the full conversion of the
Shares into Common Stock, is the affirmative vote of the holders of not less
than a majority of the outstanding Common Stock.

 

4.5.          SEC Reports; Financial Statements

 

(a)           Since June 30, 2008, the Company has timely filed or
furnished, without any extensions thereof except as permitted by Rule 12b-25
of the Exchange Act, all forms, reports, statements, certifications and other
documents (the “SEC Reports”)
required by the Exchange Act to be filed or furnished by it with or to the SEC,
all of which have complied, as to form, as of their respective filing dates in
all material respects with all applicable requirements of the Exchange Act and,
in each case, the rules and regulations of the SEC promulgated
thereunder.  None of the SEC Reports,
including any financial statements or schedules included or incorporated by
reference therein, at the time filed or furnished, and giving effect to any
amendments or supplements thereto or any subsequent SEC Report filed prior to
the date of this Agreement, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading that has not been superseded by a subsequently
filed SEC Report that corrects or completes any such untrue statement or
omission.  To the knowledge of the
Company, none of the SEC Reports is the subject of ongoing SEC review or
outstanding SEC comment.  None of the
Company’s Subsidiaries is required to file periodic reports with the SEC
pursuant to the Exchange Act.

 

(b)           The financial statements of the
Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the
SEC with respect thereto as in effect at the time of filing.  Such financial statements have been prepared
in accordance with GAAP, except as may be otherwise specified in such financial
statements or the notes thereto and except that unaudited financial statements
may not contain all footnotes required by GAAP, and fairly present in all
material respects the financial position of the Company and its consolidated
Subsidiaries as of and for the dates thereof and the results of operations and
cash flows of the Company and its consolidated 

 

8

 

Subsidiaries for the periods
then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments.

 

(c)           Neither the Company nor any of its
consolidated Subsidiaries has any liabilities, obligations, claims or losses
(whether liquidated or unliquidated, secured or unsecured, absolute, accrued,
contingent or otherwise) that would be required to be disclosed on the Company’s
most recent consolidated balance sheet filed with the SEC (including the notes
thereto) in conformity with GAAP that are not disclosed in the SEC Reports or
reserved on the most recent consolidated balance sheet of the Company and its
consolidated Subsidiaries included in the SEC Reports, other than those
incurred in the ordinary course of the Company’s or its Subsidiaries’
respective businesses since the date of such most recent consolidated balance
sheet filed with the SEC or which, individually or in the aggregate, do not or
would not reasonably be expected to have a Material Adverse Effect.

 

4.6.          Litigation. 
Except as disclosed in the SEC Reports, the Company has not received
notice of any claim, action, suit, proceeding, arbitration, mediation or
governmental investigation that is pending or, to the knowledge of the Company,
threatened against or relating to the Company or any of its Subsidiaries or any
properties or assets of the Company or any of its Subsidiaries, other than any
such claim, action, suit, proceeding, arbitration, mediation or governmental
investigation that would not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.

 

4.7.          Compliance with Law; No
Default.  Neither the Company nor any of its Subsidiaries is, or has been since June 30,
2008 in conflict with, in default with respect to or in violation of: (a) the Restated Certificate of
Incorporation or bylaws (or equivalent organizational and governing documents)
of the Company or any of its Subsidiaries, (b) any Law applicable to the Company or any of its Subsidiaries or by which
any property or asset of the Company or any of its Subsidiaries is bound or affected or (c) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries, or
any property or asset of the Company or any of its Subsidiaries, is bound or affected, except in any
such case as has not had and would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

 

4.8.          Absence of Certain
Changes.  Except as set forth in the SEC Reports, since
June 30, 2008 there has not been any change, development, event,
condition, occurrence or effect that individually or in the aggregate has had
or would reasonably be expected to have a Material Adverse Effect.

 

4.9.          Exemption from
Registration.  Subject to, and in reliance on, the
representations, warranties and covenants made herein by the Purchasers, the
offering, issuance and sale of the Shares in accordance with the terms and on
the bases of the representations and 

 

9

 

warranties set forth in this Agreement
may and shall properly occur pursuant
to one or more applicable exemptions from the registration requirements of the Securities Act.

 

4.10.        No Brokers.  None of the
Company or any of its officers, directors, employees or Affiliates, has
employed or made, or will enter into or make, any agreement, contract,
arrangement or understanding with any broker, finder or similar agent or any
Person that will result in any liability of any of the Purchaser or any of such
Purchaser’s Affiliates, for any finder’s fee, brokerage fee or commission or
similar payment in connection with the transactions contemplated hereby nor is
there any claim by any Person, or to the knowledge of the Company, any basis
for a claim by any Person for any such finder’s fee, brokerage fee or
commission or similar payment.

 

4.11.        Title.  The
Company and each Subsidiary has good and marketable title in fee simple to all
real property and good and marketable title to all personal property owned by
it which is material to its business, in each case free and clear of all liens,
encumbrances and defects except such as do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of
such property.  Any real property and
facilities held under lease by the Company or any of its Subsidiaries are held
by it under valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and proposed to be made
of such property and buildings.

 

4.12.        Patents and Trademarks.  The
Company and the Subsidiaries have, or have rights to use, patents, trademarks,
service marks, trade names, trade secrets, inventions, copyrights, and other
intellectual property rights necessary for use in connection with its business
and which the failure to so have would have or would reasonably be expected to
have a Material Adverse Effect (collectively,
the “Intellectual Property Rights”).  Neither the Company nor any Subsidiary
has received any written notice that any product or service offered by the
Company or any Subsidiary as of the date hereof, or any use of its Intellectual
Property Rights as of the date hereof, violate or infringe upon the rights of
any other Person.  All such Intellectual
Property Rights are enforceable and, to the knowledge of the Company, there is
no existing infringement by another Person of any of the Intellectual Property
Rights.

