Document:

Exhibit 10.2

 

 

 

SECURITY AGREEMENT

 

among

 

DURATEK, INC.,

 

CERTAIN SUBSIDIARIES THEREOF,

 

and

 

CREDIT LYONNAIS NEW YORK BRANCH,

as COLLATERAL AGENT

 

 

Dated as of December 16, 2003

 

 

 

 

 

SECURITY AGREEMENT

 

SECURITY
AGREEMENT, dated as of December 16, 2003, made by each of the undersigned
assignors (each, an “Assignor” and, together with any other entity that
becomes an assignor hereunder pursuant to Section 10.12 hereof, the “Assignors”)
in favor of Credit Lyonnais New York Branch, as Collateral Agent (together with
any successor Collateral Agent, the “Collateral Agent”), for the benefit
of the Secured Creditors (as defined below). 
Certain capitalized terms as used herein are defined in Article IX
hereof.  Except as otherwise defined
herein, all capitalized terms used herein and defined in the Credit Agreement
(as defined below) shall be used herein as therein defined.

 

W I T N E S S E T H:

 

WHEREAS, Duratek,
Inc. (the ”Borrower”), the lenders from time to time party thereto
(the “Lenders”) and Credit Lyonnais New York Branch, as administrative
agent (together with any successor Administrative Agent, the “Administrative
Agent”) (the Lenders, each Issuing Lender, the Administrative Agent and the
Collateral Agent are herein called the “Lender Creditors”), have entered
into a Credit Agreement, dated as of December 16, 2003, providing for the
making of Loans to, and the issuance of and participation in Letters of Credit
for the account of, the Borrower, all as contemplated therein (as used herein,
the term “Credit Agreement” means the Credit Agreement described above
in this paragraph, as the same may be amended, modified, extended, renewed,
replaced, restated, supplemented or refinanced from time to time, and including
any agreement extending the maturity of, or refinancing or restructuring
(including, but not limited to, the inclusion of additional borrowers or
guarantors thereunder or any increase in the amount borrowed) all or any
portion of, the indebtedness under such agreement or any successor agreement,
whether or not with the same agent, trustee, representative, lenders or
holders; provided that, with respect to any agreement providing for the
refinancing or replacement of indebtedness under the Credit Agreement, such
agreement shall only be treated as, or as part of, the Credit Agreement
hereunder if (i) either (A) all obligations under the Credit Agreement being
refinanced or replaced shall be paid in full at the time of such refinancing or
replacement, and all commitments and letters of credit issued pursuant to the
refinanced or replaced Credit Agreement shall have terminated in accordance
with their terms or (B) the Required Lenders shall have consented in writing to
the refinancing or replacement indebtedness being treated as indebtedness
pursuant to the Credit Agreement, and (ii) a notice to the effect that the
refinancing or replacement indebtedness shall be treated as issued under the
Credit Agreement shall be delivered by the Borrower to the Collateral Agent);

 

WHEREAS, the
Borrower and/or one or more of its Subsidiaries may at any time and from time
to time enter into, and/or guaranty the obligations of one another under, one
or more Interest Rate Protection Agreements or Other Hedging Agreements with
one or more Lenders or any affiliate thereof (each such Lender or affiliate,
even if the respective Lender subsequently ceases to be a Lender under the
Credit Agreement for any reason, together with such Lender’s or affiliate’s
successors and assigns, if any, collectively, the “Hedging Creditors”);

 

WHEREAS, one or
more Lenders or any affiliate thereof (each such Lender or affiliate, even if
the respective Lender subsequently ceases to be a Lender under the Credit

 

 

Agreement for any reason,
together with such Lender’s or affiliate’s successors and assigns, if any,
collectively, the “Secured Supplemental L/C Creditors” and, together
with the Hedging Creditors, the “Other Creditors”; and the Lender
Creditors, the Hedging Creditors and the Secured Supplemental L/C Creditors are
collectively referred to herein as the “Secured Creditors”) may at any
time and from time to time issue Secured Supplemental Letters of Credit for the
account of the Borrower;

 

WHEREAS, pursuant
to the Subsidiaries Guaranty, each Subsidiary Guarantor has jointly and
severally guaranteed to the Secured Creditors the payment when due of all
Guaranteed Obligations as described therein;

 

WHEREAS, it is a
condition precedent to (i) the making of Loans to the Borrower and the issuance
of, and participation in, Letters of Credit for the account of the Borrower
under the Credit Agreement, (ii) to the Hedging Creditors entering into
Interest Rate Protection Agreements and Other Hedging Agreements and (iii) to
the Secured Supplemental L/C Creditors issuing Secured Supplemental Letters of
Credit for the account of the Borrower that each Assignor shall have executed
and delivered to the Collateral Agent this Agreement; and

 

WHEREAS, each
Assignor will obtain benefits from the incurrence of Loans by the Borrower and
the issuance of, and participation in, Letters of Credit for the account of the
Borrower under the Credit Agreement, the entering into by the Borrower and/or
one or more of its Subsidiaries of Interest Rate Protection Agreements or Other
Hedging Agreements and the issuance of Secured Supplemental Letters of Credit
for the account of the Borrower and, accordingly, desires to execute this
Agreement in order to satisfy the condition described in the preceding
paragraph and to induce the Lenders to make Loans to the Borrower and issue, and/or
participate in, Letters of Credit for the account of the Borrower, the Hedging
Creditors to enter into Interest Rate Protection Agreements or Other Hedging
Agreements with the Borrower and/or one or more of its Subsidiaries and the
Secured Supplemental L/C Creditors to issue Secured Supplemental Letters of
Credit for the account of the Borrower;

 

NOW, THEREFORE, in
consideration of the benefits accruing to each Assignor, the receipt and
sufficiency of which are hereby acknowledged, each Assignor hereby makes the
following representations and warranties to the Collateral Agent for the
benefit of the Secured Creditors and hereby covenants and agrees with the
Collateral Agent for the benefit of the Secured Creditors as follows:

 

ARTICLE
I

 

SECURITY
INTERESTS

 

1.1  Grant of Security Interests.  (a)  As security for the prompt and complete
payment and performance when due of all of its Obligations, each Assignor does
hereby assign and transfer unto the Collateral Agent, and does hereby pledge and
grant to the Collateral Agent, for the benefit of the Secured Creditors, a
continuing security interest in all of the right, title and interest of such
Assignor in, to and under all of the following personal property and fixtures
(and all rights therein) of such Assignor, or in which or to which such
Assignor has any rights, in each case whether now existing or hereafter from
time to time acquired:

 

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(i)            each and every Account;

 

(ii)           all cash;

 

(iii)          the Cash Collateral Account and all monies,
securities, Instruments and other investments deposited or required to be
deposited in the Cash Collateral Account;

 

(iv)          all Chattel Paper (including, without
limitation, all Tangible Chattel Paper and all Electronic Chattel Paper);

 

(v)           all Commercial Tort Claims;

 

(vi)          all computer programs of such Assignor and
all intellectual property rights therein and all other proprietary information
of such Assignor, including but not limited to Domain Names and Trade Secret
Rights;

 

(vii)         all Contracts, together with all Contract
Rights arising thereunder;

 

(viii)        all Copyrights;

 

(ix)           all Equipment;

 

(x)            all Deposit Accounts and all other demand,
deposit, time, savings, cash management, passbook and similar accounts
maintained by such Assignor with any Person and all monies, securities,
Instruments and other investments deposited or required to be deposited in any
of the foregoing;

 

(xi)           all Documents;

 

(xii)          all General Intangibles;

 

(xiii)         all Goods;

 

(xiv)        all Instruments;

 

(xv)         all Inventory;

 

(xvi)        all Investment Property;

 

(xvii)       all Letter-of-Credit Rights (whether or not the
respective letter of credit is evidenced by a writing);

 

(xviii)      all Marks, together with the registrations and
right to all renewals thereof, and the goodwill of the business of such
Assignor symbolized by the Marks;

 

(xix)         all Patents;

 

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(xx)          all Permits;

 

(xxi)         all Software and all Software licensing
rights, all writings, plans, specifications and schematics, all engineering
drawings, customer lists, goodwill and licenses, and all recorded data of any
kind or nature, regardless of the medium of recording;

 

(xxii)        all Supporting Obligations; and

 

(xxiii)       all Proceeds and products of any and all of the
foregoing (all of the above, the “Collateral”);

 

provided
that, notwithstanding anything to the contrary contained in this Agreement, the
term “Collateral” as used herein shall not include (x) any Limited Liability
Company Interests (as defined in the Pledge Agreement), Partnership Interests
(as defined in the Pledge Agreement), or Vitritek Interests (as defined in the
Pledge Agreement) unless, and in such case only to the extent that, such
Limited Liability Company Interests, Partnership Interests and/or Vitritek
Interests are included in the definition of “Collateral” as such term is
defined in the Pledge Agreement or (y) any of the Assignors’ rights in any of
the following Patents: U.S. Patent Numbers 5,851,246; 5,656,044; 5,584,255 and
5,425,792 (collectively, the “Subject Patents”), to the extent that (and
only for so long as) any agreement among any Assignor and any other Person with
rights to such Patents prohibits the granting of, or requires the consent of
such other Person in connection with the granting of, a security interest in
such Patents (any such agreement, a “Subject Patent Agreement”).

 

(b)           The
security interest of the Collateral Agent under this Agreement extends to all
Collateral which any Assignor may acquire, or with respect to which any Assignor
may obtain rights,  at any time during
the term of this Agreement.

 

1.2  Power of Attorney.  Each
Assignor hereby constitutes and appoints the Collateral Agent its true and
lawful attorney, irrevocably, with full power after the occurrence of and during
the continuance of an Event of Default (in the name of such Assignor or
otherwise) to act, require, demand, receive, compound and give acquittance for
any and all moneys and claims for moneys due or to become due to such Assignor
under or arising out of the Collateral, to endorse any checks or other
instruments or orders in connection therewith and to file any claims or take
any action or institute any proceedings which the Collateral Agent may deem to
be necessary or advisable to protect the interests of the Secured Creditors,
which appointment as attorney is coupled with an interest.

 

ARTICLE
II

 

GENERAL
REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Each Assignor
represents, warrants and covenants, which representations, warranties and
covenants shall survive execution and delivery of this Agreement, as follows:

 

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2.1  Necessary Filings.  Except
for filings which are necessary to perfect the security interests created
hereunder, which filings (to the extent that this representation or warranty is
made or deemed made after the 10th day following the Initial Borrowing Date)
have been made, all filings, registrations, recordings and other actions
necessary or appropriate to create, preserve and perfect the security interest
granted by such Assignor to the Collateral Agent hereby in respect of the
Collateral have been accomplished (subject to the time periods specified in
Sections 3.9, 4.6 and 5.6) and the security interest granted to the Collateral
Agent pursuant to this Agreement in and to the Collateral creates a valid and,
together with all such filings, registrations, recordings and other actions, a
perfected security interest therein prior to the rights of all other Persons
therein (other than holders of Permitted Liens) and subject to no other Liens
(other than Permitted Liens) and is entitled to all the rights, priorities and
benefits afforded by the Uniform Commercial Code or other relevant law as
enacted in any relevant jurisdiction to perfected security interests, in each
case to the extent that the Collateral consists of the type of property in
which a security interest may be perfected by possession (other than the
property described in Section 2.9, to the extent that the requirements of the
second sentence of Section 2.9 are not applicable to such property) or control
(within the meaning of the UCC as in effect on the date hereof in the State of
New York), by filing a financing statement under the Uniform Commercial Code as
enacted in any relevant jurisdiction or by a filing of a Grant of Security
Interest in the respective form attached hereto in the United States Patent and
Trademark Office or in the United States Copyright Office.

 

2.2  No Liens.  Such Assignor
is, and as to all Collateral acquired by it from time to time after the date
hereof such Assignor will be, the owner of all Collateral free from any Lien,
security interest, encumbrance or other right, title or interest of any Person
(other than Permitted Liens), and such Assignor shall defend the Collateral
against all claims and demands of all Persons at any time claiming the same or
any interest therein adverse to the Collateral Agent.

 

2.3  Other Financing Statements.  As
of the date hereof, there is no financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) covering or
purporting to cover any interest of any kind in the Collateral (other than
financing statements filed in respect of Permitted Liens), and so long as the
Termination Date has not occurred, such Assignor will not execute or authorize
to be filed in any public office any financing statement (or similar statement
or instrument of registration under the law of any jurisdiction) or statements
relating to the Collateral, except financing statements filed or to be filed in
respect of and covering the security interests granted hereby by such Assignor
or in connection with Permitted Liens.

 

2.4  Chief Executive Office, Record Locations.  The
chief executive office of such Assignor is, on the date of this Agreement (or,
if later, on the date that such Assignor becomes a party hereto), located at
the address indicated on Annex A hereto for such Assignor.  During the period of the four calendar
months preceding the date of this Agreement (or, if later, the period of four
calendar months preceding the date that such Assignor becomes a party to this
Agreement), the chief executive office of such Assignor has not been located at
any address other than that indicated on Annex A in accordance with the
immediately preceding sentence, in each case unless each such other address is
also indicated on Annex A hereto for such Assignor.

 

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2.5  Location of Inventory and Equipment.  All
Inventory and Equipment held on the date hereof (or, if later, on the date that
such Assignor becomes a party hereto), or held at any time during the period of
four calendar months prior to the date hereof (or, if later, the period of four
calendar months preceding the date that such Assignor becomes a party to this
Agreement), by each Assignor is located at one of the locations shown on Annex
B hereto for such Assignor.

 

2.6  Legal Names; Type of Organization (and
Whether a Registered Organization and/or a Transmitting Utility); Jurisdiction
of Organization; Location; Organizational Identification Numbers; Changes
Thereto; etc.  The exact legal name of each Assignor, the type of
organization of such Assignor, whether or not such Assignor is a Registered
Organization, the jurisdiction of organization of such Assignor, such
Assignor’s Location, the organizational identification number (if any) of such
Assignor, and whether or not such Assignor is a Transmitting Utility, is listed
on Annex C hereto for such Assignor. 
Such Assignor shall not change its legal name, its type of organization,
its status as a Registered Organization (in the case of a Registered
Organization), its status as a Transmitting Utility or as a Person which is not
a Transmitting Utility, as the case may be, its jurisdiction of organization,
its Location, or its organizational identification number (if any) from that
used on Annex C hereto, except that any such changes shall be permitted (so
long as not in violation of the applicable requirements of the Secured Debt
Agreements and so long as same do not involve (x) a Registered Organization
ceasing to constitute same other than in connection with a merger, dissolution
or liquidation otherwise permitted by the Secured Debt Agreements or (y) such
Assignor changing its jurisdiction of organization or Location from the United
States or a State thereof to a jurisdiction of organization or Location, as the
case may be, outside the United States or a State thereof) if (i) such Assignor
shall have given to the Collateral Agent 
not less than 15 days’ prior written notice of each change to the
information listed on Annex C (as adjusted for any subsequent changes thereto
previously made in accordance with this sentence), together with a supplement
to Annex C which shall correct all information contained therein for such
Assignor, and (ii) in connection with the respective such change or changes,
such Assignor shall have taken all action reasonably requested by the
Collateral Agent to maintain the security interests of the Collateral Agent in
the Collateral intended to be granted hereby at all times fully perfected and
in full force and effect.  In addition,
to the extent that such Assignor does not have an organizational identification
number on the date hereof (or, if later, on the date that such Assignor becomes
a party hereto) and later obtains one, such Assignor shall promptly thereafter
notify the Collateral Agent of such organizational identification number and
shall take all actions reasonably satisfactory to the Collateral Agent to the
extent necessary to maintain the security interest of the Collateral Agent in
the Collateral intended to be granted hereby fully perfected and in full force
and effect.

 

2.7  Trade Names; Etc.  Such
Assignor has not and does not operate in any jurisdiction under, and in the
preceding five years has not and does not operate in any jurisdiction under,
any trade names, fictitious names or other names except its legal name as
specified in Annex C and such other trade or fictitious names as are listed on
Annex D hereto for such Assignor.  Such
Assignor shall not assume or operate in any jurisdiction under any new trade,
fictitious or other name until (i) such Assignor shall have given to the
Collateral Agent not less than 15 days’ written notice of its intention so to
do, clearly describing such new name and the jurisdictions in which such new
name will be used and providing such other information in

 

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connection therewith as
the Collateral Agent may reasonably request and (ii) with respect to such new
name, such Assignor shall have taken all action reasonably requested by the
Collateral Agent to maintain the security interest of the Collateral Agent in
the Collateral intended to be granted hereby at all times fully perfected and
in full force and effect.

 

2.8  Certain Significant Transactions.  During
the one year period preceding the date of this Agreement, no Person shall have
merged or consolidated with or into any Assignor, and no Person shall have
liquidated into, or transferred all or substantially all of its assets to, any
Assignor, in each case except as described in Annex E hereto.  With respect to any transactions so
described in Annex E hereto, the respective Assignor shall have furnished to
the Collateral Agent such information with respect to the Person (and the
assets of the Person and locations thereof) which merged with or into or
consolidated with such Assignor, or was liquidated into or transferred all or
substantially all of its assets to such Assignor, and shall have furnished to
the Collateral Agent such UCC lien searches, as may have been reasonably
requested with respect to such Person and its assets, to establish that no
security interest (excluding Permitted Liens) continues perfected on the date
hereof with respect to any Person described above (or the assets transferred to
the respective Assignor by such Person), including without limitation pursuant
to Section 9-316(a)(3) of the UCC.

 

2.9  Non-UCC Property.  Except
as provided in the immediately succeeding sentence, the aggregate fair market
value (as determined by the Assignors in good faith) of all property of the
Assignors of the types described in clauses (1), (2) and (3) of Section
9-311(a) (excluding (to the extent applicable) any Copyrights, Marks, Patents
and Software) of the UCC does not exceed $2,500,000.  If the aggregate value of all such property at any time owned by
all Assignors exceeds $2,500,000, the Assignors shall provide prompt written
notice thereof to the Collateral Agent and, upon the request of the Collateral
Agent, the Assignors shall promptly (and in any event within 30 days) take such
actions (at their own cost and expense) as may be required under the respective
United States, State or other laws referenced in Section 9-311(a) of the UCC to
perfect the security interests granted herein in any Collateral where the
filing of a financing statement does not perfect the security interest in such
property in accordance with the provisions of Section 9-311(a) of the UCC.

 

2.10  As-Extracted Collateral; Timber-to-be-Cut.  On
the date hereof (or, if later, on the date that such Assignor becomes a party
to this Agreement), such Assignor does not own, or expect to acquire, any
property which constitutes, or would constitute, As-Extracted Collateral or
Timber-to-be-Cut.  If at any time after
the date of this Agreement such Assignor owns, acquires or obtains rights to
any As-Extracted Collateral or Timber-to-be-Cut, such Assignor shall furnish
the Collateral Agent with prompt written notice thereof (which notice shall
describe in reasonable detail the As-Extracted Collateral and/or
Timber-to-be-Cut and the locations thereof) and shall take all actions as may
be deemed reasonably necessary or desirable by the Collateral Agent to perfect
the security interest of the Collateral Agent therein.

 

2.11  Collateral in the Possession of a Bailee.  If
any Inventory or other Goods are at any time in the possession of a bailee,
such Assignor shall promptly notify the Collateral Agent thereof and, if
requested by the Collateral Agent, shall use its reasonable best efforts to
promptly obtain an acknowledgment from such bailee, in form and substance
reasonably satisfactory to the Collateral Agent, that the bailee holds such
Collateral for the benefit of the

 

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Collateral Agent and
shall act upon the instructions of the Collateral Agent, without the further
consent of such Assignor. The Collateral Agent agrees with such Assignor that
the Collateral Agent shall not give any such instructions unless an Event of
Default has occurred and is continuing or would occur after taking into account
any action by the respective Assignor with respect to any such bailee.

 

2.12  Recourse.  This Agreement
is made with full recourse to each Assignor and pursuant to and upon all the
warranties, representations, covenants and agreements on the part of such
Assignor contained herein and in the other Secured Debt Agreements and
otherwise in writing in connection herewith or therewith.

 

ARTICLE
III

 

SPECIAL
PROVISIONS CONCERNING ACCOUNTS; CONTRACT RIGHTS;

INSTRUMENTS; CHATTEL PAPER AND CERTAIN OTHER COLLATERAL

 

3.1  Additional Representations and
Warranties.  As of the time when each of its Accounts arises,
each Assignor shall be deemed to have represented and warranted that each such
Account, and all records, papers and documents relating thereto (if any) are
genuine and what they purport to be, and that all papers and documents (if any)
relating thereto (i) will, to the knowledge of such Assignor, represent the
genuine, legal, valid and binding obligation of the account debtor evidencing
indebtedness unpaid and owed by the respective account debtor arising out of
the performance of labor or services or the sale or lease and delivery of the
merchandise listed therein, or both, (ii) will, to the knowledge of such
Assignor, evidence true and valid obligations, enforceable in accordance with
their respective terms, except to the extent that the enforceability thereof may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws generally affecting creditors’ rights and by equitable
principles (regardless of whether enforcement is sought in equity or at law),
and (iii) will be in compliance and will conform in all material respects with
all applicable federal, state and local laws and applicable laws of any
relevant foreign jurisdiction (other than any non-compliance that is not within
the control of the relevant Assignor).

 

3.2  Maintenance of Records.  Each
Assignor will keep and maintain at its own cost and expense accurate records of
its Accounts and Contracts, including, but not limited to, originals of all
documentation (including each Contract) with respect thereto, records of all
payments received, all credits granted thereon, all merchandise returned and
all other dealings therewith, and such Assignor will make the same available on
such Assignor’s premises to the Collateral Agent for inspection, at such
Assignor’s own cost and expense, at any and all reasonable times upon
reasonable prior notice to such Assignor and otherwise in accordance with the
Credit Agreement.  Upon the occurrence
and during the continuance of an Event of Default and at the request of the
Collateral Agent, such Assignor shall, at its own cost and expense, deliver all
tangible evidence of its Accounts and Contract Rights (including, without
limitation, all documents evidencing the Accounts and all Contracts) and such
books and records to the Collateral Agent or to its representatives (copies of
which evidence and books and records may be retained by such Assignor).  Upon the occurrence and during the
continuance of an Event of Default and if the Collateral Agent so directs, such
Assignor shall legend, in form and manner satisfactory to the Collateral Agent,
the Accounts and the Contracts, as well as books, records

 

8

 

and documents (if any) of such
Assignor evidencing or pertaining to such Accounts and Contracts with an
appropriate reference to the fact that such Accounts and Contracts have been
assigned to the Collateral Agent and that the Collateral Agent has a security
interest therein.

 

3.3  Direction to Account Debtors; Contracting
Parties; etc.  Upon the occurrence and during the continuance of
an Event of Default, if the Collateral Agent so directs any Assignor, such
Assignor agrees (x) to cause all payments on account of the Accounts and
Contracts to be made directly to the Cash Collateral Account, (y) that the
Collateral Agent may, at its option, directly notify the obligors with respect
to any Accounts and/or under any Contracts to make payments with respect
thereto as provided in the preceding clause (x), and (z) that the Collateral
Agent may enforce collection of any such Accounts and Contracts and may adjust,
settle or compromise the amount of payment thereof, in the same manner and to
the same extent as such Assignor. 
Without notice to or assent by any Assignor, the Collateral Agent may,
upon the occurrence and during the continuance of an Event of Default, apply
any or all amounts then in, or thereafter deposited in, the Cash Collateral
Account toward the payment of the Obligations in the manner provided in Section
7.4 of this Agreement.  The reasonable
costs and expenses of collection (including reasonable attorneys’ fees),
whether incurred by an Assignor or the Collateral Agent, shall be borne by the
relevant Assignor.  The Collateral Agent
shall deliver a copy of each notice referred to in the preceding clause (y) to
the relevant Assignor, provided that (x) the failure by the Collateral
Agent to so notify such Assignor shall not affect the effectiveness of such
notice or the other rights of the Collateral Agent created by this Section 3.3
and (y) no such notice shall be required if an Event of Default of the type
described in Section 10.05 of the Credit Agreement has occurred and is
continuing.

 

3.4  Modification of Terms; etc.  Except
in accordance with such Assignor’s ordinary course of business and consistent
with reasonable business judgment or as permitted by Section 3.5 hereof, no
Assignor shall rescind or cancel any indebtedness evidenced by any Account or
under any Contract, or modify any material term thereof or make any material
adjustment with respect thereto, or extend or renew the same, or compromise or
settle any material dispute, claim, suit or legal proceeding relating thereto,
or sell any Account or Contract, or interest therein, without the prior written
consent of the Collateral Agent.  Except
as may otherwise be permitted under this Section 3.4 or under Section 3.5
hereof, no Assignor will do anything to impair the rights of the Collateral
Agent in the Accounts or Contracts.

 

3.5  Collection.  Each Assignor
shall endeavor in accordance with reasonable business practices to cause to be
collected from the account debtor named in each of its Accounts or obligor
under any Contract, as and when due (including, without limitation, amounts
which are delinquent, such amounts to be collected in accordance with generally
accepted lawful collection procedures) any and all amounts owing under or on
account of such Account or Contract, and apply forthwith upon receipt
thereof all such amounts as are so collected to the outstanding balance of such
Account or under such Contract.  Except
as otherwise directed by the Collateral Agent after the occurrence and during
the continuation of an Event of Default, any Assignor may allow in the ordinary
course of business as adjustments to amounts owing under its Accounts and
Contracts (i) an extension or renewal of the time or times of payment, or
settlement for less than the total unpaid balance, which such Assignor finds
appropriate in accordance with reasonable business judgment and (ii) a
refund or credit due as a result of returned or damaged merchandise or
improperly performed services or for other reasons which

 

9

 

such Assignor finds appropriate
in accordance with reasonable business judgment.  The reasonable costs and expenses (including, without limitation,
reasonable attorneys’ fees) of collection, whether incurred by an Assignor or
the Collateral Agent, shall be borne by the relevant Assignor.

 

3.6  Instruments.  If any
Assignor owns or acquires any Instrument in excess of $250,000 constituting
Collateral (other than checks and other payment instruments received and
collected in the ordinary course of business), such Assignor will within 10
Business Days notify the Collateral Agent thereof, and upon request by the
Collateral Agent will promptly deliver such Instrument to the Collateral Agent
appropriately endorsed to the order of the Collateral Agent.

 

3.7  Assignors Remain Liable Under Accounts.  Anything
herein to the contrary notwithstanding, the Assignors shall remain liable under
each of the Accounts to observe and perform all of the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise to such Accounts.  Neither the Collateral Agent nor any other
Secured Creditor shall have any obligation or liability under any Account (or
any agreement giving rise thereto) by reason of or arising out of this
Agreement or the receipt by the Collateral Agent or any other Secured Creditor
of any payment relating to such Account pursuant hereto, nor shall the
Collateral Agent or any other Secured Creditor be obligated in any manner to
perform any of the obligations of any Assignor under or pursuant to any Account
(or any agreement giving rise thereto), to make any payment, to make any
inquiry as to the nature or the sufficiency of any payment received by them or
as to the sufficiency of any performance by any party under any Account (or any
agreement giving rise thereto), to present or file any claim, to take any
action to enforce any performance or to collect the payment of any amounts
which may have been assigned to them or to which they may be entitled at any
time or times.

