Document:

Exhibit 10.17

 

 

 

INTEREST PURCHASE AGREEMENT

by and among

 

Accellent Corp.

as the Purchaser,

 

and

 

each of the Members of

Machining Technology Group, LLC (the “Company”)

set forth on the signature page hereto,

constituting all of the Members of the Company

 

 

Dated as of October 6, 2005

 

 

 

 

TABLE OF CONTENTS

 

	
  Title

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  DEFINITIONS AND TERMS

  	
  1

  
	
  Section 1.1

  	
  Defined
  Terms

  	
  1

  
	
  Section 1.2

  	
  Terms
  Generally

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  ACQUISITION AND DISPOSITION OF ASSETS

  	
  2

  
	
  Section 2.1

  	
  Purchase
  and Sale

  	
  2

  
	
  Section 2.2

  	
  Operating
  Agreement

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  PAYMENT AND DELIVERY

  	
  2

  
	
  Section 3.1

  	
  Purchase
  Price

  	
  2

  
	
  Section 3.2

  	
  Adjustments
  to Closing Cash Payment and Purchase Price

  	
  2

  
	
  Section 3.3

  	
  Payment
  of Purchase Price

  	
  3

  
	
  Section 3.4

  	
  Earnout
  Payment

  	
  4

  
	
  Section 3.5

  	
  Closing

  	
  5

  
	
  Section 3.6

  	
  Deliveries
  by the Members

  	
  5

  
	
  Section 3.7

  	
  Deliveries
  by the Purchaser

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  REPRESENTATIONS AND WARRANTIES OF THE MEMBERS

  	
  7

  
	
  Section 4.1

  	
  Authorization
  and Validity

  	
  7

  
	
  Section 4.2

  	
  Capitalization,
  Subsidiaries

  	
  7

  
	
  Section 4.3

  	
  Organization

  	
  8

  
	
  Section 4.4

  	
  No
  Conflict

  	
  8

  
	
  Section 4.5

  	
  Governmental
  Consents

  	
  8

  
	
  Section 4.6

  	
  Financial
  Statements

  	
  9

  
	
  Section 4.7

  	
  Absence
  of Certain Changes or Events

  	
  9

  
	
  Section 4.8

  	
  Absence
  of Undisclosed Liabilities

  	
  12

  
	
  Section 4.9

  	
  Property;
  Assets

  	
  12

  
	
  Section 4.10

  	
  Litigation
  and Claims; Compliance with Laws

  	
  13

  
	
  Section 4.11

  	
  Taxes

  	
  14

  
	
  Section 4.12

  	
  Insurance

  	
  16

  
	
  Section 4.13

  	
  Environmental
  Matters

  	
  16

  
	
  Section 4.14

  	
  Material
  Contracts

  	
  17

  
	
  Section 4.15

  	
  Intellectual
  Property

  	
  19

  
	
  Section 4.16

  	
  Employee
  Benefits; ERISA

  	
  22

  
	
  Section 4.17

  	
  Labor
  Matters

  	
  24

  
	
  Section 4.18

  	
  Records

  	
  25

  
	
  Section 4.19

  	
  Affiliate
  Transactions

  	
  25

  
	
  Section 4.20

  	
  Indebtedness
  and Cash on Hand at Closing

  	
  26

  
	
  Section 4.21

  	
  Brokers,
  Finders, Etc.

  	
  26

  
	
  Section 4.22

  	
  Questionable
  Payments

  	
  26

  
	
  Section 4.23

  	
  Competing
  Business

  	
  26

  
				

 

 

	
  Section 4.24

  	
  Other
  Information

  	
  26

  
	
  Section 4.25

  	
  Product
  Warranty and Liability

  	
  26

  
	
  Section 4.26

  	
  Naturalization
  of the Employees

  	
  27

  
	
  Section 4.27

  	
  Bank
  Accounts

  	
  27

  
	
  Section 4.28

  	
  Business
  Relationships

  	
  27

  
	
  Section 4.29

  	
  Accredited
  Investor Status

  	
  28

  
	
  Section 4.30

  	
  FDA
  Legal Compliance and Permits

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  REPRESENTATIONS AND WARRANTIES OF PURCHASER

  	
  29

  
	
  Section 5.1

  	
  Authorization
  and Validity

  	
  30

  
	
  Section 5.2

  	
  Organization

  	
  30

  
	
  Section 5.3

  	
  No
  Conflict

  	
  30

  
	
  Section 5.4

  	
  Governmental
  Consents

  	
  30

  
	
  Section 5.5

  	
  Capital
  Stock

  	
  31

  
	
  Section 5.6

  	
  Investment

  	
  31

  
	
  Section 5.7

  	
  Public
  Reports

  	
  32

  
	
  Section 5.8

  	
  Financial
  Statements

  	
  32

  
	
  Section 5.9

  	
  Events
  Subsequent to Most Recent Fiscal Quarter End

  	
  32

  
	
  Section 5.10

  	
  Undisclosed
  Liabilities

  	
  32

  
	
  Section 5.11

  	
  Other
  Information

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  COVENANTS

  	
  33

  
	
  Section 6.1

  	
  Further
  Assurances; Cooperation

  	
  33

  
	
  Section 6.2

  	
  Transition

  	
  33

  
	
  Section 6.3

  	
  Confidentiality

  	
  33

  
	
  Section 6.4

  	
  Tax
  Matters; Proration

  	
  34

  
	
  Section 6.5

  	
  Real
  Estate

  	
  34

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  SURVIVAL AND INDEMNIFICATION

  	
  35

  
	
  Section 7.1

  	
  Survival
  of Representations and Warranties

  	
  35

  
	
  Section 7.2

  	
  Indemnification
  by the Members

  	
  35

  
	
  Section 7.3

  	
  Indemnification
  by the Purchaser

  	
  36

  
	
  Section 7.4

  	
  Notice
  and Resolution of Claim

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  MISCELLANEOUS

  	
  38

  
	
  Section 8.1

  	
  Notices

  	
  38

  
	
  Section 8.2

  	
  Amendment,
  Waiver

  	
  40

  
	
  Section 8.3

  	
  Assignment

  	
  40

  
	
  Section 8.4

  	
  Entire
  Agreement

  	
  40

  
	
  Section 8.5

  	
  Parties
  in Interest

  	
  40

  
	
  Section 8.6

  	
  Expense

  	
  40

  
	
  Section 8.7

  	
  Governing
  Law; Jurisdiction; Service of Process

  	
  41

  
	
  Section 8.8

  	
  Specific
  Performance

  	
  41

  
	
  Section 8.9

  	
  Transfer
  and Similar Taxes

  	
  41

  
	
  Section 8.10

  	
  Counterparts;
  Facsimile Signature

  	
  41

  
	
  Section 8.11

  	
  Headings

  	
  41

  

 

ii

 

	
  EXHIBITS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Certificate
  of Designation

  	
   

  
	
  Exhibit B

  	
   

  	
  Subscription Agreement

  	
   

  
	
  Exhibit C

  	
   

  	
  Voting Agreement

  	
   

  
	
  Exhibit D

  	
   

  	
  Parent Shareholders’ Agreement

  	
   

  
	
  Exhibit E

  	
   

  	
  Parent Registration Rights Agreement

  	
   

  
	
  Exhibit F

  	
   

  	
  Escrow Agreement

  	
   

  
	
  Exhibit G

  	
   

  	
  Secretary Certificate

  	
   

  
	
  Exhibit H

  	
   

  	
  Special Warranty Deed

  	
   

  
	
  Exhibit I

  	
   

  	
  Release

  	
   

  
	
  Exhibit J

  	
   

  	
  Employment Agreement

  	
   

  
	
  Exhibit K

  	
   

  	
  Non-competition Agreement

  	
   

  
	
  Exhibit L

  	
   

  	
  Legal Opinion

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule 3.3(a)

  	
   

  	
  Cash
  Purchase Price Allocation

  	
   

  
	
  Schedule 4.2(a)

  	
   

  	
  Capitalization

  	
   

  
	
  Schedule 4.4(b)

  	
   

  	
  Conflicts

  	
   

  
	
  Schedule 4.5

  	
   

  	
  Consents

  	
   

  
	
  Schedule 4.7

  	
   

  	
  Certain
  Changes or Events

  	
   

  
	
  Schedule 4.8

  	
   

  	
  Undisclosed
  Liabilities

  	
   

  
	
  Schedule 4.9(a)

  	
   

  	
  Liens

  	
   

  
	
  Schedule 4.9(b)(i)

  	
   

  	
  Real
  Property

  	
   

  
	
  Schedule 4.9(b)(ii)

  	
   

  	
  Transfers
  of Real Property

  	
   

  
	
  Schedule 4.9(b)(iii)

  	
   

  	
  Consents
  to Leases

  	
   

  
	
  Schedule 4.9(c)(i)

  	
   

  	
  Personal
  Property

  	
   

  
	
  Schedule 4.9(c)(ii)

  	
   

  	
  Personal
  Property Leases

  	
   

  
	
  Schedule 4.10(a)

  	
   

  	
  Litigation

  	
   

  
	
  Schedule 4.11(a)(i)

  	
   

  	
  Tax
  Returns

  	
   

  
	
  Schedule 4.11(a)(ii)

  	
   

  	
  Tax
  Jurisdictions

  	
   

  
	
  Schedule 4.11(c)(i)

  	
   

  	
  Additional
  Taxes

  	
   

  
	
  Schedule 4.11(c)(ii)

  	
   

  	
  Filed
  Tax Returns

  	
   

  
	
  Schedule 4.11(d)

  	
   

  	
  Power
  of Attorney

  	
   

  
	
  Schedule 4.11(f)

  	
   

  	
  Tax
  Elections

  	
   

  
	
  Schedule 4.11(g)

  	
   

  	
  Unpaid
  Taxes

  	
   

  
	
  Schedule 4.12

  	
   

  	
  Insurance

  	
   

  
	
  Schedule 4.13(c)

  	
   

  	
  Environmental
  Permits

  	
   

  
	
  Schedule 4.14(a)

  	
   

  	
  Material
  Contracts

  	
   

  
	
  Schedule 4.14(b)

  	
   

  	
  Consents
  to Material Contracts

  	
   

  
	
  Schedule 4.15(a)

  	
   

  	
  Intellectual
  Property

  	
   

  
	
  Schedule 4.15(c)

  	
   

  	
  Computer
  Programs

  	
   

  
	
  Schedule 4.15(d)

  	
   

  	
  Licenses

  	
   

  

 

iii

 

	
  Schedule 4.16(a)

  	
   

  	
  Employee
  Benefits Plans

  	
   

  
	
  Schedule 4.17

  	
   

  	
  Labor
  Matters

  	
   

  
	
  Schedule 4.19

  	
   

  	
  Affiliate
  Transactions

  	
   

  
	
  Schedule 4.20

  	
   

  	
  Indebtedness

  	
   

  
	
  Schedule 4.21

  	
   

  	
  Brokers

  	
   

  
	
  Schedule 4.27

  	
   

  	
  Bank
  Accounts

  	
   

  
	
  Schedule 4.28(a)

  	
   

  	
  Customers
  and Suppliers

  	
   

  
	
  Schedule 4.28(b)

  	
   

  	
  Disputes
  with Customers or Suppliers

  	
   

  
	
  Schedule 4.30(e)

  	
   

  	
  FD&C
  Permits

  	
   

  
	
  Schedule 5.3(b)

  	
   

  	
  Conflicts

  	
   

  
	
  Schedule 5.5

  	
   

  	
  Capital
  Stock

  	
   

  
	
  Schedule 5.9

  	
   

  	
  Events
  Subsequent to Most Recent Fiscal Quarter

  	
   

  
	
  Schedule 5.10

  	
   

  	
  Undisclosed
  Liabilities

  	
   

  

 

iv

 

INTEREST PURCHASE AGREEMENT

 

This INTEREST PURCHASE AGREEMENT, dated as of October 6,
2005 (this “Agreement”), is made and entered into by and among Accellent Corp.
(the “Purchaser”), a Colorado corporation and each of the members of Machining
Technology Group, LLC (the “Company”), a Tennessee limited liability company
(each such member hereinafter individually referred to as a “Member” and
collectively referred to as the “Members”).

 

WITNESSETH

 

WHEREAS, the Company is engaged in the business of
developing, engineering, prototyping and manufacturing specialized implants and
instruments for medical device companies (the “Business”);

 

WHEREAS, the Purchaser and UTI Holding Company, a
Delaware corporation and wholly-owned subsidiary of the Purchaser (the “Purchaser
Affiliate”) desire to acquire from the Members and the Members desire to sell
to the Purchaser and the Purchaser Affiliate all of the Ownership Interests in
the Company;

 

WHEREAS, the Purchaser is a wholly-owned subsidiary of
Accellent Inc., a Maryland corporation (the “Parent”); and

 

WHEREAS, the Members have agreed to accept a portion
of the purchase price hereunder in shares of the Parent’s convertible preferred
stock.

 

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

 

ARTICLE I

DEFINITIONS AND TERMS

 

Section 1.1                                      Defined
Terms.  Each capitalized term used
and not otherwise defined herein shall have the respective meaning ascribed to
such term in Schedule 1.1 attached hereto or in the Section referenced
in such Schedule 1.1.

 

Section 1.2                                      Terms
Generally.  The
definitions in Schedule 1.1 shall apply equally to both the
singular and plural forms of the terms defined. 
Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms.  The words “include,” “includes” and “including”
shall be deemed to be followed by the phrase “without limitation” even if not
followed actually by such phrase unless the context expressly provides
otherwise.  Unless otherwise expressly
defined, terms defined in the Agreement shall have the same meanings when used
in any Exhibit or Schedule and terms defined in any Exhibit or Schedule shall
have the same meanings when used in the Agreement or in any other Exhibit or
Schedule.  Unless the context requires
otherwise, references to Articles and Sections refer to Articles and
Sections of this Agreement, and references to Schedules or Exhibits refer to
the Schedules and Exhibits attached to this Agreement, each of which is made a
part hereof for all

 

 

purposes.  The words “herein,” “hereof,” “hereto” and “hereunder”
and other words of similar import refer to this Agreement as a whole and not to
any particular provision of this Agreement. 
The phrase “made available” in this Agreement shall mean that the
information referred to has been made available by the party in question.  The phrases “the date of this Agreement,” “the
date hereof” and terms of similar import, unless the context otherwise
requires, shall be deemed to refer to the date set forth in the introductory
paragraph of this Agreement.  References
to “dollars” or “$” in this Agreement shall be deemed to refer to the
applicable denomination of federal funds of the United States of America.

 

ARTICLE II

ACQUISITION AND DISPOSITION OF ASSETS

 

Section 2.1                                      Purchase
and Sale.  At the Closing, upon the
terms and subject to the conditions set forth in this Agreement, the Members
shall sell and deliver to the Purchaser and the Purchaser Affiliate and the
Purchaser shall and shall cause the Purchaser Affiliate to purchase from the
Members, the Ownership Interests free and clear of all Liens.

 

Section 2.2                                      Operating
Agreement.  The Members hereby waive
and shall cause the Company to waive, as of the Closing, any and all of their
respective rights under the Operating Agreement and agree that the Purchaser
and the Purchaser Affiliate shall be deemed substitute members of the Company
in accordance with the terms of the Operating Agreement and the Act.

 

ARTICLE III

PAYMENT AND DELIVERY

 

Section 3.1                                      Purchase
Price.  The aggregate consideration
(the “Purchase Price”) to the Members under this Agreement shall be an amount
equal to (a) FORTY-FOUR MILLION DOLLARS ($44,000,000), (b) minus the
amount of any Closing Adjustment as provided in Section 3.2 below, and (c) plus
any portion of the Earnout Amount (as defined in Section 3.3(c) below)
to which the Members may become entitled, which amounts shall be payable in
accordance with Sections 3.3 and 3.4 below.

 

Section 3.2                                      Adjustments
to Closing Cash Payment and Purchase Price.

 

The Closing Cash Payment
(as defined in Section 3.3(a) below) will be subject to the following
adjustment on the Closing Date (the “Closing Adjustment”), based on the
difference between the Closing Date Cash and THREE HUNDRED THOUSAND DOLLARS
($300,000) (the “Baseline Closing Cash Amount”).

 

(a)                                  if
the Baseline Closing Cash Amount exceeds the amount of Closing Date Cash, the
Closing Cash Payment will be decreased by the amount by which the Baseline
Closing Cash Amount exceeds the Closing Date Cash; and

 

(b)                                 if
the Baseline Closing Cash Amount is equal to or less than the amount of Closing
Date Cash, the Closing Cash Payment will not be adjusted pursuant to this Section 3.2.

 

2

 

For
purposes of this Agreement, “Closing Date Cash” shall mean the book balance of
cash of the Company in the Closing Date Cash Account as of the close of
business on the day immediately prior to the Closing Date (and not thereafter
removed).  For purposes of this
Agreement, “Closing Date Cash Account” shall mean the bank account of the
Company identified on Schedule 4.27.

 

Section 3.3                                      Payment
of Purchase Price.

 

(a)                                  THIRTY
THREE MILLION DOLLARS ($33,000,000) of the Purchase Price (the “Closing Cash
Payment”), minus any Closing Adjustment thereto made pursuant to Section 3.2,
minus the aggregate of the payoff amounts for the Company Indebtedness required
to be delivered pursuant to the payoff letters described in Section 3.6(e),
and minus the Escrow Amount, shall be paid in cash on the Closing Date by the
Purchaser (the “Adjusted Closing Cash Payment”) for the benefit of the Members
by inter-bank wire transfers of immediately available federal funds payable in
the amounts and to the Persons set forth in Schedule 3.3(a).

 

(b)                                 ELEVEN
MILLION DOLLARS ($11,000,000) of the Purchase Price shall be paid on the
Closing Date by the Parent to the Members (or the Members’ designees on the
Members’ behalf) on behalf of the Purchaser by the issuance of 407,407 shares
of Parent’s Class A-9 5% Convertible Preferred Stock (the “Class A-9
Preferred Stock”).  The Class A-9
Preferred Stock shall have the rights and preferences set forth in the
certificate of designation for the Class A-9 Preferred Stock attached
hereto as Exhibit A (the “Certificate of Designation”).  In connection with the issuance of the Class A-9
Preferred Stock pursuant to this Section 3.3(b), the Members and their
permitted designees, if any, shall each be required to execute (i) a
subscription agreement substantially in the form attached hereto as Exhibit B
(the “Subscription Agreement”), (ii) a voting agreement substantially in
the form attached hereto as Exhibit C (the “Voting Agreement”) and (iii) joinders
(the “Joinders”) to the Parent Shareholders’ Agreement and Parent Registration
Rights Agreement, the current versions of which are attached to this Agreement
as Exhibit D and Exhibit E, respectively, as all of
such agreements may be amended or restated from time to time.

 

(c)                                  SIX
MILLION DOLLARS ($6,000,000) (the “Earnout Amount”) of the Purchase Price shall
be paid after the Closing, if at all, pursuant to the terms of the earnout arrangement
set forth in Section 3.4 hereof.

 

(d)                                 A
portion of the Purchase Price equal to NINE HUNDRED THOUSAND DOLLARS ($900,000)
(the “Escrow Amount”) shall not be paid to the Members at Closing and instead
shall be deposited into an account (the “Escrow Account”) to be applied by the
Escrow Agent in accordance with the terms of the escrow agreement substantially
in the form attached hereto as Exhibit F (the “Escrow Agreement”).

 

(e)                                  Notwithstanding
any other provision in this Agreement to the contrary, in the event that the
Purchaser becomes entitled to indemnification under Article VII, the
Purchaser shall be entitled to receive payment from the Escrow Account in
accordance with the terms of the Escrow Agreement, on a dollar-for-dollar
basis, in the full amount of any such adjustment or right to indemnification.

 

3

 

Section 3.4                                      Earnout
Payment.  

 

(a)                                  If,
and only if, the consolidated EBITDA of the Company’s Business for the fiscal
year ended December 31, 2006 (the “2006 EBITDA”) is equal to or greater
than SEVEN MILLION NINE HUNDRED THOUSAND DOLLARS ($7,900,000), then, subject to
Section 3.4(b) below, the Purchaser shall pay the Earnout Amount to
the Members, in proportion to their respective percentage ownership of the
Company Interests set forth on Schedule 4.2(a), by wire transfer of
immediately available federal funds.

 

(b)                                 Notwithstanding
any other provision in this Agreement to the contrary, in the event that the
Purchaser becomes entitled to indemnification under Article VII, the
Purchaser may offset all or any portion of the Earnout Amount on a
dollar-for-dollar basis, against the full amount of any such adjustment or
right to indemnification.

 

(c)                                  On
or before the earlier of (i) thirty (30) days after the Purchaser’s
receipt of its outside auditor’s report with respect to the audit of the
financial statements of the Purchaser for the fiscal year ending December 31,
2006 or (ii) March 30, 2007, the Purchaser shall provide to the
Members a statement (the “2006 EBITDA Statement”) setting forth in reasonable
detail the 2006 EBITDA.  The Purchaser
shall provide the Members and their authorized representatives access to the
Purchaser’s books and records (including financial statements) during normal
business hours for the sole purpose of verifying the 2006 EBITDA.  The Earnout Amount, to the extent not offset
in accordance with Section 3.4(b), shall be payable within five (5) days
after (i) receipt by the Purchaser of written notice from the Members that
they have accepted the 2006 EBITDA Statement, or (ii) becoming conclusive
and binding pursuant to Section 3.4(d) below.  The Earnout Amount, to the extent not offset
in accordance with Section 3.4(b), shall be paid by wire transfer of
immediately available federal funds to an account or accounts designated by the
Members and shall be made in proportion to the Member’s respective percentage
ownership of the Company Interests set forth on Schedule 4.2(a).

 

(d)                                 The
Members shall notify the Purchaser in writing (the “2006 EBITDA Dispute Notice”)
within thirty (30) days after receipt of the 2006 EBITDA Statement, with
respect to its acceptance or dispute of such 2006 EBITDA Statement.  In the event that the Members dispute such
2006 EBITDA Statement, the Members shall set forth in such notice the facts of
the dispute and, to the best of their ability, their calculation of 2006
EBITDA.  The Purchaser and the Members
shall meet and use commercially reasonable efforts to resolve the items or
amounts in dispute.  If the parties are
unable to reach an agreement within thirty (30) days after the Purchaser’s
receipt of the 2006 EBITDA Dispute Notice, then the Auditor shall be requested
to conduct a review of the disputed items or amounts and compute the 2006
EBITDA.  In making its calculation, the
Auditor shall consider only the items or amounts in dispute (and to the extent
required, any other amounts necessary to derive the disputed items or
amounts).  Such determination shall be
made within thirty (30) days after the date on which the Auditor begins its
review and shall be binding on the parties. 
Fifty percent (50%) of the costs and expenses of the Auditor
contemplated by this Section 3.4(d) shall be borne by the Purchaser
and the remainder of such costs shall be borne jointly and severally by the
Members.

 

4

 

(e)                                  2006
EBITDA shall not include any management charges paid by the Company to the
Purchaser of its Affiliates.  Although
extraordinary, one-time or non-recurring items are excluded from the definition
of EBITDA for purposes of this Agreement, any extraordinary, one-time or
non-recurring items may be included in the definition of EBITDA, but only if
such items are agreed upon between the Purchaser and the Members.  These items may include but will not be
limited to:  (i) acquisitions of
other medical device manufacturers, (ii) material changes in benefit
programs or incentive plans or (iii) additional overhead incurred
unrelated to the Company’s Business as of Closing.

 

Section 3.5                                      Closing.  The consummation of the transactions
contemplated by this Agreement (hereinafter called the “Closing”) shall take
place at the offices of Hogan & Hartson LLP in Denver, Colorado, on
the date of the execution of this Agreement, or on such other date or at such
other time and place (including remotely or by facsimile) as may be mutually
agreed upon by the parties hereto.  The
date on which the Closing occurs is referred to herein as the “Closing Date.”  Notwithstanding the foregoing or any other
provision of this Agreement to the contrary, the parties hereto agree that the
Closing shall be deemed to take effect at 12:01 A.M. (Eastern Standard
Time) on the Closing Date.