 

4.13.        Labor Relations.  No material
labor dispute exists or, to the knowledge of the Company, is imminent with
respect to any of the employees of the Company or any of its Subsidiaries which
has resulted in or would reasonably be expected to result in a Material Adverse
Effect.  No executive officer is, or is
now expected to be, in material violation of any term of any employment
contract, confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any
restrictive covenant, and the continued employment of each such executive
officer does not subject the Company to any liability with respect to any of
the foregoing matters.  The Company and
each Subsidiary is in compliance with all applicable Laws and regulations
relating to employment and employment practices, terms and conditions of
employment and wages and hours, except where 

 

10

 

the failure to be in compliance
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

4.14.        Exchange Act Registration.  The Common Stock is registered pursuant to Section 12(b) of
the Exchange Act, and the Company has taken no action designed to, or which is
likely to have the effect of, terminating the registration of the Common Stock
under the Exchange Act nor has the Company received any notification that the
SEC is contemplating terminating such registration.

 

4.15.        Application of Takeover Protections.  The Company and the Board
have taken all necessary action to ensure that the transactions contemplated by
this Agreement and any of the transactions contemplated hereby will be deemed
to be exceptions to the provisions of Section 203 of the Delaware General
Corporation Law and the Company’s Restated Certificate of Incorporation, and
that any other similar moratorium, control share acquisition, fair price,
business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover Law does not and will not apply to
this Agreement or any of the transactions contemplated hereby.

 

4.16.        Insurance.  The
Company and each Subsidiary is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
customary in the businesses and locations in which the Company and each
Subsidiary is engaged.

 

4.17.        Regulatory Permits.  The
Company and each Subsidiary possesses all certificates, authorizations and
permits issued by the appropriate regulatory authorities necessary to conduct
their respective businesses as presently conducted (“Material Permits”),
except where the failure to possess such permits would not, individually or in
the aggregate, have or would reasonably be expected to result in a Material
Adverse Effect, and neither the Company nor any Subsidiary has received any
written notice of proceedings relating to the revocation or modification of any
Material Permit.

 

4.18.        Environmental Laws.  The
Company and each Subsidiary (a) is in compliance in all material respects
with any and all Environmental Laws (as hereinafter defined); (b) has
received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses; and (c) is
in compliance with all terms and conditions of any such permit, license or
approval, except where the failure to so comply would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse
Effect.  The term “Environmental Laws” means all applicable
Laws relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), including, without limitation, Laws relating to
emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”) into the environment, or otherwise relating
to the manufacture, processing, 

 

11

 

distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions,
judgments, licenses, notices or notice letters, orders, permits, plans or
regulations issued, entered, promulgated or approved thereunder.

 

4.19.        Investment Company. 
The Company is not, and is not an Affiliate of, and immediately after
receipt of payment for the Shares will not be or be an Affiliate of, an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.

 

4.20.        Offering of Securities.  Neither the Company nor any Person acting on
its behalf has taken any action (including any offering of any of the Shares to
be issued pursuant to this Agreement under the Securities Act and the rules and
regulations of the SEC thereunder) which might subject the offering, issuance
or sale of any of the Shares to the Purchasers pursuant to this Agreement to
the registration requirements of the Securities Act.

 

5.             Conditions of
Parties’ Obligations.

 

5.1.          Conditions of the Purchasers’ Obligations.  The obligations of each of the Purchasers
under Section 1 hereof are subject to the fulfillment prior to or on the
Closing Date (and each additional closing date if any additional Shares are
issued, sold and purchased hereunder after the Closing Date) of all of the
following conditions, any of which may be waived in whole or in part by such
Purchaser severally in his, her or its absolute discretion.

 

(a)           Representations
and Warranties.  Each of the
representations and warranties of the Company contained in Section 4
hereof shall be true and correct (i) in all respects, if such
representations and warranties are qualified by materiality, Material Adverse
Effect or similar terms and phrases and (ii) in all material respects, if
such representations and warranties are not qualified by materiality, Material
Adverse Effect or similar terms and phrases, in each case at and as of the date
hereof and the Closing Date, as though such representations and warranties were
made on the Closing Date (except for representations and warranties that
expressly speak only as of a specific date or time other than the Closing Date,
which representations and warranties shall continue on the Closing Date to have
been true and correct (in all material respects, if such representations and
warranties are not qualified by materiality, Material Adverse Effect or similar
terms and phrases) as of such specific date or time), and the Purchasers shall
have received a certificate, dated the Closing Date, executed by an officer of
the Company to such effect.

 

(b)           Performance.  The Company shall have performed and complied
in all material respects with all agreements, obligations and conditions
contained in this Agreement that are required to be performed or complied with
by it on or before the Closing, and the Purchasers shall have received a
certificate, dated the Closing Date, executed by an officer of the Company to
such effect.

 

12

 

(c)           Approval of
Senior Lenders.  The Company shall
have obtained, if required under the Credit Agreement, the consent of the
senior lenders under the Credit Agreement with respect to the execution and
delivery of this Agreement and the other Transaction Documents and the
transactions contemplated hereby and thereby.

 

(d)           Filing of
Certificate of Designation.  The
Certificate of Designation shall have been filed with the Secretary of State of
the State of Delaware and the Purchasers have received evidence of such filing
satisfactory to counsel for the Purchasers.

 

(e)           Registration
Rights Agreement.  The Company shall
have executed and delivered the Registration Rights Agreement.

 

(f)            Opinion of
Company Counsel.  The Purchasers
shall have received an opinion from Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo P.C., counsel to the Company, dated the Closing Date, in form and
substance satisfactory to counsel for the Purchasers.

 

(g)           Share
Certificates.  The Purchasers
participating in the Closing shall have received certificates representing the
number of Shares purchased by such Purchaser.

 

(h)           Consents and
Waivers  The Company shall have
obtained all consents or waivers necessary to execute and perform its
obligations under this Agreement and the other Transaction Documents, to issue
the Shares, and to carry out the transactions contemplated hereby and thereby,
except for the Required Stockholder Approval and the Increase
Authorization.  Other than as excepted in
the immediately preceding sentence and any filings with the SEC in connection
therewith, all corporate and other action and governmental filings necessary to
effectuate the terms of this Agreement, the other Transaction Documents and
other agreements and instruments executed and delivered by the Company in
connection herewith shall have been made or taken.

 

(i)            No Material
Adverse Effect.  There shall have
been no Material Adverse Effect with respect to the Company since the date
hereof.

 

(j)            Expenses of
Purchaser’s Counsel and Consultants. 
The Company shall have paid, in accordance with Section 6.13
hereof, the Expenses of the Purchasers or shall have made provision therefor
satisfactory to the Purchasers.

