Document:

Registration Rights Agreement

 

Exhibit 4.16

Registration Rights Agreement

Dated As of March 21, 2005

among

Republic Services, Inc.

and

Merrill Lynch & Co.,

Merrill Lynch, Pierce, Fenner & Smith

Incorporated,

Banc of America Securities LLC

Barclays Capital Inc.

Citigroup Global Markets Inc.

and

Allen & Company LLC

 

 

REGISTRATION RIGHTS AGREEMENT

          This Registration Rights Agreement (the “Agreement”) is made and entered into this 21st day
of March 2005, among Republic Services, Inc., a Delaware corporation (the “Company”), and Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Banc of America Securities
LLC, Barclays Capital Inc., Citigroup Global Markets Inc. and Allen & Company
LLC (collectively, the “Dealer Managers”).

          This Agreement is made pursuant to the Dealer Manager Agreement, dated February 16, 2005,
among the Company and the Dealer Managers (the “Dealer Manager Agreement”), which provides for
the offer by the Company to exchange its unsecured notes due 2035 (the “New Notes”) for any and
all of its 7-1/8% Notes due 2009 (the “Existing Notes”) validly tendered in the exchange offer
and not properly withdrawn, on the terms and subject to the conditions set forth in the Offering
Memorandum dated February 16, 2005 (the “Offering Memorandum”). In order to induce the Dealer
Managers to enter into the Dealer Manager Agreement, the Company has agreed to provide for the
benefit of the Holders (defined below) the registration rights set forth in this Agreement. The
execution of this Agreement is a condition to the closing under the Dealer Manager Agreement.

          In consideration of the foregoing, the parties hereto agree as follows:

          1. Definitions.

          As used in this Agreement, the following capitalized defined terms shall have the following
meanings:

     “1933 Act” shall mean the Securities Act of 1933, as amended from time to
time.

     “1934 Act” shall mean the Securities Exchange Act of l934, as amended from
time to time.

     “Base Indenture” shall mean the indenture, dated as of August 15, 2001,
between the Company and The Bank of New York, as trustee, relating to the issuance of
senior notes, as the same may be amended, supplemented, waived or otherwise modified from
time to time in accordance with the terms thereof.

     “Closing Date” shall mean the Exchange Date as defined in the Dealer Manager
Agreement.

 

 

     “Company” shall have the meaning set forth in the preamble and shall also
include the Company’s successors.

     “Dealer Manager” or “ Dealer Managers” shall have the meaning set
forth in the preamble.

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

     “Depositary” shall mean The Depository Trust Company, or any other depositary
appointed by the Company, provided, however, that such depositary must have an address in
the Borough of Manhattan, in the City of New York.

     “Exchange Offer” shall mean the exchange offer by the Company of Exchange
Securities for Registrable Securities pursuant to Section 2.1 hereof.

     “Exchange Offer Registration” shall mean a registration under the 1933 Act
effected pursuant to Section 2.1 hereof.

     “Exchange Offer Registration Statement” shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another appropriate form or on
any successor form used for substantially the same transactions), and all amendments and
supplements to such registration statement, including the Prospectus contained therein, all
exhibits thereto and all documents incorporated by reference therein.

     “Exchange Period” shall have the meaning set forth in Section 2.1 hereof.

     “Exchange Securities” shall mean the 6.086% Senior Notes due 2035, Series B
issued by the Company under the Indenture containing terms identical to the Securities in
all material respects (except for references to certain interest rate provisions,
restrictions on transfers and restrictive legends), to be offered to Holders of Securities
in exchange for Registrable Securities pursuant to the Exchange Offer.

     “Existing Notes” shall have the meaning set forth in the preamble.

     “Holder” shall mean each Person who becomes the registered owner of
Registrable Securities under the Indenture and each Participating Broker-Dealer that holds
Exchange Securities for so long as such Participating Broker-Dealer is

2

 

required to deliver a prospectus meeting the requirements of the 1933 Act in connection
with any resale of such Exchange Securities.

     “Indenture” shall mean the Base Indenture, as supplemented by the Second
Supplemental Indenture, dated March 21, 2005, between the Company and The Bank of New York,
as trustee, relating to the issuance of the New Notes, as the same may be amended, waived
or otherwise modified from time to time in accordance with the terms thereof.

     “Majority Holders” shall mean the Holders of a majority of the aggregate
principal amount of Outstanding (as defined in the Indenture) Registrable Securities;
provided that whenever the consent or approval of Holders of a specified percentage
of Registrable Securities is required hereunder, Registrable Securities held by the Company
and other obligors on the Securities or any Affiliate (as defined in the Indenture) of the
Company shall be disregarded in determining whether such consent or approval was given by
the Holders of such required percentage amount.

     “New Notes” shall have the meaning set forth in the preamble.

     “Participating Broker-Dealer” shall mean any Dealer Manager and any other
broker-dealer which makes a market in the New Notes and exchanges Registrable Securities in
the Exchange Offer for Exchange Securities.

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

     “Private Exchange” shall have the meaning set forth in Section 2.1 hereof.

     “Private Exchange Securities” shall have the meaning set forth in Section 2.1
hereof.

     “Prospectus” shall mean the prospectus included in a Registration Statement,
including any preliminary prospectus, and any such prospectus as amended or supplemented by
any prospectus supplement, including any such prospectus supplement with respect to the
terms of the offering of any portion of the Registrable Securities covered by a Shelf
Registration Statement, and by all other amendments and supplements to a prospectus,
including post-effective amendments, and in each case including all material incorporated
by reference therein.

3

 

     “Registrable Securities” shall mean the New Notes and, if issued, the Private
Exchange Securities; provided, however, that New Notes and, if issued, Private Exchange
Securities, shall cease to be Registrable Securities when (i) a Registration Statement with
respect to such New Notes shall have been declared effective under the 1933 Act and such
New Notes shall have been disposed of pursuant to such Registration Statement, (ii) such
New Notes have been sold to the public pursuant to Rule l44 (or any similar provision then
in force, but not Rule 144A) under the 1933 Act, (iii) such New Notes shall have ceased to
be outstanding or (iv) the Exchange Offer is consummated (except in the case of New Notes
which may not be exchanged in the Exchange Offer).

     “Registration Expenses” shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including without
limitation: (i) all SEC, stock exchange or National Association of Securities Dealers,
Inc. (the “NASD”) registration and filing fees, including, if applicable, the fees and
expenses of any “qualified independent underwriter” (and its counsel) that is required to
be retained by any holder of Registrable Securities in accordance with the rules and
regulations of the NASD, (ii) all fees and expenses incurred in connection with compliance
with state securities or blue sky laws and compliance with the rules of the NASD (including
reasonable fees and disbursements of counsel designated by the Majority Holders in
connection with blue sky qualification of any of the Exchange Securities or Registrable
Securities and any filings with the NASD), (iii) all expenses of any Persons in preparing
or assisting in preparing, word processing, printing and distributing any Registration
Statement, any Prospectus, any amendments or supplements thereto, any underwriting
agreements, securities sales agreements and other documents relating to the performance of
and compliance with this Agreement, (iv) all fees and expenses incurred in connection with
the listing, if any, of any of the Registrable Securities on any securities exchange or
exchanges, (v) all rating agency fees, (vi) the fees and disbursements of counsel for the
Company and of the independent public accountants of the Company, including the expenses of
any special audits or “cold comfort” letters required by or incident to such performance
and compliance, (vii) the fees and expenses of the Trustee, and any escrow agent or
custodian, (viii) the reasonable fees and expenses, if any, of the Dealer Managers in
connection with the Exchange Offer, and (ix) the reasonable fees and disbursements of one
special counsel designated by the Majority Holders representing the Holders of Registrable
Securities.

     “Registration Statement” shall mean any registration statement of the Company
which covers any of the Exchange Securities or Registrable Securities

4

 

pursuant to the provisions of this Agreement, and all amendments and supplements to any
such Registration Statement, including post-effective amendments, in each case including
the Prospectus contained therein, all exhibits thereto and all material incorporated by
reference therein.

     “SEC” shall mean the Securities and Exchange Commission or any successor
agency or government body performing the functions currently performed by the United States
Securities and Exchange Commission.

     “Shelf Registration” shall mean a registration effected pursuant to Section
2.2 hereof.

     “Shelf Registration Statement” shall mean a “shelf” registration statement of
the Company pursuant to the provisions of Section 2.2 of this Agreement which covers all of
the Registrable Securities or all of the Private Exchange Securities on an appropriate form
under Rule 415 under the 1933 Act, or any successor or similar rule that may be adopted by
the SEC, and all amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.

     “Trustee” shall mean the trustee with respect to the Securities under the
Indenture.

          2. Registration Under the 1933 Act.

          2.1 Exchange Offer. The Company shall, for the benefit of the Holders, at the
Company’s cost, (A) use its commercially reasonable efforts to prepare and, as soon as
practicable but not later than 90 days following the Closing Date, file with the SEC an Exchange
Offer Registration Statement on an appropriate form under the 1933 Act with respect to a proposed
Exchange Offer and the issuance and delivery to the Holders, in exchange for the Registrable
Securities (other than Private Exchange Securities), of a like principal amount of Exchange
Securities, (B) use its commercially reasonable efforts to cause the Exchange Offer Registration
Statement to be declared effective under the 1933 Act within 180 days of the Closing Date, (C)
use its best efforts to keep the Exchange Offer Registration Statement effective until the
closing of the Exchange Offer and (D) use its commercially reasonable efforts to cause the
Exchange Offer to be consummated not later than 225 days following the Closing Date. The
Exchange Securities will be issued under the Indenture. Upon the effectiveness of the Exchange
Offer Registration Statement, the Company shall promptly commence the Exchange Offer, it being
the objective of such Exchange Offer to enable each Holder

5

 

eligible and electing to exchange Registrable Securities for Exchange Securities (assuming that
such Holder (a) is not an affiliate of the Company within the meaning of Rule 405 under the 1933
Act, (b) is not a broker-dealer tendering Registrable Securities acquired directly from the
Company for its own account, (c) acquired or will acquire the Exchange Securities in the ordinary
course of such Holder’s business and (d) has no arrangements or understandings with any Person to
participate in the Exchange Offer for the purpose of distributing the Exchange Securities) to
transfer such Exchange Securities from and after their receipt without any limitations or
restrictions under the 1933 Act and under state securities or blue sky laws.

          In connection with the Exchange Offer, the Company shall:

          (a) mail as promptly as practicable to each Holder a copy of the Prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and
related documents;

          (b) keep the Exchange Offer open for acceptance for a period of not less than 20 business
days after the date notice thereof is mailed to the Holders (or longer if required by applicable
law) (such period referred to herein as the “Exchange Period”);

          (c) utilize the services of the Depositary for the Exchange Offer;

          (d) permit Holders to withdraw tendered Registrable Securities at any time prior to 5:00
p.m. (Eastern Time), on the last business day of the Exchange Period, by sending to the
institution specified in the notice, a telegram, telex, facsimile transmission or letter setting
forth the name of such Holder, the principal amount of Registrable Securities delivered for
exchange, and a statement that such Holder is withdrawing such Holder’s election to have such
Securities exchanged; and

          (e) otherwise comply in all respects with all applicable laws relating to the Exchange
Offer.

          If, prior to consummation of the Exchange Offer any of the Dealer Managers hold any New
Notes acquired by them directly from the Company, the Company upon the request of any Dealer
Manager shall, simultaneously with the delivery of the Exchange Securities in the Exchange Offer,
issue and deliver to such Dealer Manager in exchange (the “Private Exchange”) for the New Notes
held by such Dealer Manager, a like principal amount of debt securities of the Company on a
senior basis, that are identical (except that such securities shall bear appropriate transfer
restrictions) to the Exchange Securities (the “Private Exchange Securities”).

6

 

          The Exchange Securities and the Private Exchange Securities shall be issued under (i) the
Indenture or (ii) an indenture identical in all material respects to the Indenture and which, in
either case, has been qualified under the Trust Indenture Act of 1939, as amended (the “TIA”), or
is exempt from such qualification and shall provide that the Exchange Securities shall not be
subject to the transfer restrictions set forth in the Indenture but that the Private Exchange
Securities shall be subject to such transfer restrictions. The Indenture or such indenture shall
provide that the Exchange Securities, the Private Exchange Securities and the New Notes shall
vote and consent together on all matters as one class and that neither of the Exchange
Securities, the Private Exchange Securities or the New Notes will have the right to vote or
consent as a separate class on any matter. The Private Exchange Securities shall be of the same
series as and the Company shall use all commercially reasonable efforts to have the Private
Exchange Securities bear the same CUSIP number as the Exchange Securities.

          As soon as practicable after the expiration date of the Exchange Offer and/or the Private
Exchange, as the case may be, the Company shall:

	 	(i)  	accept for exchange all Registrable Securities
duly tendered and not validly withdrawn pursuant to the Exchange Offer
in accordance with the terms of the Exchange Offer Registration
Statement and the letter of transmittal which shall be an exhibit
thereto;
	 
	 	(ii)  	accept for exchange all New Notes properly
tendered pursuant to the Private Exchange;
	 
	 	(iii)  	deliver to the Trustee for cancellation all
Registrable Securities so accepted for exchange; and
	 
	 	(iv)  	cause the Trustee promptly to authenticate and
deliver Exchange Securities or Private Exchange Securities, as the case
may be, to each Holder of Registrable Securities so accepted for
exchange in a principal amount equal to the principal amount of the
Registrable Securities of such Holder so accepted for exchange.

          Interest on each Exchange Security and Private Exchange Security will accrue from the last
date on which interest was paid on the Registrable Securities surrendered in exchange therefor
or, if no interest has been paid on the Registrable Securities, from the date of original
issuance. The Exchange Offer and Private

7

 

Exchange shall not be subject to any conditions, other than (i) that the Exchange Offer or the
Private Exchange, or the making of any exchange by a Holder, does not violate applicable law or
any applicable interpretation of the staff of the SEC, (ii) the due tendering of Registrable
Securities in accordance with the Exchange Offer and the Private Exchange, (iii) that each Holder
of Registrable Securities exchanged in the Exchange Offer shall have represented that all
Exchange Securities to be received by it shall be acquired in the ordinary course of its business
and that at the time of the consummation of the Exchange Offer it shall have no arrangement or
understanding with any person to participate in the distribution (within the meaning of the 1933
Act) of the Exchange Securities and shall have made such other representations as may be
reasonably necessary under applicable SEC rules, regulations or interpretations to render the use
of Form S-4 or other appropriate form under the 1933 Act available and (iv) that no action or
proceeding shall have been instituted or threatened in any court or by or before any governmental
agency with respect to the Exchange Offer or the Private Exchange which, in the Company’s
judgment, would reasonably be expected to impair the ability of the Company to proceed with the
Exchange Offer or the Private Exchange.