 

Section 3.6                                      Deliveries
by the Members.  At the Closing, the
Members shall deliver to the Purchaser or cause to be delivered to the
Purchaser:

 

(a)                                  Resignations
of the Company’s managers and officers;

 

(b)                                 A
duly executed certificate of the secretary of the Company or other appropriate
officer of the Company with primary responsibility for the custody of the books
and records of the Company, dated as of the Closing Date, in the form attached
hereto as Exhibit G;

 

(c)                                  A
special warranty deed in the form attached hereto as Exhibit H,
duly executed and acknowledged by GT Management, LLC, a Tennessee limited
liability company (“GTM”), conveying to the Company fee simple title to the
Real Property subject to the Real Property Lease Agreement dated December 31,
2004, between the Industrial Development Board of the Town of Arlington, Tennessee
and GTM (the “GTM Property”), together with a Title Policy or Title Policies
(or unconditional commitments therefor) insuring that fee simple title to the
GTM Property is owned by the Company subject only to exceptions that are
satisfactory to the Purchaser, in its discretion, with all premiums therefor
paid by the Purchaser;

 

(d)                                 Copies
of all consents, approvals, authorizations, agreements and other documentation
required to be obtained by the Company and the Members to consummate the
transactions contemplated by this Agreement without breaching any of the
Members’ representations or warranties;

 

(e)                                  Payoff
letters stating the payoff amounts for the Company’s Indebtedness and written
evidence satisfactory to the Purchaser of the release of all Liens on the
property and assets of the Company;

 

5

 

(f)                                    A
written release of claims against the Company, duly executed by the Members and
GTM, in the form attached hereto as Exhibit I;

 

(g)                                 A
Subscription Agreement, Voting Agreement and the Joinders, duly executed by the
Members;

 

(h)                                 The
Escrow Agreement, duly executed by the Members;

 

(i)                                     Employment
Agreements, each substantially in the form attached hereto as Exhibit J
(the “Employment Agreements”) duly executed by the Members;

 

(j)                                     Non-competition
Agreements, each substantially in the form attached hereto as Exhibit K
(the “Non-competition Agreements”) duly executed by the Members;

 

(k)                                  An
opinion of Martin, Tate, Morrow & Marston, P.C., counsel to the
Company and the Members, dated as of the Closing Date, in form attached hereto
as Exhibit L;

 

(l)                                     A
copy of the Financial Statements, as certified by the Members; and

 

(m)                               Such
other documents, instruments and writings reasonably requested by Purchaser at
or prior to the Closing.

 

Section 3.7                                      Deliveries
by the Purchaser.  At the Closing,
the Purchaser shall deliver or cause to be delivered to the Members:

 

(a)                                  The
Adjusted Closing Cash Payment by inter-bank wire transfer of immediately
available federal funds of the United States of America, which amount shall be
paid and delivered to or for the benefit of the Members in the amounts and to
the Persons set forth on Schedule 3.3(a);

 

(b)                                 A
duly executed certificate of the secretary or an assistant secretary of the
Purchaser, dated the Closing Date, in form attached hereto as Exhibit G;

 

(c)                                  Copies
of all consents, approvals, authorizations, agreements and other documentation
required to be obtained by the Purchaser to consummate the transactions
contemplated by this Agreement without breaching the Purchaser’s
representations or warranties;

 

(d)                                 The
Escrow Agreement, duly executed by the Purchaser;

 

(e)                                  Employment
Agreements, duly executed by the Purchaser;

 

(f)                                    Non-competition
Agreements, duly executed by the Purchaser;

 

(g)                                 Share
certificates evidencing the Class A-9 Preferred Stock issued to the
Members by the Parent;

 

(h)                                 A
Subscription Agreement, Voting Agreement and the Joinders duly executed by the
Parent; and

 

6

 

(i)                                     Such
other documents, instruments and writings reasonably requested by the Members
at or prior to the Closing.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE MEMBERS

 

The Members hereby jointly and severally represent and
warrant to the Purchaser that the statements contained in this Article IV
are accurate and complete as of the date hereof, except as set forth in the
disclosure schedules accompanying this Agreement.  The disclosure schedules will be arranged in
numbered and lettered paragraphs corresponding to the numbered and lettered
Sections contained in this Article IV.

 

Section 4.1                                      Authorization
and Validity.  The Members have full
individual power and the legal capacity to enter into this Agreement and the
other documents and instruments to be executed and delivered by the Members
pursuant hereto and to carry out the Members’ obligations hereunder and
thereunder.  The execution, delivery and
performance of any documents and instruments to be executed and delivered by
the Company pursuant hereto, and the consummation by the Company of the
transactions contemplated thereby, have been duly and validly authorized by all
necessary action of the Company and the Members (in all cases, entity action or
otherwise) and no other act or proceeding on the part of the Company or the
Members, as applicable, is necessary to authorize the execution and delivery by
the Members of this Agreement or the other documents or instruments to be
executed and delivered by the Company or the Members pursuant hereto, or the
consummation by the Company and the Members of the transactions contemplated
hereby or thereby, as the case may be. 
This Agreement and the other documents and instruments to be executed
and delivered by the Company and the Members pursuant hereto (to the extent
that such Person is a party hereto or thereto) have been duly and validly
executed and delivered by the Company and the Members (to the extent that such
Person is a party hereto or thereto) and, assuming this Agreement and the other
documents and instruments to be executed and delivered by the Company and the
Members pursuant hereto (to the extent that such Person is a party hereto or
thereto) are the valid and binding obligation of any other parties hereto or
thereto, constitutes a valid and binding obligation of the Company and the
Members (to the extent that such Person is a party hereto or thereto)
enforceable against the Company and the Members (to the extent that such Person
is a party hereto or thereto) in accordance with its terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency or other
similar laws, now or hereafter in effect, affecting creditors’ rights
generally, and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.

 

Section 4.2                                      Capitalization,
Subsidiaries.

 

(a)                                  Schedule 4.2(a) sets
forth the percentage of all outstanding Company Interests owned by each Member
next to each Member’s name.  The Members
hold of record and beneficially the Company Interests set forth next to their
respective names on Schedule 4.2(a) free and clean of any
Liens.

 

7

 

(b)                                 The
Company Interests constitute 100% of the Ownership Interests.  Neither the Company, nor any Member has ever
transferred, assigned, pledged, encumbered or hypothecated any of the Ownership
Interests.

 

(c)                                  Other
than the Operating Agreement, there are no buy/sell agreements, interest
holder, equity holder or member agreements, subscriptions, options, warrants,
calls, profit participation or similar rights, contracts, commitments,
understandings, restrictions or arrangements relating to the issuance, sale, transfer
or voting of any Ownership Interests, including any rights of conversion or
exchange under any outstanding securities or other instruments.

 

(d)                                 The
Company has no Subsidiaries.  The Company
does not own any equity or other ownership interests in any other Person.

 

Section 4.3                                      Organization.  The Company (a) is a limited liability
company, duly organized, validly existing and in good standing under the laws
of the State of Tennessee, and (b) has full power and authority to own all
of its properties and assets and to carry on the Business as it is now being
conducted.  The Company is duly licensed
or qualified to do business and is in good standing as a foreign entity in each
jurisdiction where the ownership, lease or operation of its assets and properties
or the conduct of the Business requires such license or qualification.  The Members have delivered to the Purchaser a
complete and correct copy of the articles of organization, Operating Agreement
and other organizational documents of the Company (collectively, the “Organizational
Documents”).  Such Organizational
Documents are in full force and effect and neither the Company nor any Member
is in violation of any provision thereof.

 

Section 4.4                                      No
Conflict.  Neither the execution,
delivery or performance of this Agreement or the other documents and
instruments to be executed and delivered by the Company or the Members pursuant
hereto, nor the consummation by the Company or the Members of the transactions
contemplated hereby or thereby, nor compliance by the Company or the Members
with any of the provisions hereof or thereof will (a) conflict with or
result in any breach of any provision of any Organizational Document of the
Company, (b) except as set forth in Schedule 4.4(b),
constitute a change in control under, or require the consent from or the giving
of notice to any third party (other than the spousal consent of the Members’
spouses), result in a violation or breach of, or constitute (with or without
notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration) under, or result in the
creation of any Lien upon or affecting any of the assets, including contracts,
of the Company pursuant to, any of the terms, conditions or provisions of any
contractual obligation of the Company, (c) violate any order, writ,
injunction, decree, statute, rule or regulation of any Governmental
Authority applicable to the Company or the Members or to which any of their
properties or assets may be bound, or (d) result in triggering of any
right of first refusal or other right under any joint venture or other
agreement to which the Company or any Member is a party.

 

Section 4.5                                      Governmental
Consents.  Except as set forth in Schedule 4.5,
no consent, order or authorization of, or registration, declaration or filing
with, any Governmental Authority

 

8

 

is required in connection
with the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby by the Company or the
Members.

 

Section 4.6                                      Financial
Statements.  The Members have
previously furnished to the Purchaser a balance sheet of the Company and GTM
dated as of June 30, 2005 (the “Second Quarter Balance Sheet”) and the
Financial Statements.  The Financial
Statements (including the notes thereto) and the Second Quarter Balance Sheet
have been prepared in accordance with GAAP applied on a consistent basis during
the periods involved, fairly present the financial position of the Company on
the dates thereof, fairly present the results of operations of the Company for
the periods involved and are in accordance with the books and records of the
Company (which books and records are accurate and complete).  Reserves are reflected
on the balance sheets in the Financial Statements, the Second Quarter Balance
Sheet and the Closing Balance Sheet against assets in amounts that have been
established on a basis consistent with the past practice.  There have been no changes in reserves of the
Company since December 31, 2004.

 

Section 4.7                                      Absence
of Certain Changes or Events.  Except
as set forth in Schedule 4.7, since December 31, 2004, (a) the
Company has conducted its Business only in the ordinary course and consistent
with past practice, (b) there have not been any developments or events
which have had or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect and (c) except as contemplated in
this Agreement, in the cases of (i) and (ii) the Company and the
Members have not, and in the remaining subparagraphs in this Section 4.7,
the Company has not:

 

(i)                                     adopted
or consented to any amendment to the Organizational Documents of the Company;

 

(ii)                                  issued,
sold or otherwise disposed of any Ownership Interests, or granted any options,
warrants, phantom, equity appreciation, profit participation or other rights to
purchase or obtain (including upon conversion, exchange or exercise) any
Ownership Interests;

 

(iii)                               declared,
set aside or paid any or made any distribution with respect to any Ownership
Interests (whether in cash or in kind) or redeemed, purchased or otherwise
acquired any of its Ownership Interests;

 

(iv)                              (A) sold,
leased, transferred or disposed of any assets or rights, other than assets or
rights that individually or in the aggregate would not be material, in either
case, and other than in the ordinary course of business consistent with past
practice, (B) incurred any Lien upon any assets or rights, except for
Liens incurred in the ordinary course of business consistent with past
practice, (C) acquired or leased any assets or rights other than in the
ordinary course of business consistent with past practice, or (D) entered
into any commitment or transaction with respect to (A), (B) or (C) above;

 

(v)                                 (A) incurred,
assumed or refinanced any Indebtedness or (B) made any loans, advances or
capital contributions to, or investments in, any Person;

 

9

 

(vi)                              paid,
discharged or satisfied any liability, obligation, or Lien other than payment,
discharge or satisfaction of (A) Indebtedness as it matures and becomes
due and payable or (B) liabilities, obligations or Liens in the ordinary
course of business consistent with past practice;

 

(vii)                           (A) changed
any of the accounting or Tax principles, practices or methods used by the
Company, except as required by changes in applicable Tax Laws, or (B) changed
reserve amounts or policies;

 

(viii)                        entered
into any employment contract or other arrangement or made any change in the
compensation payable or to become payable to any Member or any of the Company’s
officers, employees, agents, consultants or Persons acting in a similar
capacity (other than general increases in wages to employees who are not
Members, officers or Persons acting in a similar capacity or Affiliates, in the
ordinary course consistent with past practice), or to Persons providing
management services, entered into or amended any employment, severance,
consulting, termination or other agreement or employee benefit plan or made any
loans to any of its Affiliates, officers, members, employees, agents or
consultants or Persons acting in a similar capacity or made any change in its
existing borrowing or lending arrangements for or on behalf of any of such
Persons pursuant to an employee benefit plan or otherwise;

 

(ix)                                paid
or made any accrual or arrangement for payment of any pension, retirement
allowance or other employee benefit pursuant to any existing plan, agreement or
arrangement to any Affiliate, officer, member, employee or Person acting in a
similar capacity; or paid or agreed to pay or made any accrual or arrangement
for payment to any Affiliate, officers, members, employees or Persons acting in
a similar capacity of any amount relating to unused vacation days, except
payments and accruals made in the ordinary course consistent with past
practice; grant, issue, accelerate or accrue salary or other payments or
benefits pursuant to any pension, profit-sharing, bonus, extra compensation, incentive,
deferred compensation, equity purchase, option, equity appreciation right,
group insurance, severance pay, retirement or other employee benefit plan,
agreement or arrangement, or any employment or consulting agreement with or for
the benefit of any Affiliate, officer, member, employee, agent or consultant or
Person acting in a similar capacity, whether past or present; or amend in any
material respect any such existing plan, agreement or arrangement in a manner
consistent with the foregoing;

 

(x)                                   entered
into any collective bargaining agreement;

 

(xi)                                made
any payments, loans, advances or any other distributions to, or entered into
any transaction, agreement or arrangement with, the Company’s Affiliates,
officers, members, employees, agents, consultants or Persons acting in a
similar capacity, shareholders of their Affiliates, associates or family
members;

 

(xii)                             made
or authorized any capital expenditures, except in the ordinary course
consistent with past practice not in excess of $100,000 individually or
$250,000 in the aggregate;

 

10

 

(xiii)                          incurred
any Taxes, except in the ordinary course of business consistent with past
practice;

 

(xiv)                         settled
or compromised any Tax liability or agreed to any adjustment of any Tax
attribute or made any election with respect to Taxes;

 

(xv)                            failed
to duly and timely file any Tax Return with the appropriate Governmental
Authorities required to be filed by it in a true and complete and correct form
and to timely pay all Taxes shown to be due thereon;

 

(xvi)                         (A) entered
into, amended, renewed or permitted the automatic renewal of, terminated or
waived any right under, any Material Contract, or, except in the ordinary
course of business consistent with past practice, any other agreement, or (B) took
any action or failed to take any action that, with or without either notice or
lapse of time, would constitute a default under any Material Contract;

 

(xvii)                      (A) made
any change in its working capital practices generally, including accelerating
any collections of cash or accounts receivable or deferring payments or (B) failed
to make timely accruals, including with respect to accounts payable and
liabilities incurred in the ordinary course of business consistent with past
practice;

 

(xviii)                   failed
to renew (at levels consistent with presently existing levels), and has not
terminated or amended or failed to perform, any of its obligations or permitted
any material default to exist or caused any material breach under, or entered into
(except for renewals in the ordinary course of business consistent with past
practice), any material policy of insurance;

 

(xix)                           experienced
any damage, destruction, or loss to its property not covered by insurance that
could have a Material Adverse Effect on the Company;

 

(xx)                              disposed
of or permitted to lapse any material Intellectual Property or granted any
license or sublicense of any rights with respect to Intellectual Property;

 

(xxi)                           experienced
significant failure on the part of the Company to operate the Business in the
ordinary course and consistent with past practice so as to preserve its
business operations intact or to preserve the goodwill of suppliers, customers
and others having business relations with the Company;

 

(xxii)                        received,
and the Company and the Members have no Knowledge of, any notice or other
indication that any key supplier, vendor or customer of the Company will cease
doing business with the Company (whether as a result of the consummation of the
transactions contemplated hereby or otherwise) in the same manner and at the
same level as previously conducted with the Company;

 

11

 

(xxiii)                     except
in the ordinary course of business consistent with past practice pursuant to
appropriate confidentiality agreements, and except as required by any Law,
provided any confidential information to any Person other than the Purchaser;

 

(xxiv)                    changed
the compensation levels (including any bonus or formula for the calculation of
any bonus) applicable to any class of the Company’s employees; or

 

(xxv)                       cancelled,
compromised, waived or released any rights or claims.

 

Section 4.8                                      Absence
of Undisclosed Liabilities.  Except
as set forth on Schedule 4.8, the Company has no Liabilities (and
there is no basis for any present or future Claims against the Company giving
rise to such Liabilities), except for (i) Liabilities set forth on the
face of the Second Quarter Balance Sheet (rather than in the notes thereto) and
(ii) Liabilities which have arisen after the date of the Second Quarter
Balance Sheet in the ordinary course of business consistent with past practice
(none of which would reasonably be expected to result in a Material Adverse
Effect).

 

Section 4.9                                      Property;
Assets.

 

(a)                                  The
Company owns, or otherwise has a valid leasehold interest providing sufficient
and legally enforceable rights to use, all of the property and assets necessary
or otherwise material to the conduct of the Business.  Except as set forth on Schedule 4.9(a),
the Company has good and marketable title to all assets reflected on the
Closing Balance Sheet, free and clear of all Liens.  All such assets are in good operating
condition and repair (ordinary wear and tear excepted), have been reasonably
maintained consistent with standards generally followed in the industry, are
suitable for their present uses and, in the case of owned or leased structures,
are structurally sound.

 

(b)                                 Schedule 4.9(b)(i) contains
a list of all real property owned, leased, subleased or used by or to the Company
(the “Real Property”), indicating whether such property is owned, leased,
subleased or used.  The current use of
the Real Property does not violate the certificate of occupancy thereof or any
local zoning or similar land use or other Laws and none of the structures on
the Real Property encroaches upon real property of another Person, and no
structure of any other Person encroaches upon any Real Property.   All facilities located on the Real Property
have received all approvals of Governmental Authorities (including licenses and
permits) required in connection with the operation thereof and have been
operated and maintained in compliance with applicable laws. The Company has not
received notice of any pending or threatened condemnation proceeding, or of any
sale or other disposition in lieu of condemnation, affecting any of the Real
Property.  Each parcel of Real Property
abuts on or has direct vehicular access to a public road.  Except as otherwise indicated in Schedule 4.9(b)(ii),
the Company has not assigned, transferred, conveyed, mortgaged, deeded in trust
or encumbered any interest in the Real Property.  With respect to each lease or sublease
listed, except as otherwise indicated on Schedule 4.9(b)(iii):

 

12

 

(i)                                     the
lease or sublease is in full force and effect and shall remain in full force
and effect on identical terms after the Closing, without the need to obtain the
consent of any party thereto;

 

(ii)                                  the
Company is in possession of the leased or subleased premises and all rental and
other obligations of the Company are current;

 

(iii)                               the
Company is not in default and no event has occurred which, with or without
notice or lapse of time, would constitute a breach or default or permit
termination, modification or acceleration under such lease or sublease;

 

(iv)                              no
party has repudiated any provision of any such lease or sublease; and

 

(v)                                 there
are no disputes, oral agreements or forbearance programs in effect as to any
lease or sublease to which the Company is a party.

 

(c)                                  Schedule 4.9(c)(i) sets
forth as of the date hereof, a complete and accurate list of all furniture,
equipment, fixed assets, leasehold improvements, manufacturing equipment,
automobiles and all other tangible personal property (including its net book
value) owned by, in the possession of, or used by the Company in connection
with the Business.  Except as set forth
in Schedule 4.9(c)(ii), such personal property is not held under
any lease, security agreement, conditional sales contract, or other title
retention or security arrangement or subject to any Liens or encumbrances, and
is not located other than in the possession of the Company.

 

(d)                                 All
receivables of the Company reflected on the Second Quarter Balance Sheet or
created after the date of the Second Quarter Balance Sheet and accurately
reflected on the Closing Balance Sheet arose from valid transactions in the
ordinary course of business consistent with past practice.

 

Section 4.10                                Litigation
and Claims; Compliance with Laws.

 

(a)                                  Schedule 4.10(a) sets
forth all Litigation as of the date hereof, including the name of the claimant,
the date of the alleged act or omission, a detailed narrative as to the nature
of the alleged act or omission, the date the matter was referred to an insurance
carrier of the Company (if referred), the estimated amount of exposure, the
amount the Company has reserved, or the amount of the Company’s claim and
estimated expenses of the Company in connection with such matters.  There is no Litigation which is not fully
covered by the insurance policies referenced in Section 4.12.  Neither the Company nor any of the assets or
properties of the Company, any Member or any Affiliate of any Member is subject
to any order, consent decree, settlement or similar agreement with any
Governmental Authority.  There is no
judgment, injunction, decree, order or other determination of an arbitrator or
Governmental Authority specifically applicable to the Company, any Member, any
Affiliate of any Member, or any of the Company’s, any Member’s or any Affiliate’s
of any Member properties or assets. 
There is no Litigation relating to alleged unlawful discrimination or
sexual harassment.  As of the date
hereof, there is no Litigation which seeks to prevent consummation of the transactions

 

13

 

contemplated hereby or
which seeks material damages in connection with the transactions contemplated
hereby.

 

(b)                                 The
Company has complied and is in compliance with all Laws applicable to the Company
and the Business.  The Company holds all
material licenses, permits and other authorizations of Governmental Authorities
necessary to conduct the Business as now being conducted or, under currently
applicable Laws, to continue to conduct the Business as now being
conducted.  To the Knowledge of the
Company and the Members, there is no intent to make any changes in the conduct
of the Company’s business that will result in or cause the Company to be in
noncompliance with applicable Laws or that will require changes in or a loss of
any such licenses, permits or other authorizations or an increase in any
expenses related thereto.  Such licenses,
permits and other authorizations as aforesaid held by the Company are valid and
in full force and effect, and there are no (i) actions pending, or to the
Knowledge of the Company and Members, threatened or (ii) to the Knowledge
of the Company and the Members, investigations pending or threatened that could
result in the termination, impairment or nonrenewal thereof.

 

Section 4.11                                Taxes.

 

(a)                                  The Company has filed all Tax Returns that it
was required to file except the Tax Return for the partial year arising by
virtue of this transaction, which such filing shall be accomplished promptly
after the Closing by the Members.  Except
as set forth on Schedule 4.11(a)(i), all such Tax Returns were
correct and complete in all respects. 
All Taxes owed by the Company (whether or not shown on any Tax Return)
have been paid.  The Company is not currently
the beneficiary of any extensions of time within which to file any Tax
Return.  No claim has ever been made by
an authority in a jurisdiction where the Company does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction.  Schedule 4.11(a)(ii) contains
a list of all jurisdictions (whether foreign or domestic) in which the Company
has been or is required to file (or be included in) a Tax Return or pay any
Tax.  There are no Liens on any of the
assets or properties of the Company or the Members that arose in connection
with any failure (or alleged failure) to pay any Tax.

 

(b)                                 The Company has complied in all respects with
all applicable laws, rules and regulations relating to the payment and
withholding of Taxes (including, without limitation, withholding of Taxes
pursuant to Sections 1441, 1442, 1445 and 1446 of the Code and similar
provisions under any applicable state or foreign laws) and has, within the time
and in the manner prescribed by law, paid over to the proper Governmental
Authorities all amounts so withheld.

 

(c)                                  Except as set forth on Schedule 4.11(c)(i),
neither the Company, nor any Member, manager or
officer of the Company expects any authority to assess any additional Taxes for
any period for which Tax Returns have been filed.  There is no dispute or claim concerning any
Tax liabilities of the Company either (A) claimed or raised by any
Governmental Authority or (B) as to which any of the Company or any of the
Members has Knowledge.  Schedule 4.11(c)(ii) lists
all federal, state, local and foreign income Tax Returns filed with respect to
the Company for taxable periods ended on or after January 1, 2000,
indicates those Tax Returns that have been audited and indicates those Tax
Returns that currently are the subject of audit.  The Company has delivered to the Purchaser
correct and complete copies of all income Tax Returns,

 

14

 

examination reports and statements of deficiencies filed by or on
behalf of or issued with respect to the Company since January 1, 2000.