 

5.2.          Conditions of the Company’s Obligations.  The obligations of the Company under Section 1
hereof are subject to the fulfillment prior to or on the Closing Date of all of
the following conditions, any of which may be waived in whole or in part by the
Company.

 

13

 

(a)           Representations
and Warranties.  Each of the
representations and warranties of each Purchaser participating in the Closing
contained in Section 3 hereof shall be true and correct (i) in all
respects, if such representations and warranties are qualified by materiality,
Material Adverse Effect or similar terms and phrases and (ii) in all
material respects, if such representations and warranties are not qualified by
materiality, Material Adverse Effect or similar terms and phrases, in each case
at and as of the date hereof and the Closing Date, as though such
representations and warranties were made on the Closing Date (except for
representations and warranties that expressly speak only as of a specific date
or time other than the Closing Date, which representations and warranties shall
continue on the Closing Date to have been true and correct (in all material
respects, if such representations and warranties are not qualified by
materiality, Material Adverse Effect or similar terms and phrases) as of such
specific date or time), and the Company shall have received a certificate from
such Purchaser, dated the Closing Date, executed by an officer of such
Purchaser, or a natural person who is a Purchaser, to such effect.

 

(b)           Performance.  Each Purchaser participating in the Closing
shall have performed and complied in all material respects with all agreements,
obligations and conditions contained in this Agreement that are required to be
performed or complied with by it on or before the Closing, and the Company
shall have received a certificate from such Purchaser, dated the Closing Date,
executed by an officer of such Purchaser, or a natural person who is a
Purchaser, to such effect.

 

(c)           Registration
Rights Agreement.  Each Purchaser
participating in the Closing shall have executed and delivered the Registration
Rights Agreement.

 

(d)           Commitment Amount.  The Company shall have received the
Commitment Amount from the Purchasers participating in the Closing.

 

(e)           Approval of
Senior Lenders.  The Company shall
have obtained, if required under the Credit Agreement, the consent of the senior
lenders under the Credit Agreement with respect to the execution and delivery
of this Agreement and the other Transaction Documents and the transactions
contemplated hereby and thereby.

 

(f)            Extension of
Subordinated Debt.  Federal Partners
L.P. shall have executed and delivered to the Company a writing evidencing the
extension of the maturity of the Subordinated Debt to July 19, 2012.

 

5.3.          Conditions of Each Party’s Obligations.  The respective obligations of each party to
consummate the transactions at the Closing contemplated hereunder are subject
to the parties being reasonably satisfied as to the absence of (a) litigation
challenging or seeking damages in connection with the transactions contemplated
by this Agreement or any of the other Transaction Documents in which there has
been issued any order or injunction delaying or 

 

14

 

preventing the consummation of the
transactions contemplated hereby or thereby, and (b) any statute, rule,
regulation, injunction, order or decree, enacted, enforced, promulgated,
entered, issued or deemed applicable to this Agreement or the transactions
contemplated hereby by any court, government or governmental authority or
agency or legislative body, domestic, foreign or supranational prohibiting or
enjoining the transactions contemplated by this Agreement.

 

6.             Covenants.

 

6.1.          Transfer Restrictions; Legend.  In addition to the provisions of the
Certificate of Designation providing that the Shares may not be transferred or
otherwise disposed of during the period from the Closing Date through the date
which is eighteen (18) months thereafter, except insofar as is necessary for
the holders thereof to participate in any Liquidation Event or Change of
Control in accordance with the provisions of the Certificate of Designation,
the Shares may only be transferred or otherwise disposed of in compliance with
state and federal securities Laws.  In
connection with any transfer of Shares other than pursuant to an effective
registration statement, the Company may require the transferor thereof to
provide to the Company an opinion of counsel selected by the transferor and
reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Shares under the
Securities Act.  The Purchasers agree to
the imprinting of a legend on the stock certificates representing the Shares in
substantially the following form:

 

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF
ANY STATE OR ANY FOREIGN REGULATORY REGIMES. 
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
ACT AND THE APPLICABLE STATE AND FOREIGN SECURITIES LAWS, AND PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM.  THE
SECURITIES REPRESENTED HEREBY ARE ALSO SUBJECT TO RESTRICTIONS ON TRANSFER AS
PROVIDED IN THE CERTIFICATE OF DESIGNATION FOR THE SECURITIES. THE ISSUER OF
THESE SECURITIES (THE “COMPANY”) MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE CERTIFICATE OF
DESIGNATION.”

 

Upon request of a Purchaser, upon receipt by
the Company of an opinion of counsel reasonably satisfactory to the Company to
the effect that such legend is no longer required under the Securities Act and
applicable state Laws, the Company shall promptly cause the foregoing legend to
be removed from any certificate for any Shares upon the expiration of such
transfer and 

 

15

 

other restrictions set forth in the
Certificate of Designation.  Each
Purchaser acknowledges that the Shares have not been registered under the
Securities Act or under any state securities Laws and agrees that he, she or it
will not sell or otherwise dispose of any of the Shares, except in compliance
with the registration requirements or exemption provisions of the Securities
Act and any other applicable securities Laws.

 

6.2.          Reporting Requirements.  Until the time that no Purchaser owns Shares,
unless the holders of a majority of the then outstanding Shares notify the
Company to the contrary or vote or consent to do so, the Company covenants to
maintain the registration of the Common Stock under Section 12(b) or
12(g) of the Exchange Act and to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to the
Exchange Act.

 

6.3.          Reservation of Common Stock.  The Company shall reserve that number of
shares of Common Stock sufficient for issuance upon conversion of the Shares
owned at any time by the Purchasers without regard to any limitation on such
conversion; provided that the Company shall not be required to reserve such
sufficient number of shares of Common stock prior to the Required Stockholder
Approval and the Increase Authorization.