          2.2 Shelf Registration. (i) If, because of any changes in law, SEC rules or
regulations or applicable interpretations thereof by the staff of the SEC, the Company is not
permitted to effect the Exchange Offer as contemplated by Section 2.1 hereof, (ii) if for any
other reason the Exchange Offer Registration Statement is not declared effective within 180 days
following the original issue of the Registrable Securities or the Exchange Offer is not
consummated within 225 days after the original issue of the Registrable Securities, or (iii) if a
Holder notifies the Company in writing prior to the 20th day following the
consummation of the Exchange Offer that it is not permitted to participate in the Exchange Offer
or does not receive fully tradeable Exchange Securities pursuant to the Exchange Offer, then in
case of each of clauses (i) through (iii) the Company shall, at its cost:

     (a) As promptly as practicable, but no later than 30 days after being required
to do so under Section 2.2(i) hereof, file with the SEC, and thereafter shall use
its commercially reasonable efforts to cause to be declared effective as promptly as
practicable but no later than 225 days after the original issue of the Registrable
Securities, a Shelf Registration Statement relating to the offer and sale of the
Registrable Securities by the Holders from time to time in accordance with the
methods of distribution elected by the Majority Holders participating in the Shelf
Registration and set forth in such Shelf Registration Statement.

     (b) Use its commercially reasonable efforts to keep the Shelf Registration
Statement continuously effective in order to permit the

8

 

Prospectus forming part thereof to be usable by Holders for a period of two years
from the Closing Date, or for such shorter period that will terminate when all
Registrable Securities covered by the Shelf Registration Statement have been sold
pursuant to the Shelf Registration Statement or cease to be outstanding or otherwise
to be Registrable Securities (the “Effectiveness Period”); provided, however, that
the Effectiveness Period in respect of the Shelf Registration Statement shall be
extended to the extent required to permit dealers to comply with the applicable
prospectus delivery requirements under the 1933 Act and as otherwise provided
herein.

     (c) Notwithstanding any other provisions hereof, use its commercially
reasonable efforts to ensure that (i) any Shelf Registration Statement and any
amendment thereto and any Prospectus forming part thereof and any supplement thereto
complies in all material respects with the 1933 Act and the rules and regulations
thereunder, (ii) any Shelf Registration Statement and any amendment thereto does
not, when it becomes effective, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the
statements therein not misleading and (iii) any Prospectus forming part of any Shelf
Registration Statement, and any supplement to such Prospectus (as amended or
supplemented from time to time), does not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements, in
light of the circumstances under which they were made, not misleading.

          The Company shall not permit any securities other than Registrable Securities to be included
in the Shelf Registration Statement. The Company further agrees, if necessary, to supplement or
amend the Shelf Registration Statement, as required by Section 3(b) below, and to furnish to the
Holders of Registrable Securities copies of any such supplement or amendment promptly after its
being used or filed with the SEC. In the event that the Exchange Offer is consummated within 225
days after the original issue of the Registrable Securities, the Company shall have no obligation
to file a Shelf Registration Statement pursuant to Section 2.2(ii).

          2.3 Expenses. The Company shall pay all Registration Expenses in connection with
the registration pursuant to Section 2.1 or 2.2. Each Holder shall pay all underwriting
discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such
Holder’s Registrable Securities pursuant to the Shelf Registration Statement.

9

 

          2.4. Effectiveness. An Exchange Offer Registration Statement pursuant to Section 2.1
hereof or a Shelf Registration Statement pursuant to Section 2.2 hereof will not be deemed to have
become effective unless it has been declared effective by the SEC; provided, however, that if,
after it has been declared effective, the offering of Registrable Securities pursuant to an
Exchange Offer Registration Statement or a Shelf Registration Statement is interfered with by any
stop order, injunction or other order or requirement of the SEC or any other governmental agency or
court, such Registration Statement will be deemed not to have become effective during the period of
such interference, until the offering of Registrable Securities pursuant to such Registration
Statement may legally resume.

          2.5 Interest. The Indenture executed in connection with the New Notes will provide
that in the event that either (a) the Exchange Offer Registration Statement is not filed with the
SEC on or prior to the 90th calendar day following the date of original issue of the New Notes, (b)
the Exchange Offer Registration Statement has not been declared effective on or prior to the 180th
calendar day following the date of original issue of the New Notes, (c) the Exchange Offer is not
consummated or a Shelf Registration Statement is not declared effective, in either case, on or
prior to the 225th calendar day following the date of original issue of the New Notes or (d) any
Registration Statement required by this Agreement is filed and declared effective but shall
thereafter cease to be effective (other than after such time as all new notes have been disposed of
hereunder) or is not usable for its intended purpose without being succeeded promptly (within 10
business days of the Registration Statement ceasing to be effective or usable) by a post-effective
amendment to such Registration Statement that cures such failure and that is itself promptly
declared effective (within 15 business days of filing)(each such event referred to in clauses (a)
through (d) above, a “Registration Default”), the interest rate borne by the New Notes shall be
increased (“Additional Interest”) by 0.25 percent per annum during the 90 day period immediately
following the occurrence of any such Registration Default, which rate will increase by 0.25 percent
at the end of each subsequent 90-day period that such Additional Interest continues to accrue under
any such circumstance, provided that the maximum aggregate increase in the interest rate will in no
event exceed 0.50 percent per annum. Following the cure of all Registration Defaults the accrual
of Additional Interest will cease and the interest rate will revert to the original rate.

          The Company shall notify the Trustee within three business days after each and every date on
which an event occurs in respect of which Additional Interest is required to be paid (an “Event
Date”). Additional Interest shall be paid by depositing with the Trustee, in trust, for the
benefit of the Holders of Registrable Securities, on or before the applicable semiannual interest
payment date, immediately available funds in sums sufficient to pay the Additional Interest then
due. The Additional Interest due

10

 

shall be payable on each interest payment date to the record Holder of New Notes entitled to
receive the interest payment to be paid on such date as set forth in the Indenture. Each
obligation to pay Additional Interest shall be deemed to accrue from and including the day
following the applicable Event Date.

          3. Registration Procedures.

          In connection with the obligations of the Company with respect to Registration Statements
pursuant to Sections 2.1 and 2.2 hereof, the Company shall:

          (a) prepare and file with the SEC a Registration Statement, within the relevant time period
specified in Section 2, on the appropriate form under the 1933 Act, which form (i) shall be
selected by the Company, (ii) shall, in the case of a Shelf Registration, be available for the
sale of the Registrable Securities by the selling Holders thereof, (iii) shall comply as to form
in all material respects with the requirements of the applicable form and include or incorporate
by reference all financial statements required by the SEC to be filed therewith or incorporated
by reference therein, and (iv) shall comply in all respects with the requirements of Regulation
S-T under the 1933 Act, and use its commercially reasonable efforts to cause such Registration
Statement to become effective and remain effective in accordance with Section 2 hereof;

          (b) prepare and file with the SEC such amendments and post-effective amendments to each
Registration Statement as may be necessary under applicable law to keep such Registration
Statement effective for the applicable period; and cause each Prospectus to be supplemented by
any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or
any similar provision then in force) under the 1933 Act and comply with the provisions of the
1933 Act, the 1934 Act and the rules and regulations thereunder applicable to them with respect
to the disposition of all securities covered by each Registration Statement during the applicable
period in accordance with the intended method or methods of distribution by the selling Holders
thereof (including sales by any Participating Broker-Dealer);

          (c) in the case of a Shelf Registration, (i) notify each Holder of Registrable Securities to
be included in a Shelf Registration Statement, at least five business days prior to filing, that
a Shelf Registration Statement with respect to such Registrable Securities is being filed and
advising such Holders that the distribution of such Registrable Securities will be made in
accordance with the method selected by the Majority Holders participating in the Shelf
Registration; (ii) furnish to each Holder of Registrable Securities to be included in a Shelf
Registration Statement without charge, as many copies of each Prospectus, including each
preliminary Prospectus, and any amendment or supplement thereto as such Holder or underwriter may
reasonably

11

 

request; and (iii) hereby consent to the use of the Prospectus or any amendment or supplement
thereto by each of the selling Holders of Registrable Securities in connection with the offering
and sale of the Registrable Securities covered by the Prospectus or any amendment or supplement
thereto included in the Shelf Registration Statement;

          (d) use its commercially reasonable efforts to register or qualify the Registrable
Securities under all applicable state securities or “blue sky” laws of such jurisdictions as any
Holder of Registrable Securities covered by a Registration Statement shall reasonably request by
the time the applicable Registration Statement is declared effective by the SEC, and do any and
all other acts and things which may be reasonably necessary or advisable to enable each such
Holder to consummate the disposition in each such jurisdiction of such Registrable Securities
owned by such Holder; provided, however, that the Company shall not be required to (i) qualify as
a foreign corporation or as a dealer in securities in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d), or (ii) take any action which would
subject it to general service of process or taxation in any such jurisdiction where it is not
then so subject;

          (e) notify promptly each Holder of Registrable Securities under a Shelf Registration or any
Participating Broker-Dealer who has notified the Company that it is utilizing the Exchange Offer
Registration Statement as provided in paragraph (f) below and, if requested by such Holder or
Participating Broker-Dealer, confirm such advice in writing promptly (i) when a Registration
Statement has become effective and when any post-effective amendments and supplements thereto
become effective, (ii) of any request by the SEC or any state securities authority for
post-effective amendments and supplements to a Registration Statement and Prospectus or for
additional information after the Registration Statement has become effective, (iii) of the
issuance by the SEC or any state securities authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any proceedings for that purpose,
(iv) of the happening of any event or the discovery of any facts during the period a Shelf
Registration Statement is effective which makes any statement made in such Registration Statement
or the related Prospectus untrue in any material respect or which requires the making of any
changes in such Registration Statement or Prospectus in order to make the statements therein not
misleading, (v) of the receipt by the Company of any notification with respect to the suspension
of the qualification of the Registrable Securities or the Exchange Securities, as the case may
be, for sale in any jurisdiction or the initiation or threatening of any proceeding for such
purpose and (vi) of any determination by the Company that a post-effective amendment to such
Registration Statement would be appropriate;

12

 

          (f) (A) in the case of the Exchange Offer Registration Statement (i) include in the
Exchange Offer Registration Statement a section entitled “Plan of Distribution” which shall
contain a statement that any such broker-dealer who receives Exchange Securities for Registrable
Securities pursuant to the Exchange Offer may be deemed a statutory underwriter and must deliver
a prospectus meeting the requirements of the 1933 Act in connection with any resale of such
Exchange Securities, (ii) furnish to each Participating Broker-Dealer who has delivered to the
Company the notice referred to in Section 3(e), without charge, as many copies of each Prospectus
included in the Exchange Offer Registration Statement, including any preliminary prospectus, and
any amendment or supplement thereto, as such Participating Broker-Dealer may reasonably request,
(iii) hereby consent to the use of the Prospectus forming part of the Exchange Offer Registration
Statement or any amendment or supplement thereto, by any Person subject to the prospectus
delivery requirements of the SEC, including all Participating Broker-Dealers, in connection with
the sale or transfer of the Exchange Securities covered by the Prospectus or any amendment or
supplement thereto, and (iv) include in the transmittal letter or similar documentation to be
executed by an exchange offeree in order to participate in the Exchange Offer (x) the following
provision (or any other provision requested by Merrill Lynch on behalf of the Participating
Broker-Dealers with respect to similar matters):

          “If the exchange offeree is a broker-dealer holding Registrable Securities acquired
for its own account as a result of market-making activities or other trading
activities, it will deliver a prospectus meeting the requirements of the 1933 Act in
connection with any resale of Exchange Securities received in respect of such
Registrable Securities pursuant to the Exchange Offer;” and

(y) a statement to the effect that by a broker-dealer making the acknowledgment described in
clause (x) and by delivering a Prospectus in connection with the exchange of Registrable
Securities, the broker-dealer will not be deemed to admit that it is an underwriter within the
meaning of the 1933 Act; and

          (B) in the case of any Exchange Offer Registration Statement, upon request of the Majority
Holders, the Company agrees to deliver to Merrill Lynch on behalf of the Participating
Broker-Dealers upon the effectiveness of the Exchange Offer Registration Statement (i) an opinion
of counsel or opinions of counsel substantially in the form attached hereto as Exhibit A, (ii)
officers’ certificates substantially in the form customarily delivered in a public offering of
debt securities and (iii) a comfort letter or comfort letters in customary form to the extent
permitted by Statement on Auditing Standards No. 72 of the American Institute of Certified Public
Accountants (or if such a comfort letter is not permitted, an agreed upon procedures

13

 

letter in customary form) from the Company’s independent certified public accountants (and, if
necessary, any other independent certified public accountants of any subsidiary of the Company or
of any business acquired by the Company for which financial statements are, or are required to
be, included in the Registration Statement) at least as broad in scope and coverage as the
comfort letter or comfort letters delivered to the Dealer Managers in connection with the
exchange of New Notes for Existing Notes;

          (g) (i) in the case of an Exchange Offer, furnish counsel for the Dealer Managers and (ii)
in the case of a Shelf Registration, furnish counsel designated by the Majority Holders copies of
any comment letters received from the SEC or any other request by the SEC or any state securities
authority for amendments or supplements to a Registration Statement and Prospectus or for
additional information;

          (h) make every reasonable effort to obtain the withdrawal of any order suspending the
effectiveness of a Registration Statement at the earliest possible moment;

          (i) in the case of a Shelf Registration, upon request of the Majority Holders furnish to
each Holder of Registrable Securities without charge one conformed copy of each Registration
Statement and any post-effective amendment thereto, including financial statements and schedules
(without documents incorporated therein by reference and all exhibits thereto, unless requested);

          (j) in the case of a Shelf Registration, cooperate with the selling Holders of Registrable
Securities to facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends; and enable such
Registrable Securities to be in such denominations (consistent with the provisions of the
Indenture) and registered in such names as the selling Holders or the underwriters, if any, may
reasonably request at least three business days prior to the closing of any sale of Registrable
Securities;