 

(d)                                 The Company has not waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency, which waiver or extension is still in
effect.  Except as set forth in Schedule 4.11(d),
no power of attorney with respect to any Taxes for which the Company may be
liable is currently in force.

 

(e)                                  The Company has not made any payments, is not
obligated to make any payments and is not a party to any agreement that under
certain circumstances could obligate it to make any payments that will not be
deductible under Code Section 280G or Section 263 or otherwise.  The Company has not agreed to make, and is
(and will not be as a result of any transactions contemplated by this
Agreement) not required to make, any adjustment under Code Section 481 (or
any similar provision of the Tax laws of any jurisdiction) by reason of a
change in accounting method or otherwise. 
None of the assets of the Company (a) is required to be treated as
being owned by any other Person pursuant to the so-called “safe harbor lease”
provisions of former Code Section 168(f)(8), (b) directly or
indirectly secures any debt, the interest on which is tax-exempt under Code Section 103(a) or
(c) is a “tax-exempt use property” within the meaning of Code Section 168(h).  The Company has not been a United States real
property holding corporation within the meaning of Code Section 897(c)(2) during
the applicable period specified in Code Section 897(c)(l)(A)(ii). No
Member is a “foreign person” as defined in Code Section 1445(f)(3).  The Company has disclosed on its federal
income Tax Returns all positions taken therein that could give rise to a
substantial understatement of federal income Tax within the meaning of Code Section 6662.
 The Company is not a party to any Tax
allocation, indemnity or sharing agreement. 
The Company (A) has not been a member of an Affiliated Group filing
a consolidated federal income Tax Return and (B) does not have any
Liabilities for the Taxes of any Person other than the Company under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or
foreign law) or as a transferee or successor, by contract or otherwise.

 

(f)                                    All material elections with respect to Taxes
affecting the Company are set forth on Schedule 4.11(f).

 

(g)                                 Except as set forth on Schedule 4.11(g),
the unpaid Taxes of the Company (A) do not exceed the reserve for Tax
Liabilities (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) set forth on the face of the
Second Quarter Balance Sheet (rather than in any notes thereto) and (B) will
not exceed the reserve for Tax Liabilities (rather than any reserve for
deferred Taxes established to reflect timing differences between book and Tax
income) as adjusted for the passage of time through the Closing Date.

 

(h)                                 The Company does not have any Liabilities pursuant to Code Section 6901 or
otherwise under applicable state or federal law by virtue of any transfer of an
asset or assets to it, and the Purchaser will not be subject to such
Liabilities as a result of any of the transactions contemplated by this
Agreement.

 

15

 

(i)                                     The Company is currently taxed as a partnership for all applicable
Tax purposes, and is not a partner or member of, any joint venture, partnership
or other arrangement or contract that would result in the Company being treated
as a partner for income tax purposes.

 

Section 4.12                                Insurance.  Schedule 4.12 sets forth a
complete and accurate list as of the date hereof of all primary, excess and
umbrella policies, bonds and other forms of insurance owned or held by or on
behalf of or providing insurance coverage to the Company, properties and assets
of the Company (or its officers, salespersons, agents or employees or Persons
acting in a similar capacity) and the extent, if any, to which the limits of
liability under such policies have been exhausted.  True and complete copies of such policies are
attached to Schedule 4.12. 
All such policies are in full force and effect and all such policies in
such amounts will be outstanding and in full force and effect at the
Closing.  The Company has not received
notice of default under any such policy, nor has it received written notice of
any pending or threatened termination of cancellation, coverage limitation or
reduction, or material premium increase with respect to any such policy.  Schedule 4.12 sets forth a
complete and accurate summary of all of the self-insurance coverage provided by
the Company.  The Company is covered by
insurance in scope and amount customary and reasonable for the business in
which it is engaged.  No letters of
credit have been posted and no cash has been restricted to support any reserves
for insurance on the Second Quarter Balance Sheet or on the Closing Balance
Sheet.

 

Section 4.13                                Environmental
Matters.

 

(a)                                  The
Company has complied and is in compliance with, and the Real Property and all
improvements thereon are in compliance with, all Environmental Laws.

 

(b)                                 The
Company has no liability, known or unknown, contingent or absolute, under any
Environmental Law, nor is the Company responsible for any such liability of any
other Person under any Environmental Law, whether by contract, by operation of
law or otherwise.  There are no facts, circumstances,
or conditions existing, initiated or occurring prior to the Closing Date, which
have or will result in liability to the Company under Environmental Laws.  There are no pending or to the Knowledge of
the Company and the Members, threatened Environmental Claims.

 

(c)                                  The
Company has been duly issued, and maintains all Environmental Permits necessary
to operate the Business, assets and property of the Company as currently
operated.  A true and complete list of
all such Environmental Permits, all of which are valid and in full force and
effect, is set forth in Schedule 4.13(c).  The Company has timely filed applications for
all Environmental Permits.  None of the
Environmental Permits set forth in Schedule 4.13(c) require
consent, notification, or other action to remain in full force and effect
following consummation of the transactions contemplated hereby.

 

(d)                                 The
Real Property contains no underground improvements, including but not limited
to treatment or storage tanks, or underground piping associated with such
tanks, used currently or in the past for the management of Hazardous Materials,
and no portion of the Real Property is or has been used as a dump or landfill
or consists of or contains filled in land or wetlands.  With respect to any real property formerly
owned, operated, or leased by the

 

16

 

Company, during the
period of such ownership, operation or tenancy, no portion of such property was
used as a dump or landfill, and neither the Company nor the members is aware of
any such use at any time prior to the Company’s ownership, operation, or
tenancy of such real property.  Neither
PCBs, “toxic mold,” nor asbestos-containing materials are present on or in the
Real Property or the improvements thereon. 
There has been no Release of Hazardous Materials at, on, under, or from
the Real Property, nor was there such a Release at any real property formerly
owned, operated or leased by the Company during the period of such ownership,
operation, or tenancy, such that the Company is or could be liable for
Remediation with respect to such Hazardous Materials.   No water body into which Hazardous Materials
are Released in connection with the Company’s business is currently listed or
proposed for listing under 33 U.S.C. §1313(d), nor are such properties adjacent
to any such water body.

 

(e)                                  The
Company has furnished to the Purchaser accurate and complete copies of all
environmental assessments, reports, audits and other documents in its
possession or under its control that relate to the Real Property, compliance
with Environmental Laws, or any other real property that the Company formerly
owned, operated, leased or used.  Any information
the Company has furnished to the Purchaser concerning the environmental
conditions of the Real Property, prior uses of the Real Property, and the
operations of the Company related to compliance with Environmental Laws is
accurate and complete.

 

(f)                                    No
Real Property, and no property to which Hazardous Materials originating on or
from such properties or the Business or assets of the Company has been sent for
treatment or disposal, is listed or proposed to be listed on the National
Priorities List or CERCLIS or on any other governmental database or list of
properties that may or do require Remediation under Environmental Laws.  The Company has not arranged, by contract,
agreement, or otherwise, for the transportation, disposal or treatment of
Hazardous Materials at any location such that it is or could be liable for
Remediation of such location pursuant to Environmental Laws.

 

(g)                                 No
Lien in favor of any person relating to or in connection with any Environmental
Claim has been filed or has attached to the Real Property.

 

(h)                                 No
authorization, notification, recording, filing, consent, waiting period,
Remediation, or approval is required under any Environmental Law in order to
consummate the transactions contemplated hereby.

 

(i)                                     No
proposed or final regulation published pursuant to Environmental Laws and no
Environmental Permit for which the Company has or should have applied, could
reasonably be expected to result in a capital expenditure in excess of $10,000.

 

Section 4.14                                Material
Contracts.

 

(a)                                  Schedule 4.14(a) lists
each of the following contracts and other agreements (or, in the case of oral
contracts, summaries thereof) to which the Company is a party or by or to which
the Company or any of its assets or properties is bound or subject (such
contracts and agreements being “Material Contracts”):

 

17

 

(i)                                     any
advertising, market research or other marketing agreements;

 

(ii)                                  any
employment, severance, non-competition, consulting or other agreements of any
nature with any current or former member, officer or employee of the Company or
any Affiliate of any of such Persons;

 

(iii)                               any
agreements relating to the making of any loan, guarantee or advance by the
Company;

 

(iv)                              any
agreements providing for the indemnification by the Company of any Person;

 

(v)                                 any
agreements with any Governmental Authority;

 

(vi)                              any
contracts, agreements and other arrangements for the sale of assets or for the
furnishing of services, goods or products by or to the Company (A) with
firm commitments having a value in excess of $10,000 or (B) having a term
which is greater than six (6) months and which is not terminable by the
Company on less than ninety (90) days’ notice without the payment of any
termination fee or similar payment;

 

(vii)                           any
broker, distributor, dealer, representative or agency agreements;

 

(viii)                        any
agreements (including settlement agreements) currently in effect pursuant to
which the Company licenses the right to use any Intellectual Property to any
Person or from any Person, and any research and development agreements;

 

(ix)                                any
confidentiality agreements entered into by the Company during the period
commencing four (4) years prior to the date hereof pursuant to which
confidential information has been provided to a third party or by which the
Company was restricted from providing information to third parties;

 

(x)                                   any
voting trust or similar agreements relating to the Ownership Interests;

 

(xi)                                any
leases of Real Property;

 

(xii)                             any
joint venture, partnership or similar documents or agreements;

 

(xiii)                          any
agreements that limit or purport to limit the ability of the Company, any
Member, employee or independent contractor or to own, operate, sell, transfer,
pledge or otherwise dispose of any assets or to compete with any business
(including the Company);

 

(xiv)                         any
agreement (or group of related agreements) under which the Company has
incurred, assumed, or guaranteed any indebtedness or borrowed money or

 

18

 

any capitalized lease obligation in excess of $25,000
in the aggregate or under which it has imposed a security interest on any of
its assets, tangible or intangible;

 

(xv)                            any
other agreement (or group of related agreements) under which the consequences
of a default or termination could reasonably be expected to have a Material
Adverse Effect;

 

(xvi)                         any
other agreement (or group of related agreements) the performance of which
involves the payment of consideration in excess of $50,000 in the aggregate
during any twelve (12)-month period; or

 

(xvii)                      all
other agreements, contracts or commitments not made in the ordinary course of
business and consistent with past practice which are material to the Company.

 

(b)                                 Each
Material Contract is legal, valid and binding on and enforceable against the
Company and, to the Knowledge of the Company and the Members, the other parties
thereto, and is in full force and effect. 
Except as set forth in Schedule 4.14(b), upon consummation
of the transactions contemplated by this Agreement, each Material Contract
shall remain in full force and effect without any loss of benefits thereunder
and without the need to obtain the consent of any party thereto to the
transactions contemplated by this Agreement. 
The Company is not (and with or without the giving of notice or lapse of
time would not be) in material breach of, or material default under, any
Material Contract and, to the Knowledge of the Company and the Members, no
other party thereto is in material breach of, or material default under, any
Material Contract.  Neither the Company
nor the Members have received any notice that any Material Contract is not
enforceable against any party thereto, that any Material Contract has been
terminated or repudiated before the expiration of its term or that any party to
a Material Contract intends to terminate or repudiate such Material Contract
prior to the termination date specified therein, or that any other party is in
breach of, or default under, any Material Contract.  True and complete copies of all Material
Contracts or, in the case of oral agreements, if any, written summaries
thereof, have been delivered to the Purchaser.

 

Section 4.15                                Intellectual
Property.

 

(a)                                  The
Company is the sole and exclusive owner of, or has the valid right to use, sell
and license, all Intellectual Property necessary or otherwise material to the
conduct of the Business as currently conducted and as currently proposed to be
conducted free and clear of all Liens.  Schedule 4.15(a) sets
forth a complete and accurate list (including whether the Company is the owner
or licensee thereof) of all (i) patents and patent applications, (ii) trademark
or service mark registrations and applications, (iii) copyright
registrations and applications and (iv) material unregistered copyrights,
service marks, trademarks and trade names, each as owned or licensed by the
Company.  The Company is currently listed
in the records of the appropriate federal, state or other governmental agency
as the sole owner of record for each owned application and registration listed
in Schedule 4.15(a).

 

19

 

(b)                                 Each
item of Intellectual Property listed in Schedule 4.15(a) is
valid and subsisting, in full force and effect in all material respects, and
has not been canceled, expired or abandoned. 
The Company possesses all right, title and interest in and to each such
item free and clear of all Liens.  There
is no pending, existing, or to the Knowledge of the Company and the Members,
threatened, opposition, interference, cancellation proceeding or other legal or
governmental proceeding before any court or registration authority in any
jurisdiction against the items listed in Schedule 4.15(a) or
the Intellectual Property.  No
Intellectual Property registration or application is subject to any maintenance
fees or taxes or actions falling due, including without limitation the filing
of an affidavit of use, renewal or response to an official action, within six (6) months
after the Closing Date.  All products,
made, used or sold under the Intellectual Property are marked with the proper
patent, copyright and other notices.

 

(c)                                  Schedule 4.15(c) lists
all of the Computer Programs which are licensed, leased or otherwise used by
the Company in connection with the operation of the Business as currently
conducted, and identifies which is licensed, leased or otherwise used, as the
case may be.   The Company does not own
any Computer Programs.  Each Computer
Program listed on Schedule 4.15(c) is either (i) currently
in the public domain or otherwise available to the Company without the license,
lease or consent of any third party or (ii) used under rights granted to
the Company pursuant to a written agreement, license or lease from a third
party, which written agreement, license or lease is set forth in or described as
“shrink-wrap” in Schedule 4.15(c). 
The Company uses the Computer Programs set forth in Schedule 4.15(c) in
connection with the operation of the Business as currently conducted and such
use does not violate the rights of any third party.  To the Knowledge of the Company and the
Members, all Computer Programs identified on Schedule 4.15(c) operate
and perform in all material respects in accordance with their documentation and
functional specifications and otherwise as required in connection with the
operation of the businesses of the Company and none of such Computer Programs
have materially malfunctioned or failed within the past three (3) years.  The Company has implemented reasonable backup
and disaster recovery technology consistent within industry practices.

 

(d)                                 Schedule 4.15(d) sets
forth a complete and accurate list of all agreements pertaining to the use of
or granting any right to use or practice any rights under any Intellectual
Property, whether the Company is the licensee or licensor thereunder (the “Licenses”)
and any written settlements or assignments relating to any Intellectual
Property.  The Company has delivered to
the Purchaser complete and correct copies of all material Licenses (as amended
to date), as well as copies of all registrations and applications identified on
Schedule 4.15(a), including all other material written
documentation evidencing ownership and prosecution (if applicable) of each such
item. The Licenses are valid and binding obligations of each party thereto,
enforceable against each such party in accordance with their terms, and there
are no breaches or defaults under any Licenses, nor has any event occurred
which with or without notice or lapse of time would constitute a breach or
default, or permit termination, modification or acceleration, of any
Licenses.  No party to any License has
given the Company notice of its intention to cancel, terminate, change the
scope of rights under, or fail to renew any License.  Each License will continue to be valid,
binding and enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby upon

 

20

 

obtaining the Required
Intellectual Property Consents (as hereinafter defined), if any.  The Company has not granted any sublicense or
similar right with respect to any License.

 

(e)                                  No
trade secret or confidential know-how either of which is material to the
Business as currently operated has been disclosed or authorized to be disclosed
to any third party, other than pursuant to a non-disclosure agreement that
protects the Company’s proprietary interests in and to such trade secrets and
confidential know-how.  The Company has
taken all reasonable precautions to protect the secrecy, confidentiality and
value of its trade secrets and confidential know-how.  The Company has at all times complied with
and is in compliance with all applicable laws relating to privacy, data
protection or the collection, retention, use and disclosure of personal
information.  The Company has at all
times complied with and is in compliance with all rules, policies and
procedures established by the Company from time to time with respect to
privacy, publicity, data protection and the collection, retention, use and
disclosure of personal information.

 

(f)                                    The
conduct of the Business as currently conducted and as conducted for the three (3) year
period immediately preceding the Closing Date does not and did not interfere
with, infringe upon or misappropriate any intellectual property right owned or
controlled by any third party, nor to the Knowledge of the Company and the
Members, will Purchaser interfere with, infringe upon or misappropriate any
intellectual property right owned or controlled by any third party as a result
of the continued operation of the Business as currently conducted and as
currently proposed to be conducted.   To
the Knowledge of the Company and the Members, no third party is interfering
with, infringing upon or misappropriating, or has at any time during the three (3) year
period immediately preceding the Closing Date interfered with, infringed upon
or misappropriated, any Intellectual Property owned by the Company and no such
claims have been made against a third party by the Company.  There are no claims or suits pending or, to
the Knowledge of Company and the Members, threatened, and the Company has not
received any notice of a third party demand, Claim or suit (i) alleging
that the Company’s activities or the conduct of the Business infringes or
infringed upon or constitutes or constituted the unauthorized use of the
proprietary rights of any third party or (ii) challenging the ownership,
use, validity or enforceability of the Intellectual Property.

 

(g)                                 There
are no settlements, consents, judgments or orders or other agreements which
restrict the rights of the Company to use any Intellectual Property, or other
agreements which restrict the Company’s rights to use any Intellectual Property
owned by the Company.

 

(h)                                 Each
item of Intellectual Property owned, licensed or available for use by the
Company immediately prior to the consummation of the transactions contemplated
hereby will be owned, licensed or available for use by the Company on identical
terms and conditions immediately subsequent to such consummation free and clear
of all Liens.  The consummation of the
transactions contemplated hereby will not require the consent of any
Governmental Authority or third party in respect of any such Intellectual
Property (the “Required Intellectual Property Consents”).

 

21

 

(i)                                     The
Company has taken commercially reasonable steps to protect the rights of the
Company in its Intellectual Property and any trade secret or confidential
information of third parties used by the Company.  No current or former manager, officer,
employee, consultant, customer or supplier of the Company has any right, title
or interest, directly or indirectly, in whole or in part, in or to any Intellectual
Property.

 

Section 4.16                                Employee
Benefits; ERISA. 

 

(a)                                  Schedule 4.16(a) contains
a true and complete list of each employment, bonus, deferred compensation,
incentive compensation, equity purchase, option, equity appreciation right or
other equity-based incentive, severance, change-in-control, or termination pay,
hospitalization or other medical, disability, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, or retirement
plan, program, agreement or arrangement, and each other employee benefit plan,
program, agreement or arrangement, sponsored, maintained or contributed to or
required to be contributed to by the Company or by any trade or business,
whether or not incorporated (an “ERISA Affiliate”), that together with the
Company would be deemed a “single employer” within the meaning of Section 4001(b)(1) of
ERISA, for the benefit of any current or former employee of the Company or any
ERISA Affiliate (the “Plans”).  Schedule 4.16(a) identifies
each of the Plans that is an “employee welfare benefit plan,” or “employee
pension benefit plan” as such terms are defined in Sections 3(1) and
3(2) of ERISA (such plans being hereinafter referred to collectively as
the “ERISA Plans”).  Neither the Company
nor any ERISA Affiliate has any formal plan or commitment, whether legally
binding or not, to create any additional Plan or modify or change any existing
Plan that would affect any current or former employee of the Company or any
ERISA Affiliate.

 

(b)                                 With
respect to each of the Plans, the Company has heretofore delivered to the
Purchaser true and complete copies of each of the following documents, as
applicable:

 

(i)                                     a
copy of the Plan documents (including all amendments thereto) for each written
Plan or a written description of any Plan that is not otherwise in writing;

 

(ii)                                  a
copy of the annual report or Internal Revenue Service Form 5500 Series, if
required under ERISA, with respect to each ERISA Plan for the last three (3) Plan
years ending prior to the date of this Agreement for which such a report was
filed;

 

(iii)                               a
copy of the actuarial report, if required under ERISA, with respect to each
ERISA Plan for the last three (3) Plan years ending prior to the date of
this Agreement;

 

(iv)                              a
copy of the most recent Summary Plan Description (“SPD”), together with all
Summaries of Material Modification issued with respect to such SPD, if required
under ERISA, with respect to each ERISA Plan, and all other material employee
communications relating to each ERISA Plan;

 

22

 

(v)                                 if
the Plan is funded through a trust or any other funding vehicle, a copy of the
trust or other funding agreement (including all amendments thereto) and the
latest financial statements thereof, if any;

 

(vi)                              all
contracts relating to the Plans with respect to which the Company or any ERISA
Affiliate may have any liability, including insurance contracts, investment
management agreements, subscription and participation agreements and record
keeping agreements; and

 

(vii)                           the
most recent determination letter received from the IRS with respect to each
Plan that is intended to be qualified under Section 401(a) of the
Code.

 

(c)                                  No
liability under Title IV of ERISA has been incurred by the Company or any
ERISA Affiliate that has not been satisfied in full, and no condition exists
that presents a material risk.

 

(d)                                 The
Pension Benefit Guarantee Corporation (the “PBGC”) has not instituted
proceedings pursuant to Section 4042 of ERISA to terminate any of the
ERISA Plans subject to Title IV of ERISA; and no condition exists that presents
a material risk that such proceedings will be instituted by the PBGC.

 

(e)                                  With
respect to each of the ERISA Plans that is subject to Title IV of ERISA, the
present value of accumulated benefit obligations under such plan, as determined
by the Plan’s actuary based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such plan’s actuary
with respect to such plan, did not, as of its latest valuation date, exceed the
then current value of the assets of such plan allocable to such accumulated
benefit obligations.

 

(f)                                    Neither
the Company, nor any ERISA Affiliate, any of the ERISA Plans, any trust created
thereunder, nor to the Knowledge of the Company and the Members, any trustee or
administrator thereof has engaged in a transaction or has taken or failed to
take any action in connection with which the Company or any ERISA Affiliate
could be subject to any material liability for either a civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant
to Section 4975(a) or (b), 4976 or 4980B of the Code.

 

(g)                                 All
contributions and premiums which the Company or any ERISA Affiliate is required
to pay under the terms of each of the ERISA Plans and Section 412 of the
Code, have, to the extent due, been paid in full or properly recorded on the
financial statements or records of the Company and none of the ERISA Plans or
any trust established thereunder has incurred any “accumulated funding
deficiency” (as defined in Section 302 of ERISA and Section 412 of
the Code), whether or not waived, as of the last day of the most recent fiscal
year of each of the ERISA Plans ended prior to the date of this Agreement.  No Lien has been imposed under Section 412(n)
of the Code or Section 302(f) of ERISA on the assets of the Company
or any ERISA Affiliate and no event or circumstance has occurred that is
reasonably likely to result in the imposition of any such Lien on any such
assets on account of any ERISA Plan.

 

23

 

(h)                                 None
of the ERISA Plans is a “multiemployer plan,” as such term is defined in Section 3(37)
of ERISA.

 

(i)                                     Each
of the Plans has been operated and administered in all material respects in
accordance with its terms and with applicable Laws, including but not limited
to ERISA and the Code.

 

(j)                                     Each
of the ERISA Plans that is intended to be “qualified” within the meaning of Section 401(a) of
the Code is so qualified.  The Company
has finally applied for and received a currently effective determination letter
from the IRS stating that it is so qualified, and no event has occurred with
would affect such qualified status.

 

(k)                                  Any
fund established under an ERISA Plan that is intended to satisfy the
requirements of section 501(c)(9) of the Code has so satisfied such
requirements.

 

(l)                                     No
amounts payable under any of the Plans or any other contract, agreement or
arrangement with respect to which the Company may have any liability could fail
to be deductible for federal income tax purposes by virtue of Section 280G
of the Code.

 

(m)                               No
Plan provides benefits, including death or medical benefits (whether or not
insured) with respect to current or former employees of the Company or any
ERISA Affiliate after retirement or other termination of service (other than (i) coverage
mandated by applicable Laws, (ii) death benefits or retirements benefits
under any “employee pension plan,” as that term is defined in Section 3(2) of
ERISA, (iii) deferred compensation benefits accrued as liabilities on the
books of the Company or an ERISA Affiliate, or (iv) benefits, the full
direct cost of which is borne by the current or former employee (or beneficiary
thereof)).