 

6.4.          Reasonable Best Efforts;
Consents and Governmental Approvals.  Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use its reasonable best
efforts to take, or cause to be taken, all appropriate action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
Laws to consummate and make effective, in the most expeditious manner practicable,
the transactions contemplated by this Agreement (including, without limitation,
satisfying the closing conditions in Section 5 hereof).  Without limiting the foregoing, each of the
Company and the Purchasers agrees to use reasonable best efforts to: (a) obtain,
and cause (with respect to the Company) the Company’s and (with respect to a
Purchaser) the Purchaser’s respective directors, officers, employees,
Affiliates or other related Persons as may be so required to obtain, all
material consents, approvals and authorizations that are required to be
obtained under any federal, state, local or foreign Law as promptly as
practicable after the date hereof; (b) prevent the entry, enactment or
promulgation of any threatened or pending injunction or order that could
materially adversely affect the ability of the parties hereto to consummate the
transactions under this Agreement; (c) lift or rescind any injunction or
order that could materially and adversely affect the ability of the parties
hereto to consummate the transactions under this Agreement; (d) in the
event that any action, suit, proceeding or investigation relating hereto or to
the transactions contemplated hereby is commenced, whether before or after the
date of this Agreement, cooperate to defend vigorously against it and respond
thereto; and (e) effect all necessary registrations and filings and
submissions of information requested by any Governmental Entity.

 

6.5.          Integration. 
The Company shall not sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in Section 2 of
the Securities Act) that would be integrated with the offer or sale of the
Shares in a manner that

 

16

 

would require the registration under the
Securities Act of the sale of the Common Stock to the Purchasers.

 

6.6.          Securities Laws
Disclosure; Publicity.  The Company
shall, by 5:30 p.m. (New York City local time) on the fourth (4th) Business Day following the
date hereof, issue a press release disclosing the material terms of the
transactions contemplated hereby, which press release shall comply with the
provisions of Rule 135c under the Securities Act, and shall file a Current
Report on Form 8-K in compliance with the requirements thereof and
subsection (d) of Rule 135c under the Securities Act.  The Company and each Purchaser shall consult
with each other in issuing any other press releases with respect to the
transactions contemplated hereby, and neither the Company nor any Purchaser
shall issue any such press release or otherwise make any such public statement
without the prior consent of the Company, with respect to any press release of
any Purchaser, or without the prior consent of each Purchaser, with respect to
any press release of the Company, in either case which consent shall not
unreasonably be withheld or delayed, except if such disclosure is required by
Law, in which case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication. Notwithstanding
the foregoing, the Company shall not publicly disclose the name of any
Purchaser, or include the name of any Purchaser in any filing with the SEC or
any regulatory agency or Trading Market, without the prior written consent of
such Purchaser, except (i) as required by federal securities Law in
connection with (A) any registration statement contemplated by the
Registration Rights Agreement, (B) any filing required by the SEC and (C) the
filing of final Transaction Documents (including signature pages thereto)
with the SEC  and (ii) to the extent
such disclosure is required by Law or NYSE regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure
permitted under this clause (ii).

 

6.7.          Non-Public
Information.  Except with respect to
the material terms and conditions of the transactions contemplated by the
Transaction Documents, the Company covenants and agrees that neither it, nor
any other Person acting on its behalf, will provide any Purchaser or its agents
or counsel with any information that the Company believes constitutes material
non-public information, unless prior thereto such Purchaser shall have executed
a written agreement regarding the confidentiality and use of such
information.  The Company understands and
confirms that each Purchaser shall be relying on the foregoing covenant in
effecting transactions in securities of the Company.

 

6.8.          Listing of Common
Stock.  The Company shall use its best
efforts to maintain the listing of Common Stock, and promptly cause the shares
of Common Stock reserved for issuance pursuant to the conversion of the Shares
to be approved for listing, on a Trading Market, subject to official notice of
issuance and upon obtaining the Required Stockholder Approval and the Increase
Authorization.  The Company shall comply
in all respects with the Company’s reporting, filing and other obligations
under the bylaws or rules of the Trading Market.

 

17

 

6.9.          Use of Proceeds.  The Company shall use the net proceeds from
the sale of Common Stock hereunder for working capital and general corporate
purposes.

 

6.10.        Indemnification of
Purchasers.   Subject to the
provisions of this Section 6.10, the Company shall indemnify and hold each
Purchaser and its directors, officers, shareholders, members, partners,
employees and agents (and any other Persons with a functionally equivalent role
of a Person holding such titles notwithstanding a lack of such title or any
other title), each Person who controls such Purchaser (within the meaning of Section 15
of the Securities Act and Section 20 of the Exchange Act), and the
directors, officers, shareholders, agents, members, partners or employees (and
any other Persons with a functionally equivalent role of a Person holding such
titles notwithstanding a lack of such title or any other title) of such
controlling persons (each, a “Purchaser Party”) harmless from any and all losses,
liabilities, obligations, claims, contingencies, damages, costs and expenses,
including all judgments, amounts paid in settlements, court costs and
reasonable attorneys’ fees and costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of
any of the representations, warranties, covenants or agreements made by the
Company in this Agreement or in the other Transaction Documents or (b) any
action instituted against a Purchaser Party in any capacity, or any of them or
their respective Affiliates, by any stockholder of the Company who is not an
Affiliate of such Purchaser Party, with respect to any of the transactions
contemplated by the Transaction Documents (unless such action is based upon a
breach of such Purchaser’s representations, warranties or covenants under the
Transaction Documents or any agreements or understandings such Purchaser may
have with any such stockholder or any violations by the Purchaser of state or
federal securities Laws or any conduct by such Purchaser which constitutes
fraud, gross negligence, willful misconduct or malfeasance).  If any action shall be brought against any
Purchaser Party in respect of which indemnity may be sought pursuant to this
Agreement, such Purchaser Party shall promptly notify the Company in writing,
and the Company shall have the right to assume the defense thereof with counsel
of its own choosing reasonably acceptable to the Purchaser Party.  Any Purchaser Party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Purchaser Party except to the extent that (i) the employment thereof
has been specifically authorized by the Company in writing, (ii) the
Company has failed after a reasonable period of time to assume such defense and
to employ counsel or (iii) in such action there is, in the reasonable
opinion of such separate counsel, a material conflict on any material issue
between the position of the Company and the position of such Purchaser Party,
in which case the Company shall be responsible for the reasonable fees and
expenses of no more than one such separate counsel for all Purchaser
Parties.  The Company will not be liable
to any Purchaser Party under this Agreement (y) for any settlement by a
Purchaser Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (z) to the extent, but
only to the extent that a loss, claim, damage or liability is attributable to
any Purchaser’s breach of any of the representations, warranties, covenants or
agreements made by such Purchaser in this Agreement or in the other Transaction
Documents.