          (k) in the case of a Shelf Registration, upon the occurrence of any event or the discovery
of any facts, each as contemplated by Sections 3(e)(iv) and 3(e)(v) hereof, as promptly as
practicable after the occurrence of such an event, use its commercially reasonable efforts to
prepare a supplement or post-effective amendment to the Registration Statement or the related
Prospectus or any document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable Securities or Participating
Broker-Dealers, such Prospectus will not contain at the time of such delivery any untrue
statement of a material fact or omit to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading or will remain
so qualified. At such time as such public disclosure is otherwise made or the Company

14

 

determines that such disclosure is not necessary, in each case to correct any misstatement of a
material fact or to include any omitted material fact, the Company agrees promptly to notify each
Holder of such determination and to furnish each Holder such number of copies of the Prospectus
as amended or supplemented, as such Holder may reasonably request;

          (l) in the case of a Shelf Registration, a reasonable time prior to the filing of any
Registration Statement, any Prospectus, any amendment to a Registration Statement or amendment or
supplement to a Prospectus or any document which is to be incorporated by reference into a
Registration Statement or a Prospectus after initial filing of a Registration Statement, provide
copies of such document to the Dealer Managers on behalf of such Holders; and make
representatives of the Company as shall be reasonably requested by the Holders of Registrable
Securities, or the Dealer Managers on behalf of such Holders, available for discussion of such
document;

          (m) obtain a CUSIP number for all Exchange Securities, Private Exchange Securities or
Registrable Securities, as the case may be, not later than the effective date of a Registration
Statement, and provide the Trustee with printed certificates for the Exchange Securities, Private
Exchange Securities or the Registrable Securities, as the case may be, in a form eligible for
deposit with the Depositary;

          (n) (i) cause the Indenture to be qualified under the Trust Indenture Act of 1939 (the
“TIA”) in connection with the registration of the Exchange Securities or Registrable Securities,
as the case may be, (ii) cooperate with the Trustee and the Holders to effect such changes to the
Indenture as may be required for the Indenture to be so qualified in accordance with the terms of
the TIA and (iii) execute, and use its commercially reasonable efforts to cause the Trustee to
execute, all documents as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable the Indenture to be so qualified in a
timely manner;

          (o) in the case of a Shelf Registration, enter into agreements (including underwriting
agreements) and take all other customary and appropriate actions in order to expedite or
facilitate the disposition of such Registrable Securities and in such connection whether or not
an underwriting agreement is entered into and whether or not the registration is an underwritten
registration:

     (i) make such representations and warranties to the Holders of such
Registrable Securities and the underwriters, if any, in form, substance and scope as
are customarily made by issuers to underwriters in similar underwritten offerings as
may be reasonably requested by them;

15

 

     (ii) obtain opinions of counsel to the Company and updates thereof (which
counsel and opinions (in form, scope and substance) shall be reasonably satisfactory
to the managing underwriters, if any, and the holders of a majority in principal
amount of the Registrable Securities being sold) addressed to each selling Holder
and the underwriters, if any, covering the matters customarily covered in opinions
requested in sales of securities or underwritten offerings and such other matters as
may be reasonably requested by such Holders and underwriters;

     (iii) obtain “cold comfort” letters and updates thereof from the Company’s
independent certified public accountants (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company or of any business
acquired by the Company for which financial statements are, or are required to be,
included in the Registration Statement) addressed to the underwriters, if any, and
use reasonable efforts to have such letter addressed to the selling Holders of
Registrable Securities (to the extent consistent with Statement on Auditing
Standards No. 72 of the American Institute of Certified Public Accounts), such
letters to be in customary form and covering matters of the type customarily covered
in “cold comfort” letters to underwriters in connection with similar underwritten
offerings;

     (iv) if an underwriting agreement is entered into, cause the same to set forth
indemnification provisions and procedures substantially equivalent to the
indemnification provisions and procedures set forth in Section 4 hereof with respect
to the underwriters and all other parties to be indemnified pursuant to said Section
or, at the request of any underwriters, in the form customarily provided to such
underwriters in similar types of transactions; and

     (v) deliver such documents and certificates as may be reasonably requested and
as are customarily delivered in similar offerings to the Holders of a majority in
principal amount of the Registrable Securities being sold and the managing
underwriters, if any.

The above shall be done at (i) the effectiveness of such Registration Statement (and each
post-effective amendment thereto) and (ii) each closing under any underwriting or similar
agreement as and to the extent required thereunder;

          (p) in the case of a Shelf Registration or if a Prospectus is required to be delivered by
any Participating Broker-Dealer in the case of an Exchange Offer, make

16

 

available for inspection by representatives of the Holders of the Registrable Securities, any
underwriters participating in any disposition pursuant to a Shelf Registration Statement, any
Participating Broker-Dealer and any counsel or accountant retained by any of the foregoing, all
financial and other records, pertinent corporate documents and properties of the Company
reasonably requested by any such persons, and cause the respective officers, directors,
employees, and any other agents of the Company to supply all information reasonably requested by
any such representative, underwriter, special counsel or accountant in connection with a
Registration Statement, and make such representatives of the Company available for discussion of
such documents as shall be reasonably requested by the Initial Purchasers;

          (q) (i) in the case of an Exchange Offer Registration Statement within five business days
prior to the filing of any Exchange Offer Registration Statement or any Prospectus forming a part
thereof (excluding, unless requested, any documents incorporated therein by reference), or two
business days prior to the filing of any amendment to an Exchange Offer Registration Statement or
amendment or supplement to such Prospectus, provide copies of such document to the Dealer
Managers and to counsel to the Holders of Registrable Securities and make such changes in any
such document prior to the filing thereof as the Dealer Managers or counsel to the Holders of
Registrable Securities may reasonably request and, except as otherwise required by applicable
law, not file any such document in a form to which the Dealer Managers on behalf of the Holders
of Registrable Securities and counsel to the Holders of Registrable Securities shall not have
previously been advised and furnished a copy of or to which the Dealer Managers on behalf of the
Holders of Registrable Securities or counsel to the Holders of Registrable Securities shall
reasonably object within five business days or business days, as the case may be, and make the
representatives of the Company available for discussion of such documents as shall be reasonably
requested by the Dealer Managers; and

          (ii) in the case of a Shelf Registration, within five business days prior to filing any
Shelf Registration Statement or any Prospectus forming a part thereof, or two business days prior
to the filing of any amendment to such Shelf Registration Statement or amendment or supplement to
such Prospectus, provide copies of such document to the Holders of Registrable Securities, to the
Dealer Managers, to counsel for the Holders and to the underwriter or underwriters of an
underwritten offering of Registrable Securities, if any, make such changes in any such document
prior to the filing thereof as the Dealer Managers, the counsel to the Holders or the underwriter
or underwriters reasonably request and not file any such document in a form to which the Majority
Holders, the Dealer Managers on behalf of the Holders of Registrable Securities, counsel for the
Holders of Registrable Securities or any underwriter shall not have previously been advised and
furnished a copy of or to which the Majority Holders,

17

 

the Dealer Managers of behalf of the Holders of Registrable Securities, counsel to the Holders of
Registrable Securities or any underwriter shall reasonably object within five business days or
two business days, as the case may be, and make the representatives of the Company available for
discussion of such document as shall be reasonably requested by the Holders of Registrable
Securities, the Dealer Managers on behalf of such Holders, counsel for the Holders of Registrable
Securities or any underwriter.

          (r) in the case of a Shelf Registration, use its commercially reasonable efforts to cause
all Registrable Securities to be listed on any securities exchange on which similar debt
securities issued by the Company are then listed if requested by the Majority Holders, or if
requested by the underwriter or underwriters of an underwritten offering of Registrable
Securities, if any;

          (s) in the case of a Shelf Registration, use its commercially reasonable efforts to cause
the Registrable Securities to be rated by the appropriate rating agencies, if so requested by the
Majority Holders, or if requested by the underwriter or underwriters of an underwritten offering
of Registrable Securities, if any;

          (t) otherwise comply with all applicable rules and regulations of the SEC and make available
to its security holders, as soon as reasonably practicable, an earnings statement covering at
least 12 months which shall satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158
thereunder;

          (u) cooperate and assist in any filings required to be made with the NASD and, in the case
of a Shelf Registration, in the performance of any due diligence investigation by any underwriter
and its counsel (including any “qualified independent underwriter” that is required to be
retained in accordance with the rules and regulations of the NASD); and

          (v) upon consummation of an Exchange Offer or a Private Exchange, obtain a customary opinion
of counsel to the Company addressed to the Trustee for the benefit of all Holders of Registrable
Securities participating in the Exchange Offer or Private Exchange, and which includes an opinion
that (i) the Company has duly authorized, executed and delivered the Exchange Securities and/or
Private Exchange Securities, as applicable, and the related indenture, and (ii) each of the
Exchange Securities and related indenture constitute a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its respective terms (with customary
exceptions).

          If following the date hereof there has been a change in SEC policy with respect to exchange
offers such as the Exchange Offer, such that in the opinion of counsel

18

 

to the Company there is a substantial question as to whether the Exchange Offer is permitted
by applicable federal law, the Company hereby agrees to seek a no-action letter or other favorable
decision from the SEC allowing the Company to consummate an Exchange Offer for the Notes. The
Company hereby agrees to pursue the issuance of such a decision to the SEC staff level. In
connection with the foregoing, the Company hereby agrees to take all such other actions as are
requested by the SEC or otherwise required in connection with the issuance of such decision,
including without limitation (A) participating in telephonic conferences with the SEC, (B)
delivering to the SEC staff an analysis prepared by counsel to the Company, setting forth the legal
basis, if any, upon which such counsel has concluded that such an Exchange Offer shall be permitted
and (C) diligently pursuing a resolution (which need not be favorable) by the SEC staff of such
submission.

          In the case of a Shelf Registration Statement, the Company may (as a condition to such
Holder’s participation in the Shelf Registration) require each Holder of Registrable Securities
to furnish to the Company such information regarding the Holder and the proposed distribution by
such Holder of such Registrable Securities as the Company may from time to time reasonably
request in writing.

          In the case of a Shelf Registration Statement, each Holder agrees that, upon receipt of any
notice from the Company of the happening of any event or the discovery of any facts, each of the
kind described in Section 3(e)(v) hereof, such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to a Registration Statement until such Holder’s receipt of the
copies of the supplemented or amended Prospectus contemplated by Section 3(k) hereof, and, if so
directed by the Company, such Holder will deliver to the Company (at its expense) all copies in
such Holder’s possession, other than permanent file copies then in such Holder’s possession, of
the Prospectus covering such Registrable Securities current at the time of receipt of such
notice. Any such suspension periods shall not exceed 30 days in any 365 day period.

          If any of the Registrable Securities covered by any Shelf Registration Statement are to be
sold in an underwritten offering, the underwriter or underwriters and manager or managers that
will manage such offering will be selected by the Majority Holders of such Registrable Securities
included in such offering and shall be acceptable to the Company. No Holder of Registrable
Securities may participate in any underwritten registration hereunder unless such Holder (a)
agrees to sell such Holder’s Registrable Securities on the basis provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting arrangements.

19

 

          4. Indemnification; Contribution.

          (a) The Company agrees to indemnify and hold harmless the Dealer Managers, each Holder, each
Participating Broker-Dealer, each Person who participates as an underwriter (any such Person being
an “Underwriter”) and each Person, if any, who controls any Holder or Underwriter within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows:

     (i) against any and all loss, liability, claim, damage and expense whatsoever, as
incurred, arising out of any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement (or any amendment or supplement thereto)
pursuant to which Exchange Securities or Registrable Securities were registered under the
1933 Act, including all documents incorporated therein by reference, or the omission or
alleged omission therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading, or arising out of any untrue statement or
alleged untrue statement of a material fact contained in any Prospectus (or any amendment
or supplement thereto) or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading;

     (ii) against any and all loss, liability, claim, damage and expense whatsoever, as
incurred, to the extent of the aggregate amount paid in settlement of any litigation, or
any investigation or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission; provided that (subject to Section 4(d)
below) any such settlement is effected with the written consent of the Company; and

     (iii) against any and all expense whatsoever, as incurred (including the fees and
disbursements of counsel chosen by any indemnified party), reasonably incurred in
investigating, preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid under subparagraph
(i) or (ii) above;

provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity with written
information furnished to the Company by the Holder or Underwriter expressly

20

 

for use in a Registration Statement (or any amendment thereto) or any Prospectus (or any
amendment or supplement thereto).

          (b) Each Holder severally, but not jointly, agrees to indemnify and hold harmless the
Company, the Dealer Managers, each Underwriter and the other selling Holders, and each of their
respective directors and officers, and each Person, if any, who controls the Company, the Dealer
Managers, any Underwriter or any other selling Holder within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, against any and all loss, liability, claim, damage and
expense described in the indemnity contained in Section 4(a) hereof, as incurred, but only with
respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the
Shelf Registration Statement (or any amendment thereto) or any Prospectus included therein (or
any amendment or supplement thereto) in reliance upon and in conformity with written information
with respect to such Holder furnished to the Company by such Holder expressly for use in the
Shelf Registration Statement (or any amendment thereto) or such Prospectus (or any amendment or
supplement thereto); provided, however, that no such Holder shall be liable for any claims
hereunder in excess of the total amount received by such Holder from the sale of Registrable
Securities pursuant to such Shelf Registration Statement.

          (c) Each indemnified party shall give notice as promptly as reasonably practicable to each
indemnifying party of any action or proceeding commenced against it in respect of which indemnity
may be sought hereunder, but failure so to notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not materially prejudiced as
a result thereof and in any event shall not relieve it from any liability which it may have
otherwise than on account of this indemnity agreement. An indemnifying party may participate at
its own expense in the defense of such action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified party) also be counsel
to the indemnified party. In no event shall the indemnifying party or parties be liable for the
fees and expenses of more than one counsel (in addition to any local counsel) separate from their
own counsel for all indemnified parties in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or contribution could be
sought under this Section 4 (whether or not the indemnified parties are actual or potential
parties thereto), unless such settlement, compromise or consent (i) includes an unconditional
release of each indemnified party from all liability arising out of such litigation,
investigation,

21

 

proceeding or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.