 

3.8  Assignors Remain Liable Under Contracts.  Anything
herein to the contrary notwithstanding, the Assignors shall remain liable under
each of the Contracts to observe and perform all of the conditions and
obligations to be observed and performed by them thereunder, all in accordance
with and pursuant to the terms and provisions of each Contract.  Neither the Collateral Agent nor any other
Secured Creditor shall have any obligation or liability under any Contract by
reason of or arising out of this Agreement or the receipt by the Collateral
Agent or any other Secured Creditor of any payment relating to such Contract
pursuant hereto, nor shall the Collateral Agent or any other Secured Creditor
be obligated in any manner to perform any of the obligations of any Assignor
under or pursuant to any Contract, to make any payment, to make any inquiry as
to the nature or the sufficiency of any performance by any party under any
Contract, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been assigned
to them or to which they may be entitled at any time or times.

 

3.9  Deposit Accounts; Etc.  (a)  No Assignor maintains, or at any time after
the date of this Agreement shall establish or maintain, any demand, time,
savings, passbook or similar account, except for such accounts maintained with
a bank (as defined in Section 9-102 of the UCC) whose jurisdiction (determined
in accordance with Section 9-304 of the UCC) is within a State of the United
States or the District of Colombia.  Annex F hereto accurately sets
forth for each Assignor, as of the date of this Agreement (or, if later, on the
date that such

 

10

 

Assignor becomes a party to
this Agreement), each Deposit Account maintained by such Assignor (including a
description thereof and the respective account number), the name of the
respective bank with which such Deposit Account is maintained, and the
jurisdiction of the respective bank with respect to such Deposit Account.  For each Deposit Account (other than (x) the
Cash Collateral Account, (y) any other Deposit Account maintained with the
Collateral Agent or (z) any other Deposit Accounts maintained by any Assignor,
so long as the aggregate balance in all such Deposit Accounts excluded pursuant
to this clause (z) does not exceed $1,000,000 at any time), the respective
Assignor shall cause the bank with which the Deposit Account is maintained to
execute and deliver to the Collateral Agent on the Initial Borrowing Date or,
if later, within 30 days (or such longer period of time as is acceptable to the
Administrative Agent, in its sole discretion) of the time of the establishment
of the respective Deposit Account, a (I) “control agreement” in substantially
the form of Annex G hereto (appropriately completed), with such changes thereto
as may be acceptable to the Collateral Agent or (II) such other “control
agreement” in form and substance satisfactory to the Collateral Agent.  If any bank with which a Deposit Account is
maintained refuses to, or does not, enter into such a “control agreement”, then
the respective Assignor shall promptly (and in any event within 30 days after
the date of this Agreement or, if later, 30 days after the establishment of
such account) close the respective Deposit Account and transfer all balances
therein to the Cash Collateral Account or another Deposit Account meeting the
requirements of this Section 3.9.  If
any bank with which a Deposit Account is maintained refuses to subordinate all
its claims with respect to such Deposit Account to the Collateral Agent’s
security interest therein on terms satisfactory to the Collateral Agent, then
the Collateral Agent, at its option, may (x) require that such Deposit Account
be terminated in accordance with the immediately preceding sentence or (y)
agree to a “control agreement” without such subordination, provided that in
such event the Collateral Agent may at any time, at its option, subsequently
require that such Deposit Account be terminated (within 30 days (or such longer
time as is acceptable to the Collateral Agent in its sole discretion) after
notice from the Collateral Agent) in accordance with the requirements of the
immediately preceding sentence. The Collateral Agent agrees that it shall not
give a “Notice of Exclusive Control” (as defined in Annex G) or a similar
notice, in each case, with respect to any Deposit Account, unless an Event of
Default has occurred and is continuing.

 

(b)           After
the date of this Agreement, no Assignor shall establish any new demand, time,
savings, passbook or similar account, except for Deposit Accounts established
and maintained with banks and meeting the requirements of preceding clause
(a).  Following the establishment of any
such Deposit Account after the date of this Agreement, the appropriate “control
agreement” shall be entered into in accordance with the requirements of
preceding clause (a) and the respective Assignor shall furnish to the
Collateral Agent a supplement to Annex F hereto containing the relevant
information with respect to the respective Deposit Account and the bank with
which same is established.

 

(c)           Notwithstanding
anything to the contrary contained in this Section 3.9, no later than six
months following the Initial Borrowing Date (or such longer time as may be
acceptable to the Collateral Agent in its sole discretion) the Borrower shall
cause (x) all Wachovia Deposit Accounts to be closed or (y) the Wachovia
Control Agreement to be terminated and (I) a new “control agreement” (or an
amendment to the Wachovia Control Agreement) to be entered into with respect to
the Wachovia Deposit Accounts in accordance

 

11

 

with the requirements of
preceding clause (a) and otherwise on terms and conditions satisfactory to the
Collateral Agent or (II) such other actions as shall be reasonably acceptable
to the Collateral Agent to be taken with respect to the Wachovia Deposit
Accounts.

 

3.10  Letter-of-Credit
Rights.  If any Assignor is at any time a beneficiary under a
letter of credit with a stated amount of $250,000 or more, such Assignor shall
promptly notify the Collateral Agent thereof and, at the request of the
Collateral Agent, such Assignor shall, pursuant to an agreement in form and
substance reasonably satisfactory to the Collateral Agent, use its reasonable
best efforts to (i) arrange for the issuer and any confirmer of such letter of
credit to consent to an assignment to the Collateral Agent of the proceeds of
any drawing under such letter of credit or (ii) arrange for the Collateral
Agent to become the transferee beneficiary of such letter of credit, with the
Collateral Agent agreeing, in each case, that after the occurrence and during
the continuance of an Event of Default the proceeds of any drawing under the
letter of credit are to be applied as provided in this Agreement.

 

3.11  Commercial
Tort Claims.  All Commercial Tort Claims of each Assignor in
existence on the date of this Agreement are described in Annex H hereto.  If any Assignor shall at any time after the
date of this Agreement acquire a Commercial Tort Claim in an amount (taking the
greater of the aggregate claimed damages thereunder or the reasonably estimated
value thereof) of $250,000 or more, such Assignor shall promptly notify the
Collateral Agent thereof in a writing signed by such Assignor and describing
the details thereof and shall grant to the Collateral Agent in such writing a
security interest therein and in the proceeds thereof, all upon the terms of
this Agreement, with such writing to be in form and substance reasonably
satisfactory to the Collateral Agent.

 

3.12  Chattel Paper.  Upon the
request of the Collateral Agent made at any time or from time to time, each
Assignor shall promptly furnish to the Collateral Agent a list of all
Electronic Chattel Paper held or owned by such Assignor.  Furthermore, if requested by the Collateral
Agent, each Assignor shall promptly take all actions which are reasonably
requested by the Collateral Agent so that the Collateral Agent has “control” of
all Electronic Chattel Paper in accordance with the requirements of Section
9-105 of the UCC.  Each Assignor will
promptly (and in any event within 10 days) following any request by the
Collateral Agent, deliver all of its Tangible Chattel Paper to the Collateral
Agent.

 

3.13  Further
Actions.  Each Assignor will, at its own expense, make, execute,
endorse, acknowledge, file and/or deliver to the Collateral Agent from time to
time such vouchers, invoices, schedules, confirmatory assignments, conveyances,
financing statements, transfer endorsements, certificates, reports and other
assurances or instruments and take such further steps, including any and all
actions as may be necessary or required under the Federal Assignment of Claims
Act, relating to its Accounts, Contracts, Instruments and other property or
rights covered by the security interest hereby granted, as the Collateral Agent
may reasonably require.

 

12

 

ARTICLE IV

 

SPECIAL PROVISIONS CONCERNING TRADEMARKS AND DOMAIN NAMES

 

4.1  Additional
Representations and Warranties.  Each Assignor represents and
warrants that it is the true and lawful owner of or otherwise has the right to
use the registered Marks and Domain Names listed in Annex I hereto for such
Assignor and that said listed Marks and Domain Names include all United States
marks and applications for United States marks registered in the United States
Patent and Trademark Office and all Domain Names that such Assignor owns or
uses in connection with its business as of the date hereof.  Each Assignor represents and warrants that
it owns, is licensed to use or otherwise has the right to use, all Marks and
Domain Names that it uses.  Each
Assignor further warrants that it has no knowledge of any third party claim
received by it that any aspect of such Assignor’s present or contemplated
business operations infringes or will infringe any trademark, service mark or
trade name of any other Person other than as could not, either individually or
in the aggregate, reasonably be expected to have a Material Adverse
Effect.  Each Assignor represents and
warrants that it is the true and lawful owner of or otherwise has the right to
use all U.S. trademark registrations and applications and Domain Name registrations
listed in Annex I hereto and that said registrations are valid, subsisting,
have not been canceled and that such Assignor is not aware of any third-party
claim that any of said registrations is invalid or unenforceable, and is not
aware that there is any reason that any of said registrations is invalid or
unenforceable, and is not aware that there is any reason that any of said
applications will not mature into registrations.  Each Assignor hereby grants to the Collateral Agent an absolute
power of attorney to sign, upon the occurrence and during the continuance of an
Event of Default and in connection with the exercise of remedies hereunder, any
document which may be required by the United States Patent and Trademark Office
or similar registrar in order to effect an absolute assignment of all right,
title and interest in each Mark and/or Domain Name, and record the same.

 

4.2  Licenses and Assignments.  Except
as otherwise permitted by the Secured Debt Agreements, each Assignor hereby
agrees not to divest itself of any right under any Mark or Domain Name absent
prior written approval of the Collateral Agent.

 

4.3  Infringements.  Each
Assignor agrees, promptly upon learning thereof, to notify the Collateral Agent
in writing of the name and address of, and to furnish such pertinent
information that may be available with respect to, any party who such Assignor
believes is, or may be, infringing or diluting or otherwise violating any of
such Assignor’s rights in and to any Mark or Domain Name in any manner that
could reasonably be expected to have a Material Adverse Effect, or with respect
to any party claiming, in writing or to the knowledge of any senior or
executive officer of any Assignor, that such Assignor’s use of any Mark or
Domain Name material to such Assignor’s business violates in any material
respect any property right of that party. 
Each Assignor further agrees to prosecute diligently in accordance with
its reasonable business practices any Person infringing any of its Marks or
Domain Names in any manner that could reasonably be expected to have a Material
Adverse Effect.

 

4.4  Preservation of Marks and Domain Names.  Each
Assignor agrees to use its Marks and Domain Names which are material to such
Assignor’s business in interstate commerce during the time in which this
Agreement is in effect and to take all such other actions

 

13

 

as are reasonably necessary to
preserve such Marks as trademarks or service marks under the laws of the United
States (other than any such Marks which are no longer used or useful in its
business or operations).

 

4.5  Maintenance of Registration.  Each
Assignor shall, at its own expense, diligently process all documents reasonably
required to maintain all Mark and/or Domain Name registrations, including but
not limited to affidavits of use and applications for renewals of registration
in the United States Patent and Trademark Office for all of its material
registered Marks, and shall pay all fees and disbursements in connection
therewith and shall not abandon any such filing of affidavit of use or any such
application of renewal prior to the exhaustion of all administrative and
judicial remedies without prior written consent of the Collateral Agent (other
than with respect to registrations and applications deemed by such Assignor in
its reasonable business judgment to be no longer prudent to pursue).

 

4.6  Future Registered Marks and Domain Names.  If
any Mark registration is issued hereafter to any Assignor as a result of any
application now or hereafter pending before the United States Patent and
Trademark Office or any Domain Name is registered by Assignor, within 30 days
of receipt of such certificate or similar indicia of ownership, such Assignor
shall deliver to the Collateral Agent a copy of such registration certificate
or similar indicia of ownership, and a grant of a security interest in such
Mark and/or Domain Name, to the Collateral Agent and at the expense of such
Assignor, confirming the grant of a security interest in such Mark and/or
Domain Name to the Collateral Agent hereunder, the form of such security to be
substantially in the form of Annex L hereto or in such other form as may be
reasonably satisfactory to the Collateral Agent.

 

4.7  Remedies.  If an Event of
Default shall occur and be continuing, the Collateral Agent may, by written
notice to the relevant Assignor, take any or all of the following actions:  (i) declare the entire right, title and
interest of such Assignor in and to each of the Marks and Domain Names,
together with all trademark rights and rights of protection to the same, vested
in the Collateral Agent for the benefit of the Secured Creditors, in which
event such rights, title and interest shall immediately vest, in the Collateral
Agent for the benefit of the Secured Creditors, and the Collateral Agent shall
be entitled to exercise the power of attorney referred to in Section 4.1 hereof
to execute, cause to be acknowledged and notarized and record said absolute
assignment with the applicable agency or registrar; (ii) take and use or sell
the Marks or Domain Names and the goodwill of such Assignor’s business
symbolized by the Marks or Domain Names and the right to carry on the business
and use the assets of such Assignor in connection with which the Marks or
Domain Names have been used; and (iii) direct such Assignor to refrain, in
which event such Assignor shall refrain, from using the Marks or Domain Names
in any manner whatsoever, directly or indirectly, and such Assignor shall
execute such further documents that the Collateral Agent may reasonably request
to further confirm this and to transfer ownership of the Marks or Domain Names
and registrations and any pending trademark applications in the United States
Patent and Trademark Office or applicable Domain Name registrar to the Collateral
Agent.

 

14

 

ARTICLE V

 

SPECIAL PROVISIONS CONCERNING PATENTS, COPYRIGHTS AND TRADE SECRETS

 

5.1  Additional Representations and
Warranties.  Each Assignor represents and warrants that it is the
true and lawful owner of all rights in (i) all Trade Secret Rights, (ii) the
Patents listed in Annex J hereto for such Assignor and that said Patents
include all the United States patents and applications for United States
patents that such Assignor owns as of the date hereof and (iii) the Copyrights
listed in Annex K hereto for such Assignor and that said Copyrights include all
the United States copyrights registered with the United States Copyright Office
and applications to United States copyrights that such Assignor owns as of the
date hereof.  Each Assignor further
warrants that it has no knowledge of any third party claim that any aspect of
such Assignor’s present or contemplated business operations infringes or will
infringe any patent of any other Person or such Assignor has misappropriated
any trade secret or proprietary information which, either individually or in
the aggregate, could reasonably be expected to have a Material Adverse
Effect.  Each Assignor hereby grants to
the Collateral Agent an absolute power of attorney to sign, upon the occurrence
and during the continuance of any Event of Default and in connection with the
exercise of remedies hereunder, any document which may be required by the
United States Patent and Trademark Office or the United States Copyright Office
in order to effect an absolute assignment of all right, title and interest in
each Patent or Copyright, and to record the same.

 

5.2  Licenses and Assignments.  Except
as otherwise permitted by the Secured Debt Agreements, each Assignor hereby
agrees not to divest itself of any right under any Patent or Copyright absent
prior written approval of the Collateral Agent.

 

5.3  Infringements.  Each
Assignor agrees, promptly upon learning thereof, to furnish the Collateral
Agent in writing with all pertinent information available to such Assignor with
respect to any infringement, contributing infringement or active inducement to
infringe or other violation of such Assignor’s rights in any Patent or
Copyright or to any claim, in writing or to the knowledge of any senior or
executive officer of any Assignor, that the practice of any Patent or use of
any Copyright violates any property right of a third party, or with respect to
any misappropriation of any Trade Secret Right or any claim, in writing or to
the knowledge of any senior or executive officer of any Assignor, that practice
of any Trade Secret Right violates any property right of a third party, in each
case, in any manner which, either individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.  Each Assignor further agrees, absent
direction of the Collateral Agent to the contrary, to diligently prosecute, in
accordance with its reasonable business judgment, any Person infringing any of
its Patents or Copyrights or any Person misappropriating any of its Trade
Secret Rights, in each case to the extent that such infringement or
misappropriation, either individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.

 

5.4  Maintenance of Patents or Copyrights.  At
its own expense, each Assignor shall make timely payment of all post-issuance
fees required to maintain in force its rights under each of its Patent or
Copyright registrations, absent prior written consent of the Collateral Agent
(other than any such Patent or Copyright registrations which are no longer used
or are deemed by

 

15

 

such Assignor in its reasonable
business judgment to no longer be useful in its business or operations).

 

5.5  Prosecution of Patent or Copyright
Applications.  At its own expense, each Assignor shall diligently
prosecute all material applications for (i) United States Patents listed in
Annex J hereto and (ii) Copyrights listed on Annex K hereto, in each case
for such Assignor and shall not abandon any such application prior to
exhaustion of all administrative and judicial remedies (other than applications
that are deemed by such Assignor in its reasonable business judgment to no
longer be necessary in the conduct of the Assignor’s business), absent written
consent of the Collateral Agent.

 

5.6  Other Patents and Copyrights.  Within
30 days of the acquisition or issuance of a United States Patent, registration
of a Copyright, or acquisition of a registered Copyright, or of filing of an
application for a United States Patent or Copyright, the relevant Assignor
shall deliver to the Collateral Agent a copy of said Copyright or Patent, or
certificate or registration of, or application therefor, as the case may be,
with a grant of a security interest as to such Patent or Copyright, as the case
may be, to the Collateral Agent and at the expense of such Assignor, confirming
the grant of a security interest, the form of such grant of a security interest
to be substantially in the form of Annex M or N hereto, as appropriate, or in
such other form as may be reasonably satisfactory to the Collateral Agent.

 

5.7  Remedies.  If an Event of
Default shall occur and be continuing, the Collateral Agent may, by written
notice to the relevant Assignor, take any or all of the following actions:  (i) declare the entire right, title, and
interest of such Assignor in each of the Patents and Copyrights vested in the
Collateral Agent for the benefit of the Secured Creditors, in which event such
right, title, and interest shall immediately vest in the Collateral Agent for
the benefit of the Secured Creditors, in which case the Collateral Agent shall
be entitled to exercise the power of attorney referred to in Section 5.1 hereof
to execute, cause to be acknowledged and notarized and to record said absolute
assignment with the applicable agency; (ii) take and practice or sell the
Patents and Copyrights; and (iii) direct such Assignor to refrain, in which
event such Assignor shall refrain, from practicing the Patents and using the
Copyrights directly or indirectly, and such Assignor shall execute such further
documents as the Collateral Agent may reasonably request further to confirm
this and to transfer ownership of the Patents and Copyrights to the Collateral
Agent for the benefit of the Secured Creditors.

 

5.8  Subject Patents.  Each Assignor covenants and agrees to use
its reasonable best efforts to provide to the Administrative Agent, within 30
days of the Initial Borrowing Date (or such later date as is acceptable to the
Collateral Agent in its sole discretion), copies of any Subject Patent
Agreements, provided, however, that if no Subject Patent Agreements are
produced within 30 days of the Initial Borrowing Date, the Borrower or such
other applicable Assignor shall take all actions required pursuant to the terms
of this Agreement with respect to Patents in existence on the Initial Borrowing
Date to perfect the Secured Creditors’ security interest in such Assignor’s
rights to such Subject Patent.

 

16

 

ARTICLE VI

 

PROVISIONS CONCERNING ALL COLLATERAL

 

6.1  Protection of Collateral
Agent’s Security.  Except as otherwise permitted by the Secured
Debt Agreements, each Assignor will do nothing to impair the rights of the
Collateral Agent in the Collateral. 
Each Assignor will at all times maintain insurance, at such Assignor’s
own expense to the extent and in the manner provided in the Secured Debt
Agreements.  Except to the extent otherwise
permitted to be retained by such Assignor or applied by such Assignor pursuant
to the terms of the Secured Debt Agreements, the Collateral Agent shall, at the
time any proceeds of such insurance are distributed to the Secured Creditors,
apply such proceeds in accordance with Section 7.4 hereof.  Each Assignor assumes all liability and
responsibility in connection with the Collateral acquired by it and the
liability of such Assignor to pay the Obligations shall in no way be affected
or diminished by reason of the fact that such Collateral may be lost,
destroyed, stolen, damaged or for any reason whatsoever unavailable to such
Assignor.

 

6.2  Warehouse Receipts
Non-Negotiable.  To the extent practicable, each Assignor agrees
that if any warehouse receipt or receipt in the nature of a warehouse receipt
is issued with respect to any of its Inventory, such Assignor shall request
that such warehouse receipt or receipt in the nature thereof shall not be
“negotiable” (as such term is used in Section 7-104 of the Uniform Commercial
Code as in effect in any relevant jurisdiction or under other relevant law).

 

6.3  Additional Information.  Each
Assignor will, at its own expense, from time to time upon the reasonable
request of the Collateral Agent, promptly (and in any event within 10 days
after its receipt of the respective request) furnish to the Collateral Agent
such information with respect to the Collateral (including the identity of the
Collateral or such components thereof as may have been requested by the
Collateral Agent, the value and location of such Collateral, etc.) as may be
reasonably requested by the Collateral Agent. 
Without limiting the forgoing, each Assignor agrees that it shall
promptly (and in any event within 10 days after its receipt of the respective
request) furnish to the Collateral Agent such updated Annexes hereto as may
from time to time be reasonably requested by the Collateral Agent.

 

6.4  Further Actions.  Each
Assignor will, at its own expense and upon the reasonable request of the
Collateral Agent, make, execute, endorse, acknowledge, file and/or deliver to
the Collateral Agent from time to time such lists, descriptions and
designations of its Collateral, warehouse receipts, receipts in the nature of
warehouse receipts, bills of lading, documents of title, vouchers, invoices,
schedules, confirmatory assignments, conveyances, financing statements,
transfer endorsements, certificates, reports and other assurances or
instruments and take such further steps relating to the Collateral and other
property or rights covered by the security interest hereby granted, which the
Collateral Agent deems reasonably appropriate or advisable to perfect, preserve
or protect its security interest in the Collateral, provided that any
such actions taken to perfect, preserve or protect the security interest in the
Collateral pursuant to the laws of a Foreign Jurisdiction shall only required
to the extent such actions are practicable (in accordance with the requirements
of local law and taking into account such cost and practicality

 

17

 

considerations as may be
reasonably agreed by the Collateral Agent, based on the advice of local
counsel).

 

6.5  Financing Statements.  Each
Assignor agrees to deliver to the Collateral Agent such financing statements,
in form reasonably acceptable to the Collateral Agent, as the Collateral Agent
may from time to time reasonably request or as are reasonably necessary or
desirable in the opinion of the Collateral Agent to establish and maintain a
valid, enforceable, perfected security interest in the Collateral as provided
herein and the other rights and security contemplated hereby.  Each Assignor will pay any applicable filing
fees, recordation taxes and related expenses relating to its Collateral.  Each Assignor hereby authorizes the
Collateral Agent to file any such financing statements without the signature of
such Assignor where permitted by law (and such authorization includes describing
the Collateral as “all assets” of such Assignor).

 

ARTICLE VII

 

REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT

 

7.1  Remedies; Obtaining the Collateral Upon
Default.  Each Assignor agrees that, if any Event of Default
shall have occurred and be continuing, then and in every such case, the Collateral
Agent, in addition to any rights now or hereafter existing under applicable law
and under the other provisions of this Agreement, shall have all rights as a
secured creditor under any UCC, and such additional rights and remedies to
which a secured creditor is entitled under the laws in effect in all relevant
jurisdictions and may:

 

(i)            personally, or by agents or attorneys,
immediately take possession of the Collateral or any part thereof, from such
Assignor or any other Person who then has possession of any part thereof with
or without notice or process of law, and for that purpose may enter upon such
Assignor’s premises where any of the Collateral is located and remove the same
and use in connection with such removal any and all services, supplies, aids
and other facilities of such Assignor;

 

(ii)           instruct the obligor or obligors on any
agreement, instrument or other obligation (including, without limitation, the
Accounts and the Contracts) constituting the Collateral to make any payment
required by the terms of such agreement, instrument or other obligation
directly to the Collateral Agent and may exercise any and all remedies of such
Assignor in respect of such Collateral;

 

(iii)          instruct all banks which have entered into a
control agreement with the Collateral Agent to transfer all monies, securities
and instruments held by such depositary bank to the Cash Collateral Account;

 

(iv)          sell, assign or otherwise liquidate any or
all of the Collateral or any part thereof in accordance with Section 7.2
hereof, or direct such Assignor to sell, assign or otherwise liquidate any or
all of the Collateral or any part thereof, and, in each case, take possession
of the proceeds of any such sale or liquidation;

 

18

 

(v)           take possession of the Collateral or any
part thereof, by directing such Assignor in writing to deliver the same to the
Collateral Agent at any reasonable place or places designated by the Collateral
Agent, in which event such Assignor shall at its own expense:

 

(x)            forthwith cause the same to be moved to the place or
places so designated by the Collateral Agent and there delivered to the
Collateral Agent;

 

(y)           store and keep any Collateral so delivered to the
Collateral Agent at such place or places pending further action by the
Collateral Agent as provided in Section 7.2 hereof; and

 

(z)            while the Collateral shall be so stored and kept,
provide such security and maintenance services as shall be reasonably necessary
to protect the same and to preserve and maintain it in good condition;

 

(vi)          license or sublicense, whether on an
exclusive or nonexclusive basis, any Marks, Domain Names, Patents or Copyrights
included in the Collateral for such term and on such conditions and in such
manner as the Collateral Agent shall in its sole judgment determine;

 

(vii)         apply any monies constituting Collateral or
proceeds thereof in accordance with the provisions of Section 7.4 hereof; and

 

(viii)        take any other action as specified in clauses
(1) through (5), inclusive, of Section 9-607 of the UCC;

 

it being understood that each
Assignor’s obligation so to deliver the Collateral is of the essence of this
Agreement and that, accordingly, upon application to a court of equity having
jurisdiction, the Collateral Agent shall be entitled to a decree requiring
specific performance by such Assignor of said obligation.  By accepting the benefits of this Agreement
and each other Security Document, the Secured Creditors expressly acknowledge
and agree that this Agreement and each other Security Document may be enforced
only by the action of the Collateral Agent acting upon the instructions of the
Required Secured Creditors and that no other Secured Creditor shall have any
right individually to seek to enforce or to enforce this Agreement or to
realize upon the security to be granted hereby, it being understood and agreed
that such rights and remedies may be exercised by the Collateral Agent for the
benefit of the Secured Creditors upon the terms of this Agreement and the other
Security Documents.