 

18

 

6.11.        Form D; Blue Sky
Filings.  The Company agrees to
timely file a Form D with respect to the Shares as required under
Regulation D and to provide a copy thereof, promptly upon request of any
Purchaser.  The Company shall take such
action as the Company shall reasonably determine is necessary in order to
obtain an exemption for, or to qualify the Shares for, sale to the Purchasers
at the Closing under applicable securities or “blue sky” Laws of the states of
the United States or any other applicable jurisdiction, and shall provide
evidence of such actions promptly upon request of any Purchaser.

 

6.12.        Sale Restriction.  Each Purchaser agrees not to directly or
indirectly offer, sell, assign, transfer, pledge, contract to sell, or
otherwise dispose of any Shares beginning on the date that the Shares are
issued in accordance with Section 1.2 hereof and ending eighteen (18)
months thereafter.

 

6.13.        Expenses of Purchasers.  As a condition to the Closing, the Company
agrees to reimburse the Purchasers for the payment of all out-of-pocket fees
and expenses incurred by the Purchasers in connection with the preparation and
negotiation of this Agreement, the other Transaction Documents and the
consummation of the transactions contemplated hereby (the “Expenses”)
in an amount not to exceed $75,000.  The
Expenses may include the reasonable legal fees and expenses of one law firm as
counsel to the Purchasers.

 

6.14.        Board of Directors.  The Company shall take all actions reasonably
necessary to effectuate the right of the holders of Series A Preferred
Stock to designate one (1) member of the Board, in accordance with the
provisions of the Certificate of Designation, and, effective upon the Closing,
the Board shall appoint such individual designated by the holders of Series A
Preferred Stock, who shall be reasonably acceptable to the Nominating and
Corporate Governance Committee of the Board, to serve on the Board from and
after the Closing and until such designee’s successor is designated and
elected.

 

7.             PREEMPTIVE RIGHTS

 

7.1.          New Issuances;
Preemptive Rights.  The Company shall
not issue, sell, exchange, agree or obligate itself to issue, sell or exchange,
or reserve or set aside for issuance, sale or exchange (a “New Issuance”) any (i) shares of
capital stock of the Company, (ii) warrants, options or other rights to
purchase capital stock of the Company (collectively, “Rights”) or (iii) debentures or other
securities convertible into or exchangeable for shares of Capital Stock of the
Company (collectively, “Convertible Securities”),
other than in an Exempt Issuance (as defined in Section 7.4 hereof),
unless in the case of each New Issuance, the Company shall have first offered
to sell such securities (the “Offered
Securities”) to the Purchasers in accordance with the provisions of Section 7.2
hereof.

 

7.2.          Right to Purchase
Offered Securities.  Each time the
Company proposes to enter into a New Issuance of Offered Securities (other than
an Exempt Issuance), the Company shall deliver to each Purchaser a notice (the “Offer Notice”) stating (i) its bona
fide

 

19

 

intention to offer such Offered Securities, (ii) the
type and amount of Offered Securities to be offered and (iii) the price
and other terms and conditions upon which it proposes to offer such Offered
Securities.  Each Purchaser shall have
the right to purchase up to such portion of the Offered Securities equal to the
total amount of Offered Securities multiplied by a fraction, the numerator of
which equals the number of shares of Common Stock then held by such Purchaser plus
the number of shares of Common Stock issuable to such Purchaser upon conversion
of all shares of Series A Preferred Stock or other convertible preferred
stock of the Company then held by such Purchaser, and the denominator of which
equals the total number of shares of Common Stock then outstanding plus
the total number of shares of Common Stock issuable upon conversion of all
shares of Series A Preferred Stock or other preferred stock of the Company
then outstanding.  The percentage of
Offered Securities that each Purchaser is entitled to purchase pursuant to this
Section 7.2 shall be referred to as such Purchaser’s “Preemptive Proportionate Share”.  Each Purchaser shall exercise, if at all,
such Purchaser’s right to purchase up to such Purchaser’s Preemptive
Proportionate Share of the Offered Securities as set forth in the Offer Notice
by providing written notice to the Company delivered not later than thirty (30)
days after the receipt by such Purchaser of the Offer Notice specifying the
number of Offered Securities such Purchaser wishes to purchase.  If such Purchaser fails to exercise its right
to purchase within such period of thirty (30) days, such right shall expire
with respect to such New Issuance (except as provided in Section 7.3
hereof).  The Company shall promptly
inform, by written notice (the “Oversubscription
Notice”), each Purchaser that elects to purchase such Purchaser’s
full Preemptive Proportionate Share of the Offered Securities (each, a “Fully-Exercising Purchaser”) of any
Purchaser that fails to elect to purchase its full Pre-emptive Proportionate
Share of the Offered Securities and specifying the total number of Offered
Securities not elected to be purchased by the Purchasers pursuant to this Section 7.2.  Each Fully-Exercising Purchaser shall have
the right to purchase up to the balance of such Offered Securities by providing
written notice to the Company delivered not later than ten (10) days after
receipt of the Oversubscription Notice specifying the additional number of
Offered Securities such Fully-Exercising Purchaser wishes to purchase.  If the amount of such Offered Securities
elected to be purchased by all such Fully-Exercising Purchasers exceeds the
amount of Offered Securities available, such Fully-Exercising Purchasers shall
be entitled to purchase the Offered Securities on a pro rata basis in
accordance with their respective Preemptive Proportionate Shares or as they may
otherwise agree to among themselves.

 

7.3.          Sale of Offered Securities.  If all of the Offered Securities have not
been purchased by the Purchasers pursuant to Section 7.2 hereof, then the
Company shall have the right, for a period of sixty (60) days commencing on the
first day immediately following the expiration of all of the rights of the
Purchasers under Section 7.2 hereof to elect to purchase the Offered
Securities, to issue the Offered Securities at not less than, and on terms no
more favorable to the Purchasers than, the price and other terms specified in
the Offer Notice.  If for any reason the
Offered Securities are not issued within such period of sixty (60) days and at
such price and on such terms, the right to issue the Offered Securities in
accordance with the Offer Notice shall expire and the provisions of this
Agreement shall continue to be applicable to the Offered Securities.