          (d) If at any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees
that it shall be liable for any settlement of the nature contemplated by Section 4(a)(ii)
effected without its written consent if (i) such settlement is entered into more than 45 days
after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party
shall have received notice of the terms of such settlement at least 30 days prior to such
settlement being entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such settlement.

          (e) If the indemnification provided for in this Section 4 is for any reason unavailable to or
insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall contribute to the
aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such
indemnified party, as incurred, in such proportion as is appropriate to reflect the relative fault
of the Company on the one hand and the Holders and the Dealer Managers on the other hand in
connection with the statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.

     The relative fault of the Company on the one hand and the Holders and the Dealer Managers on
the other hand shall be determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company, on the one hand, or by the Holders or the
Dealer Managers, on the other hand, and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.

     The Company, the Holders and the Dealer Managers agree that it would not be just and equitable
if contribution pursuant to this Section 4 were determined by pro rata allocation (even if the
Dealer Managers were treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above in this Section 4.
The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 4 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.

22

 

     Notwithstanding the provisions of this Section 4, no Dealer Manager shall be required to
contribute any amount in excess of the fees received by it in connection with the initial exchange.

     No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the
1933 Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation.

     For purposes of this Section 4, each Person, if any, who controls a Dealer Manager or Holder
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the
same rights to contribution as such Dealer Manager or Holder, and each director of the Company,
and each Person, if any, who controls the Company within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company. The
Dealer Managers’ respective obligations to contribute pursuant to this Section 7 are several in
proportion to the percentage of fees attributable to each Dealer Manager as set forth in Section
2 to the Agreement and not joint.

          5. Miscellaneous.

          5.1 Rule 144 and Rule 144A. For so long as the Company is subject to the reporting
requirements of Section 13 or 15 of the 1934 Act, the Company covenants that it will file the
reports required to be filed by it under the 1933 Act and Section 13(a) or 15(d) of the 1934 Act
and the rules and regulations adopted by the SEC thereunder. If the Company ceases to be so
required to file such reports, the Company covenants that it will upon the request of any Holder
of Registrable Securities (a) make publicly available such information as is necessary to permit
sales pursuant to Rule 144 under the 1933 Act, (b) deliver such information to a prospective
purchaser as is necessary to permit sales pursuant to Rule 144A under the 1933 Act and it will
take such further action as any Holder of Registrable Securities may reasonably request, and (c)
take such further action that is reasonable in the circumstances, in each case, to the extent
required from time to time to enable such Holder to sell its Registrable Securities without
registration under the 1933 Act within the limitation of the exemptions provided by (i) Rule 144
under the 1933 Act, as such Rule may be amended from time to time, (ii) Rule 144A under the 1933
Act, as such Rule may be amended from time to time, or (iii) any similar rules or regulations
hereafter adopted by the SEC.

          5.2 No Inconsistent Agreements. The Company has not entered into and the Company
will not after the date of this Agreement enter into any agreement which is inconsistent with the
rights granted to the Holders of Registrable Securities in this Agreement or otherwise conflicts
with the provisions hereof. The rights granted to the

23

 

Holders hereunder do not and will not for the term of this Agreement in any way conflict with the
rights granted to the holders of the Company’s other issued and outstanding securities under any
such agreements.

          5.3 Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given unless the Company has
obtained the written consent of Holders of at least a majority in aggregate principal amount of
the outstanding Registrable Securities affected by such amendment, modification, supplement,
waiver or departure.

          5.4 Notices. All notices and other communications provided for or permitted
hereunder shall be made in writing by hand delivery, registered first-class mail, telex,
telecopier, or any courier guaranteeing overnight delivery (a) if to a Holder, at the most
current address given by such Holder to the Company by means of a notice given in accordance with
the provisions of this Section 5.4, which address initially is the address set forth in the
Dealer Manager Agreement with respect to the Dealer Managers; and (b) if to the Company,
initially at the Company’s address set forth in the Dealer Manager Agreement, and thereafter at
such other address of which notice is given in accordance with the provisions of this Section
5.4.

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

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

          5.5 Successor and Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors, assigns and transferees of each of the parties, including, without
limitation and without the need for an express assignment, subsequent Holders; provided
that nothing herein shall be deemed to permit any assignment, transfer or other disposition of
Registrable Securities in violation of the terms of the Dealer Manager Agreement or the
Indenture. If any transferee of any Holder shall acquire Registrable Securities, in any manner,
whether by operation of law or otherwise, such Registrable Securities shall be held subject to
all of the terms of this Agreement, and by taking and holding such Registrable Securities such
person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms
and

24

 

provisions of this Agreement, including the restrictions on resale set forth in this Agreement
and, if applicable, the Dealer Manager Agreement, and such person shall be entitled to receive
the benefits hereof.

          5.6 Third Party Beneficiaries. The Dealer Managers (even if the Dealer Managers are
not Holders of Registrable Securities) shall be third party beneficiaries to the agreements made
hereunder between the Company, on the one hand, and the Holders, on the other hand, and shall
have the right to enforce such agreements directly to the extent they deem such enforcement
necessary or advisable to protect their rights or the rights of Holders hereunder. Each Holder
of Registrable Securities shall be a third party beneficiary to the agreements made hereunder
between the Company, on the one hand, and the Dealer Managers, on the other hand, and shall have
the right to enforce such agreements directly to the extent it deems such enforcement necessary
or advisable to protect its rights hereunder.

          5.7. Specific Enforcement. Without limiting the remedies available to the Dealer
Managers and the Holders, the Company acknowledges that any failure by the Company to comply with
its obligations under Sections 2.1 through 2.4 hereof may result in material irreparable injury
to the Dealer Managers or the Holders for which there is no adequate remedy at law, that it would
not be possible to measure damages for such injuries precisely and that, in the event of any such
failure, the Dealer Managers or any Holder may obtain such relief as may be required to
specifically enforce the Company’s obligations under Sections 2.1 through 2.4 hereof.

          5.8. Restriction on Resales. Until the expiration of two years after the
original issuance of the New Notes, the Company will not, and will cause its “affiliates” (as
such term is defined in Rule 144(a)(1) under the 1933 Act) not to, resell any New Notes which
are “restricted securities” (as such term is defined under Rule 144(a)(3) under the 1933 Act)
that have been reacquired by any of them and shall immediately upon any purchase of any such
New Notes submit such to the Trustee for cancellation.

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

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

25

 

          5.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS
THEREOF.

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

26

 

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

	 	 	 	 	 
	 	REPUBLIC SERVICES, INC.

 	 
	 	By:  	/s/ Edward A. Lang, III
 	 
	 	 	Name:  	Edward A. Lang, III	 
	 	 	Title:  	Vice President, Finance and Treasurer	 
	 

Confirmed and accepted as

    of the date first above

    written:

	 	 	 
	MERRILL LYNCH, PIERCE, FENNER & SMITH
	 	 
	                         INCORPORATED	 	 

Banc of America Securities LLC

Barclays Capital Inc.

Citigroup Global Markets Inc.

Allen & Company LLC

	 	 	 
	BY: MERRILL LYNCH, PIERCE, FENNER & SMITH

                         INCORPORATED
	 	 

	 	 	 	 	 
	 	 	 
	 	By:  	/s/ David Portugal
 	 
	 	 	Name:  	David Portugal 	 
	 	 	Title:  	Vice President 	 

27

 

	 	 	 	 	 

Exhibit A

Form of Opinion of Counsel

Merrill Lynch, Pierce, Fenner & Smith

                    Incorporated

Banc of America Securities LLC

Barclays Capital Inc.

Citigroup Global Markets Inc.

Allen &Company LLC

c/o Merrill Lynch, Pierce, Fenner & Smith

                    Incorporated

Merrill Lynch World Headquarters

North Tower

World Financial Center

New York, New York 10281-1209

Ladies and Gentlemen:

     We have acted as counsel for Republic Services, Inc. , a Delaware corporation (the “Company”),
in connection with the exchange by the Company of its unsecured notes due 2035 for any and all of
its 7-1/8 Notes due 2009 in accordance with the terms of the Dealer Manager Agreement dated
February 16, 2005 among the Company, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Banc of America Securities LLC, Barclays Capital Inc., Citigroup Global Markets Inc.
and Allen & Company LLC (collectively, the “Dealer Managers”) and the filing by the Company of an
Exchange Offer Registration Statement (the “Registration Statement”) in connection with an Exchange
Offer to be effected pursuant to the Registration Rights Agreement (the “Registration Rights
Agreement”), dated March 21, 2005 between the Company and the Dealer Managers. This opinion is
furnished to you pursuant to Section 3(f)(B) of the Registration Rights Agreement. Unless
otherwise defined herein, capitalized terms used in this opinion that are defined in the
Registration Rights Agreement are used herein as so defined.

     We have examined such documents, records and matters of law as we have deemed necessary for
purposes of this opinion. In rendering this opinion, as to all matters of fact relevant to this
opinion, we have assumed the completeness and accuracy of, and are relying solely upon, the
representations and warranties of the Company set forth in the Dealer Manager Agreement and the
statements set forth in certificates of public officials and officers of the Company, without
making any independent investigation or inquiry with respect to the completeness or accuracy of
such representations, warranties or

 

statements, other than a review of the certificate of incorporation, by-laws and relevant
minute books of the Company.

     Based on and subject to the foregoing, we are of the opinion that:

          1. The Exchange Offer Registration Statement and the Prospectus (other than the financial
statements, notes or schedules thereto and other financial data and supplemental schedules included
or incorporated by reference therein or omitted therefrom and the Form T-1, as to which such
counsel need express no opinion), comply as to form in all material respects with the requirements
of the 1933 Act and the applicable rules and regulations promulgated under the 1933 Act.

          2. We have participated in the preparation of the Registration Statement and the Prospectus
and in the course thereof have had discussions with representatives of the Underwriters, officers
and other representatives of the Company and Ernst & Young LLP, the Company’s independent public
accountants, during which the contents of the Registration Statement and the Prospectus were
discussed. We have not, however, independently verified and are not passing upon, and do not
assume any responsibility for, the accuracy, completeness or fairness of the statements contained
in the Registration Statement and the Prospectus. Based on our participation as described above,
nothing has come to our attention that would lead us to believe that the Registration Statement
(except for financial statements and schedules and other financial data included therein as to
which we make no statement) contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus or any amendment or supplement thereto (except for financial
statements and schedules and other financial data included therein, as to which such counsel need
make no statement), at the time the Prospectus was issued, at the time any such amended or
supplemented Prospectus was issued or at the Closing Date, included or includes an untrue statement
of a material fact or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading.

     This opinion is being furnished to you solely for your benefit in connection with the
transactions contemplated by the Registration Rights Agreement, and may not be used for any other
purpose or relied upon by any person other than you. Except with our prior written consent, the
opinions herein expressed are not to be used, circulated, quoted or otherwise referred to in
connection with any transactions other than those contemplated by the Registration Rights Agreement
by or to any other person.

Very truly yours,EX-10.1

 

Exhibit 10.1

EXECUTION COPY

AGREEMENT

     This Agreement made as of the 31st day of May, 2005 by and between Tollgrade
Communications, Inc., a Pennsylvania corporation (the “Corporation”), and Mark B. Peterson, an
individual residing in the Commonwealth of Pennsylvania and an employee of the Corporation (the
“Executive”).

WITNESSETH:

     WHEREAS, the Board of Directors of the Corporation has determined that it is in the best
interests of the Corporation to enter into this Agreement with the Executive; and

     WHEREAS, the Executive desires to obtain certain benefits in the event his employment is
terminated;

     NOW, THEREFORE, the parties hereto, each intending to be legally bound hereby, agree as
follows:

	1.  	Definition of Terms. The following terms when used in this Agreement shall have the
meaning hereafter set forth:

	 	(a)  	“Annual Salary Adjustment Percentage” shall mean the mean average percentage
increase in base salary for all members of the Executive Council of the Corporation
during the two full calendar years immediately preceding the time to which such
percentage is being applied; provided, however, that if after a Change-in-Control, as
hereinafter defined, there should be a significant change in the number of members of
the Executive Council of the Corporation or in the manner in which they are
compensated, then the foregoing definition shall be changed by substituting for the
phrase “Executive Council of the Corporation” the phrase “persons then performing the
functions formerly performed by the Executive Council of the Corporation.”
	 
	 	(b)  	“Beneficial Owner” shall have the meaning ascribed to such term in Rule 13d-3
of the General Rules and Regulations under the Exchange Act.
	 
	 	(c)  	“Board” or “Board of Directors” means the Board of Directors of the
Corporation.
	 
	 	(d)  	“Cause for Termination” shall be limited solely and exclusively to any of the
following grounds, as reasonably determined by the Board of Directors thereof:

	 	(i)  	Fraud, misappropriation, theft, embezzlement or other willful
and deliberate acts of similar dishonesty;

 

 

	 	(ii)  	Conviction of, or a plea of guilty or nolo contendre to, a
felony or a crime involving moral turpitude;
	 
	 	(iii)  	Illegal use of drugs in the workplace;
	 
	 	(iv)  	Intentional and willful misconduct that subjects the
Corporation to criminal liability or material civil liability;
	 
	 	(v)  	Willful and deliberate breach of the Executive’s duty of
loyalty, including, but not limited to, the diversion or usurpation of
corporate opportunities properly belonging to the Corporation;
	 
	 	(vi)  	Willful and deliberate disregard of the Corporation’s policies
and procedures in any material respect;
	 
	 	(vii)  	Material breach or violation of the Corporation’s Code of
Ethics for Senior Executive and Financial Officers or a material breach or
violation of the Corporation’s Code of Business Conduct and Ethics;
	 
	 	(viii)  	Breach or violation of any of the material terms of this Agreement, including
but not limited to, the covenants and restrictions, set forth in Sections 5 and
6 of this Agreement;
	 
	 	(ix)  	Willful and deliberate insubordination, willful and deliberate
refusal to perform, or willful gross neglect in the performance of, his duties
or responsibilities, or willful and deliberate refusal to follow the proper
instructions of the Board of Directors or the Executive Committee thereof, if
any; or
	 
	 	(x)  	Failure of the Executive to fully cooperate in any action,
litigation, investigation or other proceeding brought before or by any
Governmental Authority.

For purposes of this definition, no act, or failure to act, on the Executive’s part
shall be considered “deliberate,” “intentional” or “willful” unless done, or omitted
to be done, by the Executive with a lack of good faith and with a lack of reasonable
belief that his action or omission was in the best interests of the Corporation.