 

(n)                                 The
consummation of the transactions contemplated by this Agreement will not (i) entitle
any current or former employee or officer of the Company or any ERISA Affiliate
to severance pay, unemployment compensation or any other similar termination
payment or (ii) accelerate the time of payment or vesting or increase the
amount of or otherwise enhance any benefit due any such employee, officer or
director.

 

(o)                                 There
are no pending or, to the Knowledge of the Company and the Members, threatened
or anticipated, claims by or on behalf of any Plan, by an employee or
beneficiary under any such Plan, or otherwise involving any such Plan (other
than routine claims for benefits).

 

Section 4.17                                Labor
Matters.  Except as set forth in Schedule 4.17,
(i) there is no labor strike, dispute, slowdown, stoppage or lockout
actually pending, or to the Knowledge of the Company and the Members,
threatened against or affecting the Company and during the past five (5) years
there has not been any such action, (ii) the Company is not a party to or
bound by any collective bargaining or similar agreement with any labor
organization, or work rules or practices agreed to with any labor
organization or employee association applicable to employees of the Company, (iii) none
of the employees of the Company is represented by any labor organization and
the Company and Members have no Knowledge of any union organizing activities
among

 

24

 

the employees of the
Company within the past five (5) years, nor does any question concerning
representation exist concerning such employees, (iv) there are no written
personnel policies, rules or procedures applicable to employees of the
Company, other than those set forth on Schedule 4.17, true and
correct copies of which have been delivered to the Purchaser prior to the
Closing Date, (v) the Company is, and has at all times been, in
compliance, in all material respects, with all applicable Laws respecting
employment and employment practices, terms and conditions of employment, wages,
hours of work and occupational safety and health, and is not engaged in any
unfair labor practices as defined in the National Labor Relations Act or other
applicable Laws, (vi) there is no unfair labor practice charge or
complaint against the Company pending or, to the Knowledge of the Company and
the Members, threatened before the National Labor Relations Board or any
similar state or foreign agency, (vii) there is no grievance arising out
of any collective bargaining agreement or other grievance procedure, (viii) to
the Knowledge of the Company and the Members, no charges with respect to or
relating to the Company are pending before the Equal Employment Opportunity
Commission or any other agency responsible for the prevention of unlawful
employment practices, (ix) the Company has not received a notice of the
intent of any federal, state, local or foreign agency responsible for the
enforcement of labor or employment Laws to conduct an investigation with
respect to or relating to the Company and no such investigation is in progress,
and (x) there are no complaints, lawsuits or other proceedings pending or, to
the Knowledge of the Company and the Members, threatened in any forum by or on
behalf of any present or former employee of the Company, any applicant for
employment or classes of the foregoing alleging breach of any express or
implied contract or employment, any Laws governing employment or the
termination thereof or other discriminatory, wrongful or tortious conduct in
connection with the employment relationship. To the Company’s and the Member’s
Knowledge, no executive, key employee, or group of employees has any plans to
reject any employment opportunity associated with the Business that may be
offered by the Purchaser.

 

Section 4.18                                Records.

 

(a)                                  The
record books of the Company contain complete and accurate records of all
actions taken by the members and manager of the Company.  Complete and accurate copies of all such
minute books have been made available by the Company to the Purchaser.

 

(b)                                 The
accounting books and records of the Company are complete and correct, have been
maintained in accordance with GAAP consistently applied and in accordance with
applicable Laws and good business practices and accurately reflect the basis
for the financial condition and results of operations of the Company set forth
in the consolidated financial statements of the Company.

 

Section 4.19                                Affiliate
Transactions.  Schedule 4.19
lists all agreements, arrangements and currently proposed agreements and
arrangements, by or between the Company, on the one hand, with or for the
benefit of any current or former member, officer or other Affiliate of the
Company or any of such Person’s Affiliates, or any entity in which any such
Person has a direct or indirect material interest.  Schedule 4.19 lists all payments
of any kind since January 1, 2005, from the Company, to or for the benefit
of any current or former member, officer or other Affiliate of the Company or
any of such Person’s Affiliates, or any entity in which any such

 

25

 

Person has a direct or
indirect material interest.  All
outstanding debts and other obligations of the Company to the Members were
incurred in return for fair and adequate consideration paid or delivered by
them in cash or other property.  All
debts of the Members or the Company’s officers or the respective Affiliates of
the Company to the Company are reflected on the Closing Balance Sheet.

 

Section 4.20                                Indebtedness
and Cash on Hand at Closing.  The
Company has no Indebtedness outstanding other than as set forth on Schedule 4.20
and reflected in the Second Quarter Balance Sheet and updated on the Closing
Balance Sheet.  The aggregate bank
balance of cash and book balance of Indebtedness as of the day prior to the
date hereof is set forth on Schedule 4.20.

 

Section 4.21                                Brokers,
Finders, Etc.  Except as set forth in
Schedule 4.21, neither the Company nor the Members have employed or
are subject to the valid claim of, nor have the Company or the Members incurred
any Liability that would be payable by the Company for any brokerage, finder’s
or other fees or commissions of, any broker, finder or other financial
intermediary in connection with the transactions contemplated by this
Agreement.

 

Section 4.22                                Questionable
Payments.  Neither the Company, any
officer or employee thereof, nor the Members have used any funds of the Company
for unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity, made any direct or indirect unlawful payments
to government officials or employees from company funds, established or
maintained any unlawful or unrecorded fund or company moneys or other assets,
made any false or fictitious entries on the books or records of any such
company, made any bribe, payoff, kickback or other unlawful payment.

 

Section 4.23                                Competing
Business.  Neither the Members nor
any Member’s Relatives have any direct or indirect interest of any nature
whatever in any Person which competes with, conducts any business similar to,
has any arrangement or agreement with, or is involved in any way with, any
business similar to the Business.

 

Section 4.24                                Other
Information  No representation or
warranty of the Members in this Agreement, nor any statement, certificate or
other document furnished or to be furnished by the Company or the Members to
the Purchaser pursuant to this Agreement, nor the Exhibits and Schedules
hereto, contains any untrue statement of a material fact, or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.

 

Section 4.25                                Product
Warranty and Liability.  It is the
Company’s standard practice to sell each product sold by the Company in
conformity with all applicable contractual commitments, if any, and all express
and implied warranties of the manufacturer. 
All products sold by the Company have been sold in conformity with such
practice.  No product sold by the Company
is subject to any other guaranty, warranty or other indemnity beyond the
applicable standard terms and conditions of sale.  No third party has advised the Company that
it has any liability, and to the Company’s and the Members’ Knowledge, the
Company has no liability,

 

26

 

arising out of any injury
to individuals or property as a result of the ownership, possession or use of
any product sold by the Company prior to the Closing.

 

Section 4.26                                Naturalization
of the Employees.  The Company has
not received a notice of any violation of any immigration and naturalization
laws relating to employment and employees and has properly completed and
maintained all applicable forms (including I-9 forms) and the Company is in
compliance with all such immigration and naturalization laws and there are no
citations, investigations, administrative proceedings or formal complaints of
violations of the immigration or naturalization laws pending or, to the
Knowledge of the Company and the Members, threatened before the U.S. Citizenship and Immigration Services
of any federal, state or administrative agency or court against or involving
the Company.

 

Section 4.27                                Bank
Accounts.  Attached hereto as Schedule 4.27
is a list of all banks or other financial institutions with which the Company
has an account or maintains a safe deposit box, showing the type and account
number of each such account and safe deposit box and the names of the Persons
authorized as signatories thereon or to act or deal in connection therewith.

 

Section 4.28                                Business
Relationships.  Schedule 4.28(a) sets
forth a complete and correct list of the five (5) largest (in terms of
dollar volume) customers of the Company during each of the immediately
preceding three (3) fiscal years and from January 1, 2005 through the
last full calendar month prior to the date of this Agreement and the ten (10) largest
(in terms of dollar volume) suppliers of the Company during the immediately
preceding fiscal year through the last full calendar month prior to the date of
this Agreement.  Schedule 4.28(a) describes
for the period beginning January 1, 2005 through the date of this
Agreement (i) all pricing concessions or changes requested by any such
supplier, and (ii) all pricing concessions or pricing changes made by the
Company for any such customer.  To the
Company’s and the Members’ Knowledge, the Company has good relationships with
its suppliers and customers.  Except as
set forth on Schedule 4.28(b), the Company is not currently in any
dispute under any written contract, purchase or sale order or written agreement
for the delivery of goods or services with any supplier or customer.  To the Company’s and the Members’ Knowledge,
no customer set forth in Schedule 4.28(a) or supplier of the
Company will cease to do business with the Company following the consummation
of the transactions contemplated hereby. 
To the Company’s and the Members’ Knowledge, there are no facts or
circumstances related to any customer’s business (other than general economic
events affecting the industry of such customer generally that do not affect the
customer disproportionately relative to other similarly situated participants
in that industry) that would cause a material reduction or cessation of any
customer’s business with the Company within a reasonable period of time after
the consummation the transactions contemplated hereby.  Neither the Company nor any Member has any
Knowledge of any material disruption (including delayed deliveries or
allocations by suppliers) in the availability of any portion of the materials
used by the Company nor does the Company or any Member have any Knowledge of
any facts that could lead it to believe that the Business will be subject to
any such material disruption within six (6) months after the consummation
of the transactions contemplated hereby. 
Neither the Company nor any Member has any Knowledge of any transaction
involving the acquisition, sale, disposal, liquidation or transfer of all or
substantially all of the assets of any customer or supplier set forth on Schedule 4.28(a),
or any merger, or consolidation of any such customer or supplier with any other
Person.

 

27

 

Section 4.29                                Accredited
Investor Status.

 

(a)                                  The
Members understand that the shares of Class A-9 Preferred Stock being
subscribed to by such Members in connection herewith have not been registered
under the Securities Act of 1933, as amended (the “Securities Act”), or under
applicable state securities laws (“Blue Sky Laws”), in reliance upon exemptions
contained in the Securities Act and Blue Sky Laws and any applicable
regulations promulgated thereunder or interpretations thereof, and cannot be
offered for sale, sold or otherwise transferred unless, among other things,
such shares of Class A-9 Preferred Stock subsequently are so registered or
qualify for exemption from registration under the Securities Act and Blue Sky
Laws, and that the certificates representing such shares of Class A-9
Preferred Stock shall bear a legend noting such restrictions as described in
the Subscription Agreement.

 

(b)                                 The
Members understand that the shares of Class A-9 Preferred Stock being
subscribed to by such Members in connection herewith are being acquired under
this Agreement by each Member in good faith solely for his own account, for
investment and not with a view toward resale or other distribution in violation
of the Securities Act, and that such securities will not be offered for sale,
sold or otherwise transferred without either registration or exemption from
registration under the Securities Act and Blue Sky Laws.

 

(c)                                  The
Members have such knowledge and experience in financial and business matters
that such Members are capable of evaluating the merits and risks of its
investment in such shares of Class A-9 Preferred Stock, and such Members understand
and are able to bear any economic risks associated with such investment
(including the inherent risk of losing all or part of its investment in such
shares of Class A-9 Preferred Stock).

 

(d)                                 The
Members are personally and directly familiar with business that is conducted
and is intended to be conducted by the Parent, including financial matters
related to such business, have been given the opportunity to ask questions of,
and receive answers from, the directors and executive officers of the Parent
concerning the business and financial affairs of the Parent, and the terms and
conditions of its or his purchase of shares of Class A-9 Preferred Stock,
and have had further opportunity to obtain any additional information desired
(including information necessary to verify the accuracy of the foregoing).

 

(e)                                  Each
such Member is an “accredited investor” within the meaning of Regulation D
promulgated under the Securities Act.

 

Section 4.30                                FDA
Legal Compliance and Permits.

 

(a)                                  The
Company is conducting and has conducted its business and operations in
compliance with the Federal Food, Drug, and Cosmetic Act (the “FD&C Act”),
21 U.S.C. §301 et. seq., and all applicable regulations promulgated by the
United States Food and Drug Administration (“FDA”) (collectively, “FDA Law and
Regulation”).

 

(b)                                 The
Company has not received any notice or communication from the FDA alleging
noncompliance with any applicable FDA Law and Regulation.  There is no civil,

 

28

 

criminal or
administrative action, suit, demand, claim, complaint, hearing, investigation,
demand letter, warning letter, proceeding or request for information pending
against the Company and the Company has no liability (whether actual or
contingent) for failure to comply with any FDA Law and Regulation.  There is no act, omission, event, or
circumstance of which the Company or the Members have Knowledge that would
reasonably be expected to give rise to or lead to any such action, suit,
demand, claim, complaint, hearing, investigation, notice, demand letter,
warning letter, proceeding or request for information or any such
liability.  There has not been any
violation of any FDA Law and Regulation by the Company in its prior product
development efforts, submissions, record keeping and reports to FDA that could
reasonably be expected to require or lead to investigation, corrective action
or enforcement action. To the Knowledge of the Company and the Members, there
is no civil or criminal proceeding relating to the Company or any Company
employee which involves a matter within or related to the FDA’s
jurisdiction.  The Company has never been
and is not now subject to FDA’s Application Integrity Policy.

 

(c)                                  The
premises of the Company and its records were most recently inspected by the FDA
on January 5-7, 2005, and the FDA issued a form FDA 483 Notice of
Observations on January 7, 2005 related to the inspection. Since January 7,
2005, the FDA has not inspected such premises or records.  The Company is not subject to any enforcement
proceedings by the FDA and, to the Company’s and the Members’ Knowledge, no
such proceedings have been threatened.

 

(d)                                 The
Members have provided the Purchaser a true and correct copy of (i) all
management review reports and management/executive meeting minutes, (ii) all
documents related to FDA regulatory action(s), including all documents showing
corrective actions undertaken by the Company or any predecessor thereto in
response to FDA regulatory action(s), and documents showing action(s) taken by
the Company or any predecessor thereto to avert such regulatory action(s), and (iii) all
FDA inspection reports and Form FDA 483 Notice of Observations issued to
the Company.

 

(e)                                  Schedule 4.30(e) sets
forth a list of all permits, licenses, registrations, certificates, orders,
clearances or approvals issued under the FD&C Act (“FD&C Permits”) and
held exclusively by the Company.  Such
listed FD&C Permits are the only FD&C Permits that are required for the
Company to conduct its business as presently conducted or as proposed to be
conducted.  Each such FD&C Permit is
in full force and effect and, to the Knowledge of the Company and the Members,
no suspension, revocation or cancellation of such FD&C Permit is threatened
and there is no basis for believing that such FD&C Permit will not be
renewable upon expiration.  Each such
FD&C Permit will continue in full force and effect immediately following
the Closing.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Purchaser hereby represents and warrants to the
Members that the statements contained in this Article V are accurate and
complete as of the date hereof, except as set forth in the disclosure schedules
accompanying this Agreement.  The
disclosure schedules will be arranged in numbered

 

29

 

and lettered paragraphs
corresponding to the numbered and lettered Sections contained in this Article V.

 

Section 5.1                                      Authorization
and Validity.  The Purchaser has full
corporate power and authority to execute and deliver this Agreement and the
other documents and instruments to be executed and delivered by the Purchaser
pursuant hereto and to carry out the Purchaser’s obligations hereunder and
thereunder.  The execution, delivery and
performance of this Agreement by the Purchaser and the other documents and
instruments to be executed and delivered by the Purchaser pursuant hereto and
the consummation by the Purchaser of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part the
Purchaser, and no other corporate proceedings on the part of the Purchaser are
necessary to authorize this Agreement, the other documents and instruments to
be executed and delivered by the Purchaser pursuant hereto, or the consummation
of the transactions contemplated hereby. 
This Agreement and the other documents and instruments to be executed
and delivered by the Purchaser pursuant hereto have been duly executed and
delivered by the Purchaser, and, assuming due execution and delivery by the
Members, constitutes valid and binding obligations of the Purchaser enforceable
against the Purchaser in accordance with their terms, except that (i) such
enforcement may be subject to applicable bankruptcy, insolvency or other
similar laws, now or hereafter in effect, affecting creditors’ rights
generally, and (ii) the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.

 

Section 5.2                                      Organization.  The Purchaser is a corporation organized
under the laws of the State of Colorado. 
The Purchaser is duly organized, validly existing and in good standing
and has full power and authority to carry on its business as presently
conducted.  The Purchaser is duly
licensed or qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the ownership, lease or operation of its
assets and properties or the conduct of its business requires such license or
qualification.

 

Section 5.3                                      No
Conflict.  Neither the execution,
delivery or performance of this Agreement or the other documents and
instruments to be executed by the Purchaser pursuant hereto, nor the
consummation by the Purchaser of the transactions contemplated hereby or
thereby, nor compliance by the Purchaser with any of the provisions hereof or
thereof will (a) conflict with or result in any breach of any provision of
the articles of incorporation or bylaws of the Purchaser, (b) except as
set forth in Schedule 5.3(b), constitute a change in control under,
or require the consent from or the giving of notice to a third party, result in
a violation or breach of, or constitute (with or without notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, or result in the creation of any Lien upon
or affecting any of the assets of the Purchaser pursuant to, any of the terms,
conditions or provisions of any contractual obligation of the Purchaser or (c) violate
any order, writ, injunction, decree, statute, rule or regulation of any
Governmental Authority applicable to the Purchaser or to which any of their
properties or assets may be bound.

 

Section 5.4                                      Governmental
Consents.  No consent, order or
authorization of, or registration, declaration or filing with, any Governmental
Authority by or on behalf of the

 

30

 

Purchaser is required in
connection with the execution, delivery and performance of this Agreement or
the consummation of the transactions contemplated hereby by the Purchaser.

 

Section 5.5                                      Capital
Stock.  Schedule 5.5
accurately and completely sets forth the capital structure of the Parent as of
the date hereof, including the number of shares of capital stock or other
equity interests of the Parent which are authorized and which are issued and
outstanding.  All of the issued and
outstanding shares of capital stock or other equity interests of the Parent are
duly authorized, validly issued, fully paid and nonassessable.  Except as disclosed on Schedule 5.5:
(i) no shares of capital stock or other equity interests of the Parent are
reserved for issuance or are held as treasury shares; (ii) there are no
outstanding options, warrants, rights, calls, commitments, subscriptions,
agreements, obligations, convertible or exchangeable securities or other plans
or commitments, contingent or otherwise, relating to the capital stock or other
equity interests of the Parent other than as contemplated by this Agreement; (iii) to
the Knowledge of the Parent, there are no outstanding contracts or other
agreements of the Parent, its shareholders, or any other Person to purchase,
redeem or otherwise acquire any outstanding shares of capital stock or other
equity interests of the Parent, or securities or obligations of any kind
convertible into any shares of the capital stock or other equity interests of
the Parent other than as contemplated by this Agreement; (iv) there are no
outstanding or authorized stock appreciation, phantom stock, stock plans or
similar rights with respect to the Parent; and (v) the Parent Shareholders’
Agreement and Parent Registration Rights Agreement are enforceable against the
parties thereto in accordance with their terms.

 

Section 5.6                                      Investment.

 

(a)                                  The
Purchaser understands that the Ownership Interests have not been registered
under the Securities Act or applicable Blue Sky Laws, in reliance upon
exemptions contained in the Securities Act and Blue Sky Laws and any applicable
regulations promulgated thereunder or interpretations thereof, and cannot be
offered for sale, sold or otherwise transferred unless, among other things,
such Ownership Interests subsequently are so registered or qualify for exemption
from registration under the Securities Act and Blue Sky Laws.

 

(b)                                 The
Purchaser acknowledges that the Ownership Interests are being acquired under
this Agreement by the Purchaser in good faith solely for its own account, for
investment and not with a view toward resale or other distribution in violation
of the Securities Act, and that such Ownership Interests will not be offered
for sale, sold or otherwise transferred without either registration or
exemption from registration under the Securities Act and Blue Sky Laws.

 

(c)                                  The
Purchaser has such knowledge and experience in financial and business matters
that the Purchaser is capable of evaluating the merits and risks of its
investment in the Ownership Interests, and the Purchaser understands and is able
to bear any economic risks associated with such investment (including the
inherent risk of losing all or part of its investment in the Ownership
Interests).

 

(d)                                 The
Purchaser is directly familiar with business that is conducted and is intended
to be conducted by the Company, including financial matters related to such
business,

 

31

 

has been given the
opportunity to ask questions of, and receive answers from, the Members and
employees of the Company concerning the business and financial affairs of the
Company and has had further opportunity to obtain any additional information
desired (including information necessary to verify the accuracy of the
foregoing).

 

(e)                                  The
Purchaser is an “accredited investor” within the meaning of Regulation D
promulgated under the Securities Act.

 

Section 5.7                                      Public
Reports.  The Purchaser has filed all
forms, reports, schedules, statements, and documents required to be filed by it
with the SEC since August 30, 2004 (collectively, the “Purchaser Public
Reports”).  Each of the Purchaser Public
Reports was filed on a timely basis and complied with the Securities Act and
the Securities Exchange Act in all material respects.  None of the Purchaser Public Reports, as of
their respective dates, (or if amended or superseded, at the time of such
subsequent filing), contained any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not
misleading.

 

Section 5.8                                      Financial
Statements.  Each of the audited and
unaudited financial statements included in or incorporated by reference into
the Purchaser Public Reports (including the related notes and schedules) (i) complied
in all material respects with applicable requirements of the SEC with respect
thereto; (ii) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby; and (iii) present
fairly the financial condition of the Purchaser and its Subsidiaries as of the
indicated dates and the results of operations of the Purchaser and its
Subsidiaries for the indicated periods; provided, however, that the interim
statements are subject to normal and recurring year-end adjustments that have
not been and to the Purchaser’s Knowledge will not be material.

 

Section 5.9                                      Events
Subsequent to Most Recent Fiscal Quarter End.  Except as set forth on Schedule 5.9,
since June 30, 2005, there has not been any event, circumstance, act, or
omission that has resulted in, or reasonably would be expected to result in, a
Purchaser Materially Adverse Effect.

 

Section 5.10                                Undisclosed
Liabilities.  Except as set forth on Schedule 5.10,
the Purchaser and its Subsidiaries have no Liabilities (and there is no basis
for any present or future Claims against Purchaser or its Subsidiaries giving
rise to such Liabilities), except for (i) Liabilities set forth on the
face of the balance sheet dated June 30, 2005 (rather than in any notes
thereto) and filed in the Purchaser Public Reports; and (ii) Liabilities
which have arisen after June 30, 2005 in the ordinary course of business
consistent with past practices (none of which would reasonably be expected to
result in a Purchaser Material Adverse Effect).

 

Section 5.11                                Other
Information.  No representation or
warranty of the Purchaser in this Agreement, nor any statement, certificate or
other document furnished or to be furnished by the Purchaser or Parent to the
Members pursuant to this Agreement, nor the Exhibits and Schedules hereto,
contains any untrue statement of a material fact, or omits to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they are made, not misleading.

 

32

 

ARTICLE VI

COVENANTS

 

Section 6.1                                      Further
Assurances; Cooperation.  (a)  From and after the Closing Date, the Members
shall promptly execute, acknowledge and deliver, and shall cause to be promptly
executed, acknowledged and delivered, any other assurances or documents
reasonably requested by the Purchaser to permit the Purchaser to satisfy its
obligations hereunder or to evidence title, or to provide the Purchaser with
the benefits enumerated in this Agreement or contemplated hereby.  The Members acknowledge and agree that from
and after the Closing, the Purchaser shall be entitled to possession of all
Company documents, books and records (including Tax records), agreements and
financial data of any sort; provided, however, that the Purchaser shall provide
the Members and their authorized representatives access to the Purchaser’s
books and records during normal business hours for purposes reasonably
acceptable to the Purchaser.   Prior to
the Closing, the Members shall have furnished to the Purchaser all Company
information regarding the Company.