 

20

 

7.4.          Exempt Issuances.  The rights set forth above shall not apply to
issuances (the “Exempt Issuances”)
in which shares of capital stock, Rights or Convertible Securities are issued:

 

(1)           as
a dividend or distribution payable pro rata to all holders of Common Stock
and/or other securities of the Company;

 

(2)           to
employees, consultants, advisors and directors of the Company in the form of
Common Stock or options to purchase shares of Common Stock, or any other
equity-related award, pursuant to an equity incentive plan or arrangement
approved by the Board;

 

(3)           in
connection with the conversion or exercise of any Rights or Convertible
Securities outstanding on the date hereof in accordance with the terms thereof
existing on the date hereof and upon the conversion of any preferred stock of
the Company;

 

(4)           in
a public offering of securities of the Company;

 

(5)           for
consideration other than cash or cash equivalents pursuant to a merger,
consolidation, acquisition or similar transaction approved by the Board
(including the director designated as described in Section 6.14 hereof);

 

(6)           pursuant
to any equipment loan or leasing arrangement, real property leasing arrangement
or debt financing from a bank or similar institution approved by the Board
(including the director designated as described in Section 6.14 hereof);
or

 

(7)           to
a strategic partner of the Company in connection with (A) joint venture,
manufacturing, marketing or distribution arrangements or (B) technology
transfer or development arrangements, provided that, the purpose of such
issuance is not to raise capital and, provided further, that, such issuance is
approved by the Board (including the director designated as described in Section 6.14
hereof).

 

7.5.          Termination.  The respective rights and obligations of the
parties under this Article 7 shall terminate if and at such time as the
Majority Holders consent to such termination or, in any case, immediately prior
to the full conversion of the Series A Preferred Stock.

 

8.             Miscellaneous.

 

8.1.          Entire Agreement; Amendments and Waivers.  This
Agreement and the Transaction Documents, together with all exhibits and schedules hereto and thereto,
constitute the entire agreement among the
parties pertaining to the subject matter hereof and 

 

21

 

thereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties with respect to such subject matters.  No provision of this Agreement
may be waived, modified, supplemented or amended except in a written instrument
signed, in the case of an amendment, by the Company and the Purchasers holding
a majority of the Shares then outstanding or, in the case of a waiver, by the
party against whom enforcement of any such waived provision is sought.  No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be a
continuing waiver in the future or a waiver of any subsequent default or a
waiver of any other provision, condition or requirement hereof, nor shall any
delay or omission of any party to exercise any right hereunder in any manner impair
the exercise of any such right.

 

8.2.          Notices.  All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be deemed
delivered (a) on the date of delivery if delivered personally or by
facsimile, upon confirmation of receipt, (b) three Business Days after
being sent by registered or certified mail, return receipt requested, postage
prepaid or (c) one Business Day after being sent via a reputable
nationwide overnight courier service guaranteeing next Business Day delivery,
in each case to the intended recipient as set forth below.

 

(a)           If
to a Purchasers at their respective addresses set forth on Schedule I
hereto.

 

with a copy to:

 

Patterson Belknap Webb & Tyler LLP

1133 Avenue of
the Americas

New York, New York 10036

Attention: Jeffrey E. LaGueux, Esq.

Telephone:
212-336-2000

Facsimile: 212-336-2222

E-Mail: jelagueux@pbwt.com

 

(b)           If
to the Company:

 

TRC Companies, Inc.

21 Griffin Road

Windsor, CT 06095

Attention:  Martin Dodd, Esq.

Telephone: 860-298-6212

Facsimile: 860-298-6323

E-Mail: mdodd@trcsolutions.com

 

22

 

with a copy to:

 

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C.

One Financial Center

Boston, MA 02111

Attention: Richard R. Kelly, Esq.

Telephone: 617-239-8491

Facsimile: 617-542-2241

E-mail:  rkelly@mintz.com

 

or at such other address as the Company or the Purchasers each may
specify by written notice to the other parties hereto.  Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this Section 8.2.

 

8.3.          Remedies.  In addition to being entitled to exercise all
rights provided herein or granted by Law, including recovery of damages, each
of the Purchasers and the Company will be entitled to specific performance
under the Transaction Documents.  The
parties agree that monetary damages may not be adequate compensation for any
loss incurred by reason of any breach of obligations contained in the
Transaction Documents and hereby agrees to waive and not to assert in any
action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

 

8.4.          Successors and
Assigns.  This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
permitted assigns.  The Company may not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of each Purchaser (other than by merger).  Any Purchaser may assign any or all of such
Purchaser’s rights under this Agreement to any Person to whom such Purchaser
assigns or transfers any Shares; provided that such transferee agrees, as a
condition to the effectiveness of such transfer, in writing to be bound, with
respect to the transferred Shares, by the provisions of the Transaction
Documents that apply to the Purchasers.

 

8.5.          No Third-Party
Beneficiaries.  This Agreement is
intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other Person, except as otherwise set forth in Section 6.10
hereof.

 

8.6.          Headings.  The headings of the Sections and paragraphs
of this Agreement have been inserted for convenience of reference only and do
not constitute a part of this Agreement.

 

23

 

8.7.          Governing Law.  This Agreement shall be governed by and
construed in accordance with the Laws of the State of New York, without regard
to its conflict of law principles.

 

8.8.          Independent Nature of
Purchasers’ Obligations and Rights. 
The obligations of each Purchaser under any Transaction Document are
several and not joint with the obligations of any other Purchaser, and no
Purchaser shall be responsible in any way for the performance or
non-performance of the obligations of any other Purchaser under any Transaction
Document.  Nothing contained herein or in
any other Transaction Document, and no action taken by any Purchaser pursuant
thereto, shall be deemed to constitute the Purchasers as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated by the
Transaction Documents.  Each Purchaser
shall be entitled to independently protect and enforce its rights, including
without limitation, the rights arising out of this Agreement or out of the
other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose.  Each Purchaser has been advised
by legal counsel acceptable to such Purchaser in such Purchaser’s review and
negotiation of the Transaction Documents. 
The Company has elected to provide all Purchasers with the same terms
and Transaction Documents for the convenience of the Company and not because it
was required or requested to do so by the Purchasers.