	 	(e)  	“Change-in-Control” shall be deemed to have occurred as of the first day any
one (1) or more of the following conditions shall have been satisfied:

	 	(i)  	Any Person (other than the Person in control of the Corporation
as of the date of this Agreement, or other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation, or a
corporation owned directly or indirectly by the stockholders of the

2

 

Corporation in substantially the same proportions as their ownership of
stock of the Corporation), becomes the Beneficial Owner, directly or
indirectly, of securities of the Corporation representing more than
thirty-five percent (35%) of the combined voting power of the Corporation’s
then outstanding securities; or

	 	(ii)  	The directors, and if required, the stockholders of the
Corporation approve:

	 	(A)  	A plan of liquidation of the Corporation; or
	 
	 	(B)  	An agreement for the sale or disposition of all
or substantially all of the Corporation’s assets; or
	 
	 	(C)  	A merger, consolidation, or reorganization of
the Corporation with or involving any other entity, other than a
merger, consolidation, or reorganization that would result in the
voting securities of the Corporation outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at
least sixty-five percent (65%) of the combined voting power of the
voting securities of the Corporation (or such surviving entity)
outstanding immediately after such merger, consolidation, or
reorganization.

	 	(iii)  	The Incumbent Directors cease for any reason to constitute at
least a majority of the Board of Directors.

“Change-in-Control” shall not include, however, a restructuring, reorganization,
merger, or other change in capitalization in which the Persons who own an interest
in the Corporation on the date hereof (the “Current Owners”) (or any individual or
entity which receives from a Current Owner an interest in the Corporation through
will or the laws of descent and distribution) maintain more than a sixty-five
percent (65%) interest in the resultant entity.

Furthermore, in no event shall a Change-in-Control be deemed to have occurred, with
respect to the Executive, if the Executive is part of a purchasing group which
consummates the Change-in-Control transaction. The Executive shall be deemed “part
of a purchasing group” for purposes of the preceding sentence if the Executive is an
equity participant or has agreed to become an equity participant in the purchasing
company or group (except for (A) passive ownership of less than five percent (5%) of
the voting equity securities of the purchasing company; or (B) ownership of equity
participation in the purchasing company or group which is otherwise deemed not to be
significant, as determined prior to the Change-in-Control by a majority of the
nonemployee continuing Directors of the Board of Directors).

3

 

	 	(f)  	“Code” means the United States Internal Revenue Code of 1986, as amended, and
any successors thereto.
	 
	 	(g)  	“Confidential Information” has the meaning set forth in Section 5(a) hereof.
	 
	 	(h)  	“Contract Payment(s)” has the meaning set forth in Section 4(f) hereof.
	 
	 	(i)  	“Current Owners” has the meaning set forth in Section 1(e) hereof.
	 
	 	(j)  	“Date of Termination” shall mean:

	 	(i)  	if the Executive’s employment is terminated for Disability, the
date such employment is terminated as specified in the Notice of Termination
given to the Executive;
	 
	 	(ii)  	if the Executive terminates due to his death or Retirement, the
date of death or Retirement, respectively;
	 
	 	(iii)  	if the Executive decides to terminate employment upon Good
Reason for Termination, the date of such termination after the Corporation has
been notified of the Executive’s decision to terminate employment and the
expiration of any applicable cure period; or
	 
	 	(iv)  	if the Executive’s employment is terminated for any other
reason, the date on which a termination becomes effective pursuant to a Notice
of Termination.

	 	(k)  	“Disability” shall mean such incapacity due to physical or mental illness or
injury as causes the Executive to be unable to perform his duties with the Corporation
during 180 consecutive days.
	 
	 	(l)  	“Exchange Act” means the United States Securities Exchange Act of 1934, as
amended, and any successor thereto.
	 
	 	(m)  	“Excise Tax” has the meaning set forth in Section 4(f) hereof.
	 
	 	(n)  	“Good Reason for Termination” shall mean the occurrence of any of the
following:

	 	(i)  	without the Executive’s express written consent, the assignment
to the Executive of any duties materially and substantially inconsistent with
his positions, duties, responsibilities and status with the Corporation, or a
material change in his reporting responsibilities, titles or offices, or any
removal of the Executive from or any failure to re-elect the Executive to any
of such positions, except in connection with the termination of the

4

 

Executive’s employment due to Cause for Termination, Disability or
Retirement (as hereinafter defined) or as a result of the Executive’s death;

	 	(ii)  	a reduction by the Corporation in the Executive’s base salary
unless such reduction is the result of the Board of Directors determining (A)
that the Executive has not adequately discharged his duties; provided that such
reduction does not exceed ten percent (10%) of his then current base salary; or
(B) that it is necessary to reduce the salary of the majority of the members of
the Executive Council; provided that such reduction, in the case of the
Executive, does not exceed ten percent (10%) of his then current base salary;
	 
	 	(iii)  	a failure by the Corporation to continue to provide incentive
compensation comparable to that provided by the Corporation immediately prior
to any Change-in-Control;
	 
	 	(iv)  	except to the extent otherwise required by applicable law, the
failure by the Corporation after a Change-in-Control to continue in effect any
benefit or compensation plan, stock option plan, pension plan, life insurance
plan, health and accident plan or disability plan in which the Executive is
participating immediately prior thereto (provided, however, that there shall
not be deemed to be any such failure if the Corporation substitutes for the
discontinued plan, a plan providing the Executive with substantially similar
benefits) or the taking of any action by the Corporation which would adversely
affect the Executive’s participation in or materially reduce the Executive’s
benefits under any of such plans or deprive the Executive of any material
fringe benefit enjoyed by the Executive immediately prior to a
Change-in-Control (provided, however, that any act or failure to act by the
Corporation that is on a plan-wide basis, i.e., it similarly affects all
employees of the Corporation or all employees eligible to participate in any
such plan, as the case may be, shall not constitute Good Reason for
Termination);
	 
	 	(v)  	the failure of the Corporation to obtain the assumption of this
Agreement by any successor as contemplated in Section 11(c) hereof;
	 
	 	(vi)  	any purported termination of the employment of the Executive by
the Corporation which is not (A) due to the Executive’s Disability, Retirement
(as hereinafter defined) or in accordance with Section 3 hereof, or (B)
effected pursuant to a Notice of Termination satisfying the requirements of
subsection (r) below;
	 
	 	(vii)  	the Corporation’s requiring the Executive to be based anywhere
other than the Corporation’s executive offices at which the Executive has his
principal office on the date hereof or executive offices located within 50
miles of the location of the Corporation’s executive offices on the date

5

 

	 	   	hereof, except for required travel on the Corporation’s business to an
extent substantially consistent with the Executive’s present business travel
obligations; or
	 
	 	(viii)  	the Corporation’s breach of any of the material provisions of this Agreement.

	 	(o)  	“Governmental Authority” means any federal, state or local court,
administrative agency or commission, legislative body, or other governmental authority
or instrumentality.
	 
	 	(p)  	“Gross-Up Payment” has the meaning set forth in Section 4(f) hereof.
	 
	 	(q)  	“Incumbent Directors” shall mean the individuals who, as of the date hereof,
constitute the Board, together with any individual who becomes a director subsequent to
the date hereof whose election, or nomination for election by the Corporation’s
shareholders, was approved by a vote of at least a majority of the directors then
comprising the Incumbent Directors, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by or on behalf of a
Person other than the Board.
	 
	 	(r)  	“Notice of Termination” shall mean a written statement which sets forth the
specific reason for termination and, if such is claimed to be Cause for Termination or
Good Reason for Termination, in reasonable detail the facts and circumstances which
indicate that such is Cause for Termination or Good Reason for Termination together (in
the case of Cause for Termination) with notice of the time and place of the meeting of
the Board of Directors called to consider such matter in accordance with Section 3
hereof.
	 
	 	(s)  	“Options” shall mean any stock options issued pursuant to any present or future
stock option plan of the Corporation.
	 
	 	(t)  	“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as
defined in Section 13(d) thereof.
	 
	 	(u)  	“Retirement” shall mean a termination of the Executive’s employment after age
65 or in accordance with any mandatory retirement arrangement with respect to an
earlier age agreed to by the Executive.
	 
	 	(v)  	“Stock Appreciation Rights” shall mean any stock appreciation rights issued
pursuant to any stock option plan of the Corporation or any future stock appreciation
rights plan.

6

 

	2.  	Employment.

	 	(a)  	Subject to the terms and conditions set forth herein, the Corporation hereby
agrees to employ the Executive as of the date hereof as its Chief Executive Officer,
and the Executive hereby accepts such employment. The duties of the Executive shall be
as determined from time to time by the Board of Directors, but shall at all times be
consistent in scope and authority with those commonly associated with the position of
chief executive officer of a publicly-held company, and in all cases shall be
substantially similar to those currently performed by the Executive as of the date
hereof.
	 
	 	(b)  	The Executive’s base salary initially shall be set at $315,000 per annum paid
in equal semi-monthly installments and shall be retroactively effective as of January
17, 2005. The Executive shall be entitled to such increases or decreases (subject to
Section 1(n)(ii) hereof) in base salary as the Compensation Committee of the Board of
Directors may determine from time to time in accordance with its regular compensation
review practices; provided that, such base salary must be increased each year by at
least the amount of the Annual Salary Adjustment Percentage.
	 
	 	(c)  	The Executive shall be entitled to receive annual bonuses based upon the
achievance of performance objectives established by the Compensation Committee of the
Board of Directors (pursuant to the Corporation’s Management Incentive Compensation
Plan at the level specified for the Corporation’s Chief Executive Officer.
	 
	 	(d)  	The Executive shall be entitled to participate in all group insurance programs,
retirement income (pension) plans, and such other benefits made available by the
Corporation to its employees and executives commensurate with the Executive’s position
in the Corporation.
	 
	 	(e)  	It is the parties’ understanding that the Executive shall be entitled to a seat
on the Corporation’s Board of Directors during the term of this Agreement.
Accordingly, the Corporation agrees to nominate Executive on its management slate of
Board candidates and recommend to the shareholders that the Executive be elected to the
Board.

	3.  	Termination by the Corporation Due to Cause for Termination; Termination by the Executive
for Good Reason.

	 	(a)  	Should Cause for Termination exist, the Board of Directors by resolution duly
adopted at a meeting of the Board may terminate the Executive’s employment due to Cause
for Termination by delivering a Notice of Termination. Notwithstanding the foregoing,
the Executive will have 15 days after receiving the Notice of Termination to correct
the act or acts constituting Cause for Termination, to provide to the Board of
Directors a written response explaining why his actions

7

 

	 	   	do not constitute Cause for Termination, and/or to request a review of the Board’s
decision. In the event the Executive continues to engage in the conduct
constituting Cause for Termination for such period, does not provide a response, and
does not request further review by the Board of Directors, the Board may make a
final determination, in its sole reasonable discretion, that the Executive has
engaged in conduct constituting Cause for Termination and may terminate the
Executive at any time after the end of the 15 day period.
	 
	 	(b)  	The Executive may terminate his employment for Good Reason for Termination by
delivering to the Board of Directors a Notice of Termination. Notwithstanding the
foregoing, the Corporation will have 15 days after receiving the Notice of Termination
to correct the conditions constituting Good Reason for Termination. If the Corporation
fails to correct such conditions within such period, then the Executive may terminate
his employment at any time after the end of the 15 day period.

	4.  	Payments and Terms Following Termination of Employment or a Change-in-Control.

	 	(a)  	If during the term of this Agreement the Executive’s employment with the
Corporation shall be terminated:

	 	(i)  	due to the Executive’s death,
	 
	 	(ii)  	by the Executive other than the Executive’s having terminated
for Good Reason for Termination, or
	 
	 	(iii)  	by the Corporation in accordance with Section 3 hereof or for
Disability or Retirement,

then the Corporation shall have no obligations hereunder to the Executive or to his
estate, as the case may be, other than (A) to pay in cash any unpaid portion of the
Executive’s base salary for the period from the last period for which the Executive
was paid to the Date of Termination, (B) in the case of death, Disability or
Retirement, to pay a pro rata portion, based upon the number of months of the
Executive’s employment during the year of termination, of any annual bonus program
or agreement in effect for such year based upon the then projected achievement of
performance objectives for such year (including, without limitation, the bonus
program contemplated under Section 2(c) hereof), and (C) to pay to the Executive any
sums that shall be due in accordance with any other employment agreement applicable
to the Executive and the then various policies, practices and benefit plans of the
Corporation.

	 	(b)  	If during the term of this Agreement the Executive’s employment with the
Corporation shall have terminated at any time during the period commencing six months
prior to the date of a Change-in-Control and ending on the third

8

 

	 	   	anniversary of the date of a Change-in-Control other than under the circumstances
above described in subsection 4(a), then the Corporation shall pay on or before the
fifth day following the Date of Termination (or if the Date of Termination preceded
the date of the Change-in-Control, on or before the fifth day following the date of
the Change-in-Control), to the Executive the following sums (less any amounts paid
to the Executive pursuant to subsection (c) of this Section 4):

	 	(i)  	in cash any unpaid portion of the Executive’s full base salary
for the period from the last period for which the Executive was paid to the
Date of Termination, or the date of the Change-in-Control, as the case may be;
and
	 
	 	(ii)  	an amount in cash as liquidated damages for lost future
remuneration equal to the product obtained by multiplying by three (3) the sum
of

	 	(A)  	the greater of

	 	(1)  	the Executive’s annual base
salary for the year in effect on the Date of Termination
(provided that in the case of Termination for Good Reason by the
Executive the date immediately preceding the date of the event
which gave rise to the Termination for Good Reason by the
Executive shall be used instead of the Date of Termination)

or

	 	(2)  	the Executive’s annual base
salary for the year in effect on the date of the
Change-in-Control;

plus

	 	(B)  	the greater of

	 	(1)  	the average annual cash award
received by the Executive as incentive compensation or bonus for
the two calendar years immediately preceding the Date of
Termination (provided that in the case of Termination for Good
Reason by the Executive the date immediately preceding the date
of the event which gave rise to the Termination for Good Reason
by the Executive shall be used instead of the Date of
Termination)

or

	 	(2)  	the average annual cash award
received by the Executive as incentive compensation or bonus for
the two calendar years immediately preceding the date of the
Change-in-Control.