 

7.2  Remedies; Disposition of the Collateral.  If
any Event of Default shall have occurred and be continuing, then any Collateral
repossessed by the Collateral Agent under or pursuant to Section 7.1 hereof and
any other Collateral whether or not so repossessed by the Collateral Agent, may
be sold, assigned, leased or otherwise disposed of under one or more contracts
or as an entirety, and without the necessity of gathering at the place of sale
the property to be sold, and in general in such manner, at such time or times,
at such place or places and on such terms as the Collateral Agent may, in
compliance with any mandatory requirements of applicable law, determine to be
commercially reasonable.  Any of the
Collateral may be sold, leased or

 

19

 

otherwise disposed of, in the
condition in which the same existed when taken by the Collateral Agent or after
any overhaul or repair at the expense of the relevant Assignor which the
Collateral Agent shall determine to be commercially reasonable.  Any such sale, lease or other disposition
may be effected by means of a public disposition or private disposition,
effected in accordance with the applicable requirements (in each case if and to
the extent applicable) of Sections 9-610 through 9-613 of the UCC and/or such
other mandatory requirements of applicable law as may apply to the respective
disposition.  The Collateral Agent may,
without notice or publication, adjourn any public or private disposition or
cause the same to be adjourned from time to time by announcement at the time
and place fixed for the disposition, and such disposition may be made at any
time or place to which the disposition may be so adjourned.  To the extent permitted by any such requirement
of law, the Collateral Agent may bid for and become the purchaser (and may pay
all or any portion of the purchase price by crediting Obligations against the
purchase price) of the Collateral or any item thereof, offered for disposition
in accordance with this Section 7.2 without accountability to the relevant
Assignor.  If, under applicable law, the
Collateral Agent shall be permitted to make disposition of the Collateral
within a period of time which does not permit the giving of notice to the relevant
Assignor as hereinabove specified, the Collateral Agent need give such Assignor
only such notice of disposition as shall be required by  such applicable law.  Each Assignor agrees to do or cause to be
done all such other acts and things as may be reasonably necessary to make such
disposition or dispositions of all or any portion of the Collateral valid and
binding and in compliance with any and all applicable laws, regulations,
orders, writs, injunctions, decrees or awards of any and all courts, arbitrators
or governmental instrumentalities, domestic or foreign, having jurisdiction
over any such sale or sales, all at such Assignor’s expense.

 

7.3  Waiver of Claims.  Except
as otherwise provided in this Agreement, EACH ASSIGNOR HEREBY WAIVES, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION
WITH THE COLLATERAL AGENT’S TAKING POSSESSION OR THE COLLATERAL AGENT’S
DISPOSITION OF ANY OF THE COLLATERAL, INCLUDING, WITHOUT LIMITATION, ANY AND
ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES, and each
Assignor hereby further waives, to the extent permitted by law:

 

(i)            all damages occasioned by such taking of
possession or any such disposition except any damages which are the direct
result of the Collateral Agent’s gross negligence or willful misconduct (as
determined by a court of competent jurisdiction in a final and non-appealable
decision);

 

(ii)           all other requirements as to the time, place
and terms of sale or other requirements with respect to the enforcement of the
Collateral Agent’s rights hereunder; and

 

(iii)          all rights of redemption, appraisement,
valuation, stay, extension or moratorium now or hereafter in force under any
applicable law in order to prevent or delay the enforcement of this Agreement
or the absolute sale of the Collateral or any portion thereof, and each
Assignor, for itself and all who may claim under it, insofar as it or they now
or hereafter lawfully may, hereby waives the benefit of all such laws.

 

20

 

Any sale of,
or the grant of options to purchase, or any other realization upon, any
Collateral shall operate to divest all right, title, interest, claim and
demand, either at law or in equity, of the relevant Assignor therein and thereto,
and shall be a perpetual bar both at law and in equity against such Assignor
and against any and all Persons claiming or attempting to claim the Collateral
so sold, optioned or realized upon, or any part thereof, from, through and
under such Assignor.

 

7.4  Application of Proceeds.  (a)  All moneys collected by the Collateral Agent
(or, to the extent the Pledge Agreement or any other Security Document requires
proceeds of collateral under such other Security Document to be applied in
accordance with the provisions of this Agreement, the Pledgee or collateral
agent under such other Security Document) upon any sale or other disposition of
the Collateral, together with all other moneys received by the Collateral Agent
hereunder, shall be applied as follows:

 

(i)            first, to the payment of all amounts
owing the Collateral Agent of the type described in clauses (iv), (v) and (vi)
of the definition of “Obligations”;

 

(ii)           second, to the extent proceeds remain
after the application pursuant to the preceding clause (i), an amount equal to
the outstanding Primary Obligations shall be paid to the Secured Creditors as
provided in Section 7.4(e) hereof, with each Secured Creditor receiving an
amount equal to its outstanding Primary Obligations or, if the proceeds are insufficient
to pay in full all such Primary Obligations, its Pro Rata Share of the amount
remaining to be distributed;

 

(iii)          third, to the extent proceeds remain
after the application pursuant to the preceding clauses (i) and (ii), an amount
equal to the outstanding Secondary Obligations shall be paid to the Secured
Creditors as provided in Section 7.4(e) hereof, with each Secured Creditor
receiving an amount equal to its outstanding Secondary Obligations or, if the
proceeds are insufficient to pay in full all such Secondary Obligations, its
Pro Rata Share of the amount remaining to be distributed; and

 

(iv)          fourth, to the extent proceeds remain
after the application pursuant to the preceding clauses (i) through (iii),
inclusive, and following the termination of this Agreement pursuant to Section
10.8(a) hereof, to the relevant Assignor or to whomever may be lawfully
entitled to receive such surplus.

 

(b)           For
purposes of this Agreement, (x) “Pro Rata Share” shall mean, when
calculating a Secured Creditor’s portion of any distribution or amount, that
amount (expressed as a percentage) equal to a fraction the numerator of which
is the then unpaid amount of such Secured Creditor’s Primary Obligations or
Secondary Obligations, as the case may be, and the denominator of which is the
then outstanding amount of all Primary Obligations or Secondary Obligations, as
the case may be, (y) “Primary Obligations” shall mean (i) in the case of
the Credit Document Obligations, all principal of, premium, fees and interest
on, all Loans, all Unpaid Drawings (including interest thereon), the Stated
Amount of all outstanding Letters of Credit and all Fees, (ii) in the case of
the Hedging Obligations, all amounts due under each Interest Rate Protection
Agreement and each Other Hedging Agreement with a Hedging Creditor (other than
indemnities, fees (including, without limitation, attorneys’ fees) and similar

 

21

 

obligations and liabilities)
and (iii) in the case of the Secured Supplemental L/C Obligations, the stated
amount of, and all other amounts (including unpaid drawings, interest thereon
and regularly accruing fees and expenses) due under or in respect of, each
Secured Supplemental Letter of Credit (other than indemnities, other fees
(including, without limitation, attorneys’ fees) and similar obligations and
liabilities) and (z) “Secondary Obligations” shall mean all Obligations
other than Primary Obligations.

 

(c)           When
payments to Secured Creditors are based upon their respective Pro Rata Shares,
the amounts received by such Secured Creditors hereunder shall be applied (for
purposes of making determinations under this Section 7.4 only) (i) first, to
their Primary Obligations and (ii) second, to their  Secondary Obligations.  If
any payment to any Secured Creditor of its Pro Rata Share of any distribution
would result in overpayment to such Secured Creditor, such excess amount shall
instead be distributed in respect of the unpaid Primary Obligations or  Secondary Obligations, as the case may be,
of the other Secured Creditors, with each Secured Creditor whose Primary
Obligations or Secondary Obligations, as the case may be, have not been paid in
full to receive an amount equal to such excess amount multiplied by a fraction
the numerator of which is the unpaid Primary Obligations or Secondary
Obligations, as the case may be, of such Secured Creditor and the denominator
of which is the unpaid Primary Obligations or 
Secondary Obligations, as the case may be, of all Secured Creditors entitled
to such distribution.

 

(d)           Each
of the Secured Creditors, by their acceptance of the benefits hereof and of the
other Security Documents, agrees and acknowledges that if the Lender Creditors
or the Secured Supplemental L/C Creditors receive a distribution on account of
undrawn amounts with respect to (x) Letters of Credit issued under the Credit
Agreement (which shall only occur after all outstanding Revolving Loans under
the Credit Agreement and Unpaid Drawings have been paid in full) or (y) Secured
Supplemental Letters of Credit, as the case may be, such amounts shall be paid
to the Administrative Agent under the Credit Agreement and held by it, for the
equal and ratable benefit of the Lender Creditors and Secured Supplemental L/C
Creditors, as cash security for the repayment of Obligations owing to the
Lender Creditors and Secured Supplemental L/C Creditors as such.  If any amounts are held as cash security
pursuant to the immediately preceding sentence, then upon the termination of
all outstanding Letters of Credit under the Credit Agreement and all
outstanding Secured Supplemental Letters of Credit, and after the application
of all such cash security to the repayment of (x) all Obligations owing to the
Lender Creditors after giving effect to the termination of all such Letters of
Credit and (y) all Obligations owing to the Secured Supplemental L/C Creditors
after giving effect to the termination of all such Secured Supplemental Letters
of Credit, if there remains any excess cash, such excess cash shall be returned
by the Administrative Agent to the Collateral Agent for distribution in
accordance with Section 7.4(a) hereof.

 

(e)           All
payments required to be made hereunder shall be made (x) if to the  Lender Creditors, to the Administrative
Agent for the account of the Lender Creditors, and (y) if to any Other
Creditor, to the trustee, paying agent or other similar representative (each, a
“Representative”) for such Other Creditor or, in the absence of such a
Representative, directly to the relevant Other Creditor.

 

(f)            For
purposes of applying payments received in accordance with this Section 7.4, the
Collateral Agent shall be entitled to rely upon (i) the Administrative Agent
and

 

22

 

(ii) the Representative or, in
the absence of such a Representative, upon the Other Creditors for a
determination (which the Administrative Agent, each Representative and the
Other Creditors agree (or shall agree) to provide upon request of the
Collateral Agent) of the outstanding Primary Obligations and Secondary
Obligations owed to the Lender Creditors or the Other Creditors, as the case
may be.  Unless it has received written
notice from a Lender Creditor or an Other Creditor to the contrary, the
Administrative Agent and each Representative, in furnishing information
pursuant to the preceding sentence, and the Collateral Agent, in acting
hereunder, shall be entitled to assume that no Secondary Obligations are
outstanding. Unless it has written notice from an Other Creditor to the
contrary, the Collateral Agent, in acting hereunder, shall be entitled to
assume that no Interest Rate Protection Agreements or Other Hedging Agreements
are in existence.

 

(g)           It
is understood that the Assignors shall remain jointly and severally liable to
the extent of any deficiency between the amount of the proceeds of the
Collateral and the aggregate amount of the Obligations.

 

7.5  Remedies Cumulative.  Each
and every right, power and remedy hereby specifically given to the Collateral
Agent shall be in addition to every other right, power and remedy specifically
given to the Collateral Agent under this Agreement, the other Secured Debt
Agreements or now or hereafter existing at law, in equity or by statute and
each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time or simultaneously and as
often and in such order as may be deemed expedient by the Collateral
Agent.  All such rights, powers and
remedies shall be cumulative and the exercise or the beginning of the exercise
of one shall not be deemed a waiver of the right to exercise any other or
others.  No delay or omission of the
Collateral Agent in the exercise of any such right, power or remedy and no
renewal or extension of any of the Obligations shall impair any such right,
power or remedy or shall be construed to be a waiver of any Default or Event of
Default or an acquiescence thereof.  No
notice to or demand on any Assignor in any case shall entitle it to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of any of the rights of the Collateral Agent to any other or further
action in any circumstances without notice or demand.  In the event that the Collateral Agent shall bring any suit to
enforce any of its rights hereunder and shall be entitled to judgment, then in
such suit the Collateral Agent may recover reasonable expenses, including
reasonable attorneys’ fees, and the amounts thereof shall be included in such
judgment.

 

7.6  Discontinuance of Proceedings.  In case the Collateral Agent shall have
instituted any proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, sale, entry or otherwise, and such proceeding shall
have been discontinued or abandoned for any reason or shall have been
determined adversely to the Collateral Agent, then and in every such case the
relevant Assignor, the Collateral Agent and each holder of any of the
Obligations shall be restored to their former positions and rights hereunder
with respect to the Collateral subject to the security interest created under
this Agreement, and all rights, remedies and powers of the Collateral Agent
shall continue as if no such proceeding had been instituted.

 

23

 

ARTICLE VIII

 

INDEMNITY

 

8.1  Indemnity.  (a)  Each
Assignor jointly and severally agrees to indemnify, reimburse and hold the
Collateral Agent, each other Secured Creditor and their respective successors,
assigns, employees, affiliates and agents (hereinafter in this Section 8.1
referred to individually as “Indemnitee,” and collectively as “Indemnitees”)
harmless from any and all liabilities, obligations, damages, injuries,
penalties, claims, demands, actions, suits, judgments and any and all costs,
expenses or disbursements (including reasonable attorneys’ fees and expenses)
(for the purposes of this Section 8.1 the foregoing are collectively called
“expenses”) of whatsoever kind and nature imposed on, asserted against or
incurred by any of the Indemnitees in any way relating to or arising out of
this Agreement, any other Secured Debt Agreement or any other document executed
in connection herewith or therewith or in any other way connected with the
administration of the transactions contemplated hereby or thereby or the
enforcement of any of the terms of, or the preservation of any rights under any
thereof, or in any way relating to or arising out of the manufacture,
ownership, ordering, purchase, delivery, control, acceptance, lease, financing,
possession, operation, condition, sale, return or other disposition, or use of
the Collateral (including, without limitation, latent or other defects, whether
or not discoverable), the violation of the laws of any country, state or other
governmental body or unit, any tort (including, without limitation, claims
arising or imposed under the doctrine of strict liability, or for or on account
of injury to or the death of any Person (including any Indemnitee), or property
damage), or contract claim; provided that no Indemnitee shall be indemnified
pursuant to this Section 8.1(a) for losses, damages or liabilities to the
extent caused by the gross negligence or willful misconduct of such Indemnitee
(as determined by a court of competent jurisdiction in a final and
non-appealable decision).  Each Assignor
agrees that upon written notice by any Indemnitee of the assertion of such a
liability, obligation, damage, injury, penalty, claim, demand, action, suit or
judgment, the relevant Assignor shall assume full responsibility for the
defense thereof.  Each Indemnitee agrees
to use its best efforts to promptly notify the relevant Assignor of any such
assertion of which such Indemnitee has knowledge.

 

(b)           Without
limiting the application of Section 8.1(a) hereof and subject to Section
8.03(c) of the Credit Agreement, each Assignor agrees, jointly and severally,
to pay or reimburse the Collateral Agent for any and all reasonable fees, costs
and expenses of whatever kind or nature incurred in connection with the creation,
preservation or protection of the Collateral Agent’s Liens on, and security
interest in, the Collateral, including, without limitation, all fees and taxes
in connection with the recording or filing of instruments and documents in
public offices, payment or discharge of any taxes or Liens upon or in respect
of the Collateral, premiums for insurance with respect to the Collateral and
all other fees, costs and expenses in connection with protecting, maintaining
or preserving the Collateral and the Collateral Agent’s interest therein,
whether through judicial proceedings or otherwise, or in defending or
prosecuting any actions, suits or proceedings arising out of or relating to the
Collateral.

 

(c)           Without
limiting the application of Section 8.1(a) or (b) hereof, each Assignor agrees,
jointly and severally, to pay, indemnify and hold each Indemnitee harmless from
and against any loss, costs, damages and expenses which such Indemnitee may
suffer,

 

24

 

expend or incur in consequence
of or growing out of any misrepresentation by any Assignor in this Agreement,
any other Secured Debt Agreement or in any writing contemplated by or made or
delivered pursuant to or in connection with this Agreement or any other Secured
Debt Agreement.

 

(d)           If
and to the extent that the obligations of any Assignor under this Section 8.1
are unenforceable for any reason, such Assignor hereby agrees to make the
maximum contribution to the payment and satisfaction of such obligations which
is permissible under applicable law.

 

8.2  Indemnity Obligations Secured by
Collateral; Survival.  Any amounts paid by any Indemnitee as to
which such Indemnitee has the right to reimbursement shall constitute
Obligations secured by the Collateral. 
The indemnity obligations of each Assignor contained in this Article
VIII shall continue in full force and effect notwithstanding the full payment
of all of the other Obligations and notwithstanding the full payment of all the
Notes issued, and Loans made, under the Credit Agreement, the termination of
all Letters of Credit issued under the Credit Agreement, the termination of all
Interest Rate Protection Agreements and Other Hedging Agreements entered into
with the Hedging Creditors, the termination of all Secured Supplemental Letters
of Credit issued by a Secured Supplemental L/C Creditor and the payment of all
other Obligations and notwithstanding the discharge thereof and the occurrence
of the Termination Date.

 

ARTICLE IX

 

DEFINITIONS

 

The following
terms shall have the meanings herein specified.  Such definitions shall be equally applicable to the singular and
plural forms of the terms defined.

 

“Account”
shall mean any “account” as such term is defined in the Uniform Commercial Code
as in effect on the date hereof in the State of New York, and in any event
shall include but shall not be limited to, all rights to payment of any
monetary obligation, whether or not earned by performance, (i) for property
that has been or is to be sold, leased, licensed, assigned or otherwise
disposed of, (ii) for services rendered or to be rendered, (iii) for a policy
of insurance issued or to be issued, (iv) for a secondary obligation incurred
or to be incurred, (v) for energy provided or to be provided, (vi) for the use
or hire of a vessel under a charter or other contract, (vii) arising out of the
use of a credit or charge card or information contained on or for use with the
card, or (viii) as winnings in a lottery or other game of chance operated or
sponsored by a State, governmental unit of a State, or person licensed or
authorized to operate the game by a State or governmental unit of a State.  Without limiting the foregoing, the term
“account” shall include all Health-Care-Insurance Receivables.

 

“Administrative
Agent” shall have the meaning provided in the recitals of this Agreement.

 

“Agreement”
shall mean this Security Agreement as the same may be amended, modified,
restated and/or supplemented from time to time in accordance with its terms.

 

25

 

“As-Extracted
Collateral” shall mean “as-extracted collateral” as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York.

 

“Assignor”
shall have the meaning provided in the first paragraph of this Agreement.

 

“Borrower”
shall have the meaning provided in the recitals of this Agreement.

 

“Cash
Collateral Account” shall mean a non-interest bearing cash collateral
account maintained with, and in the sole dominion and control of, the
Collateral Agent for the benefit of the Secured Creditors.

 

“Chattel Paper”
shall mean “chattel paper” as such term is defined in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.  Without limiting the foregoing, the term
“Chattel Paper” shall in any event include all Tangible Chattel Paper and all
Electronic Chattel Paper.

 

“Class”
shall have the meaning provided in Section 10.2 of this Agreement.

 

“Collateral”
shall have the meaning provided in Section 1.1(a) of this Agreement.

 

“Collateral
Agent” shall have the meaning provided in the first paragraph of this
Agreement.

 

“Commercial
Tort Claims” shall mean “commercial tort claims” as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York.

 

“Contract
Rights” shall mean all rights of any Assignor under each Contract,
including, without limitation, (i) any and all rights to receive and demand
payments under any or all Contracts, (ii) any and all rights to receive and compel
performance under any or all Contracts and (iii) any and all other rights,
interests and claims now existing or in the future arising in connection with
any or all Contracts.

 

“Contracts”
shall mean all contracts between any Assignor and one or more additional
parties (including, without limitation, any Interest Rate Protection
Agreements, Other Hedging Agreements, licensing agreements and any partnership
agreements, joint venture agree­ments and limited liability company
agreements).

 

“Copyrights”
shall mean any United States or foreign copyright now or hereafter owned by any
Assignor, including any registrations of any copyrights, in the United States
Copyright Office or any foreign equivalent office, as well as any application
for a copyright registration now or hereafter made with the United States
Copyright Office or any foreign equivalent office by any Assignor.

 

“Credit
Agreement” shall have the meaning provided in the recitals of this
Agreement.

 

26

 

“Credit
Document Obligations” shall have the meaning provided in the definition of
“Obligations” in this Article IX.

 

“Credit
Document Obligations Termination Date” shall mean the first date after the
Effective Date upon which all Credit Document Obligations have been paid in
full and all Commitments and Letters of Credit under the Credit Agreement have
been terminated and no further Commitments may be provided thereunder.

 

“Credit
Documents” shall have the meaning provided in the Credit Agreement and
shall include any documentation from time to time executed and delivered in
connection with any amendment, modification, extension, renewal, replacement,
restatement, supplementation, refinancing or restructuring of the Credit
Agreement, as set forth in the recitals to this Agreement.

 

“Deposit
Accounts” shall mean all “deposit accounts” as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.

 

“Documents”
shall mean “documents” as such term is defined in the Uniform Commercial Code
as in effect on the date hereof in the State of New York.

 

“Domain Names”
shall mean all Internet domain names and associated URL addresses in or to
which any Assignor now or hereafter has any right, title or interest.

 

“Electronic
Chattel Paper” shall mean “electronic chattel paper” as such term is
defined in the Uniform Commercial Code as in effect on the date hereof in the
State of New York.

 

“Equipment”
shall mean any “equipment” as such term is defined in the Uniform Commercial
Code as in effect on the date hereof in the State of New York, and in any
event, shall include, but shall not be limited to, all machinery, equipment,
furnishings, fixtures and vehicles now or hereafter owned by any Assignor and
any and all additions, substitutions and replacements of any of the foregoing
and all accessions thereto, wherever located, together with all attachments,
com­ponents, parts, equipment and accessories installed thereon or affixed
thereto.

 

“Event of
Default” shall mean any Event of Default under, and as defined in any
Secured Debt Agreement and shall in any event include, without limitation, any
payment default on any of the Obligations after the expiration of any
applicable grace period.

 

“Foreign
Jurisdiction” shall mean any jurisdiction that is not located in the United
States of any State thereof.

 

“General
Intangibles” shall mean “general intangibles” as such term is defined in
the Uniform Commercial Code as in effect on the date hereof in the State of New
York.

 

“Goods”
shall mean “goods” as such term is defined in the Uniform Commercial Code as in
effect on the date hereof in the State of New York.

 

27

 

“Health-Care-Insurance
Receivable” shall mean any “health-care-insurance receivable” as such term
is defined in the Uniform Commercial Code as in effect on the date hereof in
the State of New York.

 

“Hedging
Creditors” shall have the meaning provided in the recitals of this Agree­ment.

 

“Hedging
Obligations” shall have the meaning provided in the definition of “Obliga­tions”
in this Article IX.

 

“Indemnitee”
shall have the meaning provided in Section 8.1(a) of this Agreement.

 

“Instrument”
shall mean “instruments” as such term is defined in the Uniform Commercial Code
as in effect on the date hereof in the State of New York.

 

“Inventory”
shall mean merchandise, inventory and goods, and all additions, substi­tutions
and replacements thereof and all accessions thereto, wherever located, together
with all goods, supplies, incidentals, packaging materials, labels, materials
and any other items used or usable in manu­facturing, processing, packaging or
shipping same, in all stages of production from raw materials through work in
process to finished goods, and all products and proceeds of whatever sort and
wherever located any portion thereof which may be returned, rejected, reclaimed
or repossessed by the Collateral Agent from any Assignor’s customers, and shall
specifically include all “inventory” as such term is defined in the Uniform
Commercial Code as in effect on the date hereof in the State of New York.

 

“Investment
Property” shall mean “investment property” as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.

 

“Lender
Creditors” shall have the meaning provided in the recitals of this
Agreement.

 

“Lenders”
shall have the meaning provided in the recitals of this Agreement.

 

“Letter-of-Credit
Rights” shall mean “letter-of-credit rights” as such term is defined in the
Uniform Commercial Code as in effect on the date hereof in the State of New
York.

 

“Location”
of any Assignor, shall mean such Assignor’s “location” as determined pursuant
to Section 9-307 of the UCC.

 

“Marks”
shall mean all right, title and interest in and to any trademarks, service
marks and trade names now held or hereafter acquired by any Assignor, including
any registration or application for registration of any trademarks and service
marks now held or hereafter acquired by any Assignor, which are registered or
filed in the United States Patent and Trademark Office or the equivalent
thereof in any state of the United States or any equivalent foreign office or
agency, as well as any unregistered trademarks and service marks used by an

 

28

 

Assignor and any trade
dress including logos, designs, fictitious business names and other business
identifiers used by any Assignor.

 

“Material
Adverse Effect” shall mean a material adverse effect on the business,
property, assets, liabilities (actual or contingent), operations or condition
(financial or otherwise) of the Borrower and its Subsidiaries taken as a whole.

 

“Obligations”
shall mean and include, as to any Assignor, all of the following:

 

(i)            the full and prompt payment when due
(whether at stated maturity, by acceleration or otherwise) of all obligations,
liabilities and indebtedness (including, without limita­tion, principal,
premium, interest (including, without limitation, all interest that accrues
after the commencement of any case, proceeding or other action relating to the
bankruptcy, insolvency, reorganization or similar proceeding of any Assignor or
any Subsidiary thereof at the rate provided for in the respective
documentation, whether or not a claim for post-petition interest is allowed in
any such proceeding), reimbursement obligations (contingent or otherwise) under
Letters of Credit, fees, costs and indemnities) of such Assignor owing to the
Lender Creditors, whether now existing or here­after incurred under, arising
out of, or in connection with, the Credit Agreement and the other Credit
Documents to which such Assignor is a party (including, without limitation, in
the case of each Assignor that is a Subsidiary Guarantor, all such obligations,
liabilities and indebt­ed­ness of such Assignor under the Subsidiaries
Guaranty) and the due per­formance and compliance by such Assignor with all of
the terms, conditions and agreements contained in the Credit Agreement and in
such other Credit Documents (all such obli­gations, liabilities and
indebtedness under this clause (i), except to the extent consisting of
obligations, liabilities or indebtedness with respect to Interest Rate
Protection Agreements, Other Hedging Agreements or Secured Supplemental Letters
of Credit, being herein collec­tively called the “Credit Document
Obligations”);

 

(ii)           the full and prompt payment when due
(whether at stated maturity, by acceleration or otherwise) of all obligations,
liabilities and indebtedness (including, without limitation, all interest that
accrues after the commencement of any case, proceeding or other action relating
to the bankruptcy, insolvency, reorganization or similar proceeding of any
Assignor or any Subsidiary thereof at the rate provided for in the respective documentation,
whether or not a claim for post-petition interest is allowed in any such
proceeding) owing by such Assignor to the Hedging Creditors now existing or
hereafter incurred under, arising out of or in connection with each Interest
Rate Protection Agreement and Other Hedging Agreement, whether such Interest
Rate Protection Agreement or Other Hedging Agreement is now in existence or
hereinafter arising (including, without limitation, in the case of an Assignor
that is a Subsidiary Guarantor, all obligations, liabilities and indebtedness
of such Assignor under the Subsidiaries Guaranty in respect of the Interest
Rate Protection Agreements and Other Hedging Agreements), and the due
performance and compliance by such Assignor with all of the terms, conditions
and agreements contained in each such Interest Rate Protection Agreement and
Other Hedging Agreement (all such obligations, liabilities and indebtedness
under this clause (ii) being herein collectively called the “Hedging
Obligations”);

 

29

 

(iii)          the full and prompt payment when due (whether
at stated maturity, by acceleration or otherwise) of all obligations,
liabilities and indebtedness (including, without limitation, reimbursement
obligations (contingent or otherwise), interest (including, without limitation,
all interest that accrues after the commencement of any case, proceeding or
other action relating to the bankruptcy, insolvency, reorganization or similar
proceeding of any Assignor or any Subsidiary thereof at the rate provided for
in the respective documentation, whether or not a claim for post-petition
interest is allowed in any such proceeding), fees and indemnities) owing by
such Assignor to the Secured Supplemental L/C Creditors now existing or
hereafter incurred under, arising out of or in connection with each Secured
Supplemental Letter of Credit and each reimbursement agreement (or similar
agreement) in respect thereof, whether such Secured Supplemental Letter of
Credit and each reimbursement agreement (or similar agreement) in respect
thereof is now in existence or hereinafter arising (including, without
limitation, in the case of an Assignor that is a Subsidiary Guarantor, all
obligations, liabilities and indebtedness of such Assignor under the
Subsidiaries Guaranty in respect of the Secured Supplemental Letters of
Credit), and the due performance and compliance by such Assignor with all of
the terms, conditions and agreements contained in each such Secured
Supplemental Letter of Credit and each reimbursement agreement (or similar
agreement) in respect thereof (all such obligations, liabilities and
indebtedness under this clause (iii) being herein collectively called the “Secured
Supplemental L/C Obligations”).