 

8.9.          Jurisdiction.  Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby  shall be brought in any federal or state
court located in the Borough of Manhattan in the State of New York, and each of
the parties hereby consents to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by Law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum.  Process in any such
suit, action or proceeding may be served on any party anywhere in the world,
whether within or without the jurisdiction of any such court.  Without limiting the foregoing, each party
agrees that service of process on such party as provided in Section 8.2
hereof shall be deemed effective service of process on such party.

 

8.10.        Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, with
the same effect as if all parties had signed the same document.  All such counterparts shall be deemed an
original, shall be construed together and shall constitute one and the same instrument.

 

8.11.        Severability.  If any provision of this Agreement shall be
found by any court of competent jurisdiction to be invalid or unenforceable,
the parties hereby waive such provision to the extent that it is found to be
invalid or unenforceable.  Such provision
shall, to the

 

24

 

maximum extent allowable by Law, be modified
by such court so that it becomes enforceable, and, as modified, shall be
enforced as any other provision hereof, all the other provisions hereof
continuing in full force and effect.

 

8.12.        WAIVER OF JURY TRIAL.  IN ANY ACTION, SUIT, OR PROCEEDING IN ANY
JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH
KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE
LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES
FOREVER TRIAL BY JURY.

 

[Remainder
of Page Intentionally Left Blank]

 

25

 

IN WITNESS WHEREOF, the parties hereto have caused this Series A
Preferred Stock Purchase Agreement to be duly executed as of the day and year
first above written.

 

	
   

  	
  THE COMPANY:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TRC COMPANIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher P. Vincze

  
	
   

  	
   

  	
  Name: Christopher P. Vincze

  
	
   

  	
   

  	
  Title: Chief Executive Officer

  

 

Signature Page to Series A Preferred Stock Purchase Agreement

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Series A
Preferred Stock Purchase Agreement to be duly executed as of the day and year
first above written.

 

	
   

  	
  THE PURCHASERS:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FEDERAL PARTNERS, L.P.

  
	
   

  	
  By:

  	
  Ninth Floor Corporation, its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen M. Duff

  
	
   

  	
   

  	
  Name: Stephen M. Duff

  
	
   

  	
   

  	
  Title: Chief Investment Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Edward Jepsen

  
	
   

  	
  Edward Jepsen

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  IAT REINSURANCE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter R. Kellogg

  
	
   

  	
   

  	
  Name: Peter R. Kellogg

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Peter R. Kellogg

  
	
   

  	
  Peter R. Kellogg

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BERMUDA PARTNERS

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter R. Kellogg

  
	
   

  	
   

  	
  Name: Peter R. Kellogg

  
	
   

  	
   

  	
  Title: Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NON-MARITAL TRUST F/B/O PETER R. KELLOGG

  
	
   

  	
  U/W/O JAMES C.
  KELLOGG, III

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter R. Kellogg

  
	
   

  	
   

  	
  Name: Peter R. Kellogg

  
	
   

  	
   

  	
  Title: Trustee and Not Individually

  

 

Signature Page to Series A Preferred Stock Purchase Agreement

 

 

SCHEDULE I

 

	
  Purchasers

  Name and Address

  	
   

  	
  Number of

  Shares Purchased

  	
   

  	
  Total

  Purchase Price

  	
   

  
	
  Federal Partners, L.P.

  c/o Ninth Floor Corporation

  One Rockefeller Plaza, 31st Floor

  New York, NY 10020

  	
   

  	
  3,720.930

  	
   

  	
  $

  	
  8,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Edward Jepsen

  14 Gale Road

  Bloomfield, CT 06002

  	
   

  	
  697.674

  	
   

  	
  $

  	
  1,500,00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  IAT Reinsurance Company

  48 Wall Street, 30th Floor

  New York, NY 10005

  	
   

  	
  465.116

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Peter R. Kellogg

  48 Wall Street, 30th Floor

  New York, NY 10005

  	
   

  	
  930.233

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bermuda Partners

  48 Wall Street, 30th Floor

  New York, NY 10005

  	
   

  	
  930.233

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Non-Marital Trust F/B/O Peter R. Kellogg
  U/W/O

  James C. Kellogg, III

  48 Wall Street, 30th Floor

  New York, NY 10005

  	
   

  	
  465.116

  	
   

  	
  $

  	
  1,000,000

  	
   

  

 

 

APPENDIX A

 

Definitions

 

Unless the context otherwise requires, the terms defined below shall
have the meanings specified for all purposes of this Agreement:

 

 “Affiliate” shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations under the Exchange Act.

 

“Agreement” has the
meaning assigned to it in the introductory paragraph hereof.

 

“Business Day” means any
day except Saturday, Sunday and any day which shall be a legal holiday or a day
on which banking institutions in the State of New York generally are authorized
or required by Law or other governmental actions to close.

 

“Board” has the meaning
assigned to it in Section 2 hereof.

 

“Certificate of Designation”
has the meaning assigned to it in Section 1.1 hereof.

 

“Change of Control” has the
meaning assigned to it in the Certificate of Designation.

 

“Closing” has the meaning
assigned to it in Section 1.2 hereof.

 

“Closing Date” has the
meaning assigned to it in Section 1.2 hereof.

 

“Commitment Amount” has
the meaning assigned to it in Section 1.2 hereof.

 

“Common Stock” has the
meaning assigned to it in the preamble hereof.

 

“Company” has the meaning
assigned to it in the introductory paragraph hereof.

 

“Company Plans”  has the meaning
assigned to it in Section 4.2 hereof.

 

“Convertible Securities”
has the meaning assigned to it in Section 7.1 hereof.

 

“Credit Agreement” means
the Credit Agreement, dated July 17, 2006, as amended, by and among the
Company, each of its Subsidiaries party thereto, the lenders that are signatory
thereto, as lenders thereunder, and Wells Fargo Foothill, Inc., as the
arranger and administrative agent thereunder.

 

“Disclosure Schedules” has
the meaning assigned to it in Section 4 hereof.

 

“Environmental Law” has
the meaning assigned to it in Section 4.18 hereof.

 

 

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

 

“Exempt Issuances” has the
meaning assigned to it in Section 7.4 hereof.

 

“Exit Strategy Business”
means the Company’s business involving fixed price remedial environmental
clean-up and closure projects.

 

“Expenses” has the meaning
assigned to it in Section 6.13 hereof.

 

“Fully Exercising Purchaser”
has the meaning assigned to it in Section 7.2 hereof.