 

(b)                                 From
and after the Closing Date, the Members shall, upon reasonable request by the
Purchaser or its Affiliates, promptly execute, acknowledge and deliver, and
shall cause to be promptly executed, acknowledged and delivered, any standard
or customary representation letters, assurances or documents regarding the
Company, its accounting controls and procedures and the financial position and
results of operations of the Company for any period(s) ending on or prior to
the date hereof to permit the Purchaser and its Affiliates to satisfy any
obligations of the Purchaser or its Affiliates under the Securities Exchange
Act of 1934, as amended, the Securities Act and the rules and regulations
promulgated thereunder.

 

Section 6.2                                      Transition.  None of the Members shall take any action
that is designed or intended to have the effect of discouraging any lessor,
licensor, customer, employee, supplier or other business associate of the
Company or the Members from maintaining the same business relationships with
the Company after the Closing as it maintained with the Company prior to the
Closing.  Each of the Members will refer
all customer inquiries relating to the Business to the Purchaser or the Company
from and after the Closing.

 

Section 6.3                                      Confidentiality.  Each of the Members shall, and shall cause
their representatives and Affiliates to, treat and hold as confidential, all of
the Confidential Information, refrain from using any Confidential Information
except in connection with this Agreement and deliver promptly to the Purchaser
or destroy, at the request and option of the Purchaser, all tangible
embodiments (and all copies) of the Confidential Information which are in each
Member’s or their representatives’ or Affiliates’ possession.  In the event that any Member is requested or
required (by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand or similar process)
to disclose any Confidential Information, such Member shall immediately notify
the Purchaser and the Company of the request or requirement so that the
Purchaser and the Company may seek an appropriate protective order or waive
compliance with the provisions of this Section 6.3.

 

33

 

Section 6.4                                      Tax
Matters; Proration.  

 

(a)                                  Except
for the partnership Tax Returns arising for the partial year ending on the
Closing Date and real property taxes, which shall be subject to proration in
accordance with Section 6.4(e), the Purchaser will prepare or cause to be
prepared all Tax Returns for the Company for all periods ending after the
Closing Date.  The Members shall file,
and the Company and the Purchaser shall cooperate on a reasonable basis, at the
Members’ sole cost and expense, with the filing of, any and all Tax Returns of
the Company for all periods ending on or prior to the Closing Date, including
any amended Tax Returns for 2003 and 2004 and the final Tax Returns for the
period commencing January 1, 2005 and ending on the Closing Date.   The Members shall permit the Purchaser to
review and comment on any such Tax Returns within a reasonable time prior to
the Members’ filing of the same.  The Members shall be entitled to, and the
Purchaser shall remit to the Members, any and all refunds or overpayments of
any Taxes of the Company relating to periods ending on or prior to the Closing
Date.

 

(b)                                 The
Members and the Purchaser shall cooperate fully, as and to the extent
reasonably requested by each other, in connection with the filing of Tax
Returns pursuant to this Section 6.4 and any audit, litigation or other
proceeding with respect to Taxes.

 

(c)                                  The
Purchaser and the Members further agree, upon request, to use their reasonable
efforts to obtain any certificate or other document from any Governmental
Authority or any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not limited to, with
respect to the transactions contemplated by this Agreement).

 

(d)                                 The
Purchaser and the Members further agree, upon request, to provide the other
party with all information that any party may be required to report to the
Internal Revenue Service pursuant to the Code and all applicable Treasury
Regulations promulgated thereunder.

 

(e)                                  The
Members and the Company shall prorate all real property taxes with respect to the
GTM Property that are incurred or payable as of the Closing Date based upon the
most recent tax bills and information available.  On the Closing Date, the prorated amounts for
which each of the Members and the Company shall be responsible shall be
calculated and the prorated amounts owed by the Members shall be paid to the
Company or its designee in cash or other immediately available funds, but not
as an adjustment to the Purchase Price. 
Notwithstanding the foregoing, in the event that any additional Taxes
are assessed against the GTM Property for any periods prior to the Closing
Date, the Members shall be responsible and, upon presentation of tax bills
showing such amounts owed, shall promptly pay all amounts owed with respect to
such Taxes.

 

Section 6.5                                      Real
Estate.   If, on or prior to sixty
(60) days following the Closing Date, the Purchaser requests that the Members
remove the portion of that certain
one-story building on the GTM Property nearest to the North-East boundary that
encroaches 5.4 feet over the 25-foot side yard setback line as shown on the
survey performed by Christopher S. Denham on September 8, 2005,
then, at the Members’ sole cost and expense, the Members shall comply with

 

34

 

the Purchaser’s request
by removing the encroaching part thereof as promptly as possible to the
reasonable satisfaction of the Purchaser.

 

ARTICLE VII

SURVIVAL AND INDEMNIFICATION

 

Section 7.1                                      Survival
of Representations and Warranties. 
Each of the representations and warranties made by the Purchaser in this
Agreement shall terminate on the twenty month anniversary of the Closing
Date.  Each of the representations and
warranties made by the Members in this Agreement shall terminate on the twenty
month anniversary of the Closing Date; provided, however, that (i) the
representations and warranties contained in Sections 4.11, 4.13 and 4.16
shall survive the Closing until 60 days following expiration of the applicable
statute of limitations; (ii) representations and warranties contained in
Sections 4.1, 4.2, 4.3, 4.29, 5.1, 5.2, 5.5 and 5.6 shall survive the Closing
and remain in full force and effect without termination; and provided  further,
that no limitation on survival of a representation or warranty shall apply in
respect of any breach thereof to the extent that the party claiming such a
breach proves fraud or willful misrepresentation by the other party with
respect to the representation or warranty that was breached.  In the event notice of any claim for
indemnification under Section 7.4(a) hereof shall have been given
within the applicable survival period, the representations and warranties that
are the subject of such indemnification claim shall survive until such time as
such claim is finally resolved.  The
covenants and agreements of the parties set forth in this Agreement and the
indemnification obligations of the parties hereunder shall survive indefinitely
except as expressly provided herein.

 

Section 7.2                                      Indemnification
by the Members.  

 

(a)                                  Subject
to the other provisions of this Article VII, each of the Members shall,
jointly and severally, indemnify, defend and hold harmless the Purchaser Indemnified
Parties from and against any and all costs, expenses, losses, damages and
liabilities (including attorneys’ fees and expenses) (“Damages”) suffered by
any of the Purchaser Indemnified Parties to the extent resulting from, arising
out of, or incurred with respect to, or (in the case of claims asserted against
any of the Purchaser Indemnified Parties by a third party) alleged to result
from, arise out of or have been incurred with respect to:

 

(i)                                     any
breach of any representation or warranty (other than the Member Non-Basket
Representations) as of the Closing Date of the Company or the Members contained
in this Agreement;

 

(ii)                                  any
breach of any covenant of the Members contained in this Agreement;

 

(iii)                               any
breach of any representation or warranty as of the Closing Date of the Members
contained in Sections 4.1, 4.2, 4.3, 4.7(xvii), 4.10(a), 4.13, 4.16 and 4.29 of
this Agreement (collectively, the “Member Non-Basket Representations”);

 

35

 

(iv)                              any
and all Taxes due from the Company relating to periods ending prior to or on
the Closing Date and any and all Taxes due from the Members and GTM; and

 

(v)                                 all
Liabilities of the Company arising from or relating to any failure by the
Company during any periods ending prior to or on the Closing Date to comply
with the terms of any agreement, license or lease with respect to any Computer
Program required to be listed on Schedule 4.15(c), any costs
incurred by the Company to acquire rights to use the Computer Programs which
were in use or available for use by the Company on or prior to the Closing
Date, including the incremental costs associated with entering into new license
agreements with providers or vendors of such Computer Programs on terms
generally held by the Company immediately prior to the Closing Date, but
excluding any incremental costs associated with any changes in the terms of
such license agreements in relation to existing license agreements between the
Company and such vendors as a result of changes in the software covered thereby
or increases in the numbers of “seats” or licenses thereunder following
Closing, any Liability for any so called “transfer fees” payable to such
vendors, and any costs incurred by the Company for achieving license
compliance with respect to any of the Computer Programs that are required to be
listed on Schedule 4.15(c).

 

(b)                                 The
Members shall not be required to indemnify any Purchaser Indemnified Party for
Damages under Section 7.2(a)(i) under the terms and provisions of
this Article VII unless and until the Damages therefrom exceed an
aggregate amount equal to $100,000 (the “Member Indemnification Threshold”), at
which time the Members shall be required to indemnify the Purchaser Indemnified
Parties for all Damages under Section 7.2(a)(i) in excess of the
Member Indemnification Threshold; provided, however, that in no
event shall the aggregate amount of indemnification under Section 7.2(a)(i) owed
by the Members exceed $10,000,000 (the “Indemnity Cap”); and provided  further,
that the Member Indemnification Threshold and the Indemnity Cap shall not apply
to or otherwise limit the Purchaser Indemnified Parties’ recovery for Damages
in respect of any breach of a representation or warranty for which Purchaser
proves fraud or willful misrepresentation by the Members. Notwithstanding
anything to the contrary contained herein and solely for purposes of
determining whether the Member Indemnification Threshold has been exceeded, all
qualifications and exceptions contained in Article IV relating to
materiality or words of similar import (including Material Adverse Effect)
shall be disregarded for purposes of determining whether there has been a
breach of any such representation or warranty pursuant to Section 7.2(a)(i) and
the Member Indemnification Threshold exceeded.

 

Section 7.3                                      Indemnification
by the Purchaser.  

 

(a)                                  Subject
to the other provisions of this Article VII, the Purchaser shall, jointly
and severally, indemnify, defend and hold harmless the Members from and against
any and all Damages suffered by any of the Members to the extent resulting
from, arising out of, or incurred with respect to, or (in the case of claims
asserted against any of the Members by a third party) alleged to result from,
arise out of or have been incurred with respect to:

 

36

 

(i)                                     any
breach of any representation or warranty (other than the Purchaser Non-Basket
Representations) as of the Closing Date of the Purchaser contained in this
Agreement;

 

(ii)                                  any
breach of any covenant of the Purchaser contained in this Agreement; and

 

(iii)                               any
breach of any representation or warranty as of the Closing Date of the
Purchaser contained in Sections 5.1, 5.2, 5.5 and 5.6 of this Agreement
(collectively, the “Purchaser Non-Basket Representations”).

 

(b)                                 Purchaser
shall not be required to indemnify any Member for Damages under Section 7.3(a)(i) under
the terms and provisions of this Article VII unless and until the Damages
therefrom exceed an aggregate amount equal to $100,000 (the “Purchaser’s
Indemnification Threshold”), at which time the Purchaser shall be required to
indemnify the Members for all Damages under Section 7.3(a)(i) in
excess of the Purchaser’s Indemnification Threshold; provided, however,
that in no event shall the aggregate amount of indemnification under Section 7.3(a)(i) owed
by the Purchaser exceed the Indemnity Cap; 
and provided  further, that the Purchaser Indemnification
Threshold and the Indemnity Cap shall not apply to or otherwise limit the
Members’ recovery for Damages in respect of any breach of a representation or
warranty for which the Members prove fraud or willful misrepresentation by the
Purchaser.  Notwithstanding anything to
the contrary contained herein and solely for purposes of determining whether
the Purchaser’s Indemnification Threshold has been exceeded, all qualifications
and exceptions contained in Article V relating to materiality or words of
similar import (including Purchaser Material Adverse Effect) shall be
disregarded for purposes of determining whether there has been a breach or
inaccuracy of any such representation or warranty pursuant to Section 7.3(a)(i) and
the Purchaser’s Indemnification Threshold exceeded.

 

(c)                                  Notwithstanding
anything contained in this Agreement to the contrary, the obligations of the
Purchaser under Section 3.4 shall
not be subject to the Purchaser’s Indemnification Threshold or the
Indemnity Cap.

 

Section 7.4                                      Notice
and Resolution of Claim.  

 

(a)                                  An
indemnified party under this Agreement shall promptly give written notice to
the indemnifying party after obtaining knowledge of any third party claim or
litigation against the indemnified party as to which recovery may be sought
against the indemnifying party because of the indemnity set forth in Sections 7.2
and 7.3, specifying in reasonable detail the claim or litigation and the basis
for indemnification; provided, however, that the failure of the
indemnified party promptly to notify the indemnifying party of any such matter
shall not release the indemnifying party, in whole or in part, from its
obligations under this Article VII except to the extent the indemnified
party’s failure to so notify in breach of this paragraph (a) materially
prejudices the indemnifying party’s ability to defend against such third party
claim or litigation.  The indemnified
party shall permit the indemnifying party to assume the defense of any such
claim, litigation or any litigation resulting from such third party claim.

 

37

 

(b)                                 If
the indemnifying party assumes the defense of any such third party claim or
litigation, the obligations of the indemnifying party under this Agreement
shall include taking all steps necessary in the investigation, defense or
settlement of such claim or litigation (including the retention of legal
counsel) and holding the indemnified party harmless from and against any and
all losses caused by or arising out of any settlement approved by the
indemnifying party or any judgment in connection with such claim or litigation.  The indemnifying party shall not, in the
defense of such claim or litigation, consent to entry of any judgment (except
with the written consent of the indemnified party) or enter into any settlement
(except with the written consent of the indemnified party):  (i) that does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to the
indemnified party a complete release from, all liability in respect of such
claim or litigation, or (ii) the effect of which is to permit any
injunction, declaratory judgment, other order or other equitable relief to be
entered, directly or indirectly, against any indemnified party.  The indemnifying party shall permit the
indemnified party to participate in such defense or settlement through counsel
chosen by the indemnified party, with the fees and expenses of such counsel
borne by the indemnified party.

 

(c)                                  Failure
by the indemnifying party to notify the indemnified party of its election to
assume the defense of any such claim or litigation by a third party within
thirty (30) days after notice thereof has been given to the indemnifying party
shall be deemed a waiver by the indemnifying party of its right to assume the
defense of such claim or litigation.  If
the indemnifying party does not assume the defense of such claim or litigation
by a third party, the indemnified party may defend or settle such claim or
litigation in such matter as the indemnified party may deem appropriate and may
settle such claim or litigation on such terms as it may deem appropriate.

 

(d)                                 If
any matter as to which a Purchaser Indemnified Party may be able to assert a
claim for Damages under this Article VII is pending or unresolved, or any
other matter as to which such Purchaser Indemnified Party actually or
potentially may suffer Damages exists, at the time any payment of the Earnout
Amount or any portion of the Escrow Amount, as applicable to the Members,
whether pursuant to Section 3.4(a), Section 3.4(b) or otherwise,
the Purchaser shall have the right, in addition to other rights and remedies
and methods of recovery (whether under this Agreement or pursuant to applicable
law), to withhold from such payment an amount equal to the claim until such
matters are resolved.  If it is finally
determined that such claims are covered by this Article VII, the amount of
such claims may be offset against the Earnout Amount or paid from the Escrow
Account, as applicable, and the remainder of the Escrow Amount or the Earnout
Amount, if any, shall be delivered to the Members pursuant to the terms of this
Agreement and the Escrow Agreement, if applicable.

 

ARTICLE VIII

MISCELLANEOUS

 

Section 8.1                                      Notices.  All notices or other communications hereunder
shall be deemed to have been duly given and made if in writing and if served by
personal delivery upon the party for whom it is intended, if delivered by
registered or certified mail, return receipt requested, or by a national
courier service, or if sent by facsimile, provided, however that
the facsimile is 

 

38

 

promptly followed by
telephone confirmation thereof to the appropriate person at the address set
forth below, or at such other address as may be designated in writing
hereafter, in the same manner, by such person.

 

To the Members:

 

Gary Stavrum

4722 Gwynne Road

Memphis, TN 38117

Telephone:  (901) 767-7208

Facsimile:  (901) 527-3746

 

and:

 

Timothy Hanson

8910 Bent Green Circle

Memphis, TN 38125

Telephone:  (901) 748-1968

Facsimile:  (901) 527-3746

 

with a copy to:

 

Martin,
Tate, Morrow & Marston, P.C.

6410 Poplar Avenue, Suite 1000

Memphis, TN 38119

Telephone:  (901) 522-9000

Facsimile:  (901) 527-3746

Attention:  Robert E. Orians

 

To the Purchaser or the Company:

 

Accellent Corp.

100 Fordham Road

Wilmington, MA 01887

Facsimile: (978) 657-0878

Telephone: (978) 570-6900

Attention: 
Stewart A. Fisher

 

39

 

with a copy to:

 

Hogan & Hartson
L.L.P.

One Tabor Center

1200 17th Street, Suite 1500

Denver, Colorado 80202

Telephone: 
(303) 899-7300

Facsimile: 
(303) 899-7333

Attention: 
Christopher J. Walsh

 

Any such notice shall be deemed delivered (a) on
the date delivered if by personal delivery, (b) on the date upon which the
return receipt is signed or delivery is refused or the notice is designated by
the postal authorities as not deliverable, as the case may be, if mailed by
registered or certified mail, (c) on the next succeeding Business Day if
sent by national courier service, or (d) on the date telecommunicated if
by telecopier if confirmed by telephone confirmation.

 

Section 8.2                                      Amendment,
Waiver.  Any provision of this
Agreement may be amended or waived if, and only if such amendment or waiver is
in writing and signed, in the case of an amendment, by the Purchaser and the
Members, or in the case of a waiver, by the party against whom the waiver is to
be effective.  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.

 

Section 8.3                                      Assignment.  The Purchaser may freely assign any of its
rights and/or obligations under this Agreement to an Affiliate of Purchaser
without the prior written consent of the Members so long as the Purchaser
remains obligated to the Members hereunder. 
No Member may assign any of its rights or obligations under this
Agreement without the prior written consent of the Purchaser hereto.

 

Section 8.4                                      Entire
Agreement.  This Agreement (including
all Schedules and Exhibits hereto) contains the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral or written, with respect to such
matters.

 

Section 8.5                                      Parties
in Interest.  This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. 
Nothing in this Agreement, express or implied, is intended to confer
upon any Person other than the Purchaser, the Purchaser Affiliate, the Members
or their successors or permitted assigns, any rights or remedies under or by
reason of this Agreement.

 

Section 8.6                                      Expense.  Except as otherwise expressly set forth
herein, all costs and expenses incurred by the Purchaser and the Purchaser
Affiliate in connection with this Agreement and the transactions contemplated
hereby shall be borne by the Purchaser and the Purchaser Affiliate, and all
costs and expenses incurred by the Members in connection with this

 

40

 

Agreement and the
transactions contemplated hereby shall be borne by the Members.  The Members acknowledge and agree that the
Company has not borne and shall not bear any costs and expenses (including any
of the Members’ legal fees and expenses) in connection with this Agreement and
the transactions contemplated hereby.

 

Section 8.7                                      Governing
Law; Jurisdiction; Service of Process. 
This Agreement shall be governed by and construed in accordance with the
Laws of the State of Tennessee without regard to its rules of conflict of
laws.  Each of the Purchaser and the
Members hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of Tennessee, County of
Shelby, or, if under applicable Law, exclusive jurisdiction is vested in
federal courts, then of the United States of America located in the Western
District of Tennessee (collectively, the “Tennessee Courts”) for any litigation
arising out of or relating to this Agreement and the transactions contemplated
hereby (and agrees not to commence any litigation relating thereto except in
such courts), waives any objection to the laying of venue of any such litigation
in the Tennessee Courts and agrees not to plead or claim in any Tennessee Court
that such litigation brought therein has been brought in an inconvenient
forum.  Any party hereto may make service
on another party by sending or delivering a copy of the process to the party to
be served at the address and in the manner provided for the giving of notices
in Section 8.1.  Nothing in this
Section, however, shall affect the right of any party to serve legal process in
any other manner permitted by law.

 

Section 8.8                                      Specific
Performance.  The parties hereto
agree that if any of the provisions of this Agreement are not performed in
accordance with their specific terms or are otherwise breached, irreparable
damage would occur, no adequate remedy at law would exist and damages would be
difficult to determine, and that the parties shall be entitled to specific
performance of the terms hereof, in addition to any other remedy at law or
equity.

 

Section 8.9                                      Transfer
and Similar Taxes.  Notwithstanding
any other provision of this Agreement to the contrary, the Purchaser shall
assume and promptly pay when due all sales, property, use, privilege, transfer,
documentary, gains, stamp, duties, recording and similar Taxes and fees
(including any penalties, interest or additions) imposed upon the Company and
any party incurred in connection with the transactions contemplated by this
Agreement.

 

Section 8.10                                Counterparts;
Facsimile Signature.  This Agreement
may be executed in two or more counterparts, each of which shall be deemed an
original and all of which together shall constitute one instrument.  In the event that any signature is delivered
by facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile
signature page were an original itself.

 

Section 8.11                                Headings.  The heading references herein and in the
table of contents hereto are for convenience purposes only, do not constitute a
part of this Agreement, and shall not be deemed to limit or affect any of the
provisions hereof.

 

41

 

[SIGNATURE PAGE FOLLOWS]

 

* * * * * *

 

42

 

SIGNATURES

 

IN WITNESS WHEREOF, the parties have executed or
caused this Agreement to be executed as of the date first above written.

 

	
   

  	
  ACCELLENT CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Stewart A. Fisher

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Stewart A.
  Fisher

  
	
   

  	
   

  	
  Title:

  	
  Chief
  Financial Officer, Vice President, 

  Treasurer and Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEMBERS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Gary
  Stavrum

  	
   

  
	
   

  	
  Gary
  Stavrum

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Timothy
  Hanson

  	
   

  
	
   

  	
  Timothy
  Hanson

  
					

 

43

 

Schedule 1.1

 

DEFINITIONS

 

“Act” shall
mean the Tennessee Limited Liability Company Act, as amended.

 

“Adjusted Closing Cash Payment”
shall have the meaning set forth in Section 3.3(a) hereof.

 

 “Affiliate” shall mean, as
to any Person (i) any other Person which, directly or indirectly, is in
control of, is controlled by, or is under common control with, such Person, (ii) any
corporation or organization (other than a Subsidiary of such Person) of which
such Person is a director, officer, manager or partner or is, directly or
indirectly, the beneficial owner of 10% or more of any class of equity
securities, (iii) any trust or other estate in which such Person has a
substantial beneficial interest or as to which such Person serves as trustee or
in a similar fiduciary capacity, (iv) any relative or spouse of such
Person, or (v) any relative of such spouse who has the same home as such
Person, relative or spouse or who is a director, officer, manager or partner of
such Person or any of its parents or Subsidiaries.  The term “control” (including, with
correlative meanings, the terms “controlled by” and “under common control with”),
as applied to any Person, means the possession, direct or indirect, of the
power to elect a majority of the board of directors of such Person or to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities or other ownership interest, by
contract or otherwise.  The term
Affiliate shall not include any Person in control of or under common control
with the Purchaser.

 

“Affiliated Group” shall
mean any affiliated group within the meaning of Code Section 1504(a) or
any similar group defined under a similar provision of state, local or foreign
law.

 

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

 

“Auditor” shall
mean a nationally recognized accounting firm to be mutually agreed upon based
on good faith negotiations between the Parties.

 

“Baseline Closing Cash Amount”
shall have the meaning set forth in Section 3.2 hereof.

 

“Blue Sky Laws”
shall have the meaning set forth in Section 4.29(a) hereof.

 

“Business”
shall have the meaning set forth in the recitals of this Agreement.

 

“Business Day”
shall mean any day other than a Saturday, a Sunday or a day on which banks in
New York City are authorized or obligated by law or executive order to close.

 

“CERCLIS” shall
mean the Comprehensive Environmental Response, Compensation, Liability
Information System.

 

“Certificate of Designation”
shall have the meaning set forth in Section 3.3(b) hereof.

 

1.1-1

 

“Claims” shall
mean all demands, claims, actions or causes of action, assessments, complaints,
directives, citations, information requests issued by a Governmental Authority,
legal proceedings, orders, notices of potential responsibility, losses, damages
(including, without limitation, diminution in value), Liabilities, sanctions,
costs and expenses, including interest, penalties and attorneys’ and experts’
fees and disbursements.

 

“Class A-9 Preferred Stock”
shall have the meaning set forth in Section 3.3(b) hereof.

 

“Closing” shall
have the meaning set forth in Section 3.5 hereof.