 

(iv)          any and all sums advanced by the Collateral
Agent in order to preserve its security interest in the Collateral;

 

(v)           in the event of any proceeding for the
collection or enforcement of any indebtedness, obligations, or liabilities of
such Assignor referred to in clauses (i), (ii) and (iii) of this definition,
after an Event of Default shall have occurred and be continuing, the reasonable
expenses of retaking, holding, preparing for sale or lease, selling or
otherwise disposing of or realizing on the Collateral, or of any exercise by
the Collateral Agent of its rights hereunder, together with reasonable
attorneys’ fees and court costs; and

 

(vi)          all amounts paid by any Indemnitee as to
which such Indemnitee has the right to reim­burse­ment under Section 8.1 of
this Agreement;

 

it being acknowledged and
agreed that the “Obligations” shall include extensions of credit of the types
described above, whether outstanding on the date of this Agreement or extended
from time to time after the date of this Agreement.  Notwithstanding anything to the contrary contained above in this
definition, obligations, liabilities and indebtedness which would otherwise
constitute Obligations pursuant to clause (iii) of this definition above shall
not constitute Obligations for purposes of (or be secured pursuant to) this
Agreement if same were incurred (or guaranteed) in violation of the provisions
of the Credit Agreement.

 

“Other
Creditors” shall have the meaning provided in the recitals of this
Agreement.

 

30

 

“Other
Obligations” shall mean, collectively, the Hedging Obligations and the
Secured Supplemental L/C Obligations.

 

“Patents”
shall mean any patent in or to which any Assignor now or hereafter has any
right, title or interest therein, and any divisions, continuations (including,
but not limited to, continuations-in-parts) and improvements thereof, as well
as any application for a patent now or hereafter made by any Assignor.

 

“Permits”
shall mean, to the extent permitted to be assigned by the terms thereof or by
applicable law, all licenses, permits, rights, orders, variances, franchises or
authorizations of or from any governmental authority or agency.

 

“Primary
Obligations” shall have the meaning provided in Section 7.4(b) of this
Agreement.

 

“Pro Rata Share”
shall have the meaning provided in Section 7.4(b) of this Agreement.

 

“Proceeds”
shall mean all “proceeds” as such term is defined in the Uniform Commercial
Code as in effect in the State of New York on the date hereof and, in any
event, shall also include, but not be limited to, (i) any and all proceeds of
any insurance, indemnity, warranty or guaranty payable to the Collateral Agent
or any Assignor from time to time with respect to any of the Collateral, (ii)
any and all payments (in any form whatsoever) made or due and payable to any
Assignor from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental authority (or any person acting under color of gov­ernmental
authority) and (iii) any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral.

 

“Registered
Organization” shall have the meaning provided in the Uniform Commercial
Code as in effect in the State of New York.

 

“Representative”
shall have the meaning provided in Section 7.4(e) of this Agreement.

 

“Required
Secured Creditors” shall mean (i) at any time prior to the Credit Document
Obligations Termination Date, the Required Lenders (or, to the extent provided
in Section 13.12 of the Credit Agreement, each of the Lenders) and (ii) at any
time on and after the Credit Document Obligations Termination Date, the holders
of a majority of the Other Obligations.

 

“Requisite
Creditors” shall have the meaning provided in Section 10.2 of this
Agreement.

 

“Secondary
Obligations” shall have the meaning provided in Section 7.4(b) of this
Agreement.

 

“Secured
Creditors” shall have the meaning provided in the recitals of this
Agreement.

 

31

 

“Secured Debt
Agreements” shall mean and include (w) this Agreement, (x) the other Credit
Documents, (y) the Interest Rate Protection Agreements and Other Hedging
Agreements entered into with any Hedging Creditor and (z) the Secured
Supplemental Letters of Credit issued by any Secured Supplemental L/C Creditor
and each related reimbursement agreement (or similar agreement).

 

“Secured
Supplemental L/C Creditors” shall have the meaning provided in the recitals
of this Agreement.

 

“Secured
Supplemental L/C Obligations” shall have the meaning provided in the
definition of “Obligations” in this Article IX.

 

“Secured
Supplemental Letters of Credit” shall mean each Supplemental Letter of
Credit designated by the Borrower to be secured by this Agreement and the other
Security Documents and entitled to the benefits of the Subsidiaries Guaranty,
but only to the extent (A) that such Supplemental Letter of Credit is permitted
to be incurred pursuant to the Credit Agreement and (B) the Borrower shall,
notwithstanding the foregoing, have delivered to the Collateral Agent at the
time of the issuance of such Supplemental Letter of Credit a certificate signed
by the Chief Financial Officer or the Treasurer of the Borrower certifying that
such Supplemental Letter of Credit shall constitute a “Secured Supplemental
Letter of Credit” and that the conditions set forth in preceding clause (A)
shall have been satisfied, such certificate to constitute conclusive evidence,
binding for all purposes, that such obligations are secured as provided in this
Agreement and the other Credit Documents; provided that, notwithstanding
the foregoing, the aggregate stated amount of all Supplemental Letters of
Credit (and all drawings thereunder) secured hereunder and entitled to the
benefits of the other Credit Documents as Secured Supplemental Letters of
Credit shall not exceed $10,000,000 at any one time outstanding.

 

“Software”
shall mean “software” as such term is defined in the Uniform Commercial Code as
in effect on the date hereof in the State of New York.

 

“Subject Patent”
shall have the meaning provided in Section 1.1(a) of this Agreement.

 

“Subject Patent
Agreement” shall have the meaning provided in Section 1.1(a) of this
Agreement.

 

“Supplemental
Letter of Credit” shall have the meaning provided in the Credit Agreement.

 

“Supporting
Obligations” shall mean any “supporting obligation” as such term is defined
in the Uniform Commercial Code as in effect on the date hereof in the State of
New York, now or hereafter owned by any Assignor, or in which any Assignor has
any rights, and, in any event, shall include, but shall not be limited to all
of such Assignor’s rights in any Letter-of-Credit Right or secondary obligation
that supports the payment or performance of, and all security for, any Account,
Chattel Paper, Document, General Intangible, Instrument or Investment Property.

 

32

 

“Tangible
Chattel Paper” shall mean “tangible chattel paper” as such term is defined
in the Uniform Commercial Code as in effect on the date hereof in the State of
New York.

 

“Termination
Date” shall have the meaning provided in Section 10.8(a) of this Agreement.

 

“Timber-to-be-Cut”
shall mean “timber-to-be-cut” as such term is used in the Uniform Commercial
Code as in effect on the date hereof in the State of New York.

 

“Trade Secrets”
shall mean any secretly held existing engineering or other data, information,
production procedures and other know-how relating to the design manufacture,
assembly, installation, use, operation, marketing, sale and/or servicing of any
products or business of an Assignor worldwide whether written or not.

 

“Trade Secret
Rights” shall mean the rights of an Assignor in any Trade Secret it holds.

 

“Transmitting
Utility” shall have the meaning given such term in Section 9-102(a)(80) of
the UCC.

 

“UCC” shall
mean the Uniform Commercial Code as in effect from time to time in the relevant
jurisdiction.

 

“Wachovia
Control Agreement” shall mean the Deposit Account Control Agreement (With
Future Notification) among Wachovia Bank, National Association, certain
Assignors and the Collateral Agent, dated December 16, 2003 (as the same may be
amended, restated, modified and/or supplemented from time to time).

 

“Wachovia
Deposit Accounts” shall mean the Deposit Accounts subject to the Wachovia
Control Agreement at any time.

 

ARTICLE X

 

MISCELLANEOUS

 

10.1  Notices.  Except as
otherwise specified herein, all notices, requests, demands or other
communications to or upon the respective parties hereto shall be sent or
delivered by mail, telegraph, telex, telecopy, cable or courier service and all
such notices and communications shall, when mailed, telegraphed, telexed,
telecopied, or cabled or sent by courier, be effective when deposited in the
mails, delivered to the telegraph com­pany, cable company or over­night
courier, as the case may be, or sent by telex or telecopier, except that
notices and communications to the Collateral Agent or any Assignor shall not be
effective until received by the Collateral Agent or such Assignor, as the case
may be.  All notices and other
communications shall be in writing and addressed as follows:

 

33

 

	
  (a)

  	
  if
  to any Assignor, c/o:

  
	
   

  
	
   

  	
  Duratek, Inc.

  
	
   

  	
  10100 Old Columbia Road

  
	
   

  	
  Columbia, MD 21046

  
	
   

  	
  Attention: Craig T.
  Bartlett

  
	
   

  	
  Telephone No.:  (410) 312-5100

  
	
   

  	
  Telecopier No.:  (410) 290-9112

  
	
   

  	
   

  
	
  (b)

  	
  if
  to the Collateral Agent, at:

  
	
   

  
	
   

  	
  Credit Lyonnais New
  York Branch

  
	
   

  	
  1301 Avenue of the
  Americas

  
	
   

  	
  New York, New York
  10019

  
	
   

  	
  Attention:  Mark Koneval

  
	
   

  	
  Telephone No.:  (212) 261-7867

  
	
   

  	
  Telecopier No.:  (212) 261-3375

  
				

 

(c)           if to any Lender
Creditor (other than the Collateral Agent), at such address as such Lender
Creditor shall have specified in the Credit Agreement;

 

(d)           if to any Other
Creditor, at such address as such Other Creditor shall have specified in
writing to the Borrower and the Collateral Agent;

 

or at such other address or
addressed to such other individual as shall have been furnished in writing by any
Person described above to the party required to give notice hereunder.

 

10.2  Waiver; Amendment.  Except
as provided in Sections 10.8 and 10.12 hereof, none of the terms and conditions
of this Agreement or any other Security Document may be changed, waived,
modified or varied in any manner whatsoever unless in writing duly signed by
each Assignor directly affected thereby (it being understood that the addition
or release of any Assignor hereunder shall not constitute a change, waiver,
discharge or termination affecting any Assignor other than the Assignor so
added or released) and the Collateral Agent (with the written consent of the
Required Secured Creditors); provided, however, that any change,
waiver, modification or variance affecting the rights and benefits of a single
Class of Secured Creditors (and not all Secured Creditors in a like or similar
manner) also shall require the written consent of the Requisite Creditors of
such affected Class.  For the purpose of
this Agreement, the term “Class” shall mean each class of Secured
Creditors, i.e., whether (x) the Lender Creditors as holders of the
Credit Document Obligations, (y) the Hedging Creditors as holders of the
Hedging Obligations or (z) the Secured Supplemental L/C Creditors as holders of
the Secured Supplemental L/C Obligations. 
For the purpose of this Agreement, the term “Requisite Creditors”
of any Class shall mean each of (x) with respect to the Credit Document
Obligations, the Required Lenders (or, to the extent provided in Section 13.12
of the Credit Agreement, each of the Lenders), (y) with respect to the Hedging
Obligations, the holders of at least a majority of all Hedging Obligations
outstanding from time to time and (z) with respect to the Secured Supplemental
L/C Obligations, the holders of at least a majority of all Secured Supplemental
L/C Obligations outstanding from time to time.

 

34

 

10.3  Obligations Absolute.  The
obligations of each Assignor hereunder shall remain in full force and effect
without regard to, and shall not be impaired by, (a) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or the like of such Assignor; (b) any exercise or non-exercise, or any waiver
of, any right, remedy, power or privilege under or in respect of this Agreement
or any other Secured Debt Agreement; or (c) any amendment to or modification of
any Secured Debt Agreement or any security for any of the Obligations; whether
or not such Assignor shall have notice or knowledge of any of the foregoing.

 

10.4  Successors and Assigns.  This
Agreement shall create a continuing security interest in the Collateral and
shall (i) remain in full force and effect, subject to release and/or
termination as set forth in Section 10.8, (ii) be binding upon each Assignor,
its successors and assigns; provided, however, that no Assignor
shall assign any of its rights or obligations hereunder without the prior
written consent of the Collateral Agent (with the prior written consent of the
Required Secured Creditors), and (iii) inure, together with the rights and
remedies of the Collateral Agent hereunder, to the benefit of the Collateral
Agent, the other Secured Creditors and their respective permitted successors,
transferees and assigns. All agreements, statements, representations and
warranties made by each Assignor herein or in any certificate or other
instrument delivered by such Assignor or on its behalf under this Agreement
shall be considered to have been relied upon by the Secured Credi­tors and
shall survive the execution and delivery of this Agreement and the other
Secured Debt Agreements regardless of any investigation made by the Secured
Creditors or on their behalf.

 

10.5  Headings Descriptive.  The
headings of the several sections of this Agreement are inserted for convenience
only and shall not in any way affect the meaning or construction of any
provision of this Agreement.

 

10.6  GOVERNING LAW; SUBMISSION TO
JURISDICTION; VENUE; WAIVER OF JURY TRIAL.  (a)  THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.  ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK IN EACH CASE
WHICH ARE LOCATED IN THE COUNTY OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH ASSIGNOR HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS. EACH ASSIGNOR HEREBY FURTHER IRREVOCABLY
WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK JURISDICTION OVER SUCH ASSIGNOR, AND
AGREES NOT TO PLEAD OR CLAIM IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT IN ANY OF THE AFORESAID
COURTS THAT ANY SUCH COURT LACKS JURISDICTION OVER SUCH ASSIGNOR.  EACH ASSIGNOR FURTHER IRREVOCABLY CONSENTS
TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH
ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY 

 

35

 

REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO ANY SUCH ASSIGNOR AT ITS ADDRESS FOR NOTICES AS
PROVIDED IN SECTION 10.1 ABOVE, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
SUCH MAILING.  EACH ASSIGNOR HEREBY
IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER
IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING
COMMENCED HEREUNDER OR UNDER ANY OTHER CREDIT DOCUMENT THAT SUCH SERVICE OF
PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE. 
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE COLLATERAL AGENT UNDER THIS
AGREEMENT, OR ANY SECURED CREDITOR, TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
ANY ASSIGNOR IN ANY OTHER JURISDICTION.

 

(b)           EACH
ASSIGNOR HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT
THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.

 

(c)           EACH
OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.

 

10.7  Assignor’s Duties.  It is
expressly agreed, anything herein contained to the contrary notwithstanding,
that each Assignor shall remain liable to perform all of the obligations, if
any, assumed by it with respect to the Collateral and the Collateral Agent
shall not have any obli­gations or liabilities with respect to any Collateral
by reason of or arising out of this Agreement, nor shall the Collateral Agent
be required or obligated in any manner to perform or fulfill any of the
obligations of any Assignor under or with respect to any Collateral.

 

10.8  Termination; Release.  (a)  After the Termination Date, this Agreement
shall terminate (provided that all indemnities set forth herein including,
without limitation in Section 8.1 hereof, shall survive such termination) and
the Collateral Agent, at the request and expense of the respective Assignor,
will promptly execute and deliver to such Assignor a proper instrument or
instruments (including Uniform Commercial Code termination statements on form
UCC-3) acknowledging the satisfaction and termination of this Agreement, and
will duly assign, trans­fer and deliver to such Assignor (without recourse and
without any representation or warranty) such of the Collateral as may be in the
possession of the Collateral Agent and as has not theretofore been sold or
otherwise applied or released pursuant to this Agreement.  As used in this Agreement, “Termination
Date” shall mean the date upon which the Total Commitment under the Credit
Agreement has been terminated and all Interest Rate Protection Agreements and
Other Hedging Agreements entered into with any Hedging Creditor have been
terminated, no

 

36

 

Note under the Credit
Agreement is outstanding and all Loans thereunder have been repaid in full, all
Letters of Credit issued under the Credit Agreement have been terminated, all
Secured Supplemental Letters of Credit have been terminated and all Obligations
then due and payable have been paid in full.

 

(b)           In
the event that any part of the Collateral is sold or otherwise disposed of (to
a Person other than a Credit Party) in connection with a sale or disposition
permitted by the Secured Debt Agreements, and the proceeds of such sale or
disposition (or from such release) are applied in accordance with the terms of
the Credit Agreement or such other Secured Debt Agreement, as the case may be,
to the extent required to be so applied, the Collateral Agent, at the request
and expense of such Assignor, will duly release from the security interest
created hereby (and will execute and deliver such documentation, including
termination or partial release statements and the like in connec­tion
therewith) and assign, transfer and deliver to such Assignor (without recourse
and without any representation or warranty) such of the Collateral as is then
being (or has been) so sold or otherwise disposed of, or released, and as may
be in the possession of the Collateral Agent (or any of its sub-agents
hereunder) and has not theretofore been released pursuant to this
Agreement.  Furthermore, upon the
release of any Subsidiary Guarantor from the Subsidiaries Guaranty in
accordance with the provisions thereof, such Assignor (and the Collateral at
such time assigned by the respective Assignor pursuant hereto) shall be
released from  this Agreement.

 

(c)           At
any time that an Assignor desires that the Collateral Agent take any action to
acknowledge or give effect to any release of Collateral pursuant to the
foregoing Section 10.8(a) or (b), such Assignor shall deliver to the Collateral
Agent a certificate signed by a principal executive officer of such Assignor
stating that the release of the respective Collateral is permitted pursuant to
such Section 10.8(a) or (b).  At any
time that the Borrower or the respective Assignor desires that a Subsidiary of
the Borrower which has been released from the Subsidiaries Guaranty be released
hereunder as provided in the last sentence of Section 10.8(b), it shall deliver
to the Collateral Agent a certificate signed by a principal executive officer
of the Borrower and the respective Assignor stating that the release of the
respective Assignor (and its Collateral) is permitted pursuant to such Section
10.8(b). If reasonably requested by the Collateral Agent (although the
Collateral Agent shall have not obligation to make such request), the relevant
Assignor shall furnish appropriate legal opinions (from counsel, reasonably
acceptable to the Collateral Agent) to the effect set forth in this Section
10.8(c).

 

(d)           The
Collateral Agent shall have no liability whatsoever to any other Secured
Creditor as the result of any release of Collateral by it in accordance with
(or which the Collateral Agent in the absence of gross negligence and willful
misconduct believes to be in accordance with) this Section 10.8.

 

10.9  Counterparts.  This
Agreement may be executed in any number of counter­parts and by the different
parties hereto on separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute one
and the same instrument.  A set of
counterparts executed by all the parties hereto shall be lodged with the
Borrower and the Collateral Agent.

 

37

 

10.10  Severability.  Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

 

10.11  The Collateral Agent and the other
Secured Creditors.  The Collateral Agent will hold in accordance
with this Agreement all items of the Collateral at any time received under this
Agreement.  It is expressly understood
and agreed that the obligations of the Collateral Agent as holder of the
Collateral and interests therein and with respect to the disposition thereof,
and otherwise under this Agreement, are only those expressly set forth in this
Agreement.  The Collateral Agent shall
act hereunder on the terms and condi­tions set forth herein and in Annex O
hereto, the terms of which shall be deemed incorporated herein by reference as
fully as if same were set forth herein in their entirety.

 

10.12  Additional Assignors.  It
is understood and agreed that any Subsidiary Guarantor that desires to become
an Assignor hereunder, or is required to execute a counterpart of this
Agreement after the date hereof pursuant to the requirements of the Credit
Agreement or any other Secured Debt Agreement, shall become an Assignor
hereunder by executing a counterpart hereof and delivering same to the
Collateral Agent (or by executing a Joinder Agreement substantially in the form
of Exhibit M to the Credit Agreement), (y) delivering supplements to Annexes A
through F, inclusive, and H through K, inclusive, hereto as are necessary to
cause such Annexes to be complete and accurate with respect to such additional
Assignor on such date and (z) taking all actions as specified in this Agreement
as would have been taken by such Assignor had it been an original party to this
Agreement, in each case with all documents required above to be delivered to
the Collateral Agent and with all documents and actions required above to be
taken to the reasonable satisfaction of the Collateral Agent.

 

[Remainder
of this page intentionally left blank; signature page follows]

 

38

 

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

 

 

	
   

  	
  DURATEK,
  INC., as an Assignor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Craig T. Bartlett

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Craig T. Bartlett

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President, Finance,

  
	
   

  	
   

  	
   

  	
  Treasurer
  & Assistant Secretary

  
	
   

  	
   

  
	
   

  	
  GTSD SUB,
  INC.,

  
	
   

  	
  DURATEK
  FEDERAL SERVICES, INC.,

  
	
   

  	
  DURATEK
  SERVICES, INC.,

  
	
   

  	
  GTSD SUB
  III, INC.,

  
	
   

  	
  GTSD SUB V,
  INC.,

  
	
   

  	
  HITTMAN
  TRANSPORT SERVICES, INC.,

  
	
   

  	
  INFOTEK,
  INC.,

  
	
   

  	
  DURATEK
  FEDERAL SERVICES OF HANFORD, INC.,

  
	
   

  	
  GTSD SUB IV,
  INC.,

  
	
   

  	
  CHEM-NUCLEAR
  SYSTEMS, L.L.C.

  
	
   

  	
  as Assignors

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Craig
  T. Bartlett

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Craig T. Bartlett  

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President & Treasurer

  
									

 

 

	
  Accepted and
  Agreed to:

  
	
   

  
	
  CREDIT
  LYONNAIS NEW YORK BRANCH,

  
	
  as
  Collateral Agent

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Mischa Zabotin

  	
   

  
	
   

  	
  Name:

  	
  Mischa Zabotin

  
	
   

  	
  Title:

  	
  Managing Director

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Gary
  Teaman

  	
   

  
	
   

  	
  Name:

  	
  Gary Teaman

  
	
   

  	
  Title:

  	
  Managing
  DirectorExhibit 4.1

 

RIGHTS AGREEMENT

 

RIGHTS AGREEMENT, dated as of
December 16, 2003 (the “Agreement”), between DURATEK, INC., a
Delaware corporation (the “Company”), and COMPUTERSHARE INVESTOR
SERVICES, LLC, a Delaware limited liability company (the “Rights Agent”).

 

WHEREAS, on December 16, 2003
(the “Rights Dividend Declaration Date”), the Board of Directors of the
Company authorized and declared a dividend of one Right for each share of
Common Stock (as hereinafter defined) of the Company outstanding at the Close
of Business (as defined herein) on the Record Date (as defined herein), and has
authorized the issuance of one Right with respect to each share of Common Stock
of the Company issued between the Record Date (whether originally issued or
delivered from the Company’s treasury) and the Distribution Date (as
hereinafter defined), each Right initially representing the right to purchase
one-one thousandth of a share of Series B Junior Participating Preferred Stock
of the Company having the rights, powers and preferences set forth in the form
of Certificate of Designation, Preferences and Rights attached hereto as Exhibit A,
upon the terms and subject to the conditions hereinafter set forth.

 

NOW, THEREFORE, in consideration
of the premises and the mutual agreements herein set forth, the parties hereby
agree as follows:

 

Section 1.                                          Certain Definitions.

 

For purposes of this Agreement,
the following terms have the meanings indicated:

 

(a)                                  “Acquiring
Person” shall mean any Person (as such term is hereinafter defined) who or
which, together with all Affiliates and Associates (as such terms are
hereinafter defined) of such Person, shall be the Beneficial Owner (as such
term is hereinafter defined) of 20%  or
more of the shares of Common Stock then outstanding, but shall not include
(i) the Company, (ii) any Subsidiary of the Company, or
(iii) any employee benefit plan of the Company or any Subsidiary of the
Company, or any Person holding shares of Common Stock for or pursuant to the
terms of any such plan to the extent, and only to the extent, of such shares so
held.  Notwithstanding the foregoing,
The Carlyle Group (together with its Affiliates and Associates, the “Qualified
Exempt Person”), who together, as of December 16, 2003, were the
Beneficial Owner of in excess of 22.5% of the Company’s outstanding Common
Stock shall not be deemed an “Acquiring Person”; provided, however,
that if after the date hereof, any Qualified Exempt Person

 

 

shall become at
any time the Beneficial Owner of an additional 5% of the shares of Common Stock
of the Company then outstanding in excess of the amount such Qualified Exempt
Person beneficially owned as of the date hereof, then such Qualified Exempt
Person shall be deemed an “Acquiring Person” hereunder as to all of their
Common Stock beneficially owned. 
Notwithstanding the foregoing, no Person shall become an “Acquiring
Person” as the result of an acquisition of shares of Common Stock by the
Company which, by reducing the number of shares of Common Stock outstanding,
increases the proportionate number of shares of Common Stock beneficially owned
by such Person to 20% or more of the shares of Common Stock of the Company then
outstanding; provided, however, that if a Person shall become the
Beneficial Owner of 20% or more of the Common Stock of the Company then
outstanding by reason of share purchases by the Company and shall, after such
share purchases by the Company, become the Beneficial Owner of any additional
shares of Common Stock of the Company, then such Person shall be deemed to be
an “Acquiring Person” if such Person is then the Beneficial Owner of 20% or
more of the Common Stock then outstanding. 
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an “Acquiring
Person”, as defined pursuant to the foregoing provisions of this paragraph (a),
has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of shares of Common Stock so that such Person
would no longer be an “Acquiring Person”, then such Person shall not be deemed
an “Acquiring Person” for any purposes of this Agreement unless and until such
Person shall again become an “Acquiring Person”.

 

(b)                                 “Affiliate”
and “Associate” shall have the respective meanings ascribed to such
terms in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act.