9

 

	 	(c)  	If during the term of this Agreement the Executive’s employment with the
Corporation shall have terminated other than under the circumstances above described in
subsections 4(a) or 4(b) (including, but not limited to, the Executive having
terminated his employment for Good Reason for Termination), then the Corporation shall
pay on or before the fifth day following the Date of Termination to the Executive the
following sums (provided, however, that if a Change-in-Control occurs within six months
following the Date of Termination, the Executive shall be entitled to the amounts set
forth in subsection (b) above reduced by the amounts paid to the Executive pursuant to
this subsection (c) of this section 4):

	 	(i)  	in cash any unpaid portion of the Executive’s full base salary
for the period from the last period for which the Executive was paid to the
Date of Termination; and
	 
	 	(ii)  	an amount in cash as liquidated damages for lost future
remuneration equal to the product obtained by multiplying by two (2) the sum of

	 	(A)  	the Executive’s annual base salary for the year
in effect on the Date of Termination
	 
	 	   	plus
	 
	 	(B)  	the average annual cash award received by the
Executive as incentive compensation or bonus for the two calendar years
immediately preceding the Date of Termination.

	 	(d)  	If the Executive’s employment should terminate under such circumstances as
entitle the Executive to receive payments pursuant to subsection (b) or subsection (c)
of this Section 4, the Corporation shall reimburse the Executive for any reasonable
fees or other costs incurred by the Executive in retaining and continuing the services
of an executive placement agency during the period beginning on the Date of Termination
and ending on the earlier to occur of (i) the second anniversary of the Date of
Termination and (ii) the date on which the Executive becomes employed by another Person
or becomes self-employed. Such reimbursement shall be made within 5 days following the
Executive’s presentment of bills or other evidence of the costs which he incurred with
such executive placement agency.
	 
	 	(e)  	If this Agreement is terminated pursuant to the terms of Section 10(b)(i)
hereof, then the Executive shall be entitled to receive the annual bonus pursuant to
Section 2(c) hereof, if any, for the last year of the Executive’s employment.

10

 

	 	(f)  	If any payment or payments (“Contract Payment(s)”) due the Executive pursuant
to this Agreement other than this subsection 4(f) result in an excise tax being imposed
on the Executive pursuant to Section 4999 of the Code, or any successor federal taxing
provision to such Section 4999 (“Excise Tax”), then the Corporation shall pay to the
Executive at the time when each Contract Payment is made an amount (a “Gross-Up
Payment”) such that after payment by the Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including, without limitation, any
income taxes and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Contract
Payments.
	 
	 	(g)  	Notwithstanding any provision for similar payments and/or benefits under any
other plan, program, agreement, policy, practice, or the like of the Corporation, this
Agreement is intended to represent the Executive’s sole entitlement to severance
payments and benefits in connection with the termination of his employment.
	 
	 	(h)  	The receipt of any severance payments pursuant to this Section 4 will be
subject to the Executive and the Corporation signing and not revoking a separation and
mutual release of claims agreement in substantially the form attached hereto as
Attachment A with the blanks appropriately completed. No severance payments will be
paid or provided until the separation and release of claims agreement becomes
effective.
	 
	 	(i)  	The Executive agrees to resign from all positions that he holds with the
Corporation or its subsidiaries, including, without limitation, his position as a
member of the Board, immediately following the termination of his employment for any
reason, if the Board so requests.
	 
	 	(j)  	Notwithstanding any provision of this Agreement to the contrary, the parties
intend that this Agreement be construed and applied in a manner that will conform its
provisions with the requirements for avoidance of additional federal income tax
pursuant to Section 409A of the Code, to the extent that such Section applies to the
payments provided hereunder. Accordingly, the provisions of this Agreement will be
interpreted consistent with the preceding sentence, and the Board and the Executive may
modify this Agreement by mutual agreement, retroactively or otherwise, to the extent
deemed advisable to prevent the application of Section 409A of the Code.
	 
	 	(k)  	The Corporation shall maintain in effect indemnification rights to the
fullest extent permitted by applicable law covering the Executive for the
Executive’s action taken or omissions occurring at or prior to the Date of
Termination.
	 
	 	(l)  	Through the sixth anniversary of the Date of Termination, the Corporation
shall maintain, if available in the directors’ and officers’ liability insurance
market, directors’ and officers’ liability insurance covering the Executive for
the Executive’s action taken or omissions occurring at or prior to the Date of

11

 

	 	   	Termination on terms which in the aggregate are not less favorable than the
terms of such current insurance coverage.

	5.  	Corporation’s Information; Nondisclosure; Related Matters.

	 	(a)  	The Executive recognizes and acknowledges that: (i) in the course of the
Executive’s employment by the Corporation it will be necessary for the Executive to
acquire information which could include, in whole or in part, information concerning
the Corporation’s sales, sales volume, sales methods, sales proposals, customers and
prospective customers, identity of customers and prospective customers, identity of key
purchasing personnel in the employ of customers and prospective customers, amount or
kind of customer’s purchases from the Corporation, the Corporation’s sources of supply,
the Corporation’s patents, patent applications, licenses, computer programs, system
documentation, special hardware, product hardware, related software development, the
Corporation’s present or contemplated products, manuals, formulae, processes, methods,
machines, compositions, ideas, improvements, inventions or other confidential or
proprietary information belonging to the Corporation or relating to the Corporation’s
affairs (collectively referred to herein as the “Confidential Information”); (ii) the
Confidential Information is the property of the Corporation; (iii) the use,
misappropriation or disclosure of the Confidential Information would constitute a
breach of trust and could cause irreparable injury to the Corporation; and (iv) it is
essential to the protection of the Corporation’s good will and to the maintenance of
the Corporation’s competitive position that the Confidential Information be kept secret
and that the Executive not disclose the Confidential Information to others or use the
Confidential Information to the Executive’s own advantage or the advantage of others.
The Executive further acknowledges that the Executive’s position with the Corporation
and any and all benefits and compensation paid to the Executive are conferred upon him
only because and on the condition of the Executive’s abiding by the confidentiality,
non-compete, non-solicitation and other restrictions contained herein.
	 
	 	(b)  	The Employee further recognizes and understands that his duties at the
Corporation may include the preparation of materials, including written or graphic
materials, and that any such materials conceived or written by him shall be done as
“work made for hire” as defined and used in the Copyright Act of 1976, 17 USC § 1
et seq. In the event of publication of such materials, the Executive
understands that since the work is a “work made for hire,” the Corporation will solely
retain and own all rights in said materials, including right of copyright, and that the
Corporation may, at its discretion, on a case-by-case basis, grant the Employee by-line
credit on such materials as the Corporation may deem appropriate.
	 
	 	(c)  	The Executive agrees to hold and safeguard the Confidential Information in
trust for the Corporation, its successors and assigns and agrees that he shall not,
without the prior written consent of the Corporation, either directly or indirectly,
misappropriate or disclose or make available to anyone for use outside the

12

 

	 	   	Corporation’s organization at any time, either during his employment with the
Corporation or subsequent to the termination of his employment with the Corporation
for any reason, including without limitation termination by the Corporation for
Cause for Termination or without cause, any of the Confidential Information, whether
or not developed by the Executive, except as required in the performance of the
Executive’s duties to the Corporation. The restrictions on use or disclosure of
Confidential Information contained in this Section 5 shall not apply to any data or
information which is or may be: (i) through no fault of the Executive, generally
known to the public or throughout the industry in which the Corporation is engaged;
or (ii) received by the Executive from a third party not in violation of any express
or implied obligation owing to the Corporation.
	 
	 	(d)  	The Executive shall disclose promptly to the Corporation or its nominee any and
all works, inventions, discoveries and improvements authored, conceived or made by the
Executive during the period of employment relating to the business or activities of the
Corporation, and hereby assigns and agrees to assign all his interest therein to the
Corporation or its nominee. No compensation, other than the Executive’s regular wages,
shall be paid to the Executive for any such works, inventions, discoveries or
improvements. Whenever requested to do so by the Corporation, the Executive shall
execute any and all applications, assignments or other instruments which the
Corporation shall deem necessary to apply for and obtain letters patent or copyrights
of the United States or any foreign country or to otherwise protect the Corporation’s
interest therein. Such obligations shall continue beyond the termination of employment
with respect to works, inventions, discoveries and improvements authored, conceived or
made by the Executive during the period of employment, and shall be binding upon the
Executive’s assigns, executors, administrators and other legal representatives.
	 
	 	(e)  	Upon the termination of the Executive’s employment with the Corporation for any
reason, including without limitation, termination by the Corporation for Cause for
Termination or without cause, the Executive shall promptly deliver to the Corporation
all correspondence, drawings, blueprints, manuals, letters, notes, notebooks, reports,
flow-charts, programs, proposals and any products or processes used by the Corporation
and, without limiting the foregoing, will promptly deliver to the Corporation any and
all other documents or materials containing or constituting Confidential Information.
	 
	 	(f)  	The Executive agrees that in the event of publication by the Executive of
written or graphic materials, the Corporation will retain and own all rights in said
materials, including the right of copyright.
	 
	 	(g)  	The Corporation and the Executive agree that the rights conveyed by this
Agreement are of a unique and special nature. The Executive and the Corporation agree
that any violation of this Section 5 will result in immediate and irreparable harm to
the Corporation and that in the event of any actual or threatened breach or violation
of any of the provisions of this Section 5, the Corporation will be

13

 

	 	   	entitled as a matter of right to seek an injunction or a decree of specific
performance without bond from any equity court of competent jurisdiction. The
Executive waives the right to assert the defense that such breach or violation can
be compensated adequately in damages in an action at law. Nothing in this Agreement
will be construed as prohibiting the Corporation from pursuing any other remedies at
law or in equity available to it for such breach or violation or threatened
violation.

	6.  	Noncompetition. The Executive covenants and agrees that during the period of the
Executive’s employment hereunder and for a period of two (2) years thereafter and any amount
of time during such two year period during which he is in violation of this provision he shall
not:

	 	(a)  	in the United States of America, or in any other country of the world in which
the Corporation has done business at any time during the last two (2) years prior to
the termination of the Executive’s employment with the Corporation, directly or
indirectly, whether as principal or as agent, officer, director, employee, consultant,
shareholder, or otherwise, alone or in association with any other person, corporation
or other entity, engage or participate in, be connected with, lend credit or money to,
furnish consultation or advice or permit his name to used in connection with, any
Competing Business. For purposes of this Agreement, the term “Competing Business”
shall mean any Person, corporation or other entity engaged in the business of: selling
or attempting to sell any product or service which competes with (i) products or
services sold by the Corporation within the two (2) years prior to termination of the
Executive’s employment hereunder or (ii) new products of the Corporation with respect
to which the Corporation had allocated engineering resources at the Date of Termination
to develop such new products;
	 
	 	(b)  	for a Competing Business, solicit the trade of, or trade with, any customer,
prospective customer, supplier, or prospective supplier of the Corporation. The
Executive further agrees that for two (2) years following termination of his employment
with the Corporation, including without limitation termination by the Corporation for
Cause for Termination or without cause, the Executive shall not for a Competing
Business, directly or indirectly, solicit the trade of, or trade with, any customers or
suppliers, or prospective customers or suppliers, of the Corporation; and
	 
	 	(c)  	for a Competing Business, directly or indirectly solicit or induce, or attempt
to solicit or induce, any employee of the Corporation to leave the Corporation for any
reason whatsoever, or hire any employee of the Corporation.

Notwithstanding the foregoing, (i) the covenant contained in this Section 6 shall terminate
in the event that the Corporation defaults in any of its post-termination payment
obligations to the Executive, and (ii) the covenant contained in this Section 6 shall be of
no force and effect if the Corporation chooses to give notice of its intent not to renew
this

14

 

Agreement and the Agreement terminates pursuant to the provisions of Section 10(b)(i)
hereof.

	7.  	Disability, Medical Insurance, Pension or Other Benefit Plans.

	 	(a)  	During the term of this Agreement, the Corporation shall provide coverage to
the Executive under the Corporation’s group long-term disability policy with disability
benefits in the amount of $10,000 per month during the term of the Disability. In
addition, during such period, to the extent available in the disability insurance
market and if purchased by the Executive, the Corporation shall reimburse the Executive
for the premium for an additional disability insurance policy which provides to the
Executive disability benefits in an amount of up to $10,000 per month during the term
of the Disability and which policy is “portable” and permits the Executive following
any termination of employment to maintain such policy in effect by continuing the
payments of the premiums thereunder.
	 
	 	(b)  	If the Executive’s employment should terminate under such circumstance as
entitle the Executive to receive payments pursuant to Section 4(b) hereof, the
Executive shall be deemed for purposes of all employee medical insurance, pension and
other benefits of the Corporation, to have remained in the continuous employment of the
Corporation for the three (3) year period following the Date of Termination and shall
be entitled to all of the medical insurance, pension or other benefits provided by the
Corporation as though he had so remained in the employment of the Corporation.
	 
	 	(c)  	If the Executive’s employment should terminate under such circumstance as
entitle the Executive to receive payments pursuant to Section 4(c) hereof, the
Executive shall be deemed for purposes of all employee medical insurance, pension and
other benefits of the Corporation, to have remained in the continuous employment of the
Corporation for the two (2) year period following the Date of Termination and shall be
entitled to all of the medical insurance, pension or other benefits provided by the
Corporation to the Executive as though he had so remained in the employment of the
Corporation.
	 
	 	(d)  	If for any reason, whether by law or provisions of the Corporation’s employee
medical insurance, pension or other benefit plans, or otherwise any benefits which the
Executive would be entitled to under the foregoing subsections of this Section 7 cannot
be paid pursuant to such employee benefit plans, then the Corporation hereby
contractually agrees to pay to the Executive the difference between the benefits which
the Executive would have received in accordance with the foregoing subsections of this
Section 7 if the Corporation or its relevant employee medical insurance, pension or
other benefit plan could have paid such benefit and the amount of benefits, if any,
actually paid by the Corporation or such employee medical insurance, pension or other
benefit plan. The Corporation shall not be required to pre-fund its obligation to pay
the foregoing difference.

15

 

	 	(e)  	Notwithstanding any other provision of this Section 7 to the contrary, the
Corporation shall not be required to provide to the Executive any of the benefits to be
provided to the Executive under subsections (b) through (d) unless the Executive shall
have timely elected COBRA continuation coverage following termination of his
employment.