 

“Closing Adjustment”
shall have the meaning set forth in Section 3.2.

 

“Closing Balance Sheet”
shall mean the balance sheet of the Company determined in accordance with GAAP
and dated as of the Closing Date, delivered by the Members to the Purchaser at
the Closing.

 

“Closing Cash Payment”
shall have the meaning set forth in Section 3.3(a) hereof.

 

“Closing Date”
shall have the meaning set forth in Section 3.5 hereof.

 

“Closing Date Cash”
shall have the meaning set forth in Section 3.2 hereof.

 

“Closing Date Cash Account”
shall have the meaning set forth in Section 3.2 hereof.

 

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

 

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

 

“Company Interests”
means the Ownership Interests in the Company.

 

“Computer Programs”
shall mean any and all (i) computer software programs and software
development tools, including all source and object code, (ii) databases
and compilations, including any and all data and collections of data, whether
machine readable or otherwise, (iii) descriptions, flow-charts and other
work product used to design, plan, organize and develop any of the foregoing,
and (iv) documentation, including user manuals and training materials,
relating to any of the foregoing.

 

“Confidential
Information” shall mean any nonpublic information concerning the
Company or the Purchaser or their respective businesses, products, financial
condition, prospects and affairs.  The
term Confidential Information will include the terms of this Agreement and the
transactions contemplated by this Agreement. 
The term Confidential Information will not include information that:

 

(a)                                  is
in the public domain other than through a negligent act or omission or willful
misconduct of any Member or the Company;

 

1.1-2

 

(b)                                 is
acquired in good faith from a third party and, at the time of the acquisition,
the Member had no Knowledge or reason to believe that such information was
wrongfully obtained or disclosed by the third party;

 

(c)                                  is
independently developed by the recipient from information not defined as
Confidential Information in this Agreement as evidenced by the recipient’s
written records; or

 

(d)                                 is
required to be disclosed under applicable law or by a valid subpoena or other
court or governmental order, decree, regulation or rule; provided, however,
that if disclosure is required under this provision, the Member will advise the
Company and the Purchaser of the requirement to disclose Confidential
Information prior to such disclosure and as soon as reasonably practicable
after the Member becomes aware of such required disclosure; and further  provided
that upon the request of the Company or the Purchaser, the Member agrees to
cooperate in good faith with any reasonable and lawful actions which the
Company or the Purchaser take to resist such disclosure, limit the information
to be disclosed or limit the extent to which the information so disclosed may
be used or made available to third parties.

 

“Damages” shall
have the meaning set forth in Section 7.2 hereof.

 

“Earnout Amount”
shall have the meaning set forth in Section 3.3(c) hereof.

 

“EBITDA” of the
Company shall mean earnings before interest expense, income tax expense,
depreciation and amortization of the Company for the period in question, as
determined in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby and excluding any extraordinary, one time or
non-recurring items of earnings or any expenses including, without limitation,
any costs and expenses of the Company relating to this Agreement.

 

“Employment Agreements” shall
have the meaning set forth in Section 3.6(i) hereof.

 

“Environmental Claims”
shall mean all Claims pursuant to Environmental Laws, including those based on,
arising out of or otherwise relating to: 
(i) the Remediation, presence or Release of, or exposure to,
Hazardous Materials or other environmental conditions initiated, existing or
occurring prior to the Closing Date at, on, under, above, from, or about any
Real Property or any real properties formerly owned, leased or operated by the
Company or any of its predecessors or Affiliates; (ii) the off-site Release,
treatment, transportation, storage or disposal prior to the Closing Date of
Hazardous Materials originating from the Company’s Assets or Business; (iii) any
violations of Environmental Laws by the Company prior to the Closing Date,
including reasonable expenditures necessary to cause the Company to be in
compliance with or resolve violations of Environmental Laws.

 

“Environmental Laws”
shall mean any Laws (including the Comprehensive Environmental Response,
Compensation, and Liability Act), including any plans, other criteria, or
guidelines promulgated pursuant to such Laws, now or hereafter in effect
relating to the Remediation, generation, production, installation, use,
storage, treatment, transportation, Release, threatened Release, or disposal of
Hazardous Materials, or noise control, or the protection of human health,
safety, natural resources, animal health or welfare, or the environment.

 

1.1-3

 

“Environmental Permits”
shall mean any Permits, licenses, certificates and approvals required under any
Environmental Law.

 

“ERISA” shall
mean the Employee Retirement Income Security Act of 1974, as amended.

 

“ERISA Affiliate”
shall have the meaning set forth in Section 4.16(a) hereof.

 

“ERISA Plans”
shall have the meaning set forth in Section 4.16(a) hereof.

 

“Escrow Account”
shall have the meaning set forth in Section 3.3(d) hereof.

 

“Escrow Agent”
shall mean Wells Fargo Bank, N.A.

 

“Escrow Agreement”
shall have the meaning set forth in Section 3.3(d) hereof.

 

“Escrow Amount”
shall have the meaning set forth in Section 3.3(d) hereof.

 

“FD&C Act” shall
have the meaning set forth in Section 4.30(a) hereof.

 

“FD&C Permits” shall
have the meaning set forth in Section 4.30(e) hereof.

 

“FDA” shall
have the meaning set forth in Section 4.30(a) hereof.

 

“FDA Law and Regulation” shall
have the meaning set forth in Section 4.30(a) hereof.

 

“Financial Statements”
shall mean the audited balance sheets and statements of income and cash flow as
of and for the fiscal years ended December 31, 2003 and December 31,
2004 for the Company and the unaudited combined balance sheets and statements
of income and cash flow of the Company and GTM as of the six (6) month
period ended June 30, 2005.

 

“GAAP” shall
mean United States generally accepted accounting principles and practices.

 

“Governmental Authority”
shall mean any national, federal, state, local or foreign judicial,
legislative, executive or governmental regulatory authority.

 

“GTM” shall
have the meaning set forth in Section 3.6(c) hereof.

 

“GTM Property” shall
have the meaning set forth in Section 3.6(c) hereof.

 

“Hazardous Materials”
shall mean any wastes, substances, radiation, or materials (whether solids,
liquids or gases):  (i) which are
hazardous, toxic, infectious, explosive, radioactive, carcinogenic, or
mutagenic; (ii) which are or become defined as “pollutants,” “contaminants,”
“hazardous materials,” “hazardous wastes,” “hazardous substances,” “toxic
substances,” “radioactive materials,” “solid wastes,”  or other similar designations in, or
otherwise subject to regulation under, any Environmental Laws; (iii) the
presence of which on the Real Property cause or threaten to cause a nuisance
pursuant to applicable statutory or common law upon the Real Property or to adjacent
properties; (iv) which contain without

 

1.1-4

 

limitation
polychlorinated biphenyls (PCBs), mold, methyl-tertiary butyl ether (MTBE),
asbestos or asbestos-containing materials, lead-based paints, urea-formaldehyde
foam insulation, or petroleum or petroleum products (including crude oil or any
fraction thereof); or (v) which pose a hazard to human health, safety,
natural resources, employees, or the environment.

 

 “Indebtedness” of any Person
at any date shall mean (a) all indebtedness of such Person for borrowed
money or for the deferred purchase price of property or services (other than
current trade liabilities incurred in the ordinary course of business
consistent with past practices and payable in accordance with customary
practices) and including earn-out or similar contingent purchase amounts, (b) any
other indebtedness of such Person which is evidenced by a note, bond, debenture
or similar instrument, (c) all obligations of such Person under any capitalized
lease (other than obligations under the Master Lease Agreement with First
Tennessee Bank for Lease No. 24403388, dated as of August 9, 2001 and
the Master Lease Agreement with First Tennessee Bank for Lease No. 23492604,
dated as of May 23, 2001), (d) all obligations of such Person in
respect of acceptances issued or created for the account of such Person, (e) all
liabilities secured by any Lien on any property owned by such Person even
though such Person has not assumed or otherwise become liable for the payment
thereof, and (f) all guarantees by such Person of obligations of others.

 

“Indemnity Cap”
shall have the meaning set forth in Section 7.2(b) hereof.

 

“Intellectual Property”
shall mean all intellectual property rights used or available for use in the
Business as currently conducted or as currently contemplated by the Company to
be conducted, or in or to which the Company has any right, title or interest,
including all patents and patent applications, together with all reissuances,
continuations, continuations-in-part, revisions, extensions and reexaminations
thereof; trademarks, trademark registrations and applications, service marks,
service mark registrations and applications, trade names, trade dress, logos,
designs, proprietary rights, slogans and general intangibles of like nature,
together with all goodwill symbolized by or related to the foregoing;
copyrights, copyright registrations and applications; mask works and all
applications, registrations and renewals in connection therewith; Computer
Programs; all domain names and the content contained on the Company’s Internet
web site(s); product plans, technology, process engineering, drawings,
schematic drawings, secret processes, proprietary knowledge, including without
limitation, trade secrets, know-how, confidential information and formulae.

 

“IRS” shall
mean the Internal Revenue Service of the United States of America.

 

“Joinders”
shall have the meaning set forth in Section 3.3(b) hereof.

 

“Knowledge”
with respect to any particular representation or warranty contained in this
Agreement, when used to apply to the “Knowledge” of a Member, shall be deemed
to be followed by the phrase “after due inquiry” and, when otherwise used,
shall mean the actual knowledge or conscious awareness after due inquiry of the
managers, senior officers or individuals performing similar functions of the
Person.

 

1.1-5

 

“Laws” shall
mean any federal, state, foreign or local law, statute, ordinance, rule,
regulation, order, determination, writ, judgment or decree, administrative
order, and administrative or judicial decision.

 

“Liabilities” shall
mean debts, liabilities, commitments, obligations, duties and responsibilities
of any kind and description, whether absolute, accrued, contingent, monetary or
nonmonetary, direct or indirect, known or unknown or matured or unmatured or of
any other nature.

 

“Licenses”
shall have the meaning set forth in Section 4.15(d) hereof.

 

“Liens” shall
mean any lien, pledge, mortgage, equitable interest, profits interest, deed of
trust, security interest, lease, charge, option, right of first refusal,
easement, encroachment, reservation, servitude, transfer restriction under any
agreement, order, decree, judgment, condition or any other encumbrance of any
nature whatsoever.

 

“Litigation”
shall mean any litigation, legal action, arbitration, proceeding, material
demand, material claim or investigation pending, or, to the Knowledge of the
Company and the Members, threatened, planned or reasonably probable, against,
affecting or brought by or against the Members, the Company, the Company’s
present or former members, employees or agents affiliated at any time with the
Company relating to the Business or any of the assets or properties of the Company.

 

“Material Adverse Effect”
shall mean, with respect to the same or any similar events, acts, conditions or
occurrences, whether individually or in the aggregate resulting in, a material
adverse effect on or a material adverse change in (a) the assets or
property of the Company, (b) any of the business, condition (financial or
otherwise), operations, prospects or liabilities of the Company, (c) the
legality or enforceability against the Company or the Members of this Agreement
or (d) the ability of the Company and each of the Members to perform its,
her or his (as the case may be) obligations and to consummate the transactions
under this Agreement.  For purposes of
clauses (a) and (b) of this definition and without limiting
the generality of the foregoing, an effect or change with respect to the same
or any similar event(s), act(s), condition(s) or occurrence(s) individually or
in the aggregate with respect to which the Purchaser would reasonably be
expected to have $50,000 in the aggregate or more in Damages being asserted
against, imposed upon or sustained by the assets or properties of the Company,
or the Company or its business, taken as a whole, shall constitute a “material
adverse” effect or change.

 

“Material
Contracts” shall have the meaning set forth in Section 4.14(a) hereof.

 

“Member(s)”
shall have the meaning(s) set forth in the preamble hereof.

 

“Member Indemnification Threshold”
shall have the meaning set forth in Section 7.2(b) hereof.

 

“Member Non-Basket
Representations” shall have the meaning set forth in Section 7.2(a)(iii) hereof.

 

1.1-6

 

“Non-competition Agreements” shall
have the meaning set forth in Section 3.6(i) hereof.

 

“Operating
Agreement” shall mean the Amended and Restated Operating Agreement
of the Company entered into by the Members, dated as of September 30,
2005.

 

“Organizational
Documents” shall have the meaning set forth in Section 4.3
hereof.

 

“Ownership
Interests” shall mean all of the rights and obligations of a member
of the Company under the Act and the Operating Agreement.

 

“Parent” shall
have the meaning set forth in the recitals of this Agreement.

 

“Parent
Registration Rights Agreement” shall mean the Third Amended and Restated Registration Rights
Agreement, dated as of June 30, 2004, among Parent and the shareholders
listed on the signature pages thereto.

 

“Parent Shareholders’
Agreement” shall mean the Amended and Restated Shareholders’ Agreement, dated as
of June 30, 2004, among Parent and the shareholders listed on the
signature pages thereto.

 

“PBGC” shall
have the meaning set forth in Section 4.16(d) hereof.

 

“Permits” shall
mean as to any Person, all licenses, permits, franchises, orders, approvals,
concessions, registrations, authorizations and qualifications under any
federal, state, local or foreign laws with any and all Governmental Authorities
or with any and all industry or other nongovernmental self-regulatory
organizations that are issued to such Person.

 

“Person” shall
mean an individual, a corporation, a partnership, limited liability company, an
association, a trust or other entity or organization.

 

“Plans” shall
have the meaning set forth in Section 4.16(a) hereof.

 

“Purchase Price”
shall have the meaning set forth in Section 3.1 hereof.

 

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

 

“Purchaser Affiliate”
shall have the meaning set forth in the recitals to this Agreement.

 

“Purchaser Indemnified Parties”
shall mean the Purchaser, the Company and their respective successors, assigns,
officers, directors, shareholders, Affiliates, agents, representatives and
employees (excluding for all purposes, the Members).

 

“Purchaser Material Adverse
Effect” shall mean, with respect to the same or any similar
events, acts, conditions or occurrences, whether individually or in the
aggregate resulting in, a material adverse effect on or a material adverse
change in (a) the assets or property of the Purchaser, (b) any of the
business, condition (financial or otherwise), operations, prospects or liabilities
of the Purchaser, (c) the legality or enforceability against the Purchaser
of this Agreement or (d) the ability of the Purchaser to perform its obligations
and to consummate the

 

1.1-7

 

transactions under this
Agreement.  For purposes of clauses (a) and (b) of
this definition and without limiting the generality of the foregoing, an effect
or change with respect to the same or any similar event(s), act(s),
condition(s) or occurrence(s) individually or in the aggregate with respect to
which the Purchaser would reasonably be expected to have $1,000,000 in the aggregate or more in Damages being asserted against,
imposed upon or sustained by the assets or properties of the Purchaser, or the
Purchaser or its business, taken as a whole, shall constitute a “material
adverse” effect or change.

 

“Purchaser Non-Basket
Representations” shall have the meaning set forth in Section 7.3(a)(iii) hereof.

 

“Purchaser Public Reports”
shall have the meaning set forth in Section 5.7 hereof.

 

 “Purchaser’s Indemnification Threshold”
shall have the meaning set forth in Section 7.3(b) hereof.

 

 “Real Property” shall have
the meaning set forth in Section 4.9(b) hereof.

 

“Relatives”
shall mean such person’s spouse, lineal ancestor or descendant, brother or
sister.

 

“Release” shall
mean any presence, emission, spill, seepage, leak, escape, leaching, discharge,
injection, pumping, pouring, emptying, dumping, disposal, migration, or release
of Hazardous Materials from any source into or upon the environment, including
the air, soil, improvements, surface water, groundwater, sewer, septic system,
storm drain, publicly owned treatment works, or waste treatment, storage, or
disposal systems.

 

“Remediation”
shall mean any investigation, clean-up, removal action, remedial action,
restoration, repair, response action, corrective action, monitoring, sampling
and analysis, installation, reclamation, closure, or post-closure in connection
with the suspected, threatened or actual Release of Hazardous Materials.

 

“Required Intellectual Property
Consents” shall have the meaning set forth in Section 4.15(h).

 

“SEC” shall
mean the Securities and Exchange Commission.

 

“Second Quarter Balance Sheet”
shall have the meaning set forth in Section 4.6 hereof.

 

“Securities Act”
shall have the meaning set forth in Section 4.29(a) hereof.

 

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

 

“SPD” shall
have the meaning set forth in Section 4.16(b)(iv) hereof.

 

“Subscription Agreement”
shall have the meaning set forth in Section 3.3(b) hereof.

 

1.1-8

 

“Subsidiary”
shall mean, with respect to any Person, any corporation or other organization,
whether incorporated or unincorporated, of which such Person or any other
subsidiary of such person beneficially owns a majority of the voting or equity
interests.

 

“Tax Law” shall
mean any Law relating to Taxes.

 

“Tax Return”
shall mean any return (including any information return), report, statement,
schedule, notice, form, or other document or information filed with or
submitted to, or required to be filed with or submitted to, any Governmental
Authority in connection with the determination, assessment, collection, or
payment of any Taxes or in connection with the administration, implementation,
or enforcement of or compliance with any Law relating to any Tax.

 

“Taxes” shall
mean all taxes (including any income taxes, payroll taxes, capital gains taxes,
value-added taxes, excise taxes, sales taxes, property taxes, gift taxes,
transfer taxes or estate taxes), levies, assessments, tariffs, duties
(including any customs duties), deficiencies, or other fees, and any related
charges or amounts (including any fines, penalties, interest, or additions to tax),
imposed, assessed, or collected by or under the authority of any Governmental
Authority or payable pursuant to any tax-sharing agreement or any other
contract relating to the sharing or payment of any such tax, levy, assessment,
tariff, duty, deficiency, or fee.

 

“Tennessee Courts”
shall have the meaning set forth in Section 8.7 hereof.

 

“Title Policy”
shall mean an ALTA title insurance policy on each parcel of the Real Property
of the Company, each issued to the Company by a title company reasonably acceptable
to the Purchaser, in an amount not less than the fair market value of the
applicable parcel, and, in each case, containing such endorsements as the
Purchaser may reasonably request and issued pursuant to a title commitment or
title report reasonably approved and accepted by the Purchaser.

 

“2006 EBITDA”
shall have the meaning set forth in Section 3.4(a) hereof.

 

“2006 EBITDA Dispute Notice”
shall have the meaning set forth in Section 3.4(a) hereof.

 

“2006 EBITDA Statement”
shall have the meaning set forth in Section 3.4(a) hereof.

 

“Voting Agreement”
shall have the meaning set forth in Section 3.3(b) hereof.

 

1.1-9

 

EXHIBIT A

 

Certificate of Designation

 

 

EXHIBIT B

 

Subscription Agreement

 

 

EXHIBIT C

 

Voting Agreement

 

 

EXHIBIT D

 

Parent Shareholders’ Agreement

 

 

EXHIBIT E

 

Parent Registration Rights Agreement

 

 

EXHIBIT F

 

Escrow Agreement

 

 

EXHIBIT G

 

Secretary Certificate

 

 

EXHIBIT H

 

Special Warranty Deed

 

 

EXHIBIT I

 

Release

 

 

EXHIBIT J

 

Employment Agreement

 

 

EXHIBIT K

 

Non-competition Agreement

 

 

EXHIBIT L

 

Legal OpinionEXHIBIT 4.2

REGISTRATION RIGHTS AGREEMENT

by
and among

Duane
Reade Inc.

Duane
Reade GP

The Guarantors named herein

and

Banc of America Securities LLC

Dated as of August
9, 2005

 

 

 

REGISTRATION
RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”)
is made and entered into as of August 9, 2005, by and among Duane Reade Inc., a
Delaware corporation (the “Company”), Duane Reade, a New York general
partnership and subsidiary of the Company (“Duane Reade GP”, and together with
the Company, the “Issuers”), Duane Reade Holdings, Inc., a Delaware corporation
(“Holdings”), each of the direct and indirect domestic subsidiaries of the
Company named herein (other than Duane Reade GP) (collectively, the “Guarantors”),
and Banc of America Securities LLC (the “Initial Purchaser”), who has agreed to
purchase the Issuers’ Senior Secured Floating Rate Notes due 2010 (the “Initial
Securities”).

This Agreement is made pursuant to the Purchase
Agreement, dated August 4, 2005, by and among the Initial Purchaser, the
Issuers and the
Guarantors (the “Purchase Agreement”) (a) for the benefit of the Initial Purchaser and (b)
for the benefit of the holders from time to time of the Initial Securities,
including the Initial Purchaser. In order to induce the Initial Purchaser to
purchase the Initial Securities, the Issuers and the Guarantors have agreed to provide the
registration rights set forth in this Agreement. The execution and delivery of
this Agreement is a condition to the obligations of the Initial Purchaser set
forth in Section 5(k) of the Purchase Agreement.

The parties hereby agree
as follows:

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

Broker-Dealer: 
Any broker
or dealer registered under the Exchange Act.

Business Day: 
Any day other than a Saturday, Sunday or U.S. federal holiday or a day
on which banking institutions or trust companies located in New York, New York
are authorized or obligated to be closed.

Closing Date:  The date of this Agreement.

Commission:  The Securities and Exchange Commission.

Company:  As defined in the preamble hereto.

Consummate:  A registered Exchange Offer shall be
deemed “Consummated” for purposes of this Agreement upon the occurrence of (i)
the filing and effectiveness under the Securities Act of the Exchange Offer
Registration Statement relating to the Exchange Securities to be issued in the
Exchange Offer, (ii) the maintenance of such Registration Statement
continuously effective and the keeping of the Exchange Offer open for a period
not less than the minimum period required pursuant to Section 3(b) hereof, and
(iii) the delivery by the Issuers to the Registrar under the Indenture of
Exchange Securities in the same aggregate principal amount as the aggregate
principal amount of Initial Securities that were tendered by Holders thereof
pursuant to the Exchange Offer.

Duane Reade GP:  As defined in the recitals hereto.

 

2

Effectiveness Target Date:  As defined in Section 5 hereof.

Exchange Act: 
The
Securities Exchange Act of 1934.

Exchange Offer: 
The
registration by the Issuers under the Securities Act of the Exchange Securities
pursuant to a Registration Statement pursuant to which the Issuers offer the Holders
of all outstanding Transfer Restricted Securities the opportunity to exchange
all such outstanding Transfer Restricted Securities held by such Holders for
Exchange Securities in an aggregate principal amount equal to the aggregate
principal amount of the Transfer Restricted Securities tendered in such
exchange offer by such Holders.

Exchange Offer Registration Statement:  The Registration Statement relating to the Exchange
Offer, including the related Prospectus.

Exchange Securities:  The Issuers’ Senior Secured Floating Rate Notes due
2010, of the same series under the Indenture as the Initial Securities, to be
issued to Holders in exchange for Transfer Restricted Securities pursuant to
this Agreement.

Guarantors:  As defined in the recitals hereto.

Holders:  As defined in Section 2(b) hereof.

Indemnified Holder: 
As defined
in Section 8(a) hereof.

Indenture:  The Indenture, dated as of December 20,
2004, by and among the Issuers, the Guarantors and U.S. Bank National
Association, as trustee (the “Trustee”), pursuant to which the Securities are
to be issued, as such Indenture is amended or supplemented from time to time in
accordance with the terms thereof.

Initial Placement: 
The
issuance and sale by the Issuers of the Initial Securities to the Initial
Purchaser pursuant to the Purchase Agreement.

Initial Purchaser: 
As defined
in the preamble hereto.

Initial Securities: 
As defined
in the preamble hereto.

Interest Payment Date:  As defined in the Indenture and the Securities.

Issuers:  As defined in the preamble hereto.

NASD:  NASD Inc.

Participating Broker-Dealer: 
The Initial Purchaser and any other Broker-Dealer which makes a market
in the Initial Securities and exchanges Transfer Restricted Securities in the
Exchange Offer for Exchange Securities.

Person:  An individual, partnership, corporation,
trust or unincorporated organization, or a government or agency or political
subdivision thereof.

3

Prospectus:  The prospectus included in a Registration
Statement, as amended or supplemented by any prospectus supplement and by all
other amendments thereto, including post-effective amendments, and all material
incorporated by reference into such Prospectus.