 

(c)                                  A
Person shall be deemed the “Beneficial Owner” of and shall be deemed to
“beneficially own” any securities:

 

(i)  which such Person or any of
such Person’s Affiliates or Associates, directly or indirectly, has the right
to acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding
(whether or not in writing), or upon the exercise of conversion rights,
exchange rights, other rights (other than these Rights), warrants or options,
or otherwise; provided, however, that a Person shall not be
deemed the “Beneficial Owner” of, or to “beneficially own”, (A) securities
tendered pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such

 

2

 

Person’s
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; or (B) securities issuable upon exercise of Rights
at any time prior to the occurrence of a Triggering Event, or
(C) securities issuable upon exercise of Rights from and after the
occurrence of a Triggering Event which Rights were acquired by such Person or
any of such Person’s Affiliates or Associates prior to the Distribution Date or
pursuant to Section 3(a) or Section 22 hereof (the “Original
Rights”) or pursuant to Section 11(i) hereof in connection with an
adjustment made with respect to any Original Rights;

 

(ii)  which such Person or any of
such Person’s Affiliates or Associates, directly or indirectly, has the right
to vote or dispose of or has “beneficial ownership” of (as determined pursuant
to Rule 13d-3 of the General Rules and Regulations under the Exchange Act),
including pursuant to any agreement, arrangement or understanding, whether or
not in writing; provided, however, that a Person shall not be
deemed the “Beneficial Owner” of, or to beneficially own, any security under
this subparagraph (ii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding:  (A) arises solely from a
revocable proxy given in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange Act, and (B) is not also then
reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or

 

(iii)  which are beneficially
owned, directly or indirectly, by any other Person (or any Affiliate or
Associate thereof) with which such Person or any of such Person’s Affiliates or
Associates has any agreement, arrangement or understanding (whether or not in
writing), for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso to subparagraph (ii) of this
paragraph (c)) or disposing of any voting securities of the Company;

 

provided,
however, that nothing in this paragraph (c) shall cause a Person
engaged in business as an underwriter of securities to be the “Beneficial
Owner” of, or to “beneficially own,” any securities acquired through such
Person’s participation in good faith in a firm commitment underwriting until the
expiration of forty days after the date of such acquisition.

 

3

 

(d)                                 “Board”
shall mean the Board of Directors of the Company.

 

(e)                                  “Business
Day” shall mean any day other than a Saturday, Sunday, or a day on which
the New York Stock Exchange  is
authorized or obligated by law or executive order to close.

 

(f)                                    “Close
of Business” on any given date shall mean 5:00 P.M., New York City time, on
such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., New York City time, on the next succeeding
Business Day.

 

(g)                                 “Common
Stock” when used with reference to the Company shall mean the shares of
common stock, par value $.01 per share, of the Company and the shares of 8%
Cumulative Convertible Redeemable Preferred Stock, par value $.01 per share, of
the Company on an as-converted basis. 
“Common Stock” when used with reference to any Person other than the
Company shall mean the class of capital stock with the greatest aggregate voting
power, or the class of equity securities or other equity interests having power
to control or direct the management, of such Person.

 

(h)                                 “Company”
shall mean Duratek, Inc., a Delaware corporation.

 

(i)                                     “Distribution
Date” shall mean the earlier of (i) the Close of Business on the tenth day
after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the Close of Business on the
Record Date), or (ii) the Close of Business on the tenth Business Day (or,
if such tenth Business Day occurs before the Record Date, the Close of Business
on the Record Date), or such specified or unspecified later date on or after
the Record Date as may be determined by action of the Board of Directors prior
to such time as any Person becomes an Acquiring Person, after the date of the
commencement by any Person (other than the Company, any Subsidiary of the
Company or any employee benefit plan of the Company or of any Subsidiary of the
Company or any Person holding shares of Common Stock for or pursuant to the
terms of any such plan) of, or of the first public announcement of the
intention of any Person (other than any of the Persons referred to in the
preceding parenthetical) to commence, a tender or exchange offer the consummation
of which would result in such Person becoming the beneficial owner of 20% or
more of the outstanding shares of Common Stock.

 

(j)                                     “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended, as in
effect on the date of this Agreement.

 

4

 

(k)                                  “Exchange
Date” shall have the meaning set forth in Section 7(a) hereof.

 

(l)                                     “Expiration
Date” shall have the meaning set forth in Section 7(a) hereof.

 

(m)                               “Final
Expiration Date” shall have the meaning set forth in Section 7(a)
hereof.

 

(n)                                 “Person”
shall mean any individual, firm, corporation, partnership or other entity, and
shall include any successor (by merger or otherwise) of such entity.

 

(o)                                 “Preferred
Stock” shall mean shares of Series B Junior Participating Preferred Stock
of the Company.

 

(p)                                 “Principal
Party” shall have the meaning set forth in Section 13(b) hereof.

 

(q)                                 “Qualified
Exempt Person” shall have the meaning set forth in the definition of
Acquiring Person in Section 1(a) above.

 

(r)                                    “Purchase
Price” shall have the meaning set forth in Section 4(a) and 11(a)(ii)
hereof.

 

(s)           “Record Date”
shall mean the Close of Business on December 29, 2003.

 

(t)                                    “Redemption
Period” shall have the meaning set forth in Section 23(a) hereof.

 

(u)                                 “Rights
Agent” shall mean COMPUTERSHARE INVESTOR SERVICES, LLC, a Delaware limited
liability company.

 

(v)                                 “Rights
Certificate” shall have the meaning set forth in Section 3(d) hereof.

 

(w)                               “Rights
Dividend Declaration Date” shall have the meaning set forth in the recitals
hereof.

 

(x)                                   “Section 11(a)(ii)
Event” shall mean any event described in Section 11(a)(ii) hereof.

 

5

 

(y)                                 “Section 13
Event” shall mean any event described in clauses (x), (y) or (z) of
Section 13(a) hereof.

 

(z)                                   “Securities
Act” shall mean the Securities Act of 1933, as amended and as in effect on
the date of this Agreement.

 

(aa)                            “Stock
Acquisition Date” shall mean the first date of public announcement (which,
for purposes of this definition, shall include, without limitation, a report
filed pursuant to Section 13(d) of the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such.

 

(bb)                          “Subsidiary”
of any Person shall mean any corporation or other entity of which a majority of
the voting power of the voting equity securities or equity interests is owned,
directly or indirectly, by such Person, or is otherwise controlled by such
Person.

 

(cc)                            “Triggering
Event” shall mean any Section 11(a)(ii) Event or any Section 13
Event.

 

Section 2.                                          Appointment of Rights Agent.

 

The Company
hereby appoints the Rights Agent to act as agent for the Company in accordance
with the terms and conditions hereof, and the Rights Agent hereby accepts such
appointment.  The Company may from time
to time appoint such Co-Rights Agents as it may deem necessary or desirable,
upon ten (10) days’ prior written notice to the Rights Agent.  The Rights Agent shall have no duty to
supervise, and shall in no event be liable for, the acts or omissions of any
such Co-Rights Agent.

 

Section 3.                                          Issue of Rights Certificates.

 

(a)                             As promptly as practicable
following the Record Date, the Company will send or deliver a copy of a Summary
of Rights to Purchase Preferred Stock, in substantially the form attached
hereto as Exhibit B (the “Summary of Rights”), to each
record holder of Common Stock as of the Close of Business on the Record Date at
the address of such holder shown on the records of the Company.  With respect to certificates for shares of
Common Stock outstanding as of the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates for the Common Stock and the
registered holders of the Common Stock shall also be the registered holders of
the associated Rights.  Until the
Distribution Date (or the earlier Expiration Date or Final Expiration Date),
the transfer of any certificate representing shares of Common Stock in respect
of which Rights have

 

6

 

been issued shall also constitute
the transfer of the Rights associated with the shares of Common Stock
represented thereby.

 

(b)                            Rights shall be issued in respect
of all shares of Common Stock issued (whether originally issued or from the
Company’s treasury) after the Record Date but prior to the earlier of the
Distribution Date or the Expiration Date or the Final Expiration Date.  Rights shall also be issued to the extent
provided in Section 22 in respect of all shares of Common Stock which are
issued (whether originally issued or from the Company’s treasury) after the
Distribution Date and prior to the Expiration Date.  Certificates representing such shares of Common Stock shall also
be deemed to be certificates for Rights, and shall bear the following legend
(in addition to any other legends that may be required):

 

This
certificate also evidences and entitles the holder hereof to certain Rights as
set forth in a Rights Agreement between Duratek, Inc. (the “Company”) and
Computershare Investor Services, LLC (the “Rights Agent”) dated as of
December 16, 2003, as the same may be amended from time to time (the
“Rights Agreement”), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal executive offices of
the Company.  Under certain
circumstances, as set forth in the Rights Agreement, such Rights will be
evidenced by separate certificates and will no longer be evidenced by this
certificate.  The Company will mail to
the holder of this certificate a copy of the Rights Agreement as in effect on
the date of mailing without charge after receipt of a written request therefor.

 

Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or held by,
any Person who is, was or becomes an Acquiring Person or any Affiliate or
Associate thereof (as such terms are defined in the Rights Agreement), whether
currently held by or on behalf of such Person or by any subsequent holder, may
become null and void.

 

With respect to such certificates containing the foregoing
legend, until the earlier of (i) the Distribution Date or (ii) the
Expiration Date, the Rights associated with the Common Stock represented by
such certificates shall be evidenced by such certificates alone and registered
holders of Common Stock shall also be the registered holders of the associated
Rights, and the transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Stock represented thereby.

 

(c)                             Until the Distribution Date (i)
the Rights will be evidenced (subject to the provisions of paragraph (a) of
this Section 3) by the certificates for Common Stock registered in the
names of the holders thereof (which certificates for Common Stock shall also be
deemed to be Rights Certificates) and not by separate Rights Certificates, and
(ii) the Rights will be transferable only in connection with

 

7

 

the transfer of the underlying
shares of Common Stock (including a transfer to the Company).  The Company shall give the Rights Agent
prompt written notice of the Distribution Date.

 

(d)                            As soon as practicable after the
Distribution Date and receipt of written notice of the Distribution Date from
the Company, the Rights Agent upon notification thereof will, at the Company’s
expense, send by first-class, insured, postage prepaid mail, to each record
holder of Common Stock as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, a rights
certificate, in substantially the form of Exhibit C hereto (the “Rights
Certificate”), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. 
In the event that an adjustment in the number of Rights per share of
Common Stock has been made pursuant to Section 11 hereof, at the time of
distribution of the Rights Certificates, the Company shall make necessary and
appropriate rounding adjustments (in accordance with Section 14(a) hereof)
so that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights.  As of and after the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates.

 

Section 4.                                          Form of Rights Certificates.

 

(a)                             The Rights Certificates (and the
forms of election to purchase and of assignment to be printed on the reverse
thereof) shall be substantially the same as Exhibit C hereto and
may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate,
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
the Rights may from time to time be listed, or to conform to usage.  The Rights Certificates shall be in a
machine printable format and in a form reasonably satisfactory to the Rights
Agent.  Subject to the provisions of
Section 11 and Section 22 hereof, the Rights Certificates, whenever
issued, shall be dated as of the Record Date, show the date of
countersignature, and on their face shall entitle the holders thereof to
purchase such number of one-one thousandths of a share of Preferred Stock as
shall be set forth therein at the price set forth therein (such exercise price
per one-one thousandth of a share, the “Purchase Price”), but the amount
and type of securities purchasable upon exercise of each Right and the Purchase
Price thereof shall be subject to adjustment as provided herein.

 

(b)                            Any Rights Certificate issued
pursuant to Section 3(d) or Section 22 hereof that represents Rights
beneficially owned by:  (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person;
(ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee

 

8

 

after the Acquiring Person becomes
such; or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and receives such Rights pursuant to either
(A) a transfer (whether or not for consideration) from the Acquiring Person
to holders of equity interests in such Acquiring Person or to any Person with
whom such Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which a
majority of the Directors has determined is part of an agreement, arrangement
or understanding which has as a primary purpose or effect avoidance of
Section 7(e) hereof and any Rights Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:

 

The Rights
represented by this Rights Certificate are or were beneficially owned by a
Person who was or became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement).  Accordingly, this Rights Certificate and the
Rights represented hereby may become null and void in the circumstances
specified in Section 7(e) of such Rights Agreement.

 

The Company
shall instruct the Rights Agent in writing of the Rights which should be so
legended and shall supply the Rights Agent with such legended Rights
Certificates.

 

Section 5.                                          Countersignature and Registration.

 

(a)                             The Rights Certificates shall be
executed on behalf of the Company by its Chief Executive Officer or Chief
Financial Officer and a Secretary or Assistant Secretary either manually or by
facsimile signature.  The Rights
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless so countersigned.  In case any officer of the Company who shall have signed any of
the Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights
Agent, and issued and delivered by the Company with the same force and effect
as though the person who signed such Rights Certificates had not ceased to be
such officer of the Company; and any Rights Certificate may be signed on behalf
of the Company by any person who, at the actual date of the execution of such
Rights Certificate, shall be a proper officer of the Company to sign such
Rights Certificate, although at the date of the execution of this Rights
Agreement any such person was not such an officer.

 

9

 

(b)                            Following the Distribution Date,
the Rights Agent will keep or cause to be kept, at its principal office or at
offices designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration and transfer of
the Rights Certificates issued hereunder. 
Such books shall show the names and addresses of the respective holders
of the Rights Certificates, the number of Rights evidenced on its face by each
of the Rights Certificates and the date of each of the Rights Certificates.

 

Section 6.                                          Transfer, Split Up, Combination and
Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates.

 

(a)                             Subject to the provisions of
Section 4(b), Section 7(e) and Section 14 hereof, at any time
after the Close of Business on the Distribution Date, and at or prior to the
Close of Business on the earlier of the Expiration Date or Final Expiration
Date, any Rights Certificate or Certificates may be transferred, split up,
combined or exchanged for another Rights Certificate or Certificates, entitling
the registered holder to purchase a like number of one-one thousandths of a
share of Preferred Stock (or following a Triggering Event, Common Stock, other
securities, cash, or other assets, as the case may be) as the Rights
Certificate or Certificates surrendered then entitled such holder (or former
holder in the case of a transfer) to purchase. 
Any registered holder desiring to transfer, split up, combine or
exchange any Rights Certificate shall make such request in writing delivered to
the Rights Agent, and shall surrender the Rights Certificate or Certificates to
be transferred, split up, combined or exchanged at the office of the Rights
Agent designated for such purpose. 
Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have properly completed and
signed the certificate contained in the form of assignment on the reverse side
of such Rights Certificate and shall have provided such additional evidence of
the identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates
or Associates thereof as the Company shall reasonably request.  Thereupon the Rights Agent shall, subject to
Section 4(b), Section 7(e) and Section 14 hereof, countersign
and deliver to the Person entitled thereto a Rights Certificate or
Certificates, as the case may be, as so requested.  The Company may require payment by the holder of Rights of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights
Certificates.

 

(b)                            Upon receipt by the Company and
the Rights Agent of evidence reasonably satisfactory to them of the loss,
theft, destruction or mutilation of a Rights Certificate, and, in case of loss,
theft or destruction, of indemnity or security reasonably satisfactory to them,
and, at the Company’s request, reimbursement to the Company and the Rights
Agent of all reasonable expenses incidental thereto,

 

10

 

and upon surrender to the Rights
Agent and cancellation of the Rights Certificate, if mutilated, the Company
will execute and deliver a new Rights Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner in lieu of the
Rights Certificate so lost, stolen, destroyed, or mutilated.

 

Section 7.                                          Exercise of Rights; Purchase Price; Expiration Date
of Rights.

 

(a)                             Subject to Section 7(e)
hereof, the registered holder of any Rights Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein including, without
limitation, the restrictions on exercisability set forth in Section 9(c),
Section 11(a)(iii) and Section 23(a) hereof) in whole or in part at
any time after the Distribution Date upon surrender of the Rights Certificate,
with the form of election to purchase and the certificate on the reverse side
thereof duly and properly executed, to the Rights Agent at the office of the
Rights Agent designated for such purpose, together with payment of the Purchase
Price for each one-one thousandth of a share of Preferred Stock (or other
securities, cash or other assets, as the case may be) as to which the Rights
are exercised, at or prior to the earlier of (i) the close of business on
December 16, 2013 (the “Final Expiration Date”), (ii) the time
at which the Rights are redeemed as provided in Section 23 hereof, or
(iii) the time at which such Rights are exchanged (the “Exchange Date”)
as provided in Section 24 hereof (the earliest of (i), (ii) and (iii)
being herein referred to as the “Expiration Date”).

 

(b)                            Each Right shall entitle the
registered holder thereof to purchase one-one thousandth of a share of
Preferred Stock, and the Purchase Price for each one-one thousandth of a share
of Preferred Stock pursuant to the exercise of a Right shall initially be
$58.00, and shall be subject to adjustment from time to time as provided in
Sections 11 and 13 hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.

 

(c)                             Upon receipt of a Rights
Certificate representing exercisable Rights, with the form of election to
purchase and the certificate duly and properly executed, accompanied by
payment, with respect to each Right so exercised, of the Purchase Price per
one-one thousandth of a share of Preferred Stock (or Common Stock, other
securities, cash or other assets, as the case may be) to be purchased and an
amount equal to any applicable transfer tax or governmental charge in cash, or
by certified check or cashier’s check payable to the order of the Company, the
Rights Agent shall, subject to Section 18(k) hereof, thereupon promptly
(i) (A) requisition from any transfer agent of the shares of
Preferred Stock (or make available, if the Rights Agent is the transfer agent)
certificates for the total number of one-one thousandths of a share of
Preferred Stock to be purchased and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests, or (B) if the Company
shall have elected to deposit the total number of

 

11

 

shares of Preferred Stock issuable
upon exercise of the Rights hereunder with a depositary agent, requisition from
the depositary agent depositary receipts representing such number of one-one
thousandths of a share of Preferred Stock as are to be purchased (in which case
certificates for the shares of Preferred Stock represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Company will direct the depositary to comply with such request,
(ii) requisition from the Company the amount of cash, if any, to be paid
in lieu of issuance of fractional shares in accordance with Section 14,
(iii) promptly after receipt of such certificates or depositary receipts,
cause the same to be delivered to or upon the order of the registered holder of
such Rights Certificate, registered in such name or names as may be designated
by such holder and (iv) after receipt thereof, promptly deliver such cash,
if any, to or upon the order of the registered holder of such Rights
Certificate.  In the event that the
Company is obligated to issue other securities (including Common Stock) of the
Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so
that such securities, cash and/or other property are available for distribution
by the Rights Agent, if and when appropriate.

 

(d)                            In case the registered holder of
any Rights Certificate shall exercise less than all the Rights evidenced
thereby, a new Rights Certificate evidencing Rights equivalent to the Rights
remaining unexercised shall be issued by the Rights Agent and delivered to, or
upon the order of, the registered holder of such Rights Certificate, registered
in such name or names as may be designated by such holder, subject to the
provisions of Section 14 hereof.

 

(e)                             Notwithstanding anything in this
Agreement to the contrary, from and after the first occurrence of a
Section 11(a)(ii) Event, any Rights beneficially owned by (i) an
Acquiring Person or an Associate or Affiliate of an Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person to
holders of equity interests in such Acquiring Person or to any Person with whom
such Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which a majority of the
Directors has determined is part of an agreement, arrangement or understanding
which has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and void without any further action, and
no holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise.  The Company shall use all reasonable efforts
to ensure that the provisions of this Section 7(e) and Section 4(b)
hereof are complied with, but shall have no liability to any holder of Rights
Certificates or other Person as a result of its failure to make

 

12

 

any determinations with respect to
an Acquiring Person or its Affiliates, Associates or transferees
hereunder.  The Rights Agent will
endeavor to comply with the provisions hereof to the extent it has received
instructions from the Company concerning such matters.

 

(f)                               Notwithstanding anything in
this Agreement to the contrary, neither the Rights Agent nor the Company shall
be obligated to undertake any action with respect to a registered holder upon
the occurrence of any purported exercise as set forth in this Section 7
unless such registered holder shall have (i) properly completed and signed
the certificate contained in the form of election to purchase set forth on the
reverse side of the Rights Certificate surrendered for such exercise, and
(ii) provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request.

 

Section 8.                                          Cancellation of Rights Certificates.

 

All
Rights Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in cancelled
form, or, if surrendered to the Rights Agent, shall be cancelled by it, and no
Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any provisions of this Rights Agreement.  The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any other
Rights Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof.  The Rights Agent
shall deliver all cancelled Rights Certificates to the Company.

 

Section 9.                                          Reservation and Availability of Capital
Stock.

 

(a)                             The Company covenants and agrees
that it will cause to be reserved and kept available out of its authorized and
unissued shares of Preferred Stock (and following the occurrence of a
Triggering Event, out of its authorized and unissued shares of Common Stock
and/or other securities or out of its authorized and issued shares held in its
treasury), the number of shares of Preferred Stock (and, following the
occurrence of a Triggering Event, shares of Common Stock and/or other
securities) that, as provided in this Agreement, including
Section 11(a)(iii) hereof, will be sufficient to permit the exercise in
full of all outstanding Rights.

 

(b)                            In the event the shares of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) issuable upon the exercise of Rights become
listed on any national securities exchange, the National Association of
Securities Dealers, Inc. Automated Quotations System

 

13

 

(“NASDAQ”), or such other
system then in use, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange, NASDAQ or such other system then in use
upon official notice of issuance upon such exercise.

 

(c)                             The Company shall use its best
efforts to (i) file, as soon as practicable following the earliest date
after the first occurrence of a Section 11(a)(ii) Event on which the
consideration to be delivered by the Company upon exercise of the Rights has
been determined in accordance with this Agreement, or as soon as is required by
law following the Distribution Date, as the case may be, a registration
statement under the Securities Act with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain effective (with
a prospectus at all times meeting the requirements of the Securities Act) until
the earlier of (A) the date as of which the Rights are no longer
exercisable for such securities, and (B) the Expiration Date.  The Company will also take such action as
may be appropriate under, or to ensure compliance with, the securities or “blue
sky” laws of the various states in connection with the exercisability of the
Rights.  The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days after the date set
forth in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. 
In addition, if the Company shall determine that a registration
statement is required following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective.  Upon any suspension of exercisability of Rights referred to in
this Section 9(c), the Company shall issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as well
as a public announcement at such time as the suspension is no longer in effect,
in each case with simultaneous written notice to the Rights Agent.  Notwithstanding any provision of this
Agreement to the contrary, the Rights shall not be exercisable and shall be
null and void so long as held by a holder in any jurisdiction where the
requisite qualification to the issuance to such holder, or the exercise by such
holder, of the Rights in such jurisdiction shall not have been obtained or be
obtainable, or the exercise thereof shall not be permitted under applicable law
or a registration statement shall not have been declared effective.  The Rights Agent may assume that any Right
exercised is permitted to be exercised under applicable law and shall have no
liability for acting in reliance upon such assumption.

 

(d)                            The Company covenants and agrees
that it will take all such action as may be necessary to ensure that all
one-one thousandths of a share of Preferred Stock (and, following the
occurrence of a Triggering Event, Common Stock and/or other securities)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be
duly and validly authorized and issued and fully paid and non-assessable.

 

14

 

(e)                             The Company further covenants and
agrees that it will pay when due and payable any and all federal and state
transfer taxes and charges which may be payable in respect of the issuance or
delivery of the Rights Certificates or of any certificates for a number of
one-one thousandths of a share of Preferred Stock (or Common Stock and/or other
securities, as the case may be) upon the exercise of Rights.  The Company shall not, however, be required
to pay any transfer tax or charge which may be payable in respect of any
transfer or delivery of Rights Certificates to a Person other than, or the
issuance or delivery of certificates for a number of one-one thousandths of a
share of Preferred Stock (or Common Stock and/or other securities, as the case
may be) in a name other than that of the registered holder of the Rights
Certificate evidencing Rights surrendered for exercise or to issue or deliver
any certificates for a number of one-one thousandths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) in a name
other than that of the registered holder upon the exercise of any Rights until
any such tax or charge shall have been paid (any such tax or charge being
payable by the holder of such Rights Certificate at the time of surrender) or
until it has been established to the Company’s satisfaction that no such tax or
charge is due.

 

Section 10.                                   Preferred Stock Record Date.

 

Each
Person in whose name any certificate for a number of one-one thousandths of a
share of Preferred Stock (or Common Stock and/or other securities, as the case
may be) is issued upon the exercise of Rights shall for all purposes be deemed
to have become the holder of record of such fractional shares of Preferred
Stock (or Common Stock and/or other securities, as the case may be) represented
thereby on, and such certificate shall be dated, the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and any applicable transfer taxes and charges) was made; provided,
however, that if the date of such surrender and payment is a date upon
which the Preferred Stock (or Common Stock and/or other securities as the case
may be) transfer books of the Company are closed, such Person shall be deemed
to have become the record holder of such shares (fractional or otherwise) on,
and such certificate shall be dated, the next succeeding Business Day on which
the Preferred Stock (or Common Stock and/or other securities as the case may
be) transfer books of the Company are open. 
Prior to the exercise of the Rights evidenced thereby, the holder of a
Rights Certificate shall not be entitled to any rights of a stockholder of the
Company with respect to shares for which the Rights shall be exercisable,
including, without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled
to receive any notice of any proceedings of the Company, except as provided
herein.

 

15

 

Section 11.                                   Adjustment of Purchase Price, Number and
Kind of Shares or Number of Rights.

 

The
Purchase Price, the number and kind of shares covered by each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.

 

(a)(i)  In
the event the Company shall at any time after the date of this Agreement (A)
declare a dividend on the Preferred Stock payable in shares of Preferred Stock,
(B) subdivide the outstanding Preferred Stock, (C) combine the outstanding
Preferred Stock into a smaller number of shares or (D) issue any shares of its
capital stock in a reclassification of the Preferred Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a) and Section 7(e) hereof, the Purchase
Price in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination or reclassification, and the
number and kind of shares of Preferred Stock or the number and kind of shares
of capital stock issuable on such date, as the case may be, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive, upon payment of the aggregate adjusted
Purchase Price then in effect necessary to exercise a Right in full, the
aggregate number and kind of shares of Preferred Stock or the number and kind
of shares of capital stock, as the case may be, which, if such Right had been
exercised immediately prior to such date and at a time when the Preferred Stock
(or other capital stock, as the case may be) transfer books of the Company were
open, such holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination, or
reclassification; provided, however, that in no event shall the consideration
to be paid upon the exercise of one Right be less than the aggregate par value
of the shares of capital stock of the Company issuable upon exercise of one
Right.  If an event occurs which would
require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii) hereof, the adjustment provided for in this
Section 11(a)(i) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.