 

“GAAP” means U.S.
generally accepted accounting principles consistently applied.

 

“Governmental Entity” means any national, federal,
state, municipal, local, territorial, foreign or other government or any
department, commission, board, bureau, agency, regulatory authority or
instrumentality thereof, or any court, judicial, administrative or arbitral
body or public or private tribunal.

 

“Hazardous Materials” has
the meaning assigned to it in Section 4.18 hereof.

 

“Increase Authorization”
has the meaning assigned to it in Section 2 hereof.

 

“Intellectual Property Rights”
has the meaning assigned to it in Section 4.12 hereof.

 

“Law” shall mean any law
(statutory, common, or otherwise), constitution, treaty, convention, statute,
ordinance, code, regulation, rule or other similar authority enacted,
adopted, promulgated, or applied by any Governmental Entity and any judgment,
decision, decree or order of any Governmental Entity.

 

“Liquidation Event” shall
have the meaning assigned to it in the Certificate of Designation.

 

“Material Adverse Effect”
means any event, change, occurrence, circumstance, condition, fact or other
matter that has had or would reasonably be expected to have a material adverse
effect on the business, condition (financial or otherwise), assets, liabilities
or results of operations of the Company and its Subsidiaries taken as a whole
or is reasonably likely to prevent, materially delay or materially impair the
ability of the Company to perform any obligation under this Agreement or to
consummate the transactions contemplated by this Agreement on a timely basis,
other than any event, change, occurrence, circumstance, condition, fact or
other matter directly resulting from:  (i) the
announcement or pendency of the transactions contemplated by this Agreement; (ii) compliance
with the terms and conditions of this Agreement; (iii) any action or
omission of the Company or its Subsidiaries taken with the prior approval of
the Purchasers purchasing a majority of the outstanding Shares; (iv) any
failure, in and of itself, by the Company to meet any internal or published
projections, forecasts, or predictions of revenue, earnings or any other
financial measure, it being understood that the

 

 

circumstances giving rise to or contributing to such failure may be
deemed to constitute, or may be taken into account in determining whether there
has been, a Material Adverse Effect; (v) any change in the price or
trading volume of the Common Stock in and of itself, it being understood that
the circumstances underlying such change may be deemed to constitute, or may be
taken into account in determining whether there has been, a Material Adverse
Effect; (vi) changes affecting the industries in which the Company and its
Subsidiaries operate, other than such changes that have a disproportionate
impact on the Company and its Subsidiaries taken as a whole as compared to
similarly situated businesses in the Company’s industries; (vii) any
shareholder or derivative litigation arising from allegations of a breach of
fiduciary duty relating to this Agreement or the transactions contemplated
hereby; (viii) changes in general economic or political conditions in the
United States of America, other than such changes that have a disproportionate
impact on the Company and its Subsidiaries taken as a whole as compared to
similarly situated businesses in the Company’s industries; (ix) changes
affecting general worldwide economic or capital market conditions, other than
such changes that have a disproportionate impact on the Company and its
Subsidiaries taken as a whole as compared to similarly situated businesses in
the Company’s industries; (x) any changes in GAAP or Laws applicable to
the Company or any of its Subsidiaries or any of their respective assets, other
than such changes that have a disproportionate impact on the Company and its
Subsidiaries taken as a whole as compared to similarly situated businesses in
the Company’s industries; or (xi) acts of war, armed hostilities,
sabotage, or terrorism or any escalation or worsening of any acts of war, armed
hostilities, sabotage, or terrorism.

 

“Material Permit” has the meaning
assigned to it in Section 4.17 hereof.

 

“New Issuance” has the
meaning assigned to it in Section 7.1 hereof.

 

“NYSE”  means the New York
Stock Exchange.

 

“Offer Notice” has the
meaning assigned to it in Section 7.2 hereof.

 

“Offered Securities” has the
meaning assigned to it in Section 7.1 hereof.

 

“Oversubscription Notice”
has the meaning assigned to it in Section 7.2 hereof.

 

“Person” means and
includes all natural persons, corporations, business trusts, associations,
companies, partnerships, joint ventures, limited liability companies and other
entities and governments and agencies and political subdivisions.

 

“Preemptive Proportionate Share”
has the meaning assigned to it in Section 7.2 hereof.

 

“Purchase Price” has the
meaning assigned it in Section 1.1 hereof.

 

“Purchaser” and “Purchasers” have the meaning assigned to
them in the introductory paragraph of this Agreement and shall include any
Affiliates of the Purchasers.

 

 

“Purchaser Party” has the
meaning assigned to it in Section 6.10 hereof.

 

“Registration Rights Agreement”
has the meaning assigned to it in Section 3.4 hereof.

 

“Required Stockholder Approval”
has the meaning assigned to it in Section 2 hereof.

 

“Rights” has the meaning
assigned to it in Section 7.1 hereof.

 

“SEC” means the Securities
and Exchange Commission.

 

“SEC Reports” has the
meaning assigned to in Section 4.5(a) hereof.

 

“Securities Act” means the
Securities Act of 1933, as amended.

 

“Series A Preferred Stock”
has the meaning assigned to it in the preamble hereof.

 

“Shares” has the meaning
assigned to it in Section 1.1 hereof.

 

“Special Meeting” has the
meaning assigned to it in Section 2 hereof.

 

“Subordinated Debt”  means $5,000,000 in
principal amount of subordinated debt issued pursuant to that certain
Subordinated Loan Agreement, dated July 19, 2006, by and among the
Company, certain of its Subsidiaries and Federal Partners, L.P.

 

“Subsidiary” means any
corporation, association trust, limited liability company, partnership, joint
venture or other business association or entity (i) at least 50% of the
outstanding voting securities of which are at the time owned or controlled
directly or indirectly by the Company or (ii) with respect to which the
Company possesses, directly or indirectly, the power to direct or cause the direction
of the affairs or management of such Person.

 

“Trading Market” means the
following markets or exchanges on which the Common Stock may be listed or
quoted for trading on the date in question: the American Stock Exchange, the
Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
Market, the NYSE or the OTC Bulletin Board.

 

“Transaction Documents”
means this Agreement, the Registration Rights Agreement and, if applicable, any
joinder agreement to which a Purchaser that purchases Shares after the Closing
is a party.

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