Purchase Agreement:  As defined in
the recitals hereto.

Registration Actions: 
As defined in Section 4(c) hereof.

Registration Default:  As defined in Section 5 hereof.

Registration Statement:  Any registration statement of the Issuers relating to
(a) an offering of Exchange Securities pursuant to an Exchange Offer or (b) the
registration for resale of Transfer Restricted Securities pursuant to the Shelf
Registration Statement, which is filed pursuant to the provisions of this
Agreement, in each case, including the Prospectus included therein, all
amendments and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.

Securities:  The Initial Securities and the Exchange
Securities.

Securities Act: 
The
Securities Act of 1933.

Shelf Registration Statement:  As defined in Section 4(a) hereof.

Suspension Notice:  As defined in
Section 4(c) hereof.

Suspension Period:  As defined in
Section 4(c) hereof.

Trust Indenture Act:  The Trust Indenture Act of 1939, as amended.

Transfer Restricted Securities:  Each Initial Security, until the earliest to occur of
(a) the date on which such Initial Security is exchanged in the Exchange Offer
for an Exchange Security entitled to be resold to the public by the Holder
thereof without complying with the prospectus delivery requirements of the
Securities Act, (b) the date on which such Initial Security has been
effectively registered under the Securities Act and disposed of in accordance
with a Shelf Registration Statement and (c) the date on which such Initial Security
is distributed to the public pursuant to Rule 144 under the Securities Act or
by a Broker-Dealer pursuant to the “Plan of Distribution” contemplated by the
Exchange Offer Registration Statement (including delivery of the Prospectus
contained therein).

Underwritten Registration or Underwritten
Offering:  A registration in which securities of the
Issuers are sold to an underwriter for reoffering to the public.

For purposes of this Agreement, if the day on which
any deadline specified in this Agreement expires is not a Business day, such
deadline shall be deemed to expire on the next succeeding Business Day.

4

 

SECTION
2.  Securities Subject to this Agreement.

(a)  Transfer Restricted Securities.  The
securities entitled to the benefits of this Agreement are the Transfer
Restricted Securities.

(b)  Holders of Transfer Restricted Securities.  A Person is deemed to be a holder
of Transfer Restricted Securities (each, a “Holder”) whenever such Person owns
Transfer Restricted Securities.

SECTION
3.  Registered Exchange Offer.

(a)  Unless the
Exchange Offer shall not be permissible under applicable law or Commission
policy (after the procedures set forth in Section 6(a) hereof have been
complied with), the Issuers shall (i) cause to be filed with the Commission on
or prior to the 120th day after the Closing Date, a Registration
Statement under the Securities Act relating to the Exchange Securities and the
Exchange Offer, (ii) use their reasonable best efforts to cause such
Registration Statement to become effective on or prior to the 180th
day after the Closing Date, (iii) in connection with the foregoing, (A) file
all pre-effective amendments to such Registration Statement as may be necessary
in order to cause such Registration Statement to become effective, (B) if
applicable, file a post-effective amendment to such Registration Statement
pursuant to Rule 430A under the Securities Act and (C) use their reasonable
best efforts to cause all necessary filings in connection with the registration
and qualification of the Exchange Securities to be made under the state
securities or blue sky laws of such jurisdictions as any Holder shall
reasonably request in writing by the time the Exchange Offer Registration
Statement is declared effective by the Commission, it being agreed that no such
registration or qualification will be made unless so requested, to permit
Consummation of the Exchange Offer; provided, however,
that none of the Issuers or any of the Guarantors shall be required to (1)
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(a), or (2) take any action which would subject it to general service
of process or taxation in any such jurisdiction where it is not then so
subject, and (iv) as promptly as practicable after the effectiveness of such
Registration Statement, commence the Exchange Offer. The Exchange Offer shall
be on the appropriate form permitting registration of the Exchange Securities
to be offered in exchange for the Transfer Restricted Securities and to permit
resales of Initial Securities held by Broker-Dealers as contemplated by Section
3(c) hereof.

(b)  The Issuers
shall use their reasonable best efforts to cause the Exchange Offer
Registration Statement to be effective continuously and shall keep the Exchange
Offer open for a period of not less than the minimum period required under
applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be
less than 30 days or shall the termination date of the Exchange Offer be not
more than 45 days (or longer if required by applicable law) after the date
notice of the Exchange Offer is mailed to the Holders. The Issuers shall cause
the Exchange Offer to comply in all material respects with all applicable
federal and state securities laws.  No
securities other than the Exchange Securities shall be included in the Exchange
Offer Registration Statement. The Issuers shall use their reasonable best
efforts to cause the Exchange Offer to be Consummated on or prior to the 210th
day after the Closing Date.

5

 

(c)  The Issuers
shall indicate in a “Plan of Distribution” section contained in the Prospectus
forming a part of the Exchange Offer Registration Statement that any
Broker-Dealer who holds Initial Securities that are Transfer Restricted
Securities and that were acquired for its own account as a result of
market-making activities or other trading activities (other than Transfer
Restricted Securities acquired directly from the Issuers), may exchange such
Initial Securities pursuant to the Exchange Offer; however, such Broker-Dealer
may be deemed to be an “underwriter” within the meaning of the Securities Act
and must, therefore, deliver a prospectus meeting the requirements of the
Securities Act in connection with any resales of the Exchange Securities
received by such Broker-Dealer in the Exchange Offer, which prospectus delivery
requirement may be satisfied by the delivery by such Broker-Dealer of the
Prospectus contained in the Exchange Offer Registration Statement. Such “Plan
of Distribution” section shall also contain all other information with respect
to such resales by Broker-Dealers that the Commission may require in order to
permit such resales pursuant thereto, but such “Plan of Distribution” shall not
name any such Broker-Dealer or disclose the amount of Initial Securities held
by any such Broker-Dealer except to the extent required by the Commission as a
result of a change in policy after the date of this Agreement.

The Issuers shall use their reasonable best efforts to
keep the Exchange Offer Registration Statement continuously effective, supplemented
and amended as required by the provisions of Section 6(c) hereof to the extent
necessary to ensure that it is available for resales of Initial Securities
acquired by Broker-Dealers for their own accounts as a result of market-making
activities or other trading activities, and to ensure that it conforms in all
material respects with the requirements of this Agreement, the Securities Act
and the policies, rules and regulations of the Commission as announced from
time to time, for a period ending on the earlier of (i) 180 days from the date
on which the Exchange Offer Registration Statement is declared effective and
(ii) the date on which a Broker-Dealer is no longer required to deliver a
prospectus in connection with market-making or other trading activities.

The Company shall furnish as soon as practicable as
many copies of the latest version of such Prospectus to Broker-Dealers as are
reasonably requested at any time during such 180-day (or shorter as provided in
the foregoing sentence) period in order to facilitate such resales.

SECTION
4.  Shelf Registration.

(a)  Shelf Registration.  If
(i) the Exchange Offer is not permitted by applicable law or Commission policy
(after the procedures set forth in Section 6(a) hereof have been complied
with), (ii) for any reason the Exchange Offer is not Consummated within 210
days after the Closing Date, or (iii) with respect to any Holder of Transfer
Restricted Securities (A) such Holder is prohibited by applicable law or
Commission policy from participating in the Exchange Offer, or (B) such Holder
may not resell the Exchange Securities acquired by it in the Exchange Offer to
the public without delivering a prospectus and that the Prospectus contained in
the Exchange Offer Registration Statement is not appropriate or available for
such resales by such Holder, or (C) such Holder is a Broker-Dealer and holds
Initial Securities acquired directly from the Issuers or one of the Issuers’
affiliates then, upon such Holder’s or Initial Purchaser’s request, the Issuers
shall

6

 

(x)  as promptly as practicable cause to be filed
a shelf registration statement pursuant to Rule 415 under the Securities Act,
which may be an amendment to the Exchange Offer Registration Statement (in either
event, the “Shelf Registration Statement”) on or prior to the earliest to occur
of (1) the later of (x) the 45th day after the date on which the Company
determines that it is not required to file the Exchange Offer Registration
Statement and (y) the 120th day after the Closing Date, (2) the 210th day after
the Closing Date (in the case of clause (ii) above) and (3) the 45th day after
the date on which the Company receives notice from a Holder of Transfer
Restricted Securities or the Initial Purchaser as contemplated by clause (iii)
above (such earliest date being the “Shelf Filing Deadline”), which Shelf
Registration Statement shall provide for resales of all Transfer Restricted
Securities the Holders of which shall have provided the information required
pursuant to Section 4(b) hereof; and

 

(y)  use their reasonable best efforts to cause
such Shelf Registration Statement to be declared effective by the Commission on
or before the later of (x) the 90th day after the Shelf Filing Deadline and (y)
the 180th day after the Closing Date.

 

The Issuers shall use their reasonable best efforts to
keep such Shelf Registration Statement continuously effective, supplemented and
amended as required by the provisions of Sections 6(b) and (c) hereof to the
extent necessary to ensure that it is available for resales of Initial
Securities by the Holders of Transfer Restricted Securities entitled to the
benefit of this Section 4(a), and to ensure that it conforms in all material
respects with the requirements of this Agreement, the Securities Act and the
rules and regulations of the Commission as announced from time to time, for a
period of two years following the effective date of such Shelf Registration
Statement (or shorter period that will terminate when all the Initial
Securities covered by such Shelf Registration Statement have been sold pursuant
to such Shelf Registration Statement).

 

(b)  Provision by Holders of
Certain Information in Connection with the Shelf Registration Statement.  No Holder of Transfer Restricted
Securities may include any of its Transfer Restricted Securities in any Shelf
Registration Statement pursuant to this Agreement unless and until such Holder
furnishes to the Company in writing, within 20 Business Days after receipt of a
request therefor, such information as the Company may reasonably request for
use in connection with any Shelf Registration Statement or Prospectus or
preliminary Prospectus included therein. Each Holder as to which any Shelf
Registration Statement is being effected agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.

(c)  Suspension. 
Notwithstanding anything to the contrary and subject to the limitation
set forth in the next succeeding paragraph, at any time after the effectiveness
of the Shelf Registration Statement, each of the Issuers shall be entitled to
suspend its obligation to file any amendment to the Shelf Registration Statement,
furnish any supplement or amendment to a Prospectus included in the Shelf
Registration Statement, make any other filing with the Commission, cause the
Shelf Registration Statement or other filing with the Commission to remain
effective or take any similar action (collectively, “Registration Actions”)
upon (A) the issuance by the Commission of a stop order suspending the
effectiveness of the Shelf 

7

 

Registration Statement or
the initiation of proceedings with respect to the Shelf Registration Statement
under Section 8(d) or 8(e) of the Securities Act, (B) the occurrence of any
event or the existence of any fact as a result of which the Shelf Registration
Statement would or shall contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, or the related Prospectus would or
shall contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
or (C) the occurrence or existence of any corporate development that, in the
discretion of the Company, makes it appropriate to postpone or suspend the
availability of the Shelf Registration Statement and the related
Prospectus.  Upon the occurrence of any
of the conditions described in clause (A), (B) or (C) above, the Company shall
give prompt notice (a “Suspension Notice”) thereof to the Holders.  Upon the termination of such condition, the
Company shall give prompt notice thereof to the Holders and shall promptly
proceed with all Registration Actions that were suspended pursuant to this paragraph.

The Issuers may only suspend Registration Actions
pursuant to the preceding paragraph for one or more periods (each, a “Suspension
Period”) not to exceed, in the aggregate, (x) sixty days in any three month
period or (y) ninety days in any twelve month period, during which no
Liquidated Damages (as defined in Section 5) shall be payable.  Each Suspension Period shall be deemed to
begin on the date the relevant Suspension Notice is given to the Holders and
shall be deemed to end on the earlier to occur of (1) the date on which the
Company gives the Holders a notice that the Suspension Period has terminated
and (2) the date on which the number of days during which a Suspension
Period has been in effect exceeds, in the aggregate, (x) sixty days in any three
month period or (y) ninety days in any twelve month period.

SECTION 5.  Liquidated Damages. 
Subject to
the Issuers’ ability to declare Suspension Periods with respect to clause (iv)
below, if (i) any of the Registration Statements required by this Agreement is
not filed with the Commission on or prior to the date specified for such filing
in this Agreement, (ii) any of such Registration Statements has not been
declared effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement (the “Effectiveness Target Date”), (iii) the
Exchange Offer has not been Consummated on or prior to the date specified for
such consummation in this Agreement or (iv) any Registration Statement required
by this Agreement is filed and declared effective but shall thereafter cease to
be effective or fail to be usable for its intended purpose for more than 30
days (each such event referred to in clauses (i) through (iv), a “Registration
Default”), each of the Issuers and Guarantors hereby agrees to pay liquidated
damages (“Liquidated Damages”) in the form of additional interest in cash to
each Holder in an amount equal to 0.25% per annum of the aggregate principal
amount of the Transfer Restricted Securities for the period of occurrence of the
Registration Default until such time as no Registration Default is in effect,
which rate shall increase by 0.25% per annum for each subsequent 90-day period
during which such Registration Default continues, but in no event shall such
increase exceed 1.00% per annum. Following the cure of all Registration
Defaults relating to any particular Transfer Restricted Securities, the
Liquidated Damages will cease to accrue from the date of such cure and the
interest rate on the Transfer Restricted Securities will revert to the original
interest rate borne by such Transfer Restricted Securities; provided, however, that, if after the date
such Liquidated Damages cease to 

8

 

accrue, a different
Registration Default occurs, Liquidated Damages may again commence accruing
pursuant to the foregoing provisions.

Notwithstanding the foregoing, (i) the amount of
Liquidated Damages payable shall not increase because more than one
Registration Default has occurred and is continuing and (ii) a Holder of
Transfer Restricted Securities who is not entitled to the benefits of the Shelf
Registration Statement shall not be entitled to Liquidated Damages with respect
to a Registration Default that pertains to the Shelf Registration Statement.

All references in the Indenture to “interest” include
the Liquidated Damages payable pursuant to this Section 5, and all accrued
Liquidated Damages shall be payable to the Holders entitled thereto, in the
manner provided for the payment of interest in the Indenture, as more fully set
forth in the Indenture and the Securities. All obligations of the Issuers and
the Guarantors set forth in the preceding paragraph that are outstanding with
respect to any Transfer Restricted Security at the time such security ceases to
be a Transfer Restricted Security shall survive until such time as all such
obligations with respect to such security shall have been satisfied in full.

SECTION
6.  Registration Procedures.

(a)  Exchange Offer Registration Statement. 
In connection with the Exchange Offer, each of the Issuers
and Guarantors shall comply with all of the provisions of Section 6(c) hereof,
shall use its reasonable best efforts to effect such exchange to permit the
sale of Transfer Restricted Securities being sold in accordance with the
intended method or methods of distribution thereof set forth in the
Registration Statement and shall comply with all of the following provisions:

(i)  If in the reasonable opinion of counsel to
the Issuers there is a question as to whether the Exchange Offer is permitted
by applicable law, each of the Issuers, and Holdings shall cause the Issuers to
seek such no-action letter or other favorable decision from the Commission,
hereby agrees to seek a no-action letter or other favorable decision from the
Commission allowing the Issuers to Consummate an Exchange Offer for such
Initial Securities.  Each of the Issuers,
and Holdings shall cause the Issuers to pursue the issuance of such a decision,
hereby agrees to pursue the issuance of such a decision to the Commission staff
level but shall not be required to take commercially unreasonable action to
effect a change of Commission policy. 
Each of the Issuers hereby agrees, and Holdings shall cause the Issuers,
however, to (A) participate in telephonic conferences with the Commission, (B)
deliver to the Commission staff an analysis prepared by counsel to the Issuers
setting forth the legal bases, if any, upon which such counsel has concluded
that such an Exchange Offer should be permitted and (C) diligently pursue a
favorable resolution by the Commission staff of such submission.

(ii)  As a condition to its participation in the
Exchange Offer pursuant to the terms of this Agreement, each Holder of Transfer
Restricted Securities shall furnish, upon the request of the Company, prior to
the Consummation thereof, a written representation to the Company (which may be
contained in the letter of transmittal contemplated by the Exchange Offer
Registration Statement) to the effect that (A) it is not an affiliate of either
of the Issuers, (B) it is not engaged in, and does not intend to engage in, and
has no 

9

 

arrangement or
understanding with any Person to participate in, a distribution of the Exchange
Securities to be issued in the Exchange Offer and (C) it is acquiring the
Exchange Securities in its ordinary course of business.  In addition, all such Holders of Transfer
Restricted Securities shall otherwise cooperate in the Issuers’ preparations
for the Exchange Offer.  Each Holder
hereby acknowledges and agrees that any Broker-Dealer and any such Holder using
the Exchange Offer to participate in a distribution of the securities to be
acquired in the Exchange Offer (1) could not under Commission policy as in
effect on the date of this Agreement rely on the position of the Commission
enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon
Capital Holdings Corporation (available May 13, 1988), as interpreted in
the Commission’s letter to Shearman & Sterling dated July 2, 1993, and
similar no-action letters (which may include any no-action letter obtained
pursuant to clause (i) above), and (2) must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction and that such a secondary resale transaction
should be covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K if the resales are of Exchange Securities obtained by such
Holder in exchange for Initial Securities acquired by such Holder directly from
the Issuers.

(b)  Shelf Registration Statement.  In
connection with the Shelf Registration Statement, each of the Issuers and
Guarantors shall comply with all the provisions of Section 6(c) hereof and
shall use its reasonable best efforts to effect such registration to permit the
sale of the Transfer Restricted Securities being sold in accordance with the
intended method or methods of distribution thereof set forth in such Shelf
Registration Statement, and pursuant thereto each of the Issuers will as
promptly as practicable prepare and file with the Commission a Registration
Statement relating to the registration on any appropriate form under the
Securities Act, which form shall be available for the sale of the Transfer
Restricted Securities in accordance with the intended method or methods of
distribution thereof set forth in such Shelf Registration Statement.

(c)  General Provisions.  Except
as otherwise provided, in connection with any Registration Statement and any
Prospectus required by this Agreement to permit the sale or resale of Transfer
Restricted Securities (including, without limitation, any Registration Statement
and the related Prospectus required to permit resales of Initial Securities by
Broker-Dealers), each of the Issuers shall:

(i)  use its reasonable best efforts to keep such
Registration Statement continuously effective and provide all requisite financial
statements for the period specified in Section 3 or 4 hereof, as applicable;
upon the occurrence of any event that would cause any such Registration
Statement or the Prospectus contained therein (A) to contain a material
misstatement or omission or (B) not to be effective and usable for resale of
Transfer Restricted Securities during the period required by this Agreement,
the Issuers shall file as promptly as practicable an appropriate amendment to
such Registration Statement, in the case of clause (A), correcting any such
misstatement or omission, and, in the case of either clause (A) or (B), use its
reasonable best efforts to cause such amendment to be declared effective and
such Registration Statement and the 

 

10

 

related Prospectus
to become usable for their intended purpose(s) as soon as practicable
thereafter;

(ii)  prepare and file with the Commission such
amendments and post-effective amendments to the applicable Registration
Statement as may be necessary to keep the Registration Statement effective for
the applicable period set forth in Section 3 or 4 hereof, as applicable, or
such shorter period as will terminate when all Transfer Restricted Securities
covered by such Registration Statement have been sold; cause the Prospectus to
be supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Securities Act, and to comply fully
with the applicable provisions of Rules 424 and 430A under the Securities Act
in a timely manner; and comply in all material respects with the provisions of
the Securities Act with respect to the disposition of all securities covered by
such Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers thereof set forth in
such Registration Statement or supplement to the Prospectus;

(iii)  advise the underwriter(s), if any, and
selling Holders as promptly as practicable and, if requested by such Persons,
to confirm such advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to any
Registration Statement or any post-effective amendment thereto, when the same
has become effective, (B) of any request by the Commission for amendments to
the Registration Statement or amendments or supplements to the Prospectus or
for additional information relating thereto, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement under the Securities Act or of the suspension by any state securities
commission of the qualification of the Transfer Restricted Securities for
offering or sale in any jurisdiction, or the initiation of any proceeding for
any of the preceding purposes, (D) of the existence of any fact or the
happening of any event that makes any statement of a material fact made in the
Registration Statement, the Prospectus, any amendment or supplement thereto, or
any document incorporated by reference therein untrue, or that requires the
making of any additions to or changes in the Registration Statement or the
Prospectus in order to make the statements therein not misleading (provided, however, that no advice by the
Issuers shall be required pursuant to this clause (D) in the event that the
Issuers either promptly file a Prospectus supplement to update the Prospectus
or a Form 8-K or other appropriate Exchange Act report that is incorporated by
reference into such Registration Statement, which, in either case, contains the
requisite information with respect to such event or facts that results in such
Registration Statement no longer containing any untrue statement of material
fact or omitting to state a material fact necessary to make the statements
contained therein not misleading).  If at
any time the Commission shall issue any stop order suspending the effectiveness
of the Registration Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities or
blue sky laws, each of the Issuers shall use its reasonable best efforts to
obtain the withdrawal or lifting of such order at the earliest practicable
time;

 

11

 

(iv)  in the case of a Shelf Registration or if a
Prospectus is required to be delivered by any Participating Broker-Dealer in
the case of an Exchange Offer, furnish without charge to the Initial Purchaser,
each selling Holder named in any Registration Statement, and each of the
underwriter(s), if any, before filing with the Commission, copies of any
Registration Statement or any Prospectus included therein or any amendments or supplements
to any such Registration Statement or Prospectus (including all documents
incorporated by reference after the initial filing of such Registration
Statement), which documents will be subject to the review and comment of such
Holders and underwriter(s) in connection with such sale, if any, for a period
of at least five Business Days, and the Issuers will not file any such
Registration Statement or Prospectus or any amendment or supplement to any such
Registration Statement or Prospectus (including all such documents incorporated
by reference) to which the Initial Purchaser of Transfer Restricted Securities
covered by such Registration Statement or the underwriter(s), if any, shall
reasonably object in writing within five Business Days after the receipt
thereof (such objection to be deemed timely made upon confirmation of telecopy
transmission within such period). 
Notwithstanding the foregoing, the Issuers shall not be required to take
any actions under this Section 6(c)(iv) that are not, in the reasonable
opinion of counsel for the Issuers, in compliance with applicable law or to
include any disclosure which at the time would have an adverse effect on the
business or operations of the Company and/or its subsidiaries, as determined in
good faith by the Issuers;

(v)  in the case of a Shelf Registration, promptly
prior to the filing of any document that is to be incorporated by reference
into a Registration Statement or Prospectus, provide copies of such document,
to the extent requested, to the Initial Purchaser, each selling Holder named in
any Registration Statement, and to the underwriter(s), if any, make each of the
Issuers’ and Guarantors’ management, officers and other representatives
available for discussion of such document and other customary due diligence
matters, and include such information in such document prior to the filing
thereof as such selling Holders or underwriter(s), if any, reasonably may
request;

(vi)  in the case of a Shelf Registration or if a
Prospectus is required to be delivered by any Participating Broker-Dealer in
the case of an Exchange Offer, make available at reasonable times for
inspection by the Initial Purchaser, the managing underwriter(s), if any,
participating in any disposition pursuant to such Registration Statement and
one firm of legal counsel or accountant retained by any of the foregoing, all
financial and other records, pertinent corporate documents and properties of
each of the Issuers and Guarantors reasonably requested by any such Persons and
cause each of the Issuers’ and Guarantors’ officers, directors and employees to
supply all information reasonably requested by any such Holder, underwriter,
attorney or accountant in connection with such Registration Statement or any
post-effective amendment thereto subsequent to the filing thereof and prior to
its effectiveness and to be available for discussion of such documents to the
extent reasonably requested by any Holder, Initial Purchaser or underwriter;

(vii)  if requested by any selling Holders or the
underwriter(s), if any, promptly incorporate in any Registration Statement or
Prospectus, pursuant to a supplement or 

 