 

(ii)                             Subject to Sections 23 and
24 of this Agreement, in the event that any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person organized, appointed or established by
the Company for or pursuant to the terms of any such plan), alone or together
with its Affiliates and Associates, shall, at any time after the Rights Dividend
Declaration Date, become an Acquiring Person, unless the event causing such
Person to become an Acquiring Person is a transaction set forth in
Section 13(a) hereof, proper provision shall be made so that promptly
following the Redemption Period (as defined in Section 23(a)), each holder
of a Right (except as provided below and in Section 7(e) hereof) shall
thereafter have the right to receive, upon exercise thereof and payment of an
amount equal to the

 

16

 

then current Purchase Price in
accordance with the terms of this Agreement, in lieu of a number of one-one
thousandths of a share of Preferred Stock, such number of shares of Common
Stock of the Company as shall equal the result obtained by (x) multiplying
the then current Purchase Price by the then number of one-one thousandths of a
share of Preferred Stock for which a Right was or would have been exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event,
whether or not such Right was then exercisable, and (y) dividing that
product (which, following such first occurrence, shall thereafter be referred
to as the “Purchase Price” for each Right and for all purposes of this
Agreement except to the extent set forth in Section 13 hereof) by 50% of
the current market price per share of Common Stock (determined pursuant to
Section 11(d) hereof) on the date of such first occurrence (such number of
shares, the “Adjustment Shares”).

 

(iii)                          The Company may at its option
substitute for a share of Common Stock issuable upon the exercise of Rights in
accordance with the foregoing subparagraph (ii) such number or fractions of
shares of Preferred Stock having an aggregate market value equal to the current
per share market price of a share of Common Stock.  In the event that the number of shares of Common Stock which is
authorized by the Company’s Restated Certificate of Incorporation, as amended,
but not outstanding, or reserved for issuance for purposes other than upon
exercise of the Rights, is not sufficient to permit the exercise in full of the
Rights in accordance with the foregoing subparagraph (ii), the Board shall, to
the extent permitted by applicable law and by any agreements or instruments
then in effect to which the Company is a party, (A) determine the excess
of (1) the value of the Adjustment Shares issuable upon the exercise of a
Right (the “Current Value”) over (2) the Purchase Price (such
excess, the “Spread”), and (B) with respect to each Right (subject
to Section 7(e) hereof), make adequate provision to substitute for some or
all of the Adjustment Shares, upon exercise of a Right and payment of the
applicable Purchase Price, (1) cash, (2) a reduction in the Purchase
Price, (3) Common Stock or other equity securities of the Company (including,
without limitation, shares, or units of shares, of Preferred Stock which the
Board has deemed to have the same value as shares of Common Stock) (such shares
of equity securities being herein called “common stock equivalents”),
(4) debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing, having an aggregate value equal to the Current
Value, where such aggregate value has been determined by the Board based upon
the advice of an investment banking firm selected by the Board; provided,
however, if the Company shall not have made adequate provision to
deliver value pursuant to clause (B) above within thirty (30) days
following the later of (x) the first occurrence of a
Section 11(a)(ii) Event and (y) the date on which the Company’s right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y)
being referred to herein as the “Section 11(a)(ii) Trigger Date”),
then the Company shall be obligated to deliver, upon the surrender for exercise
of a Right and without requiring payment of the Purchase Price, shares of
Common Stock (to the extent available) and then, if

 

17

 

necessary, cash, which shares
and/or cash have an aggregate value equal to the Spread.

 

If,
upon the occurrence of a Section 11(a)(ii) Event, the Board shall
determine in good faith that it is likely that sufficient additional shares of
Common Stock could be authorized for issuance upon exercise in full of the
Rights, then if the Board so elects, the thirty (30) day period set forth above
may be extended to the extent necessary, but not more than ninety (90) days
after the Section 11(a)(ii) Trigger Date, in order that the Company may
seek stockholder approval for the authorization of such additional shares (such
period, as it may be extended, the “Substitution Period”).  To the extent that action is to be taken
pursuant to the preceding provisions of this Section 11(a)(iii), the
Company (x) shall provide, subject to Section 7(e) hereof, that such
action shall apply uniformly to all outstanding Rights, and (y) may
suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant to
the first sentence of this Section 11(a)(iii) and to determine the value
thereof.  In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension is no longer in effect.  For purposes of this
Section 11(a)(iii), the value of the Common Stock shall be the current
market price (as determined pursuant to Section 11(d) hereof) per share of
the Common Stock on the Section 11(a)(ii) Trigger Date and the value of
any “common stock equivalent” shall be deemed to have the same value as the
Common Stock on such date.  The Board
may, but shall not be required to, establish procedures to allocate the right
to receive shares of Common Stock upon the exercise of the Rights among holders
of Rights pursuant to this Section 11(a)(iii).

 

(b)                            In case the Company shall fix a
record date for the issuance of rights, options or warrants to all holders of
Preferred Stock entitling them (for a period expiring within forty-five (45)
calendar days after such record date) to subscribe for or purchase Preferred
Stock (or shares having the same rights, privileges and preferences as the
shares of Preferred Stock (“equivalent preferred stock”) or securities
convertible into Preferred Stock at a price per share of Preferred Stock or per
share of “equivalent preferred stock” (or having a conversion price per share
of Preferred Stock, if a security convertible into Preferred Stock) less than
the current per share market price of the Preferred Stock (as defined in
Section 11(d) hereof) on such record date, the Purchase Price to be in
effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of shares of Preferred Stock which the
aggregate offering price of the total number of shares of Preferred Stock
and/or equivalent preferred stock so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such current market price, and the denominator of

 

18

 

which shall be the number of shares
of Preferred Stock outstanding on such record date, plus the number of
additional shares of Preferred Stock and/or equivalent preferred stock to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible); provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right.  In
case such subscription price may be paid in a consideration part or all of
which shall be in a form other than cash, the value of such consideration shall
be as determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive
for all purposes.  Shares of Preferred
Stock owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation.  Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.

 

(c)                             In case the Company shall fix a
record date for a distribution to all holders of Preferred Stock (including any
such distribution made in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend out of the
earnings or retained earnings of the Company), assets (other than a dividend
payable in Preferred Stock, but including any dividend payable in stock other
than Preferred Stock), or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be in effect
after such record date shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, the numerator of
which shall be the current per share market price of the Preferred Stock (as
defined in Section 11(d) hereof) on such record date, less the fair market
value (as determined in good faith by the Board, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive
for all purposes) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to a share of Preferred Stock and the denominator of which shall be
such current per share market price of the Preferred Stock; provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right.  Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that such distribution is not so made, the
Purchase Price shall again be adjusted to be the Purchase Price which would
then be in effect if such record date had not been fixed.

 

(d)                            (i) For the purpose of any
computation hereunder, the “current market price” of the Common Stock on
any date shall be deemed to be the average of the daily closing prices per
share of such Common Stock for the 30 consecutive

 

19

 

Trading Days (as such term is
hereinafter defined) immediately prior to but not including such date; provided,
however, that in the event that the current market price of the Common
Stock is determined during a period following the announcement by the issuer of
such Common Stock of (i) a dividend or distribution on such Common Stock
payable in shares of such Common Stock or securities convertible into such
Common Stock (other than the Rights), or (ii) any subdivision, combination
or reclassification of such Common Stock, and prior to the expiration of the
requisite thirty (30) Trading Day period, as set forth above, after the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification, then, and in each such case, the
“current market price” shall be appropriately adjusted to take into account
ex-dividend trading.  The closing price
for each day shall be the last sale price, regular way, or, in case no such
sale takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common Stock are
not listed or admitted to trading on the New York Stock Exchange, as reported
in the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
shares of Common Stock are listed or admitted to trading or, if the shares of
Common Stock are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of the high
bid and low asked prices in the over-the-counter market, as reported by the
NASDAQ or such other system then in use, or, if on any such date the shares of
Common Stock are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the shares of Common Stock selected by the Board.

 

If
on any such date no market maker is making a market in the Common Stock, the
fair value of such shares on such date as determined in good faith by the Board
shall be used.  The term “Trading Day”
shall mean a day on which the principal national securities exchange on which
the shares of Common Stock are listed or admitted to trading is open for the
transaction of business, or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, the term “Trading
Day” shall mean a Monday, Tuesday, Wednesday, Thursday or Friday on which
banking or trust institutions in the State of New York are not authorized or
obligated by law or executive order to close. 
If the Common Stock is not publicly held or not listed or traded,
“current market price” shall mean the fair value per share as determined in
good faith by the Board, whose determination shall be described in a statement
filed with the Rights Agent and shall be conclusive for all purposes.

 

(ii)                                  For the purpose of any
computation hereunder, the “current market price” per share of Preferred
Stock shall be determined in the same manner as set forth above for the Common
Stock in clause (i) of this Section 11(d)

 

20

 

(other than the last sentence
thereof).  If the current market price
per share of Preferred Stock cannot be determined in the manner provided above
or if the Preferred Stock is not publicly held or listed or traded in a manner
described in clause (i) of this Section 11(d), the “current market
price” per share of Preferred Stock shall be conclusively deemed to be an
amount equal to 1,000 (as such number may be appropriately adjusted for such
events as stock splits, stock dividends and recapitalizations with respect to
the Common Stock occurring after the date of this Agreement) multiplied by the
current market price per share of the Common Stock.  If neither the Common Stock nor the Preferred Stock is publicly held
or so listed or traded, “current market price” per share of the Preferred Stock
shall mean the fair value per share as determined in good faith by the Board,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.  For all purposes of this Agreement, the “current market price” of
one-one thousandth of a share of Preferred Stock shall be equal to the “current
market price” of one share of Preferred Stock divided by 1,000.

 

(e)                             Anything herein to the contrary
notwithstanding, no adjustment in the Purchase Price shall be required unless
such adjustment would require an increase or decrease of at least one percent
(1%) in such price; provided, however, that any adjustments which
by reason of this Section 11(e) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment.  All calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth of a share
of Common Stock or other share or one-millionth of a share of Preferred Stock,
as the case may be.  Notwithstanding the
first sentence of this Section 11(e), an adjustment required by this
Section 11 shall be made no later than the earlier of (i) three years from
the date of the transaction which requires such adjustment or (ii) the
Expiration Date.

 

(f)                               If as a result of an adjustment
made pursuant to Section 11(a)(ii) or Section 13(a) hereof, the
holder of any Right thereafter exercised shall become entitled to receive any
shares of capital stock of the Company other than Preferred Stock, thereafter
the number of such other shares so receivable upon exercise of any Right and
the Purchase Price thereof shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Preferred Stock contained in Sections 11(a), (b), (c),
(e), (g), (h), (i), (j), (k) and (m), and the provisions of Sections 7, 9,
10, 13 and 14 hereof with respect to the Preferred Stock shall apply on like
terms to any such other shares.

 

(g)                            All Rights originally issued by
the Company subsequent to any adjustment made to the Purchase Price hereunder
shall evidence the right to purchase, at the adjusted Purchase Price, the
number of one-one thousandths of a share of Preferred Stock purchasable from
time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.

 

21

 

(h)                            Unless the Company shall have
exercised its election as provided in Section 11(i), upon each adjustment
of the Purchase Price as a result of the calculations made in
Sections 11(b) and (c), each Right outstanding immediately prior to the
making of such adjustment shall thereafter evidence the right to purchase, at
the adjusted Purchase Price, that number of one-one thousandths of a share of
Preferred Stock (calculated to the nearest one-millionth) obtained by (i)
multiplying (x) the number of one-one thousandths of a share covered by a Right
immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing
the product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.

 

(i)                                The Company may elect on or
after the date of any adjustment of the Purchase Price to adjust the number of
Rights, in lieu of any adjustment in the number of one-one thousandths of a
share of Preferred Stock issuable upon the exercise of a Right.  Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of
one-one thousandths of a share of Preferred Stock for which a Right was
exercisable immediately prior to such adjustment.  Each Right held of record prior to such adjustment of the number
of Rights shall become that number of Rights (calculated to the nearest
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect immediately
after adjustment of the Purchase Price. 
The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made.  This record date may be the date on which
the Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least ten (10) days later than the
date of the public announcement.  If
Rights Certificates have been issued, upon each adjustment of the number of
Rights pursuant to this Section 11(i), the Company shall, as promptly as
practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment.  Rights
Certificates to be so distributed shall be issued, executed and countersigned
in the manner provided for herein (and may bear, at the option of the Company,
the adjusted Purchase Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified in the
public announcement.

 

(j)                                Irrespective of any adjustment
or change in the Purchase Price or the number of one-one thousandths of a share
of Preferred Stock issuable upon the

 

22

 

exercise of the Rights, the Rights
Certificates theretofore and thereafter issued may continue to express the
Purchase Price per one-one thousandth of a share and the number of one-one
thousandths of a share which were expressed in the initial Rights Certificates
issued hereunder.

 

(k)                             Before taking any action that
would cause an adjustment reducing the Purchase Price below the then-par value,
if any, of the number of one-one thousandths of a share of Preferred Stock
issuable upon exercise of the Rights, the Company shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and non-assessable such number
of one-one thousandths of a share of Preferred Stock at such adjusted Purchase
Price.

 

(l)                                In any case in which this
Section 11 shall require that an adjustment in the Purchase Price be made
effective as of a record date for a specified event, the Company may elect to
defer until the occurrence of such event the issuance to the holder of any
Right exercised after such record date the number of one-one thousandths of a
share of Preferred Stock and other capital stock or securities of the Company,
if any, issuable upon such exercise over and above the number of one-one
thousandths of a share of Preferred Stock and other capital stock or securities
of the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however,
that the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder’s right to receive such additional shares
upon the occurrence of the event requiring such adjustment.

 

(m)                          Anything in this Section 11 to
the contrary notwithstanding, the Company shall be entitled to make such
reductions in the Purchase Price, in addition to those adjustments expressly
required by this Section 11, as and to the extent that the Board in its
sole discretion shall determine to be advisable in order that any
(i) consolidation or subdivision of the Preferred Stock,
(ii) issuance wholly for cash of any shares of Preferred Stock at less
than the current market price, (iii) issuance wholly for cash of shares of
Preferred Stock or securities which by their terms are convertible into or
exchangeable for Preferred Stock, (iv) stock dividends or
(v) issuance of rights, options or warrants referred to hereinabove in
this Section 11, hereafter made by the Company to holders of its Preferred
Stock shall not be taxable to such stockholders.

 

(n)                            The Company covenants and agrees
that it shall not, at any time after the Distribution Date, (i) consolidate
with any other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof), (ii) merge with or into any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or (iii) sell or transfer (or permit
any Subsidiary to sell or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than 50% of the

 

23

 

assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at
the time of or immediately after such consolidation, merger or sale there are
any rights, warrants or other instruments or securities outstanding or
agreements in effect which would substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or sale, the
stockholders of the Person who constitutes, or would constitute, the “Principal
Party” for purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
and Associates.

 

(o)                            The Company covenants and agrees
that, after the Distribution Date, it will not, except as permitted by
Section 23 or Section 27 hereof, take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably
foreseeable that such action will diminish substantially or otherwise eliminate
the benefits intended to be afforded by the Rights.

 

(p)                            Anything in this Agreement to the
contrary notwithstanding, in the event that the Company shall at any time after
the Rights Dividend Declaration Date and prior to the Distribution Date
(i) declare a dividend on the outstanding shares of Common Stock payable
in shares of Common Stock, (ii) subdivide the outstanding shares of Common
Stock, or (iii) combine the outstanding shares of Common Stock into a
smaller number of shares, the number of Rights associated with each share of
Common Stock then outstanding, or issued or delivered thereafter but prior to
the Distribution Date, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event by a
fraction the numerator of which shall be the total number of shares of Common
Stock outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.

 

Section 12.                                   Certificate of Adjusted Purchase Price or Number of
Shares.

 

Whenever
an adjustment is made as provided in Sections 11 or 13 hereof, the Company
shall (a) promptly prepare a certificate setting forth such adjustment, and a
brief statement of the facts and computations accounting for such adjustment,
(b) promptly file with the Rights Agent and with each transfer agent for the
Preferred Stock and the Common Stock a copy of such certificate and (c) mail or
deliver a brief summary thereof to each holder of a Rights Certificate (or, if
prior to the Distribution Date, to each holder of a certificate representing
shares of

 

24

 

Common Stock) in accordance with
Section 25 hereof.  The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of any
adjustment unless and until it shall have received such certificate.

 

Section 13.                                   Consolidation, Merger or Sale or Transfer
of Assets or Earning Power.

 

(a)                             Subject to Section 23 of
this Agreement, in the event that, following the Stock Acquisition Date,
directly or indirectly,

 

(x)                                        the
Company shall consolidate with, or merge with and into, any other Person (other
than a Subsidiary of the Company in a transaction which complies with
Section 11(o) hereof), and the Company shall not be the continuing or
surviving corporation of such consolidation or merger,

 

(y)                                      any
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof) shall consolidate with, or merge with or into,
the Company, and the Company shall be the continuing or surviving corporation
of such consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Common Stock shall be changed
into or exchanged for stock or other securities of any other Person or cash or
any other property, or

 

(z)                                        the
Company shall sell or otherwise transfer (or one or more of its Subsidiaries
shall sell or otherwise transfer), in one transaction or a series of related
transactions, assets or earning power aggregating more than 50% of the assets
or earning power of the Company and its Subsidiaries (taken as a whole) to any
Person or Persons (other than the Company or any Subsidiary of the Company in
one or more transactions each of which complies with Section 11(o)
hereof),

 

then,
and in each such case, proper provision shall be made so that:

 

(i)                                          each
holder of a Right, except as provided in Section 7(e) hereof, shall, upon
the expiration of the Redemption Period (as defined in Section 23(a)),
thereafter have the right to receive, upon the exercise thereof at the then
current Purchase Price in accordance with the terms of this Agreement, such
number of validly authorized and issued, fully paid, non-assessable and freely
tradable shares of Common Stock of the Principal Party (as such term is
hereinafter

 

25

 

defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall be
equal to the result obtained by

 

(1)                                       multiplying the then
current Purchase Price by the number of one-one thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the
first occurrence of a Section 13 Event (or, if a Section 11(a)(ii)
Event has occurred prior to the first occurrence of a Section 13 Event,
multiplying the number of one-one thousandths of a share of Preferred Stock for
which a Right was exercisable immediately prior to the first occurrence of a
Section 11(a)(ii) Event by the Purchase Price in effect immediately prior
to such first  occurrence), and

 

(2)                                       dividing that product
(which product, following the first occurrence of a Section 13 Event,
shall be referred to as the “Purchase Price” for each Right and for all
purposes of this Agreement) by 50% of the current market price per share of the
shares of Common Stock of such Principal Party on the date of consummation of
such Section 13 Event (or the fair market value on such date of other
securities or property of the Principal Party, as provided for herein);

 

(ii)                                       such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such Section 13 Event, all the obligations and duties of the Company
pursuant to this Agreement;

 

(iii)                                    the
term “Company” shall thereafter be deemed to refer to such Principal Party, it
being specifically intended that the provisions of Section 11 hereof shall
apply only to such Principal Party following the first occurrence of a
Section 13 Event;

 

(iv)                                   such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock) in connection
with the consummation of any such transaction as may be necessary to assure
that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights; and

 

(v)                                      the
provisions of Section 11(a)(ii) hereof shall be of no effect following the
first occurrence of any Section 13 Event.

 

(b)                            “Principal Party” shall
mean

 

26

 

(i) 
in the case of any transaction described in clause (x) or (y) of the
first sentence of Section 13(a), the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted in
such merger or consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation; and

 

(ii) 
in the case of any transaction described in clause (z) of the first
sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions;

 

provided, however, that in any such case, (1)
if the Common Stock of such Person is not at such time and has not been
continuously over the preceding twelve (12) month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, “Principal Party” shall refer to such other Person; (2) if the
Common Stock of such Person is not and has not been so registered and such
Person is a Subsidiary, directly or indirectly, of more than one Person, the
Common Stocks of two or more of which are and have been so registered,
“Principal Party” shall refer to whichever of such Persons is the issuer of the
Common Stock having the greatest aggregate market value; and (3) if the Common
Stock of such Person is not and has not been so registered and such Person is
owned, directly or indirectly, by a joint venture formed by two or more Persons
that are not owned, directly or indirectly, by the same Person, the rules set
forth in (1) and (2) above shall apply to each of the chains of ownership
having an interest in such joint venture as if such party were a Subsidiary of
both or all of such joint venturers, and the Principal Parties in each such
chain shall bear the obligations set forth in this Section 13 in the same
ratio as their direct or indirect interests in such Person bear to the total of
such interests.

 

(c)                             The Company shall not consummate
any Section 13 Event unless the Principal Party shall have a sufficient
number of authorized shares of its Common Stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and
such Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs
(a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of any such Section 13 Event, the Principal
Party will:

 

(i)                                          prepare
and file a registration statement under the Securities Act, with respect to the
Rights and the securities purchasable upon exercise of the Rights on an
appropriate form, and will use its best efforts to cause such registration
statement to (A) become effective as

 

27

 

soon as practicable after such filing and
(B) remain effective (with a prospectus at all times meeting the
requirements of the Securities Act) until the Expiration Date;

 

(ii) 
deliver to holders of the Rights historical financial statements for the
Principal Party and each of its Affiliates which comply in all respects with
the requirements for registration on Form 10 under the Exchange Act;

 

(iii) 
use its best efforts to obtain any necessary regulatory approvals in
respect of the securities purchasable upon exercise of outstanding Rights; and

 

(iv) 
use its best efforts, if such Common Stock of the Principal Party shall
be listed or admitted to trading on a national securities exchange, to list or
admit to trading (or continue the listing of) the Rights and the securities
purchasable upon exercise of the Rights on such securities exchange, or if the
securities of the Principal Party purchasable upon exercise of the Rights shall
not be listed or admitted to trading on a national securities exchange, to
cause the Rights and the securities purchasable upon exercise of the Rights to
be reported by NASDAQ or such other system then in use.

 

The provisions of this Section 13 shall similarly apply
to successive mergers or consolidations or sales or other transfers.  In the event that a Section 13 Event
shall occur at any time after the occurrence of a Section 11(a)(ii) Event,
the Rights which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a) hereof.

 

(d)                            In no event shall the Rights Agent
have any liability in respect of any such Principal Party transactions,
including, without limitation, the propriety thereof.  The Rights Agent may rely and be fully protected in relying upon
a certificate of the Company stating that the provisions of this
Section 13 have been fulfilled. 
Notwithstanding anything in this Agreement to the contrary, the prior
written consent of the Rights Agent must be obtained in connection with any
supplemental agreement which alters the rights or duties of the Rights Agent.

 

Section 14.                                   Fractional Rights and Fractional Shares.

 

(a)                             The Company shall not be required
to issue fractions of Rights except prior to the Distribution Date as provided
in Section 11(p) hereof, or to distribute Rights Certificates which
evidence fractional Rights.  In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value

 

28

 

of the whole Right.  For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable.  The closing price for any day shall be the last sale price, or,
in case no such sale takes place on such day, the average of the high bid and
low asked prices, in either case as reported by the New York Stock Exchange or,
if the Rights are not listed or admitted to trading on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading, or such other
system then in use or, if on any such date the Rights are not quoted by any
such organization, the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the Rights selected by the
Board.  If on any such date no such
market maker is making a market in the Rights the fair value of the Rights on
such date as determined in good faith by the Board shall be used.  In the event the Rights are listed or
admitted to trading on a national securities exchange, the closing price for
any day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the high bid and low asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to the national securities exchange
on which the Rights are listed or admitted to trading.

 

(b)                            The Company shall not be required
to issue fractions of shares of Preferred Stock (other than fractions which are
integral multiples of one-one thousandth of a share of Preferred Stock) upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of Preferred Stock (other than fractions which are integral multiples of
one-one thousandth of a share of Preferred Stock).  In lieu of fractional shares of Preferred Stock that are not
integral multiples of one-one thousandth of a share of Preferred Stock, the
Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one-one thousandth of a share of
Preferred Stock.  For purposes of this
Section 14(b), the current market value of one-one thousandth of a share
of Preferred Stock shall be one-one thousandth of the closing price of a share
of Preferred Stock (as determined pursuant to Section 11(d)(ii) hereof)
for the Trading Day immediately prior to the date of such exercise.

 

(c)                             Following the occurrence of one
of the events specified in Section 11 giving rise to the right to receive
Common Stock, common stock equivalents or other securities upon the exercise of
a Right, the Company shall not be required to issue fractions of shares of
Common Stock, common stock equivalents or other securities upon exercise of the
Rights or to distribute certificates which evidence fractional shares of Common
Stock, common stock equivalents or other securities.  In lieu of fractional shares of Common Stock, common stock
equivalents or other securities the Company may pay to the registered holders
of Rights

 

29

 

Certificates at the time such
Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one (1) share of Common Stock,
common stock equivalents or other securities. 
For purposes of this Section 14(c), the current market value of one
share of Common Stock shall be the closing price of one share of Common Stock
(as determined pursuant to Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.

 

(d)                            The holder of a Right by the
acceptance of the Rights expressly waives his right to receive any fractional
Rights or any fractional shares upon exercise of a Right, except as permitted
by this Section 14.

 

Section 15.                                   Rights of Action.

 

All
rights of action in respect of this Agreement, except the rights of action
vested in the Rights Agent pursuant to Section 18 and Section 19
hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
the Common Stock); and any registered holder of any Rights Certificate (or,
prior to the Distribution Date, of the Common Stock), without the consent of
the Rights Agent or of the holder of any other Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), may, in his own behalf and for his
own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company to enforce, or otherwise act in respect of, his
right to exercise the Rights evidenced by such Rights Certificate in the manner
provided in such Rights Certificate and in this Agreement.  Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and will be entitled to specific performance of the
obligations under, and injunctive relief against actual or threatened
violations of, the obligations hereunder of any Person subject to this
Agreement.

 

Section 16.                                   Agreement of Rights Holders.

 

Every
holder of a Right by accepting the same consents and agrees with the Company
and the Rights Agent and with every other holder of a Right that:

 

(a)                             prior to the Distribution Date,
the Rights will be transferable only in connection with the transfer of the
Common Stock;

 

(b)                            after the Distribution Date, the
Rights Certificates are transferable only on the registry books of the Rights
Agent if surrendered at the office of the Rights Agent designated for such
purposes, duly endorsed or

 

30

 

accompanied by a proper instrument
of transfer and with the appropriate form of assignment and the certificate
contained therein duly completed and executed;

 

(c)                             subject to Section 6(a) and
Section 7(f) hereof, the Company and the Rights Agent may deem and treat
the Person in whose name the Rights Certificate (or, prior to the Distribution
Date, the associated Common Stock certificate) is registered as the absolute
owner thereof and of the Rights evidenced thereby (notwithstanding any
notations of ownership or writing on the Rights Certificates or the associated
Common Stock certificate made by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7(e) hereof, shall be
affected by any notice to the contrary; and

 

(d)                            Notwithstanding anything in this
Agreement to the contrary, neither the Company nor the Rights Agent shall have
any liability to any holder of a Right or other Person as a result of its
inability to perform any of its obligations under this Agreement by reason of
any preliminary or permanent injunction or other order, decree, judgment or
ruling (whether interlocutory or final) issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any government authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company
must use its best efforts to have any such order, decree or ruling lifted or
otherwise overturned as soon as possible.