	8.  	Other Employment. In the event of a termination of employment under the
circumstances above described in Section 4(b) or 4(c) hereof, the Executive shall have no duty
to seek any other employment after termination of his employment with the Corporation and the
Corporation hereby waives and agrees not to raise or use any defense based on the position
that the Executive had a duty to mitigate or reduce the amounts due him hereunder by seeking
other employment whether suitable or unsuitable and should the Executive obtain other
employment, then the only effect of such on the obligations of the Corporation hereunder shall
be that the Corporation shall be entitled to credit against any payments which would otherwise
be made pursuant to Section 7 hereof, any comparable payments to which the Executive is
entitled under the employee benefit plans maintained by the Executive’s other employer or
employers in connection with services to such employer or employers after termination of his
employment with the Corporation.
	 
	9.  	Stock Appreciation Rights and Options. If the Executive’s employment should
terminate under such circumstances as entitle the Executive to receive payments pursuant to
section 4(b) hereof then with respect to such outstanding Stock Appreciation Rights and/or
Options which did not immediately become exercisable upon the occurrence of a
Change-in-Control, such Stock Appreciation Right or Option shall be automatically vested and
remain outstanding in accordance with its terms and be exercisable thereafter until the stated
expiration date of such Stock Appreciation Right or Option.
	 
	10.  	Term of this Agreement.

	 	(a)  	This Agreement shall be for an initial term beginning on the date hereof and
expiring on December 31, 2007 and shall automatically be extended for successive
additional terms of one year unless termination occurs pursuant to subsection (b)
below.
	 
	 	(b)  	Except for the obligations of the Executive under Sections 5, 6 and 8 of this
Agreement and the obligations of the Corporation under Sections 4, 7, 8, 9 and 11(i)
(together with the allocation of costs thereunder) of this Agreement which shall
survive the termination of this Agreement as provided therein, this Agreement shall
terminate (i) at the end of the then current term of this Agreement provided that
either party has given the other party written notice of its intent not to renew at
least sixty (60) days prior to the end of the then current term or (ii) upon the
effectiveness of the earlier termination of the Executive’s employment pursuant to the
terms of this Agreement.

16

 

	11.  	Miscellaneous.

	 	(a)  	This Agreement shall be construed under the laws of the Commonwealth of
Pennsylvania without regard to its conflicts of laws provisions. The parties hereto
further agree that any action brought to enforce any right or obligation under this
Agreement shall be subject to the exclusive jurisdiction of the courts of the
Commonwealth of Pennsylvania. Each party hereby consents to personal jurisdiction in
any action brought in any court, federal or state, within the Commonwealth of
Pennsylvania having subject matter jurisdiction in this matter. Each party hereby
irrevocably waives any objection, including, without limitation, any objection to the
laying of venue or based on the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any such action or proceeding in such jurisdiction.
	 
	 	(b)  	This Agreement constitutes the entire understanding of the parties hereto with
respect to the subject matter hereof and may only be amended or modified by written
agreement signed by the parties hereto.
	 
	 	(c)  	The Corporation will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Corporation, by agreement in form and substance
satisfactory to the Executive, to expressly assume and agree to perform this Agreement
(including but not limited to, those provisions which survive termination of this
Agreement) in the same manner required of the Corporation and to perform it as if no
such succession had taken place. Failure of the Corporation to obtain such agreement
prior to the effectiveness of any such succession shall be a breach of this Agreement
and shall entitle the Executive to terminate employment due to Good Reason for
Termination. As used in this Agreement, “Corporation” shall mean the Corporation as
hereinbefore defined and any successor to its business and/or assets as aforesaid which
executes and delivers the agreement provided for in this subsection (c) or which
otherwise becomes bound by all the terms and provisions of this Agreement by operation
of law.
	 
	 	(d)  	This Agreement shall inure to the benefit of and be enforceable by the
Executive and the Corporation and their respective legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amounts would still be payable to him hereunder if he
had continued to live, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to his devisee, legatee or other
designee or, if there be no such designee, to his estate.
	 
	 	(e)  	Any notice or other communication provided for in this Agreement shall be in
writing and, unless otherwise expressly stated herein, shall be deemed to have been
duly given (i) on the date of delivery if delivered in person, (ii) three

17

 

	 	   	business days after being mailed by United States registered mail, return receipt
requested, postage prepaid, or (iii) one business day after being sent by an
overnight commercial courier of national reputation, addressed in the case of the
Executive to his office at the Corporation with a copy to his residence and in the
case of the Corporation to its principal executive offices, attention of the
Chairman of the Board.
	 
	 	(f)  	No provisions of this Agreement may be modified (except as provided in Section
4(j) hereof), waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and approved by resolution of the Board of
Directors or the Compensation Committee thereof. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any condition
or provision of this Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time. No agreements or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement.
	 
	 	(g)  	The invalidity or unenforceability of any provisions of this Agreement shall
not affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect. If any provision hereof shall be deemed
invalid or unenforceable, either in whole or in part, this Agreement shall be deemed
amended to delete or modify, as necessary, the offending provision and to alter the
bounds thereof in order to render it valid and enforceable.
	 
	 	(h)  	This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original but all of which together will constitute one and the same
instrument.
	 
	 	(i)  	If litigation should be brought to enforce, interpret or challenge any
provision contained herein, each party shall bear its own attorney’s fees and other
costs incurred in such litigation. If a money judgment is rendered in favor of the
Executive, to interest on any such money judgment obtained calculated at the prime rate
of interest in effect from time to time at PNC Bank, N.A. from the date that the
payment should have been made or damages incurred under this Agreement.
	 
	 	(j)  	The Executive acknowledges that he has had the opportunity to discuss this
matter with and obtain advice from his private attorney, has had sufficient time to,
and has carefully read and fully understands all the provisions of this Agreement, and
is knowingly and voluntarily entering into this Agreement.

18

 

     IN WITNESS WHEREOF, this Agreement has been executed on the date first above written.

	 	 	 	 	 	 	 
	ATTEST:	 	 	 	TOLLGRADE COMMUNICATIONS, INC.
	 
	 	 	 	 	 	 
	

	 	 	 	By:	 	 
	 

	 	 	 	 	 
	 
	 	 	 	 	 	 
	

	 	 	 	Title:	 	 
	

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	WITNESS:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	Mark B. Peterson, Executive

19

 

ATTACHMENT A

SEPARATION AND MUTUAL RELEASE

AGREEMENT

     THIS AGREEMENT (“Agreement”) is made as of the ______day of ______, 20___, by and
between MARK B. PETERSON (“Executive”) and TOLLGRADE COMMUNICATIONS, INC., a
Pennsylvania corporation (the “Corporation”) (Executive and the Corporation are referred
to sometimes hereinafter individually as “Party” and collectively as, the “Parties”).

W I T N E S S E T H:

     WHEREAS, Executive has served as its Chief Executive Officer for ___years; and

     WHEREAS, pursuant to that certain Employment Agreement dated as of ___, 2005,
as amended from time to time (the “Employment Agreement”), Executive currently is
employed by the Corporation as its Chief Executive Officer; and

     WHEREAS, the Executive’s employment with the Corporation has terminated effective
as of ___on ___, 20___(the “Date of Termination”); and

     WHEREAS, Executive is a member of the Board of Directors of the Corporation (the
“Board” or “Board of Directors”); and

     WHEREAS, the Executive will resign as a director of the Corporation effective as of
the Date of Termination as required in the Employment Agreement; and

     WHEREAS, on and subject to the terms and conditions of this Agreement, Executive
and the Corporation desire to settle fully and finally all matters between them,
including, without limitation, any matters that relate to Executive’s employment, the
termination of that employment, or Executive’s association with the Corporation
generally, whether as an employee, director, officer, shareholder or otherwise.

     NOW, THEREFORE, in consideration of the premises and the covenants and agreements
set forth herein, the Parties hereto, intending to be legally bound, agree as follows:

     1. Termination/Resignation. Executive acknowledges that his employment
with the Corporation has terminated and hereby resigns his position as an officer and
director of the Corporation and any and all positions he holds with the Corporation, its
subsidiary companies, or any of its other affiliates, effective as of the Date of
Termination. From and after the Date of Termination, Executive shall not make any
statements or engage in conduct which would lead any person or entity to believe that he
is an employee, officer, director, consultant, agent or other authorized representative
of the Corporation or any of its subsidiaries.

 

 

     2. Separation Pay. The Corporation shall pay to Executive as separation
pay the payments as may be required in the Employment Agreement.

     3. Employee Benefits, Corporation-Related Business Expenses and D&O
Coverage. The Corporation shall provide to or on behalf of Executive all of the
benefits and coverages as may be required pursuant to the Employment Agreement.

     4. Return of Corporation Property. Executive agrees that he will promptly
return to the Corporation all property belonging to the Corporation and that he will
otherwise comply with the Corporation’s normal employment termination procedures. By
way of example only, the Corporation’s property includes, but is not limited to, items
such as keys, vehicles, credit cards, cell phones, pagers, computers, all originals and
copies (regardless of the form or format on which such originals and copies are
maintained) of all Corporation specifications and pricing information, all customer
lists and other customer-related information, all supplier lists and other
supplier-related information, computer discs, tapes and other documents which relate to
the business of the Corporation and/or its customers and/or its suppliers.

     5. Standstill Provision. Through the second anniversary of the Date of
Termination, Executive and his Representatives (as defined below) shall not, directly
or indirectly, without the prior written consent of the Board: (a) acquire or offer or
agree to acquire, directly or indirectly, by purchase or otherwise, more than five
percent (5%) of any outstanding class of voting securities or securities convertible
into voting securities of the Corporation, (b) propose to, or attempt to induce any
other individual or entity to, enter into, directly or indirectly, any merger,
consolidation, business combination, asset purchase (other than routine purchases in the
ordinary course of business of product offered for sale by the Corporation) or other
similar transaction involving the Corporation or any of its affiliates, (c) make, or in
any way participate in any solicitation of proxies to vote, execute any consent as a
Corporation shareholder, act to call a meeting of the Corporation’s shareholders, make a
proposal to be acted upon by the Corporation’s shareholders or seek to advise or
influence any person with respect to the voting or not voting of any securities of the
Corporation, (d) form, join or in any way participate in a partnership, syndicate, joint
venture or other “group” (as defined under Section 13(d)(3) of the Securities Exchange
Act of 1934, as amended (the “1934 Act”)), with respect to any voting securities of the
Corporation or transfer Executive’s voting rights with respect to any securities of the
Corporation (by voting trust or otherwise), (e) otherwise act, alone or in concert with
others, to seek to control or influence the management, Board or policies of the
Corporation or seek a position on the Board, (f) disclose any intention, plan or
arrangement inconsistent with the foregoing, or (g) advise, assist or encourage any
other persons in connection with any of the foregoing. If Executive has initiated any
of the foregoing activities prior to the Date of Termination, Executive shall cease,
terminate and otherwise refrain from conducting such activities and shall take any and
all necessary steps to effect the foregoing and any proposals made by Executive as a
shareholder of the Corporation on or before the Date of Termination, are hereby
withdrawn. As used herein, the term “Representative” shall include Executive’s
employees, agents, investment bankers, advisors, affiliates and associates of any of the
foregoing and persons under the control of any of the foregoing (as the term
“affiliate,” “associate” and “control” are defined under the 1934 Act). Executive also
agrees during such period not to request the Corporation or its representatives,
directly or indirectly, to amend or waive any provision of this Section 5 (including
this sentence) to take any action which might

21

 

require the Corporation to make a public announcement regarding the possibility of
a merger, consolidation, business combination or other transaction of any kind with the
Executive or any affiliate of the Executive.

	 	6.  	Mutual General Release and Covenant Not-to-Sue.

	 	(a)  	By Executive.

	 	(i)  	Except as is otherwise explicitly
provided herein, Executive, for himself, his agents,
attorneys, Representatives, affiliates, heirs and assigns and
all persons claiming by, through, for or under any of them or
on any of their behalf, hereby fully and forever releases and
discharges the Corporation, its subsidiaries and other
affiliates, predecessors and successors, their respective
shareholders, officers, directors, employees, heirs and
assigns (individually, a “Releasee” and collectively,
“Releasees”), from any and all Claims which Executive may have
had, may now have, or may hereafter claim or assert against
the Releasees on account of any matter whatsoever, arising out
of or relating to (A) Executive’s employment or termination of
employment or other association with the Corporation, its
subsidiaries or other affiliates (as an employee, director,
officer, shareholder or otherwise) or (B) any other act,
event, failure to act or thing which has occurred or was
created at any time on or before the Date of Termination. As
used herein, “Claims” shall mean all claims, counterclaims,
cross-claims, actions, causes of action, demands, obligations,
debts, disputes, covenants, contracts, agreements, rights,
suits, rights of contribution and indemnity, liens, expenses,
assessments, penalties, charges, injuries, losses, costs
(including, without limitation, attorneys’ fees and costs of
suit), damages (including, without limitation, compensatory,
consequential, bad faith or punitive damages), and
liabilities, direct or indirect, of any and every kind,
character, nature and manner whatsoever, in law or in equity,
civil or criminal, administrative or judicial, in contract or
in tort (including, without limitation, bad faith and
negligence of any kind) or otherwise, whether now known or
unknown, claimed or unclaimed, asserted or unasserted,
suspected or unsuspected, discovered or undiscovered, accrued
or unaccrued, anticipated or unanticipated, fixed or
contingent, liquidated or unliquidated, state or federal,
under common law, statute or regulation. Without limiting the
generality hereof, this release (and the defined term “Claims”
as used in this Agreement) covers Claims based upon torts
(such as, for example, negligence, fraud, defamation, wrongful
discharge); express and implied contracts (except this
Agreement); federal, state or local statutes and ordinances;
and every other source of legal rights and obligations which
may be validly waived or released.

22

 

	 	(ii)  	Executive covenants and represents
that he has not filed and will not in the future file or
permit to be filed in his name, or on his behalf, any lawsuit
or other legal proceeding asserting Claims which are within
the scope of the release in Section 6(a)(i) against any of the
Releasees. Further, Executive represents and warrants that he
has not suffered any on-the-job injury for which he has not
filed a claim.
	 
	 	(iii)  	Nothing contained in this Section
6(a) shall be deemed to waive any remedy available to
Executive at law or in equity in the event of a breach by the
Corporation (or any of its successors) of its or their
obligations under this Agreement.
	 