12

 

post-effective
amendment if necessary, such information as such selling Holders and underwriter(s),
if any, may reasonably request to have included therein, including, without
limitation, information relating to the “Plan of Distribution” of the Transfer
Restricted Securities, information with respect to the principal amount of
Transfer Restricted Securities being sold to such underwriter(s), the purchase
price being paid therefor and any other terms of the offering of the Transfer
Restricted Securities to be sold in such offering; and make all required
filings of such Prospectus supplement or post-effective amendment as soon as
practicable after the Company is notified of the matters to be incorporated in
such Prospectus supplement or post-effective amendment;

(viii)  in the case of a Shelf Registration, use its
reasonable best efforts to cause the Transfer Restricted Securities covered by
the Registration Statement to be rated with the appropriate rating agencies, if
so requested by the Holders of a majority in aggregate principal amount of
Securities covered thereby or the underwriter(s), if any;

(ix)  in the case of a Shelf Registration, furnish
to each selling Holder and each of the underwriter(s), if any, without charge,
at least one copy of the Registration Statement, as first filed with the
Commission, and of each amendment thereto, including financial statements and
schedules, (without documents incorporated therein by reference or exhibits
thereto, unless requested);

(x)  deliver to (i) in the case of an Exchange
Offer, each Participating Broker-Dealer who submits a written request to the Company
and (ii) in the case of a Shelf Registration, each selling Holder and each of
the underwriter(s), if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons reasonably may request; subject to the final paragraph of this
Section 6(c), each of the Issuers and Guarantors hereby consents to the use of
the Prospectus and any amendment or supplement thereto by each of the selling
Holders and each of the underwriter(s), if any, in connection with the offering
and the sale of the Transfer Restricted Securities covered by the Prospectus or
any amendment or supplement thereto;

(xi)  in the case of a Shelf Registration, enter
into such agreements (including an underwriting agreement), and make such
customary representations and warranties, and take all such other customary and
appropriate actions in connection therewith in order to expedite or facilitate
the disposition of the Transfer Restricted Securities pursuant to any Shelf
Registration Statement contemplated by this Agreement, all to such extent as
may be reasonably requested by any Holder of Transfer Restricted Securities or
underwriter in connection with any sale or resale pursuant to any Shelf
Registration Statement contemplated by this Agreement; and whether or not an
underwriting agreement is entered into and whether or not the registration is
an Underwritten Registration, each of the Issuers and Guarantors shall:

(A)  to the extent reasonably requested, furnish to
the Initial Purchaser, each selling Holder and each underwriter, if any, in
such substance and scope as they may reasonably request and as are customarily
made by issuers to 

13

 

underwriters in
primary underwritten offerings, upon the effectiveness of the Shelf
Registration Statement:

(1)  a certificate, dated the date of
effectiveness of the Shelf Registration Statement, signed by (y) the President
or any Vice President and (z) a principal financial or accounting officer of
each of the Issuers and Guarantors, confirming, as of the date thereof, the
matters set forth in paragraphs (i), (ii) and (iii) of Section 5(e) of the
Purchase Agreement and such other matters as such parties may reasonably
request;

(2)  an opinion, dated the date of effectiveness
of the Shelf Registration Statement, of counsel for the Issuers and the
Guarantors, covering the matters set forth in Section 5(c) of the Purchase
Agreement and such other matter as such parties may reasonably request; and

(3)  a customary comfort letter, dated the date of
effectiveness of the Shelf Registration Statement, from the Company’s
independent accountants, in the customary form and covering matters of the type
customarily requested to be covered in comfort letters by underwriters in
connection with primary underwritten offerings, and covering or affirming the
matters set forth in the comfort letters delivered pursuant to Section 5(a) of
the Purchase Agreement, without exception;

(B)  set forth in full or incorporate by reference
in the underwriting agreement, if any, the indemnification provisions and
procedures of Section 8 hereof with respect to all parties to be indemnified
pursuant to said Section; and

(C)  deliver such other documents and certificates
as may be reasonably requested by such parties and as are customarily delivered
in similar offerings to evidence compliance with Section 6(c)(xi)(A) hereof and
with any customary conditions contained in the underwriting agreement or other
agreement entered into by either of the Issuers or any of the Guarantors
pursuant to this Section 6(c)(xi), if any.

If at any time the
representations and warranties of the Issuers and the Guarantors contemplated
by the certificate furnished pursuant to Section 6(c)(xi)(A)(1) hereof cease to
be true and correct, the Issuers or the Guarantors shall so advise the Initial
Purchaser and the underwriter(s), if any, and each selling Holder promptly and,
if requested by such Persons, shall confirm such advice in writing;

(xii)  in the case of a Shelf Registration Statement,
prior to any public offering of Transfer Restricted Securities, use its
reasonable best efforts to cooperate with the selling Holders, the
underwriter(s), if any, and their respective counsel in connection with the
registration and qualification of the Transfer Restricted Securities under the
state securities or blue sky laws of such jurisdictions as the selling Holders
or underwriter(s), if any, may reasonably request in writing by the time the
Shelf Registration Statement is declared effective by the Commission, it being
agreed that no such registration or 

 

14

 

qualification will
be made unless so requested and use its reasonable best efforts to do any and
all other acts or things necessary or advisable to enable the disposition in
such jurisdictions of the Transfer Restricted Securities covered by the Shelf
Registration Statement; provided, however,
that none of the Issuers or the Guarantors shall be required to register or
qualify as a foreign corporation where it is not then so qualified or to take
any action that would subject it to the service of process in suits or to
taxation in any jurisdiction where it is not then so subject;

(xiii)  shall issue, upon the request of any Holder
of Initial Securities covered by the Shelf Registration Statement, Exchange
Securities having an aggregate principal amount equal to the aggregate
principal amount of Initial Securities surrendered to the Company by such
Holder in exchange therefor or being sold by such Holder; such Exchange
Securities to be registered in the name of such Holder or in the name of the
purchaser(s) of such Securities, as the case may be; in return, the Initial
Securities held by such Holder shall be surrendered to the Company for
cancellation;

(xiv)  in the case of a Shelf Registration,
cooperate with the selling Holders and the underwriter(s), if any, to
facilitate the timely preparation and delivery of certificates representing
Transfer Restricted Securities to be sold and not bearing any restrictive
legends; and enable such Transfer Restricted Securities to be in such
denominations and registered in such names as the Holders or the
underwriter(s), if any, may request at least three Business Days prior to any
sale of Transfer Restricted Securities made by such Holders or underwriter(s);

(xv)  use its reasonable best efforts to cause the
Transfer Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or authorities,
if any, as may be necessary to enable the seller or sellers thereof or the
underwriter(s), if any, to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in Section 6(c)(xii)
hereof;

(xvi)  if any fact or event contemplated by Section
6(c)(iii)(D) hereof shall exist or have occurred, use its reasonable best
efforts to prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of Transfer Restricted Securities, the Prospectus will not
contain at the time of such delivery any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or will
remain so qualified and at such time as such public disclosure is otherwise
made or the Company determines that such disclosure is not necessary, in each
case to correct any misstatement of a material fact or to include any omitted
material fact, the Company agrees promptly to notify each Holder of such
determination;

(xvii)  provide a CUSIP number for all Exchange
Securities or Transfer Restricted Securities, as the case may be, not later
than the effective date of the Registration Statement covering such Securities
and provide the Trustee under the Indenture with any 

15

 

necessary printed
certificates for such Securities which are in a form eligible for deposit with
the Depository Trust Company;

(xviii)  cooperate and assist in any filings required
to be made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any “qualified independent
underwriter”) that is required to be retained in accordance with the rules and
regulations of the NASD;

(xix)  otherwise use its reasonable best efforts to
comply in all material respects with all applicable rules and regulations of
the Commission, and make generally available to its securityholders, as soon as
practicable, a consolidated earnings statement meeting the requirements of Rule
158 (which need not be audited) for the twelve-month period (A) commencing at
the end of any fiscal quarter in which Transfer Restricted Securities are sold
to underwriters in a firm commitment or best efforts Underwritten Offering or
(B) if not sold to underwriters in such an offering, beginning with the first
month of the Company’s first fiscal quarter commencing after the effective date
of the Registration Statement;

(xx)  cause the Indenture to be qualified under the
Trust Indenture Act not later than the effective date of the first Registration
Statement required by this Agreement, and, in connection therewith, cooperate
with the Trustee and the Holders of Securities to effect such changes to the
Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the Trust Indenture Act; and to execute and use
its reasonable best efforts to cause the Trustee to execute, all documents that
may be required to effect such changes and all other forms and documents
required to be filed with the Commission to enable such Indenture to be so
qualified in a timely manner; and

(xxi)  cause all Securities covered by the
Registration Statement to be listed on each securities exchange or automated
quotation system on which similar securities issued by the Issuers are then
listed if reasonably requested by the Holders of a majority in aggregate
principal amount of Initial Securities or the managing underwriter(s), if any.

Each Holder agrees by acquisition of a Transfer
Restricted Security that, upon (i) receipt of any notice from the Company of
the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof,
or (ii) a Suspension Period, such Holder will forthwith discontinue disposition
of Transfer Restricted Securities pursuant to the applicable Registration
Statement until such Holder’s receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 6(c)(xvi) hereof, or until it is
advised in writing (the “Advice”) by the Company that the use of the Prospectus
may be resumed, and has received copies of any additional or supplemental
filings that are incorporated by reference in the Prospectus.  If so directed by the Company, each Holder
will deliver to the Company (at such Holder’s expense) all copies, other than
permanent file copies then in such Holder’s possession, of the Prospectus
covering such Transfer Restricted Securities that was current at the time of
receipt of such notice.  In the event the
Company shall give any such notice, the time period regarding the effectiveness
of such Registration Statement set forth in Section 3 or 4 hereof, as
applicable, shall be extended by the number of days during the period from and
including the date of the giving of such notice described in (i) or (ii) of
this paragraph to and including the date when each selling Holder 

 

16

 

covered by such
Registration Statement shall have received the copies of the supplemented or
amended Prospectus contemplated by Section 6(c)(xvi) hereof or shall have
received the Advice.

SECTION
7.  Registration Expenses.

(a)  All
expenses incident to the Issuers’ and the Guarantors’ performance of or
compliance with this Agreement will be borne by the Issuers and the Guarantors,
jointly and severally, regardless of whether a Registration Statement becomes
effective, including, without limitation: (i) all registration and filing fees
and expenses (including filings made by the Initial Purchaser or any Holder
with the NASD (and, if applicable, the fees and expenses of any “qualified
independent underwriter” and its counsel that may be required by the rules and
regulations of the NASD)); (ii) all fees and expenses of compliance with
federal securities and state securities or blue sky laws; (iii) all expenses of
printing (including printing certificates for the Exchange Securities to be
issued in the Exchange Offer and printing of Prospectuses), messenger and
delivery services and telephone; (iv) all fees and disbursements of counsel for
the Issuers and the Guarantors and, subject to Section 7(b) hereof, the Holders
of Transfer Restricted Securities; (v) all application and filing fees in
connection with listing the Exchange Securities on a securities exchange or
automated quotation system pursuant to the requirements thereof; and (vi) all
fees and disbursements of independent certified public accountants of the
Issuers and the Guarantors (including the expenses of any special audit and
comfort letters required by or incident to such performance).

Each of the Issuers and Guarantors will, in any event,
bear its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expenses of any annual audit and the fees and expenses of any Person,
including special experts, retained by the Issuers or the Guarantors.

(b)  In
connection with the Shelf Registration Statement required by this Agreement,
the Issuers and the Guarantors, jointly and severally, will reimburse the
Initial Purchaser and the Holders of Transfer Restricted Securities being
registered pursuant to the Shelf Registration Statement, for the reasonable
fees and disbursements of not more than one counsel, who shall be Fried, Frank,
Harris, Shriver & Jacobson LLP or such other counsel as may be chosen by
the Holders of a majority in principal amount of the Transfer Restricted
Securities for whose benefit such Registration Statement is being prepared.

Each Holder shall pay all underwriting discounts and
commissions and transfer taxes, if any, relating to the sale or disposition of
such Holder’s Transfer Restricted Securities pursuant to a Shelf Registration
Statement.

SECTION
8.  Indemnification.

(a)  Each of the
Issuers and Guarantors, jointly and severally, agrees to indemnify and hold
harmless (i) each Holder and (ii) each Person, if any, who controls (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
any Holder (any of the Persons referred to in this clause (ii) being
hereinafter referred to as a “controlling person”) and (iii) the respective
officers, directors, partners, employees, representatives and agents of any
Holder or any controlling person (any Person referred to in clause (i), (ii) or
(iii) may hereinafter 

17

 

be referred to as an “Indemnified
Holder”), to the fullest extent lawful, from and against any and all losses,
claims, damages, liabilities, judgments, actions and expenses (including,
without limitation, and as incurred, reimbursement of all reasonable costs of
investigating, preparing, pursuing, settling, compromising, paying or defending
any claim or action, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, including the reasonable fees and
expenses of any one firm of legal counsel to any Indemnified Holder), arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or Prospectus (or any
amendment or supplement thereto), or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses arise out of an untrue statement or omission
or alleged untrue statement or omission that is made in reliance upon and in
conformity with information relating to any of the Holders furnished in writing
to the Company by any of the Holders expressly for use therein; and provided, further, that
this indemnity agreement shall not apply to any loss, claim, damage, liability
or expense arising from an offer or sale of Transfer Restricted Securities
occurring during a Suspension Period, if a notice of such Suspension Period was
given to and received by such Person. 
This indemnity agreement shall be in addition to any liability which the
Issuers and the Guarantors may otherwise have.

In case any action or proceeding (including any
governmental or regulatory investigation or proceeding) shall be brought or
asserted against any of the Indemnified Holders with respect to which indemnity
may be sought against the Issuers or the Guarantors, such Indemnified Holder
(or the Indemnified Holder controlled by such controlling person) shall
promptly notify the Issuers and the Guarantors in writing; provided,
however, that the failure to give such notice shall not relieve any
of the Issuers or the Guarantors of its obligations pursuant to this Agreement
to the extent it is not materially prejudiced as a proximate result of such
failure.  Each of the Issuers and
Guarantors may participate at its own expense in the defense of such
action.  Such Indemnified Holder shall
have the right to employ its own counsel in any such action and the fees and
expenses of such counsel shall be paid, as incurred, by the Issuers and the
Guarantors (regardless of whether it is ultimately determined that an
Indemnified Holder is not entitled to indemnification hereunder).  The Issuers and the Guarantors shall not,
collectively, in connection with any one such action or proceeding or separate
but substantially similar or related actions or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for such Indemnified Holders, which firm shall be
designated by the Holders.  The Issuers
and the Guarantors shall be liable for any settlement of any such action or
proceeding effected with the Issuers’ and the Guarantors’ prior written
consent, which consent shall not be withheld unreasonably, and each of the
Issuers and Guarantors agrees to indemnify and hold harmless any Indemnified
Holder from and against any loss, claim, damage, liability or expense by reason
of any settlement of any action effected with the written consent of the
Issuers and the Guarantors.  The Issuers
and the Guarantors shall not, without the prior written consent of each
Indemnified Holder, settle or compromise or consent to the entry of judgment in
or otherwise seek to terminate any pending or threatened action, claim,
litigation or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not any Indemnified Holder is a party
thereto), unless such settlement, compromise, consent or termination includes
an unconditional release of each Indemnified Holder from all liability arising
out of such action, claim, litigation or proceeding.

 

18

 

(b)  Each Holder
of Transfer Restricted Securities agrees, severally and not jointly, to
indemnify and hold harmless the Issuers and the Guarantors and their respective
directors and officers who sign a Registration Statement, and any Person
controlling (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) any of the Issuers or Guarantors and the respective
officers, directors, partners, employees, representatives and agents of each
such Person, to the same extent as the foregoing indemnity from the Issuers and
the Guarantors to each of the Indemnified Holders, but only with respect to
claims and actions based on information relating to such Holder furnished in
writing by such Holder expressly for use in any Registration Statement. In case
any action or proceeding shall be brought against any of the Issuers or
Guarantors or their respective officers, directors, partners, employees,
representatives, agents or any such controlling person in respect of which
indemnity may be sought against a Holder of Transfer Restricted Securities,
such Holder shall have the rights and duties given to the Issuers and the
Guarantors, and the Issuers, the Guarantors and their respective officers,
directors, partners, employees, representatives, agents and such controlling
person shall have the rights and duties given to each Holder by the preceding
paragraph.

(c)  If the
indemnification provided for in this Section 8 is unavailable to an indemnified
party under Section 8(a) or (b) hereof (other than by reason of exceptions
provided in those Sections) in respect of any losses, claims, damages,
liabilities, judgments, actions or expenses referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative benefits received by the
Issuers and the Guarantors, on the one hand, and the Holders, on the other
hand, from the Initial Placement (which in the case of the Issuers and the
Guarantors shall be deemed to be equal to the total gross proceeds to the
Issuers and the Guarantors from the Initial Placement), the amount of
Liquidated Damages which did not become payable as a result of the filing of
the Registration Statement resulting in such losses, claims, damages,
liabilities, judgments actions or expenses, and such Registration Statement, or
if such allocation is not permitted by applicable law, the relative fault of
the Issuers and the Guarantors, on the one hand, and the Holders, on the other
hand, in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations.  The relative
fault of the Issuers and the Guarantors on the one hand and of the Indemnified
Holder on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Issuers and the Guarantors, on the one hand, or the Indemnified
Holders, on the other hand, and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in the second paragraph of
Section 8(a) hereof, any legal or other fees or expenses reasonably incurred by
such party in connection with investigating or defending any action or claim.

The Issuers, the Guarantors and each Holder of
Transfer Restricted Securities agree that it would not be just and equitable if
contribution pursuant to this Section 8(c) were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose) or
by any other method of allocation which does not take account of the equitable
considerations referred 

19

 

to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or expenses referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8, none of the
Holders (and its related Indemnified Holders) shall be required to contribute,
in the aggregate, any amount in excess of the amount by which the total
discount received by such Holder with respect to the Initial Securities exceeds
the amount of any damages which such Holder has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. The Holders’
obligations to contribute pursuant to this Section 8(c) are several in
proportion to the respective principal amount of Initial Securities held by
each of the Holders hereunder and not joint.

SECTION 9.  Rule 144A.  Each of the
Issuers and Guarantors
hereby agrees with each Holder, for so long as any Transfer Restricted
Securities remain outstanding, to make available to any Holder or beneficial
owner of Transfer Restricted Securities in connection with any sale thereof and
any prospective purchaser of such Transfer Restricted Securities from such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Securities Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A under the Securities Act.

SECTION 10.  Participation in Underwritten Registrations.  No Holder may participate in any Underwritten
Registration hereunder unless such Holder (a) agrees to sell such Holder’s
Transfer Restricted Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all reasonable questionnaires,
powers of attorney, indemnities, underwriting agreements, lock-up letters and
other documents required under the terms of such underwriting arrangements.

SECTION 11.  Selection of Underwriters.  The Holders of Transfer Restricted Securities covered
by the Shelf Registration Statement who desire to do so may sell such Transfer
Restricted Securities in an Underwritten Offering. In any such Underwritten
Offering, the investment banker(s) and managing underwriter(s) that will
administer such offering will be selected by the Company and shall be
reasonably acceptable to the Holders of a majority in aggregate principal
amount of such Transfer Restricted Securities included in such offering.

SECTION
12.  Miscellaneous.

(a)  Remedies. Each of
the Issuers and Guarantors hereby agrees that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
the provisions of this Agreement and hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.

(b)  No Inconsistent Agreements.  Each of the Issuers and Guarantors
will not on or after the date of this Agreement enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with 

20

 

the provisions
hereof.  The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of any of the Issuers’ or Guarantors’
securities under any agreement in effect on the date hereof.

(c)  Adjustments Affecting the Securities. 
The Company will not take any action, or permit any change to
occur, with respect to the Securities that would materially and adversely
affect the ability of the Holders to Consummate any Exchange Offer.

(d)  Amendments and Waivers.  The
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to or departures from the provisions hereof may not be
given unless the Company has (i) in the case of Section 5 hereof and this Section
12(d)(i), obtained the written consent of Holders of all outstanding Transfer
Restricted Securities and (ii) in the case of all other provisions hereof,
obtained the written consent of Holders of a majority of the outstanding
principal amount of Transfer Restricted Securities affected by such amendment,
modification, supplement, waiver, consent or departure.

(e)  Notices.  All notices
and other communications provided for or permitted hereunder shall be made in
writing by hand-delivery, first-class mail (registered or certified, return
receipt requested), telex, telecopier, or air courier guaranteeing overnight
delivery:

(i)  if to a Holder, at the address set forth on
the records of the Registrar under the Indenture, with a copy to the Registrar
under the Indenture; and

(ii)  if to the Company, Duane Reade GP or any of
the Guarantors:

	
   

  	
  Duane Reade Inc.

  
	
   

  	
  440 Ninth Avenue

  
	
   

  	
  New York, New
  York 10001

  
	
   

  	
  Facsimile: 212-594-0832

  
	
   

  	
  Attention:.

  	
   Michelle
  Bergman, Esq

  
	
   

  	
   

  	
  General Counsel

  

       With a copy to:

	
   

  	
  Paul, Weiss,
  Rifkind, Wharton & Garrison LLP

  
	
   

  	
  1285 Avenue of the Americas

  
	
   

  	
  New York, New
  York  10019

  
	
   

  	
  Facsimile:

  	
  212-757-3990

  
	
   

  	
  Attention:.

  	
  Lawrence G. Wee,
  Esq

  

All such notices and communications shall be deemed to
have been duly given: at the time delivered by hand, if personally delivered;
five Business Days after being deposited in the mail, postage prepaid, if
mailed; when answered back, if telexed; when receipt acknowledged, if
telecopied; and on the next Business Day, if timely delivered to an air courier
guaranteeing overnight delivery.

Copies of all such notices, demands or other
communications shall be concurrently delivered by the Person giving the same to
the Trustee at the address specified in the Indenture.

21

 

(f)  Successors and Assigns.  This
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties, including, without limitation, and without the
need for an express assignment, subsequent Holders of Transfer Restricted
Securities; provided, however, that this Agreement
shall not inure to the benefit of or be binding upon a successor or assign of a
Holder unless and to the extent such successor or assign acquired Transfer
Restricted Securities from such Holder. 
Nothing herein shall be deemed to permit any assignment, transfer or
other disposition of Transfer Restricted Securities in violation of the terms
of the Purchase Agreement or the Indenture.

(g)  Counterparts.  This
Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement.

(h)  Headings.  The headings
in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.

(i)  Governing Law.  THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW RULES THEREOF.

(j)  Severability.  In the
event that any one or more of the provisions contained herein, or the
application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.

(k)  Entire Agreement.  This
Agreement together with the Purchase Agreement, the Indenture, the Securities
and any related documents is intended by the parties as a final expression of
their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein.  There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Issuers with respect to the Transfer Restricted Securities.  This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.

22

 

IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first written above.

	
   

  	
  Duane Reade
  Inc., a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  John K. Henry

  
	
   

  	
  Title:

  	
  Senior Vice
  President and

  
	
   

  	
   

  	
  Chief Financial
  Officer

  

 

	
   

  	
  Duane Reade, a New York general partnership

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Duane Reade Inc., as general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  John K. Henry

  
	
   

  	
  Title:

  	
  Senior Vice President and

  
	
   

  	
   

  	
  Chief Financial Officer

  

 

	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  By: DRI I, Inc., as general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  John K. Henry

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  

 

 

	
   

  	
  Duane Reade Holdings, Inc., 

  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  John K. Henry

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  

 

	
   

  	
  DRI I, Inc., a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  John K. Henry

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  

 

	
   

  	
  Duane Reade International, Inc., a 

  Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  John K. Henry

  
	
   

  	
  Title:

  	
  Senior Vice President and

  
	
   

  	
   

  	
  Chief Financial Officer

  

 

	
   

  	
  Duane Reade Realty, Inc., a 

  Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  John K. Henry

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  

 

 

 

The foregoing
Registration Rights Agreement is hereby confirmed and accepted as of the date
first above written:

 

	
  BANC OF AMERICA SECURITIES LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

623243

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