 

Section 17.                                   Rights Certificate Holder Not Deemed a
Stockholder.

 

No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Preferred Stock or any
other securities of the Company which may at any time be issuable on the
exercise of the Rights represented thereby, nor shall anything contained herein
or in any Rights Certificate be construed to confer upon the holder of any Rights
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by such Rights Certificate shall have been exercised in accordance
with the provisions hereof.

 

Section 18.                                   Duties of Rights Agent.

 

The
Rights Agent undertakes only the duties and obligations expressly imposed by
this Agreement upon the following terms and conditions, by all of which

 

31

 

the Company and the holders of
Rights Certificates, by their acceptance thereof, shall be bound:

 

(a)                             The Rights Agent may consult with
legal counsel of its selection (who may be legal counsel for the Company), and
the advice or opinion of such counsel shall be full and complete authorization
and protection to the Rights Agent, and the Rights Agent shall incur no
liability, for or in respect of any action taken or omitted by it in good faith
and in accordance with such advice or opinion.

 

(b)                            Whenever in the performance of its
duties under this Agreement the Rights Agent shall deem it necessary or
desirable that any fact or matter (including, without limitation, the identity
of any Acquiring Person and the determination of “current market price”) be
proved or established by the Company prior to taking or suffering or omitting
to take any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate signed by any person believed by the
Rights Agent to be any one of the Chief Executive Officer or Chief Financial
Officer of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent, and the Rights Agent shall
incur no liability, for or in respect of any action taken, omitted or suffered
in good faith by it under the provisions of this Agreement in reliance upon
such certificate.

 

(c)                             The Rights Agent shall be liable
hereunder only for its own gross negligence, bad faith, or willful misconduct.

 

(d)                            The Rights Agent shall not be
liable for or by reason of any of the statements of fact or recitals contained
in this Agreement or in the Rights Certificates (except as to its
countersignature thereof) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the
Company only.

 

(e)                             The Rights Agent is serving as an
administrative agent and shall not be under any responsibility in respect of,
the validity of any provision of this Agreement or the execution and delivery
of this Agreement (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming null and void
pursuant to Section 7(e) hereof) or any adjustment required under any of
the provisions hereof or responsible for the manner, method, or amount of any
such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after the Rights Agent’s actual receipt of
notice of any such

 

32

 

adjustment); nor shall it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or shares of
Preferred Stock to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Common Stock or shares of Preferred
Stock will, when so issued, be validly authorized and issued, fully paid and
non-assessable, nor shall the Rights Agent be responsible for the legality of
the terms hereof in its capacity as an administrative agent.

 

(f)                               The Company agrees that it will
perform, execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the carrying
out or performing by the Rights Agent of the provisions of this Agreement.

 

(g)                            The Rights Agent is hereby
authorized and directed to accept instructions with respect to the performance
of its duties hereunder from any person believed by the Rights Agent to be any
one of the Chief Executive Officer or Chief Financial Officer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken, omitted to be taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officer or for any delay in acting while waiting for those
instructions.  Any application by the
Rights Agent for written instructions from the Company may, at the option of
the Rights Agent, set forth in writing any action proposed to be taken,
suffered or omitted by the Rights Agent under this Agreement and the date on or
after which such action shall be taken or suffered or such omission shall be
effective.  The Rights Agent shall not
be liable for any action taken or suffered by, or omission of, the Rights Agent
in accordance with a proposal included in any such application on or after the
date specified in such application (which date shall not be less than five
Business Days after the date any officer of the Company actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instruction in response to such application specifying the action to be taken,
suffered or omitted.

 

(h)                            The Rights Agent and any
stockholder, affiliate, director, officer or employee of the Rights Agent may
buy, sell or deal in any of the Rights or other securities of the Company or
become pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as fully
and freely as though it were not Rights Agent under this Agreement.  Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company or for any other Person
or legal entity.

 

(i)                                The Rights Agent may execute
and exercise any of the rights or powers hereby vested in it or perform any
duty hereunder either itself or by or

 

33

 

through its attorneys or agents,
and the Rights Agent shall not be answerable or accountable for any act,
default, neglect, or misconduct of any such attorneys or agents or for any loss
to the Company resulting from any such act, default, neglect, or misconduct; provided,
however, the Rights Agent was not grossly negligent in the selection
thereof.

 

(j)                                No provision of this Agreement
shall require the Rights Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of its duties hereunder
or in the exercise of its rights if there shall be reasonable grounds for
believing that repayment of such funds or adequate indemnification against such
risk or liability is not reasonably assured to it.

 

(k)                             If, with respect to any Rights
Certificate surrendered to the Rights Agent for exercise or transfer, the
certificate attached to the form of assignment or form of election to purchase,
as the case may be, has either not been properly completed or indicates an
affirmative response to clause 1 and/or 2 thereof, the Rights Agent
shall not take any further action with respect to such requested exercise of
transfer without first consulting with the Company.

 

(l)                                The Rights Agent undertakes
only the express duties and obligations imposed on it by this Agreement and no
implied duties or obligations shall be read into this Agreement against the
Rights Agent.

 

(m)                          In addition to the foregoing, the
Rights Agent shall be protected and shall incur no liability for, or in respect
of, any action taken or omitted by it in connection with its administration of
this Agreement if such acts or omissions are in reliance upon (i) the proper
execution of the certification concerning beneficial ownership appended to the
form of assignment and the form of election to purchase attached to the Rights
Certificate unless the Rights Agent shall have actual knowledge that, as
executed, such certification is untrue, or (ii) the non-execution of such
certification including, without limitation, any refusal to honor any otherwise
permissible assignment or election by reason of such non-execution.

 

(n)                            The Company agrees to give the
Rights Agent prompt written notice of any event or ownership which would
prohibit the exercise or transfer of the Rights Certificates.

 

Section 19.                                   Compensation and Indemnification of the Rights Agent.

 

(a)                             The Company agrees to pay to the
Rights Agent such compensation as shall be agreed in writing between the
Company and the Rights Agent for all services rendered by it hereunder and,
from time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and expenses and other disbursements incurred in the
administration and execution of this Agreement and

 

34

 

the exercise and performance of its
duties hereunder.  The Company also
agrees to indemnify the Rights Agent, its officers, employees, agents and
directors for, and to hold each of them harmless against, any loss, liability,
or expense, incurred without gross negligence, bad faith or willful misconduct
on the part of the Rights Agent, for any action taken, suffered or omitted by
the Rights Agent or such other indemnified party in connection with the
acceptance and administration of this Agreement and the exercise of its duties
hereunder, including but not limited to the costs and expenses of defending against
any claim (whether asserted by the Company, a holder of Rights, or any other
Person) of liability in the premises. 
The indemnity provided for hereunder shall survive the expiration of the
Rights and the termination of this Agreement.

 

(b)                            The Rights Agent shall be
authorized and protected and shall incur no liability for or in respect of any
action taken, suffered or omitted by it in connection with its administration
of this Agreement or the exercise of its duties hereunder in reliance upon any
Rights Certificate or certificate for Common Stock or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed and executed by the proper person or persons.

 

(c)                             Anything in this Agreement to the
contrary notwithstanding, in no event shall the Rights Agent be liable for
special, indirect or consequential loss or damage of any kind whatsoever
(including but not limited to lost profits), even if the Rights Agent has been
advised of the likelihood of such loss or damage and regardless of the form of
the action.

 

Section 20.                                   Merger or Consolidation or Change of Name
of Rights Agent.

 

(a)                             Any Person into which the Rights
Agent or any successor Rights Agent may be merged or with which it may be
consolidated, or any Person resulting from any merger or consolidation to which
the Rights Agent or any successor Rights Agent shall be a party, or any Person
succeeding to all or substantially all the stock transfer business of the
Rights Agent or any successor Rights Agent, shall be the successor to the
Rights Agent under this Agreement without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided, however,
that such Person would be eligible for appointment as a successor Rights Agent
under the provisions of Section 21 hereof.  In case at the time such successor Rights Agent shall succeed to
the agency created by this Agreement, any of the Rights Certificates shall have
been countersigned but not delivered, any such successor Rights Agent may adopt
the countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor

 

35

 

Rights Agent may countersign such
Rights Certificates either in the name of the predecessor Rights Agent or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.

 

(b)                            In case at any time the name of
the Rights Agent shall be changed and at any such time any of the Rights
Certificates shall have been countersigned but not delivered, the Rights Agent
may adopt the countersignature under its prior name and deliver Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, the Rights Agent may
countersign such Rights Certificates either in its prior name or in its changed
name; and in all such cases such Rights Certificates shall have the full force
provided in the Rights Certificates and in this Agreement.

 

Section 21.                                   Change of Rights Agent.

 

The
Rights Agent or any successor Rights Agent may resign and be discharged from
its duties under this Agreement upon thirty (30) days’ notice in writing
mailed to the Company.  The Company may
remove the Rights Agent or any successor Rights Agent upon thirty (30) days’
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Stock and Preferred Stock
by registered or certified mail, and to the holders of the Rights Certificates
by first-class mail.  If the Rights
Agent shall resign or be removed or shall otherwise become incapable of acting,
the Company shall appoint a successor to the Rights Agent.  If the Company shall fail to make such
appointment within a period of thirty (30) days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then the Rights Agent or the registered holder
of any Rights Certificate may, at the expense of the Company, apply to any court
of competent jurisdiction for the appointment of a new Rights Agent.  Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (i) a Person organized
and doing business under the laws of the United States or the States of
Delaware or New York  (or of any
other state of the United States so long as such Person is authorized to do
business in the States of Delaware or New York), in good standing, having an
office in the States of Delaware or New York which is authorized under such
laws to exercise corporate trust power and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least
$50 million or (ii) an affiliate of such a Person.  After appointment, the successor Rights
Agent shall be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to the

 

36

 

successor Rights Agent any property
at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose.  Not later than the effective date of any
such appointment the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock and the
Preferred Stock, and mail a notice thereof in writing to the registered holders
of the Rights Certificates.  Failure to
give any notice provided for in this Section 21, however, or any defect
therein, shall not affect the legality or validity of the resignation or removal
of the Rights Agent or the appointment of the successor Rights Agent, as the
case may be.

 

Section 22.                                   Issuance of New Rights Certificates.

 

Notwithstanding
any of the provisions of this Agreement or of the Rights to the contrary, the
Company may, at its option, issue new Rights Certificates evidencing Rights in
such form as may be approved by the Board to reflect any adjustment or change
in the Purchase Price per share and the number or kind of class of shares or
other securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement.  In addition, in connection with the issuance or sale of shares of
Common Stock following the Distribution Date (other than upon exercise of a
Right) and prior to the redemption or expiration of the Rights, the Company
(a) shall, with respect to shares of Common Stock so issued or sold
pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if
deemed necessary or appropriate by the Board, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (i) no such Rights
Certificate shall be issued if, and to the extent that, the Company shall be
advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate
shall be issued if, and to the extent that, appropriate adjustment shall
otherwise have been made in lieu of the issuance thereof.

 

Section 23.                                   Redemption.

 

(a)                             The Board may, at its option, at
any time during the period commencing on the Rights Dividend Declaration Date
and ending on the earlier of (i) the Close of Business on the tenth day
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall
have occurred prior to the Record Date, the Close of Business on the tenth day
following the Record Date), or (ii) the Close of Business on the Final
Expiration Date, (the “Redemption Period”) cause the Company to redeem
all but not less than all the then outstanding Rights at a redemption price of
$0.01 per Right, as such amount may be appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof

 

37

 

(such redemption price being
hereinafter referred to as the “Redemption Price”); provided, however,
that, if the Board authorizes redemption of the Rights on or after the time a
Person becomes an Acquiring Person, then such authorization shall require the
concurrence of two-thirds of the Directors. 
If, following the occurrence of a Stock Acquisition Date and following
the expiration of the Company’s right of redemption hereunder (i) a Person who
is an Acquiring Person shall have transferred or otherwise disposed of a number
of shares of Common Stock in one transaction or series of transactions, not
directly or indirectly involving the Company or any of its Subsidiaries, which
did not result in the occurrence of a Triggering Event such that such Person is
thereafter a Beneficial Owner of 10% or less of the outstanding shares of
Common Stock, (ii) there are no other Persons, immediately following the
occurrence of the event described in clause (i), who are Acquiring Persons, and
(iii) the Board, by a vote of two-thirds of the Board, shall so approve, then
the Company’s right of redemption shall be reinstated and thereafter be subject
to the provisions of this Section 23. 
Notwithstanding anything contained in this Agreement to the contrary,
the Rights shall not be exercisable after the first occurrence of a
Section 11(a)(ii) Event or a Section 13 Event until such time as the
Company’s right of redemption hereunder has expired.  The Company may, at its option, pay the Redemption Price in cash,
shares of Common Stock (based on the current market price of the Common Stock
at the time of redemption) or any other form of consideration deemed
appropriate by the Board.

 

(b)                            Immediately upon the action of the
Board ordering the redemption of the Rights, evidence of which shall have been
filed with the Rights Agent, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption
Price.  Promptly after the action of the
Board ordering the redemption of the Rights, the Company shall give notice of
such redemption to the Rights Agent and the holders of the then outstanding
Rights by mailing such notice to all such holders at their last addresses as
they appear upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Transfer Agent for the Common
Stock; provided, however, that the failure to give, or any defect
in, any such notice shall not affect the validity of such redemption.  Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice.  Each such notice of redemption
will state the method by which the payment of the Redemption Price will be
made.

 

Section 24.                                   Exchange.

 

(a)                             The Board may, at its option, at
any time after any Person becomes an Acquiring Person, exchange all or part of
the then outstanding and exercisable Rights (which shall not include Rights
that have become null and void pursuant to the provisions of Section 7(e)
hereof) for shares of Common Stock at an

 

38

 

exchange ratio of one share of
Common Stock per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
exchange ratio being hereinafter referred to as the “Exchange Ratio”).  Notwithstanding the foregoing, the Board
shall not be empowered to effect such exchange at any time after any Person
(other than the Company, any Subsidiary of the Company, any employee benefit
plan of the Company or any such Subsidiary, or any entity holding Common Stock
for or pursuant to the terms of any such plan), together with all Affiliates
and Associates of such Person, becomes the Beneficial Owner of 50% or more of
the Common Stock then outstanding.

 

(b)                            Immediately upon the action of the
Board ordering the exchange of any Rights pursuant to subsection (a) of
this Section 24 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter of
a holder of such Rights shall be to receive that number of shares of Common
Stock equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio.  The Company shall
promptly give public notice of any such exchange; provided, however,
that the failure to give, or any defect in, such notice shall not affect the
validity of such exchange.  The Company
promptly shall mail a notice of any such exchange to all of the holders of such
Rights at their last addresses as they appear upon the registry books of the
Rights Agent.  Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice.  Each such
notice of exchange will state the method by which the exchange of Common Stock
for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. 
Any partial exchange shall be effected pro rata based on the number of
Rights (other than Rights which have become void pursuant to the provisions of
Section 7(e) hereof) held by each holder of Rights.

 

(c)                             In any exchange pursuant to this Section 24, the Company, at its
option, may substitute common stock equivalents (as defined in
Section 11(a)(iii)) for shares of Common Stock exchangeable for Rights, at
the initial rate of one common stock equivalent for each share of Common Stock,
as appropriately adjusted to reflect adjustments in dividend, liquidation and
voting rights of common stock equivalents pursuant to the terms thereof, so
that each common stock equivalent delivered in lieu of each share of Common
Stock shall have essentially the same dividend, liquidation and voting rights
as one share of Common Stock.

 

(d)                            In the event that there shall not
be sufficient Common Stock issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in accordance with
this Section 24, the Company shall take all such action as may be
necessary to authorize additional shares of Common Stock for issuance upon
exchange of the Rights.

 

(e)                             The Company shall not be required
to issue fractions of shares of Common Stock or to distribute certificates
which evidence fractional shares of

 

39

 

Common Stock.  In lieu of such fractional shares, the
Company shall pay to the registered holders of the Right Certificates with
regard to which such fractional shares would otherwise be issuable an amount in
cash equal to the same fraction of the current market value of a whole share of
Common Stock.  For the purposes of this
paragraph (e), the current market value of a whole share of Common Stock
shall be the closing price of a share of Common Stock (as determined pursuant
to the second sentence of Section 11(d) hereof) for the Trading Day
immediately prior to the date of exchange pursuant to this Section 24.

 

Section 25.                                   Notice of Certain Events.

 

(a)                             In case the Company shall
propose, at any time after the Distribution Date (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings) or (ii) to
offer to the holders of Preferred Stock rights or warrants to subscribe for or
to purchase any additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights or options, or (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification
involving only the subdivision of outstanding Preferred Stock), or (iv) to
effect any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its subsidiaries to effect any sale or
other transfer), in one or more transactions, of more than 50% of the assets or
earning power of the Company and its subsidiaries (taken as a whole) to, any
other Person, or (v) to effect the liquidation, dissolution or winding up
of the Company, then, in each such case, the Company shall give to each holder
of a Rights Certificate, to the extent feasible and in accordance with
Section 26 hereof, a notice of such proposed action, which shall specify
the record date for the purposes of such stock dividend, distribution of rights
or warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and
the date of participation therein by the holders of the shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in
the case of any action covered by clause (i) or (ii) above at least twenty (20)
days prior to the record date for determining holders of the shares of
Preferred Stock for purposes of such action and in the case of any such other
action, at least twenty (20) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
shares of Preferred Stock whichever shall be the earlier.

 

(b)                            In case any Section 11(a)(ii)
Event shall occur, then, in any such case, (i) the Company shall as soon
as practicable thereafter give to each holder of a Rights Certificate and to
the Rights Agent, to the extent feasible and in accordance with Section 26
hereof, a notice of the occurrence of such event which shall specify the event
and the consequences of the event to holders of Rights under
Section 11(a)(ii) hereof, and (ii) all references in the preceding
paragraph to

 

40

 

Preferred Stock shall be deemed
thereafter to refer to Common Stock and/or, if appropriate other securities.

 

Section 26.                                   Notices.

 

Notices
or demands authorized by this Agreement to be given or made by the Rights Agent
or by the holder of any Rights Certificate to or on the Company shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Rights Agent) as
follows:

 

Duratek, Inc.

10100 Old
Columbia Road

Columbia, MD
21046

Attention:  Chief Financial Officer

 

Subject to the provisions of Section 21 hereof, any
notice or demand authorized by this Agreement to be given or made by the
Company or by the holder of any Rights Certificate to or on the Rights Agent
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Company)
as follows:

 

Computershare
Investor Services, LLC

7550 Lucerne Drive, Suite 103

Cleveland, OH 44103

Attention:  Michael Lang

 

Notices or demands authorized by this Agreement to be given
or made by the Company or the Rights Agent to the holder of any Rights
Certificate shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to any such holder at the address of such holder as
shown on the registry books of the Company.

 

Section 27.                                   Supplements and Amendments.

 

Prior
to the Distribution Date and subject to the last sentence of this
Section 27, the Company may in its sole and absolute discretion, and the
Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement in any respect without the approval of any holders
of certificates representing shares of Common Stock; provided, however,
that the right of the Board of Directors to extend the Distribution Date shall
not require any amendment or supplement hereunder.  From and after the Distribution Date and subject to the last
sentence of this Section 27, the Company may in its sole and absolute
discretion, and the Rights Agent shall at any time and from time to time, if

 

41

 

the Company so directs, supplement
or amend this Agreement without the approval of any holders of Rights
Certificates in order (i) to cure any ambiguity, (ii) to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or
lengthen any time period hereunder or (iv) to change or supplement the
provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person or an Affiliate or
Associate of any such Person); provided, however, that this
Agreement may not be supplemented or amended (A) to lengthen a time period
relating to when the Rights may be redeemed at such time as the Rights are not
then redeemable, or (B) to lengthen any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights (other than an
Acquiring Person or an Affiliate or Associate of any such Person).  Upon
the delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the
terms of this Section 27, the Rights Agent shall execute such supplement
or amendment.  Notwithstanding any other
provision hereof, the Rights Agent’s consent must be obtained regarding any
amendment or supplement pursuant to this Section 27 which alters the
Rights Agent’s rights or duties. 
Notwithstanding anything contained in this Agreement to the contrary, no
supplement or amendment shall be made which changes the Redemption Price.

 

Section 28.                                   Successors.

 

All
the covenants and provisions of this Agreement by or for the benefit of the
Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.

 

Section 29.                                   Determinations and Actions by the Board,
etc.

 

For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common
Stock of which any Person is the Beneficial Owner, shall be made in accordance
with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and
Regulations under the Exchange Act.  The
Board (with, where specifically provided for herein, the concurrence of
two-thirds of the Directors) shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board (with, where specifically provided for herein, the
concurrence of two-thirds of the Directors) or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of
this Agreement, and (ii) make all determinations deemed necessary or advisable
for the administration

 

42

 

of this Agreement (including
without limitation a determination to redeem or not redeem the Rights or to
amend the Agreement).  All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done
or made by the Board (with, where specifically provided for herein, the concurrence
of two-thirds of the Directors) in good faith, shall (x) be final, conclusive
and binding on the Company, the Rights Agent, the holders of the Rights and all
other Persons, and (y) not subject any director to any liability to the holders
of the Rights.

 

Section 30.                                   Benefits of this Agreement.

 

Nothing
in this Agreement shall be construed to give to any Person other than the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Distribution Date, the registered holders of the Common
Stock) any legal or equitable right, remedy or claim under this Agreement; but
this Agreement shall be for the sole and exclusive benefit of the Company, the
Rights Agent and the registered holders of the Rights Certificates (and, prior
to the Distribution Date, registered holders of Common Stock).  Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the
interests of the holders of shares of Common Stock.

 

Section 31.                                   Severability.

 

If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however,
that notwithstanding anything in this Agreement to the contrary, if any such
term, provision, covenant or restriction is held by such court or authority to
be invalid, void or unenforceable and the Board of Directors determines in its
good faith judgment that severing the invalid language from this Agreement
would materially and adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be reinstated
and shall not expire until the Close of Business on the tenth day following the
date of such determination by the Board.

 

Section 32.                                   Governing Law.

 

This
Agreement, each Right and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of Delaware and for
all purposes shall be governed by and construed in accordance with the laws of
such State; provided, however, that the rights and obligations of the Rights
Agent shall be governed by and construed in accordance with the laws of the
State of New York.

 

43

 

Section 33.                                   Counterparts.

 

This
Agreement may be executed in any number of counterparts.  It shall not be necessary that the signature
of or on behalf of each party appears on each counterpart, but it shall be
sufficient that the signature of or on behalf of each party appears on one or
more of the counterparts.  All
counterparts shall collectively constitute a single agreement.  It shall not be necessary in any proof of
this Agreement to produce or account for more than a number of counterparts
containing the respective signatures of or on behalf of all of the parties.

 

Section 34.                                   Descriptive Headings.

 

Descriptive
headings of the several Sections of this Agreement are inserted for convenience
only and shall not control or affect the meaning or construction of any of the
provisions hereof.

 

44

 

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

 

	
   

  	
  DURATEK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert F. Shawver

  	
   

  
	
   

  	
  Name: 

  	
  Robert F. Shawver

  
	
   

  	
  Title:

  	
  Executive Vice President and

  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COMPUTERSHARE INVESTOR

  SERVICES, LLC, as Rights Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael J. Lang

  	
   

  
	
   

  	
  Name:

  	
  Michael J. Lang

  
	
   

  	
  Title:

  	
  Senior Relationship Manager

  
					

 

45

 

TABLE OF CONTENTS

 

	
  Section 1.

  	
  Certain Definitions.

  	
   

  
	
  Section 2.

  	
  Appointment of Rights Agent.

  	
   

  
	
  Section 3.

  	
  Issue of Rights Certificates.

  	
   

  
	
  Section 4.

  	
  Form of Rights Certificates.

  	
   

  
	
  Section 5.

  	
  Countersignature and Registration.

  	
   

  
	
  Section 6.

  	
  Transfer, Split Up, Combination and
  Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights
  Certificates.

  	
   

  
	
  Section 7.

  	
  Exercise of Rights;
  Purchase Price; Expiration Date of Rights.

  	
   

  
	
  Section 8.

  	
  Cancellation of
  Rights Certificates.

  	
   

  
	
  Section 9.

  	
  Reservation and Availability of Capital
  Stock.

  	
   

  
	
  Section 10.

  	
  Preferred Stock Record Date.

  	
   

  
	
  Section 11.

  	
  Adjustment of Purchase Price, Number and
  Kind of Shares or Number of Rights.

  	
   

  
	
  Section 12.

  	
  Certificate of
  Adjusted Purchase Price or Number of Shares.

  	
   

  
	
  Section 13.

  	
  Consolidation, Merger or Sale or Transfer
  of Assets or Earning Power.

  	
   

  
	
  Section 14.

  	
  Fractional Rights and Fractional Shares.

  	
   

  
	
  Section 15.

  	
  Rights of Action.

  	
   

  
	
  Section 16.

  	
  Agreement of Rights Holders.

  	
   

  
	
  Section 17.

  	
  Rights Certificate Holder Not Deemed a
  Stockholder.

  	
   

  
	
  Section 18.

  	
  Duties of Rights Agent.

  	
   

  
	
  Section 19.

  	
  Compensation and
  Indemnification of the Rights Agent.

  	
   

  
	
  Section 20.

  	
  Merger or Consolidation or Change of Name
  of Rights Agent.

  	
   

  
	
  Section 21.

  	
  Change of Rights Agent.

  	
   

  
	
  Section 22.

  	
  Issuance of New Rights Certificates.

  	
   

  
	
  Section 23.

  	
  Redemption.

  	
   

  
	
  Section 24.

  	
  Exchange.

  	
   

  
	
  Section 25.

  	
  Notice of Certain Events.

  	
   

  
	
  Section 26.

  	
  Notices.

  	
   

  
	
  Section 27.

  	
  Supplements and Amendments.

  	
   

  
	
  Section 28.

  	
  Successors.

  	
   

  
	
  Section 29.

  	
  Determinations and Actions by the Board,
  etc.

  	
   

  
	
  Section 30.

  	
  Benefits of this Agreement.

  	
   

  
	
  Section 31.

  	
  Severability.

  	
   

  
	
  Section 32.

  	
  Governing Law.

  	
   

  
	
  Section 33.

  	
  Counterparts.

  	
   

  
	
  Section 34.

  	
  Descriptive Headings.

  	
   

  

 

 

	
  EXHIBITS

  	
   

  
	
   

  	
   

  
	
  Exhibit A

  	
  Certificate of Designation

  
	
  Exhibit B

  	
  Summary of Rights

  
	
  Exhibit C

  	
  Form of Rights Certificate

  

 

 

DURATEK, INC.