	 	(iv)  	Excluded from the release and
covenant not to sue set forth in Sections 6(a)(i) and
6(a)(ii), respectively, are any Claims which cannot be waived
by law and any rights that may arise after the Date of
Termination (including matters arising pursuant to this
Agreement, any benefit policy, plan or program, and the
provisions of the Employment Agreement which specifically
survive termination of the Employment Agreement) and any
claims against any Releasee for fraud, deceit, theft or
misrepresentation.
	 
	 	(v)  	Executive acknowledges and agrees
that it is his intention that the release set forth in Section
6(a)(i) be effective as a full and final release of each and
every thing released herein.

	 	(b)  	By the Corporation.

	 	(i)  	Except as is otherwise expressly
provided herein, the Corporation, for itself, its subsidiaries
and other affiliates, agents, attorneys, representatives,
officers, directors, shareholders, predecessors, successors
and assigns and all persons claiming by, through, for or under
any of them or on any of their behalf, hereby fully and
forever releases and discharges Executive, his affiliates,
heirs and assigns (individually, an “Executive Releasee” and
collectively, “Executive Releasees”), from any and all Claims
which the Corporation may have had, may now have, or may
hereafter claim or assert against the Executive Releasees, on
account of any matter whatsoever, arising out of or relating
to (A) Executive’s employment or termination of employment,
service as an officer, director of or fiduciary acting on
behalf of the Corporation, or any other association with the
Corporation, its subsidiaries or any of its other affiliates
(whether as an employee, officer, director, shareholder or
otherwise), or (B) any other act, event, failure to act or
thing which has occurred or was created at any time on or
before the Date of Termination.

23

 

	 	(ii)  	The Corporation covenants and
represents that it has not filed and will not in the future
file or permit to be filed in its name, or on its behalf, any
lawsuit or other legal proceeding asserting Claims which are
within the scope of this release against any of the Executive
Releasees.
	 
	 	(iii)  	Excluded from the release and
covenant not to sue set forth in Sections 6(b)(i) and
6(b)(ii), respectively, are any Claims which cannot be waived
by law, any rights that may arise after the Date of
Termination (including matters arising pursuant to this
Agreement) and any Claims against any Executive Releasee for
fraud, deceit, theft or misrepresentation.
	 
	 	(iv)  	The Corporation acknowledges and
agrees that it is its intention that the release set forth in
Section 6(b)(i) be effective as a full and final release of
each and every thing released herein.

     7. Corporation’s Information; Nondisclosure; Related Matters. Executive
covenants and agrees to be bound by the provisions of Section 5 of the Employment
Agreement.

     8. Executive’s Noncompetition. Executive covenants and agrees to be bound
by the provisions of Section 6 of the Employment Agreement.

     9. Non-Admission of Liability. It is acknowledged and agreed that nothing
contained herein, including but not limited to the consideration paid hereunder,
constitutes or will be construed as an admission of liability or of any wrongdoing or
violation of law on the part of either Party hereto.

     10. Non-Disparagement.

          (a) Executive agrees that he will not, at any time, make any disparaging statements
about the Corporation or any Releasee to any current, former or prospective employer,
any applicant referral source, any current, former or prospective employee of the
Corporation, any current, former or prospective customer or supplier of the Corporation,
the media, or to any other person or entity.

          (b) The Corporation agrees that none of the members of the Board or the Executive
Council of the Corporation as constituted on the date hereof, at no time, will make any
disparaging statements about Executive to any former or prospective employer of
Executive, the media, or to any other person or entity. The Corporation will instruct
its employees not to make any disparaging statements about Executive.

          (c) As used in this Section 10, the term “disparaging statement” means any
communication, oral or written, which would cause or tend to cause the recipient of the
communication to question the integrity, competence, or good character of the person or
entity to whom the communication relates.

24

 

     11. Remedies for Breach. Each Party will be entitled to pursue any remedy
available at law or in equity for any breach of this Agreement by the other Party. Each
Party acknowledges that remedies at law may be inadequate to protect against its breach
of this Agreement and hereby in advance agrees, without prejudice to any rights to
judicial relief the other Party may otherwise have, to the granting of equitable relief,
including injunctive relief, in the other Party’s favor without proof of actual damages.

     12. Representations/Warranties by Executive. Executive represents and
warrants to the Corporation that the following statements are true and correct:

	 	(a)  	Executive is signing this Agreement voluntarily
and is legally competent to do so.
	 
	 	(b)  	Executive has been advised to consult, and has
in fact consulted, an attorney of his own choice before signing this
Agreement.
	 
	 	(c)  	Executive has read and fully understands each of
the provisions of this Agreement, he has been given sufficient and
reasonable time to consider each of them and fully understands his
rights under all applicable laws and the ramifications and
consequences of his execution of this Agreement.
	 
	 	(d)  	No promises, agreements or representations have
been made to Executive to induce him to sign this Agreement, except
those that are written in this Agreement.
	 
	 	(e)  	Executive has not, in whole or in part, sold,
assigned, transferred, conveyed or otherwise disposed of any of the
Claims covered by the release set forth in Section 6(a) (the
“Executive’s Release”).
	 
	 	(f)  	The consideration received by Executive for the
Executive’s Release constitutes lawful and adequate consideration.
	 
	 	(g)  	Executive has not engaged in any of the
activities listed in subsections (a)-(g) of Section 5 hereof.
	 
	 	(h)  	Executive waives any notice requirements under
the Corporation’s by-laws with respect to any of the Board’s meetings
to consider the approval of the terms and conditions of this
Agreement.

     13. Representations/Warranties by the Corporation. The Corporation
represents and warrants to Executive that the following statements are true and correct:

	 	(a)  	This Agreement has been duly authorized and executed by the Corporation.
	 
	 	(b)  	The Corporation has not, in whole or in part, sold, assigned, transferred, conveyed
or otherwise disposed of any of the Claims covered by the release set forth in Section 6(b)
(the “Corporation’s Release”).

25

 

	 	(c)  	The consideration received by the Corporation for the Corporation’s Release
constitutes lawful and adequate consideration.

     14. Waiver of Rights. If on one or more instances either Party fails to
insist that the other Party perform any of the terms of this Agreement, such failure
shall not be construed as a waiver by such Party of any past, present, or future right
granted under this Agreement; and the obligations of both Parties under this Agreement
shall continue in full force and effect.

     15. Severability/Applicability. If any provision, section or subsection of
this Agreement is adjudged by any court to be void or unenforceable in whole or in part,
this adjudication shall not affect the validity of the remainder of this Agreement,
including any other provision, section or subsection. Each provision, section and
subsection of this Agreement is separable from every other provision, section and
subsection, and constitutes a separate and distinct covenant.

     16. Successors & Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the Parties and their respective successors, assigns, executors,
administrators and personal representatives.

     17. Notices. All notices, requests, demands, claims and other
communications under this Agreement shall be in writing. Any notice, request, demand,
claim or other communication hereunder shall be deemed duly given the next business day
(or when received if sooner) if it is sent by (a) confirmed facsimile; (b) overnight
delivery; or (c) registered or certified mail, return receipt requested, postage
prepaid, and addressed, to the respective address of such Party specified below its or
his signature below. Either Party may send any notice, request, demand, claim or other
communication hereunder to the intended recipient at the address set forth below using
any other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail or electronic mail), but no such notice, request, demand,
claim or other communication shall be deemed to have been duly given unless and until it
is actually received by the intended recipient. Either Party may change the address to
which notices, requests, demands, claims and other communications hereunder are to be
delivered by giving the other Party notice in the manner provided in this Agreement.
Each Party irrevocably consents to service of process in connection with disputes
arising out of this Agreement or otherwise in the manner provided for notices in this
Section 17. Nothing in this Agreement will affect the right of any Party to service
process in any other manner permitted by law.

     18. Public Announcement of Termination/Resignation. The Parties agree that
the Corporation will file with the Securities and Exchange Commission (the “SEC”) a
report on Form 8-K and the Corporation will issue a press release each of which will
disclose Executive’s resignation as a Director and termination as an executive officer
of the Corporation. [Executive acknowledges and agrees that he has received and
reviewed those provisions of the press release that will be issued that relate to the
termination of employment and resignation from the Board, agrees fully with the
statements made by the Corporation therein with respect thereto, and has not provided
and will not provide to the Corporation any written correspondence concerning the
circumstances surrounding his termination or employment of resignation as a Director.]
[INSERT ONLY IF APPLICABLE: Executive acknowledges and agrees that his resignation as a
Director did not involve any disagreement with the

26

 

Corporation on any matter relating to the Corporation’s operations, policies or
practices within the meaning contemplated by Form 8-K.]

     19. Sub-certification of ___Annual Report. In connection with the
preparation of the Corporation’s ___Annual Report on Form 10-K for the fiscal year
(the “Annual Report”) and prior to the filing by the Corporation of such Annual Report
with the SEC, Executive shall provide to the Corporation promptly following the
Corporation’s request (and in no event more than seven (7) business days after such
request) a duly executed original of the Certificate attached hereto as Exhibit A (the
“Sub-certification Certificate”). The Corporation shall provide to Executive a copy of
the Annual Report and the Corporation’s Proxy Statement on Schedule 14A at the time of
requesting such Certificate. If the Corporation requests that Executive provide the
Sub-certification Certificate and Executive provides the same to the Corporation within
the foregoing time frame, the Corporation shall indemnify, defend and hold harmless
Executive, to the fullest extent provided under applicable law, against any losses,
claims, damages, liabilities, action, suit, proceeding, cost or expense (including
reasonable attorney’s fees) (collectively, “Liabilities”) arising out of or pertaining
to any action against Executive for any material misstatement or omission in the Annual
Report; provided, however, notwithstanding the foregoing provisions of this sentence,
the Corporation shall have no obligation to indemnify, defend or hold harmless Executive
for Liabilities arising out of or pertaining to any material misstatement or omission in
the Annual Report which is actually known to Executive (without duty of investigation)
and not disclosed by him to the Corporation at the time of his delivery to the
Corporation of the Sub-certification Certificate.

     20. Entire Agreement. This Agreement supersedes and replaces all prior and
contemporaneous written or oral agreements relating to Executive’s employment,
compensation and employment termination, including the Employment Agreement (other than
the post-termination provisions which survive the termination of the Employment
Agreement as provided therein), but not including any and all stock option agreements
between Executive and the Corporation and any employee benefit plans or programs.

     21. Interpretation; Enforcement. This Agreement will be interpreted and
enforced according to the laws of the Commonwealth of Pennsylvania, without regard to
its conflicts of laws provision. The parties hereto further agree that any action to
enforce any right or obligation under this Agreement shall be subject to the exclusive
jurisdiction of the courts of the Commonwealth of Pennsylvania. Each Party hereby
consents to personal jurisdiction in any action brought in any court, federal or state,
within the Commonwealth of Pennsylvania having subject matter jurisdiction in this
matter. Each Party hereby irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of forum non
conveniens, which it may now or hereafter have to the bringing of any such action or
proceeding in such jurisdiction.

     22. Amendment. No provision of this Agreement may be modified, amended or
revoked, except in a writing signed by Executive and an authorized official of the
Corporation.

     23. Acknowledgment of Waiver of Claims Under ADEA. Executive acknowledges
that he is waiving and releasing any rights he may have under the Age Discrimination in
Employment Act of 1967 (“ADEA”) and that this waiver and release is knowing and
voluntary. Executive and the Corporation agree that this waiver and release does

27

 

not apply to any rights that or claims that might arise under the ADEA after the
date of this Agreement. Executive acknowledges that the consideration given for this
waiver and release agreement is in addition to anything of value to which Executive was
already entitled. Executive further acknowledges that he has been advised by this
writing that (a) he has at least twenty-one (21) days within which to consider this
Agreement, (b) he has seven (7) days following the execution of this Agreement by the
Parties to revoke the Agreement and (c) this Agreement shall not be effective until the
revocation period has expired. Any revocation should be in writing and delivered to the
Corporation by the close of business on the seventh (7th) day from the date
that Executive signs this Agreement.

[Intentionally Left Blank]

28

 

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

WITNESS:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Mark B. Peterson	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	Address:	 	 	 
	

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	TOLLGRADE COMMUNICATIONS, INC.	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	By:	 	 	 	 
	

	 	 	 	 	 	 	 
	

	 	 	 	Name:	 	 	 	 
	

	 	 	 	 	 	 	 
	

	 	 	 	Title:	 	 	 	 
	

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	Address:	493 Nixon Road	 	 
	

	 	 	 	 	 	Cheswick, PA 15024	 	 

29

 

Exhibit A

CERTIFICATE

The undersigned hereby certifies as follows:

	1.  	I understand that this certificate will be relied upon by the Chief
Executive Officer and Chief Financial Officer of Tollgrade Communications, Inc.
(the “Corporation”) in making the certifications required of them in the
Corporation’s annual report for its 20___fiscal year on Form 10-K (the “Annual
Report”).
	 
	2.  	I have reviewed the Annual Report (as distributed on ______, 20___). I did
not participate in the preparation of the Annual Report.
	 
	3.  	Based on my actual knowledge (without duty of investigation) gained during
my employment by the Corporation, except as set forth in the Schedule attached
hereto, nothing has come to my attention that causes me to believe that the Annual
Report contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading.
	 
	4.  	Based on my actual knowledge (without duty of investigation) gained during
my employment by the Corporation, except as set forth in the Schedule attached
hereto, nothing has come to my attention that causes me to believe that the
financial statements and other financial information included in the Annual Report,
do not fairly present in all material respects the financial conditions, results of
operations and cash flows of the corporation as of, and for, the year ended
December 31, 20___.
	 
	5.  	Based on my actual knowledge (without duty of investigation) gained during
my employment by the Corporation, except as set forth in the Schedule attached
hereto, nothing has come to my attention that causes me to believe that there is
any material weakness or significant deficiency in the design or operation of the
Corporation’s disclosure controls and procedures or the Corporation’s internal
controls over financial reporting as they existed and were utilized as of the last
day of my employment by the Corporation, which could adversely affect the
Corporation’s ability to timely and accurately report the financial and other
information required to be disclosed by the Corporation in its periodic reports
required to be filed pursuant to the Securities Exchange Act of 1934, as amended.

Date: ______________, 20___

	 	 	 	 	 
	

	 	 	 	 
	

	 	Mark B. Peterson

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00085-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00085-of-00352.parquet"}]]