 

and

 

COMPUTERSHARE INVESTOR SERVICES, LLC

 

as Rights Agent

 

 

RIGHTS AGREEMENT

 

dated as of December 16, 2003

 

 

Exhibit A

 

CERTIFICATE OF
DESIGNATION, PREFERENCES AND

RIGHTS OF

SERIES B JUNIOR PARTICIPATING PREFERRED STOCK

OF

DURATEK, INC.

 

Pursuant to
Section 151 of the General Corporation Law

of the State of Delaware

 

I, Robert F. Shawver, Executive Vice
President and Chief Financial Officer of Duratek, Inc., a corporation organized
and existing under the General Corporation Law of the State of Delaware, in
accordance with the provisions of Section 103 thereof, DO HEREBY CERTIFY:

 

That pursuant to the authority conferred
upon the Board of Directors by the Amended and Restated Certificate of
Incorporation of the said Corporation, the said Board of Directors on
December 10, 2003 adopted the following resolution creating a series of
100,000 shares of Preferred Stock designated as Series B Junior Participating
Preferred Stock:

 

RESOLVED, that pursuant to the authority
granted to and vested in the Board of Directors of this Corporation (the
“Board”) in accordance with the provisions of its Amended and Restated
Certificate of Incorporation a series of Preferred Stock of the Corporation be
and it hereby is created, and that the designation and amount thereof and the
voting rights or powers, preferences and relative, participating, optional and
other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:

 

Section 1.                    Designation and Amount.  The shares of such series, par value $.01
per share, shall be designated as “Series B Junior Participating Preferred
Stock” and the number of shares constituting such series shall be One Hundred
Thousand (100,000).  Such number of
shares may be increased or decreased by resolution of the Board of Directors;
provided, that no decrease shall reduce the number of shares of Series B Junior
Participating Preferred Stock to a number less than the number of shares then
outstanding plus the number of shares reserved for issuance upon the exercise
of outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series B
Junior Participating Preferred Stock.

 

 

Section 2.                    Dividends and Distributions.

 

(A)                              Subject
to the prior and superior rights of the holders of any shares of any series of
Preferred Stock ranking prior and superior to the shares of Series B Junior
Participating Preferred Stock with respect to dividends, the holders of shares
of Series B Junior Participating Preferred Stock shall be entitled to receive,
when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly dividends payable in cash on the 15th day
of January, April, July and October, in each year (each such date being
referred to herein as a “Quarterly Dividend Payment Date”), commencing on the
first Quarterly Dividend Payment Date after first issuance of a share or
fraction of a share of Series B Junior Participating Preferred Stock, in an
amount per share (rounded to the nearest cent) equal to the greater of
(a) $10.00 or (b) subject to the provision for adjustment hereinafter set
forth, 1,000 times the aggregate per share amount of all cash dividends, and
1,000 times the aggregate per share amount (payable in kind) of all non-cash
dividends or other distributions, other than a dividend payable in shares of
common stock, par value $.01 per share, of the Corporation (the “Common Stock”),
or a subdivision of the outstanding shares of Common Stock (by reclassification
or otherwise), declared on the Common Stock, since the immediately preceding
Quarterly Dividend Payment Date, or, with respect to the first Quarterly
Dividend Payment Date, since the first issuance of any share or fraction of a
share of Series B Junior Participating Preferred Stock.  In the event the Corporation shall at any
time after December 16, 2003 (the “Rights Declaration Date”)
(i) declare or pay any dividend on Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, or
(iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the amount to which holders of shares of Series
B Junior Participating Preferred Stock were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

 

(B)                                The
Corporation shall declare a dividend or distribution on the Series B Junior
Participating Preferred Stock as provided in paragraph (A) above
immediately after it declares a dividend or distribution on the Common Stock
(other than a dividend payable in shares of Common Stock); provided that, in
the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the
next subsequent Quarterly Dividend Payment Date, a dividend of $10.00 per share
on the Series B Junior Participating Preferred

 

2

 

Stock
shall nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.

 

(C)                                Dividends
shall begin to accrue and be cumulative on outstanding shares of Series B
Junior Participating Preferred Stock from the Quarterly Dividend Payment Date
next preceding the date of issue of such shares of Series B Junior
Participating Preferred Stock, unless the date of issue of such shares is prior
to the record date set for the first Quarterly Dividend Payment Date, in which
case dividends on such shares shall begin to accrue from the date of issue of
such shares, or unless the date of issue is a Quarterly Dividend Payment Date
or is a date after the record date for the determination of holders of shares
of Series B Junior Participating Preferred Stock entitled to receive a
quarterly dividend and before such Quarterly Dividend Payment Date, in either
of which event such dividends shall begin to accrue and be cumulative from such
Quarterly Dividend Payment Date. 
Accrued but unpaid dividends shall not bear interest.  Dividends paid on the shares of Series B
Junior Participating Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding.  The Board of Directors may
fix a record date for the determination of holders of shares of Series B Junior
Participating Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 50 days
prior to the date fixed for the payment thereof.

 

Section 3.                    Voting Rights.  The holders of shares of Series B Junior
Participating Preferred Stock shall have the following voting rights:

 

(A)                              Subject
to the provision for adjustment hereinafter set forth, each share of Series B
Junior Participating Preferred Stock shall entitle the holder thereof to 1,000
votes on all matters submitted to a vote of the stockholders of the
Corporation.  In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the number of
votes per share to which holders of shares of Series B Junior Participating
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

 

(B)                                Except
as otherwise provided by law, the holders of shares of Series B Junior
Participating Preferred Stock and the holders of shares of

 

3

 

Common
Stock shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.

 

(C)                                Except
as set forth herein, holders of Series B Junior Participating Preferred Stock
shall have no special voting rights and their consent shall not be required
(except to the extent they are entitled to vote with holders of Common Stock as
set forth herein) for taking any corporate action.

 

Section 4.                    Certain Restrictions.

 

(A)                              Whenever
dividends or distributions payable on the Series B Junior Participating
Preferred Stock as provided in Section 2 are not paid, thereafter and
until such dividends and distributions, whether or not declared, on shares of
Series B Junior Participating Preferred Stock outstanding shall have been paid
in full, the Corporation shall not:

 

(i)                                     declare
or pay dividends on, or make any other distributions on, or redeem or purchase
or otherwise acquire for consideration any shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series B Junior Participating Preferred Stock; or

 

(ii)                                  declare or pay dividends on,
or make any other distributions on, any shares of stock ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with
the Series B Junior Participating Preferred Stock, except dividends paid
ratably on the Series B Junior Participating Preferred Stock and all such
parity stock on which dividends are payable in proportion to the total amounts
to which the holders of all such shares are then entitled; or

 

(iii)                               redeem or purchase or otherwise
acquire for consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series B
Junior Participating Preferred Stock, provided that the Corporation may at any
time redeem, purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation ranking junior (either as
to dividends or upon dissolution, liquidation or winding up) to the Series B
Junior Participating Preferred Stock; or

 

(iv)                              redeem or purchase or otherwise
acquire for consideration any shares of Series B Junior Participating Preferred
Stock, or any shares of stock ranking on a parity with the Series B Junior
Participating Preferred Stock, except in accordance with a purchase offer made
in writing or by publication (as determined by the Board of Directors) to all
holders of such

 

4

 

shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series
or classes.

 

(B)                                The
Corporation shall not permit any subsidiary of the Corporation to purchase or
otherwise acquire for consideration any shares of stock of the Corporation
unless the Corporation could, under paragraph (A) of this Section 4,
purchase or otherwise acquire such shares at such time and in such manner.

 

Section 5.                    Reacquired Shares.  Any shares of Series B Junior Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any
manner whatsoever shall be retired and canceled promptly after the acquisition
thereof.  All such shares shall upon
their cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.

 

Section 6.                    Liquidation, Dissolution or Winding Up.

 

(A)                              Upon
any liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series B Junior Participating Preferred Stock unless, prior
thereto, the holders of shares of Series B Junior Participating Preferred Stock
shall have received $58,000.00 per share, plus any unpaid dividends and
distributions payable thereon, whether or not declared, to the date of such
payment (the “Series B Liquidation Preference”).  Following the payment of the full amount of the Series B
Liquidation Preference, no additional distributions shall be made to the
holders of Series B Junior Participating Preferred Stock unless, prior thereto,
the holders of shares of Common Stock shall have received an amount per share
(the “Common Adjustment”) equal to the quotient obtained by dividing
(i) the Series B Liquidation Preference by (ii) 1,000 (as appropriately
adjusted as set forth in subparagraph (C) below to reflect such events as
stock splits, stock dividends and recapitalizations with respect to the Common
Stock) (such number in clause (ii) immediately above being referred to as the
“Adjustment Number”).  Following the
payment of the full amount of the Series B Liquidation Preference and the
Common Adjustment in respect of all outstanding shares of Series B Junior Participating
Preferred Stock and Common Stock, respectively, holders of Series B Junior
Participating Preferred Stock and holders of shares of Common Stock shall
receive their ratable and proportionate share of the

 

5

 

remaining
assets to be distributed in the ratio of the Adjustment Number to one (1) with
respect to such Preferred Stock and Common Stock, on a per share basis,
respectively.

 

(B)                                In
the event, however, that there are not sufficient assets available to permit
payment in full of the Series B Liquidation Preference and the liquidation
preferences of all other series of preferred stock, if any, which rank on a
parity with the Series B Junior Participating Preferred Stock, then such
remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences.  In the event, however, that there are
sufficient assets available to permit payment in full of the Common Adjustment,
then such remaining assets shall be distributed ratably to the holders of
Common Stock.

 

(C)                                In
the event the Corporation shall at any time after the Rights Declaration Date
(i) declare any dividend on Common Stock payable in shares of Common
Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine
the outstanding Common Stock into a smaller number of shares, then in each such
case the Adjustment Number in effect immediately prior to such event shall be
adjusted by multiplying such Adjustment Number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common Stock
that were outstanding immediately prior to such event.

 

Section 7.                    Consolidation, Merger, etc.  In case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case the shares of Series B Junior
Participating Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or
exchanged.  In the event the Corporation
shall at any time after the Rights Declaration Date (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock, or (iii) combine the outstanding Common
Stock into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of
shares of Series B Junior Participating Preferred Stock shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the

 

6

 

number
of shares of Common Stock that were outstanding immediately prior to such
event.

 

Section 8.                    No
Redemption.  The Series B Junior
Participating Preferred Stock shall not be redeemable.

 

Section 9.                    Ranking.  Notwithstanding anything contained herein to
the contrary, the Series B Junior Participating Preferred Stock shall rank
junior to all other series of the Corporation’s Preferred Stock as to voting
rights, the payment of dividends and the distribution of assets in liquidation,
unless the terms of any such series shall provide otherwise.

 

Section 10.              Amendment.
The Amended and Restated Certificate of Incorporation of the Corporation shall
not be further amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series B Junior Participating
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of at least a majority of the outstanding shares of Series B Junior
Participating Preferred Stock, voting separately as a class.

 

Section 11.              Fractional Shares.  Series B Junior Participating Preferred
Stock may be issued in fractions of a share which shall entitle the holders, in
proportion to such holders fractional shares, to exercise voting rights,
receive dividends, participate in distributions and to have the benefit of all
other rights of holders of Series B Junior Participating Preferred Stock.

 

7

 

IN WITNESS WHEREOF, Duratek, Inc. has
caused this Certificate of Designation to be signed this 16th  day of December  2003.

 

	
   

  	
  DURATEK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert F. Shawver

  
	
   

  	
  Robert F. Shawver

  
	
   

  	
  Executive Vice President and

  Chief Financial Officer

  

 

8

 

Exhibit B

 

SUMMARY OF RIGHTS TO
PURCHASE

SERIES B JUNIOR PARTICIPATING PREFERRED STOCK

 

The Board of Directors of Duratek, Inc., a Delaware Corporation
(the “Company”), has declared a dividend distribution of one right (“Right”)
for each outstanding share of common stock of the Company and each outstanding
share of 8% Cumulative Convertible Redeemable Preferred Stock of the Company on
an as-converted basis (collectively, the “Common Stock”).  The distribution is payable to stockholders
of record on December 29, 2003. 
Each Right, when exercisable, entitles the registered holder to purchase
from the Company one-one thousandth of a share of Series B Junior Participating
Preferred Stock (“Preferred Stock”) at a price of $58.00 per one-one thousandth
share (the “Purchase Price”), subject to adjustment.  The description and terms of the Rights are set forth in a Rights
Agreement (the “Rights Agreement”) between the Company and Computershare
Investor Services, as Rights Agent (the “Rights Agent”).

 

Initially, the Rights will be attached to all certificates
representing shares of Common Stock then outstanding, and no separate
certificates evidencing the Rights will be distributed.  The Rights will separate from the Common
Stock and a distribution of Rights Certificates (as defined below) will occur
upon the earlier to occur of (i) 10 days following a public announcement that a
person or group of affiliated or associated persons (an “Acquiring Person”) has
acquired, or obtained the right to acquire, beneficial ownership of 20% or more
of the outstanding shares of Common Stock (the “Stock Acquisition Date”) or
(ii) 10 business days (or such later date as the Board of Directors of the
Company may  determine) following the
commencement of, or the first public announcement of the intention to commence,
a tender offer or exchange offer the consummation of which would result in the
beneficial ownership by a person of 20% or more of the outstanding shares of
Common Stock (the earlier of such dates being called the “Distribution
Date”).  Due to their current ownership
position in excess of 20% of the Company’s outstanding Common Stock, under the
Rights Agreement, The Carlyle Group and its affiliates and associates shall not
be considered an Acquiring Person unless it and its affiliates and associates
shall acquire more than  an additional
5% of the Company’s outstanding Common Stock in excess of the amount owned by
such persons on the date of adoption of the Rights Agreement.

 

Until the Distribution Date, (i) the Rights will be evidenced
by the Common Stock certificates, and will be transferred with and only with
the Common Stock certificates, (ii) new Common Stock certificates issued after
December 29, 2003 upon transfer or new issuance of the Common Stock will
contain a notation incorporating the Rights Agreement by reference, and (iii)
the surrender for

 

 

transfer
of any certificates for Common Stock outstanding will also constitute the
transfer of the Rights associated with the Common Stock represented by such
certificate.

 

The Rights are not exercisable until the Distribution Date and
will expire at the close of business on December 16, 2013, unless earlier
redeemed or exchanged by the Company as described below.  The Rights will not be exercisable by a
holder in any jurisdiction where the requisite qualification to the issuance to
such holder, or the exercise by such holder, of the Rights has not been
obtained or is not obtainable.

 

As soon as practicable following the Distribution Date,
separate certificates evidencing the Rights (“Rights Certificates”) will be
mailed to holders of record of the Common Stock as of the close of business on
the Distribution Date and, thereafter, the separate Rights Certificates alone
will evidence the Rights.  Except as
otherwise determined by the Board of Directors of the Company, only shares of
Common Stock issued prior to the Distribution Date will be issued with Rights.

 

In the event that a Person becomes the beneficial owner of 20%
or more of the then outstanding shares of Common Stock, each holder of a Right
will, after the end of a redemption period referred to below, have the right to
exercise the Right by purchasing, for an amount equal to the Purchase Price,
Common Stock (or, in certain circumstances, cash, property or other securities
of the Company) having a value equal to two times such amount.  Notwithstanding any of the foregoing,
following the occurrence of the events set forth in this paragraph, all Rights
that are, or (under certain circumstances specified in the Rights Agreement)
were, beneficially owned by any Acquiring Person will be null and void.  However, Rights are not exercisable
following the occurrence of the events set forth above until such time as the
Rights are no longer redeemable by the Company as set forth below.

 

For example, at a Purchase Price of $58.00 per Right, each
Right not owned by an Acquiring Person (or by certain related parties)
following an event set forth in the preceding paragraph would entitle its
holder to purchase $116.00 worth of Common Stock (or other consideration, as
noted above) for $58.00.  Assuming that
the Common Stock had a per share value of $29.00 at such time, the holder of
each valid Right would be entitled to purchase four shares of Common Stock for
$58.00.

 

In the event that, at any time following the Stock Acquisition
Date, (i) the Company is acquired in a merger or other business combination
transaction in which the Company is not the surviving corporation, or (ii) 50%
or more of the Company’s assets or earning power is sold or transferred, each
holder of a Right (except Rights which previously have been voided as set forth
above) shall, after the expiration of the redemption period referred to below,
have the right to receive, upon exercise, common stock of the acquiring company
having a value equal to two

 

2

 

times
the Purchase Price of the Right (e.g., common stock of the acquiring
company having a value of $116.00 for the $58.00 Purchase Price).

 

At any time after a person or group of affiliated or associated
persons becomes an Acquiring Person and prior to the acquisition by such person
or group of 50% or more of the outstanding Common Stock, the Board of Directors
of the Company may exchange the Rights (other than Rights owned by such person
or group which have become void), in whole or in part, at an exchange ratio of
one share of Common Stock (or, in certain circumstances, other equity
securities of the Company which are deemed by the Board of Directors of the
Company to have the same value as shares of Common Stock) per Right (subject to
adjustment).

 

The Purchase Price payable, and the number of one-one
thousandths of a share of Preferred Stock or other securities or property
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution under certain circumstances.

 

In general, the Board of Directors of the Company, may cause
the Company to redeem the Rights in whole, but not in part, at any time during
the period commencing on December 16, 2003 and ending on the tenth day
following the Stock Acquisition Date (the “Redemption Period”) at a price of
$0.01 per Right (payable in cash, Common Stock or other consideration deemed
appropriate by the Board of Directors of the Company).  Under certain circumstances set forth in the
Rights Agreement, the decision to redeem the Rights will require the
concurrence of two-thirds of the Directors. 
After the Redemption Period has expired, the Company’s right of redemption
may be reinstated if an Acquiring Person reduces his beneficial ownership to
10% or less of the outstanding shares of Common Stock in a transaction or
series of transactions not involving the Company and there are no other
Acquiring Persons.  Immediately upon the
action of the Board of Directors of the Company ordering redemption of the
Rights, the Rights will terminate and the only right of the holders of Rights
will be to receive the $0.01 redemption price.

 

Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends. 
While the distribution of the Rights will not be subject to federal
taxation to stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Stock (or other consideration) of the Company or for
common stock of the acquiring company as set forth above.

 

*   *   *

 

A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Current Report on Form
8-K.  A copy of the Rights Agreement is
available free of charge from the Company. 
This summary

 

3

 

description
of the Rights does not purport to be complete and is qualified in its entirety
by reference to the Rights Agreement.

 

4

 

Exhibit C

 

[Form of Rights
Certificate]

 

	
  Certificate No.
  R-          

  	
   

  	
  Rights

  

 

NOT EXERCISABLE
AFTER DECEMBER 16, 2013 OR EARLIER IF REDEEMED OR EXCHANGED BY THE
COMPANY.  THE RIGHTS ARE SUBJECT TO
REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.01 PER RIGHT ON THE TERMS SET
FORTH IN THE RIGHTS AGREEMENT.  UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF ANY SUCH PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL
AND VOID.  THE RIGHTS SHALL NOT BE
EXERCISABLE, AND SHALL BE VOID SO LONG AS HELD, BY A HOLDER IN ANY JURISDICTION
WHERE THE REQUISITE QUALIFICATION TO THE ISSUANCE TO SUCH HOLDER, OR THE
EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN SUCH JURISDICTION SHALL NOT HAVE BEEN
OBTAINED OR BE OBTAINABLE.  [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).
ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.] */

 

*/                                     The
portion of the legend in brackets shall be inserted only if applicable and
shall replace the preceding sentence.

 

 

Rights Certificate

 

 

This certifies that
                                ,
or its registered assigns, is the registered owner of the number of Rights set
forth above, each of which entitles the owner thereof, subject to the terms,
provisions and conditions of the Rights Agreement, dated as of
December 16, 2003, as the same may be amended from time to time (the
“Rights Agreement”), between Duratek, Inc., a Delaware corporation (the
“Company”), and ComputerShare Investor Services, LLC, a Delaware limited
liability company, as Rights Agent (the “Rights Agent”), to purchase from the
Company at any time prior to December 16, 2013 at the office or offices of
the Rights Agent designated for such purpose, or its successors as Rights
Agent, one-one thousandth of a fully paid, non-assessable share of Series B
Junior Participating Preferred Stock, par value $.01 per share (the “Preferred
Stock”) of the Company, at a purchase price of $58.00 per one-one thousandth
share (the “Purchase Price”), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly
executed.  The number of Rights
evidenced by this Rights Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above, and the Purchase Price per
share set forth above, are the number and Purchase Price as of
            , based
on the Preferred Stock as constituted at such date, and are subject to
adjustment upon the happening of certain events as provided in the Rights
Agreement.

 

From and after the occurrence of an event described in
Section 11(a)(ii) of the Rights Agreement, the Rights evidenced by this
Rights Certificate beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Person (as such terms are defined in the
Rights Agreement), (ii) a transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, concurrently with or after such
transfer, became an Acquiring Person or an Affiliate or Associate of an
Acquiring Person shall become null and void and no holder hereof shall have any
right with respect to such Rights from and after the occurrence of such
Section 11(a)(ii) Event.

 

The Rights evidenced by this Rights Certificate shall not be
exercisable, and shall be void so long as held, by a holder in any jurisdiction
where the requisite qualification to the issuance to such holder, or the
exercise by such holder, of the Rights in such jurisdiction shall not have been
obtained or be obtainable.

 

As provided in the Rights Agreement, the Purchase Price and the
number and kind of shares of Preferred Stock or other securities, which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are

 

2

 

subject
to modification and adjustment upon the happening of certain events, including
Triggering Events (as such term is defined in the Rights Agreement).

 

This Rights Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions and
conditions are hereby incorporated herein by reference and made a part hereof
and to which Rights Agreement reference is hereby made for a full description
of the rights, limitations of rights, obligations, duties and immunities
hereunder of the Rights Agent, the Company and the holders of the Rights
Certificates, which limitations of rights include the temporary suspension of
the exercisability of such Rights under the specific circumstances set forth in
the Rights Agreement.  Copies of the
Rights Agreement are on file at the above-mentioned office of the Rights Agent
and are also available upon written request to the Rights Agent.

 

This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office or offices of the Rights Agent
designated for such purpose, may be exchanged for another Rights Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the
holder to purchase a like aggregate number of one-one thousandths of a share of
Preferred Stock as the Rights evidenced by the Rights Certificate or Rights
Certificates surrendered shall have entitled such holder to purchase.  If this Rights Certificate shall be
exercised in part, the holder shall be entitled to receive upon surrender
hereof another Rights Certificate or Rights Certificates for the number of
whole Rights not exercised.

 

Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Certificate may be redeemed by the Company at its option at a
redemption price of $0.01 per Right at any time prior to the earlier of the
close of business on (i) the tenth day following the Stock Acquisition
Date, and (ii) the Final Expiration Date (as defined in the Rights
Agreement).  Under certain circumstances
set forth in the Rights Agreement, the decision to redeem shall require the
concurrence of two-thirds of the Directors. 
After the expiration of the redemption period, the Company’s right of
redemption may be reinstated if the Acquiring Person reduces its beneficial
ownership to 10% or less of the outstanding shares of Common Stock in a
transaction or series of transactions not involving the Company, and such
reinstatement is approved by the Company’s Board of Directors.

 

At any time after a person becomes an Acquiring Person and
prior to the acquisition by such person of 50% or more of the outstanding
Common Stock, the Board of Directors of the Company may exchange the Rights
(other than Rights owned by such Acquiring Person which have become void), in
whole or in part, at an exchange ratio of one share of Common Stock (or, in
certain circumstances, other equity securities of the Company which are deemed
by the Company’s Board of Directors to have the same value as shares of Common
Stock) per Right (subject to adjustment).

 

3

 

No fractional shares of Preferred Stock will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractions which
are integral multiples of one-one thousandth of a share of Preferred Stock,
which may, at the election of the Company, be evidenced by depositary
receipts), but in lieu thereof a cash payment will be made, as provided in the
Rights Agreement.

 

No holder of this Rights Certificate, as such, shall be
entitled to vote or receive dividends or be deemed for any purpose the holder
of shares of Preferred Stock or of any other securities of the Company which
may at any time be issuable on the exercise hereof, nor shall anything
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a stockholder of the Company or
any right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.

 

This Rights Certificate shall not be valid or obligatory for
any purpose until it shall have been countersigned by an authorized signatory
of the Rights Agent.

 

4

 

WITNESS the facsimile signature of the proper officers of the
Company.

 

	
  Dated as of 

  	
   

  	
  ,

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DURATEK, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
										

 

 

Countersigned:

 

 

	
  Dated as of 

  	
   

  	
  ,

  	
   

  	
   

  	
   

  

 

COMPUTERSHARE INVESTOR SERVICES,
LLC

as Rights Agent

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  

 

5

 

[Form of Reverse Side
of Rights Certificate]

 

 

FORM OF ASSIGNMENT

 

 

(To be executed by the
registered holder if

such holder desires to transfer
the

Rights Certificate.)

 

FOR VALUE RECEIVED

hereby sells, assigns and transfers unto

(Please print name and address of transferee)

 

 

this Rights Certificate,
together with all right, title and interest therein, and does hereby
irrevocably constitute and appoint
                           
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.

 

 

	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  	
   

  

 

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Signature

  

 

Signature Guaranteed:

 

 

Certificate

 

The undersigned hereby certifies by checking the appropriate
boxes that:

 

(1)                                  this
Rights Certificate [  ] is [  ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);

 

 

(2)                                  after
due inquiry and to the best knowledge of the undersigned, it [  ] did [ 
] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person.

 

 

	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Signature

  	
   

  

 

 

Signature Guaranteed:

 

 

NOTICE

 

The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.

 

 

FORM OF ELECTION TO PURCHASE

 

(To be executed if the
registered holder

desires to exercise Rights
represented

by the Rights Certificate.)

 

To:                                                                                                                           

 

The undersigned hereby irrevocably elects to exercise
             
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person which may be issuable upon the
exercise of the Rights) and requests that certificates for such shares be
issued in the name of and delivered to:

 

 

 

(Please print name and address)

 

 

 

Please insert social security

or other identifying
number:                                                    

 

If such number of Rights shall not be all the Rights evidenced
by this Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to:

 

 

 

(Please
print name and address)

 

 

 

Please insert social security

or other identifying
number:                                                                     

 

 

	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
								

 

 

Signature Guaranteed:

 

2

 

Certificate

 

The undersigned hereby certifies by checking the appropriate
boxes that:

 

(1)                                  the
Rights evidenced by this Rights Certificate [  
] are [   ] are not being
exercised by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
in the Rights Agreement);

 

(2)                                  after
due inquiry and to the best knowledge of the undersigned, it [  ] did [ 
] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or became an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person.

 

 

	
  Dated:

  	
   

  	
  ,

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Signature

  	
   

  

 

 

Signature Guaranteed:

 

3

 

NOTICE

 

The signature to the foregoing Election to Purchase and
Certificate must correspond to the name as written upon the face of this Rights
Certificate in every particular, without alteration or enlargement or any
change whatsoever.

 

4

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