Document:

exv10w6

 

Exhibit 10.6

PLEDGE AGREEMENT

     THIS PLEDGE AGREEMENT (as amended, supplemented or otherwise modified from
time to time, this “Pledge Agreement”) dated as of September 22, 2003 is by and
among the parties identified as “Pledgors” on the signature pages hereto and
such other parties as may become Pledgors hereunder after the date hereof
(collectively the “Pledgors”) and BANK OF AMERICA, N.A., as administrative
agent (in such capacity, the “Administrative Agent”) for the Secured Parties
(defined below).

W I T N E S S E T H

     WHEREAS, pursuant to that Credit Agreement dated as of August 12, 2003 (as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”) among BioReliance Corporation, Inc., a Delaware corporation
(“BioReliance”), BioReliance (Glasgow) Limited, a Scottish private limited
company (the “Foreign Borrower”; together with BioReliance, the “Borrowers”),
the Guarantors identified therein (the “Guarantors”), the Lenders identified
therein and Bank of America, N.A., as Administrative Agent, Security Trustee
and L/C Issuer, the Lenders have agreed to provide credit facilities to the
Borrowers; and

     WHEREAS, this Pledge Agreement is required under the terms of the Credit
Agreement;

     NOW, THEREFORE, in consideration of these premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

     1.     Definitions. Capitalized terms used and not otherwise defined herein
shall have the meanings provided in the Credit Agreement. In addition, the
following terms, which are defined in the UCC as in effect in the State of New
York on the date hereof, are used as defined therein: Accession, Financial
Asset, Proceeds and Security. As used herein:

     “Pledged Collateral” has the meaning provided in Section 2.

     “Pledged Shares” has the meaning provided in Section 2.

		
	 	     “Secured Obligations” means, without duplication, (a) all
obligations (including the Foreign Obligations) of any Credit Party
arising under any Credit Document or otherwise with respect to any Loan
or Letter of Credit, whether direct or indirect (including those acquired
by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest and fees that accrue
after the commencement by or against any Credit Party or any Affiliate
thereof of any proceeding under any Debtor Relief Laws naming such Person
as the debtor in such proceeding, regardless of whether such interest and
fees are allowed claims in such proceeding, (b) all obligations under any
Swap Contract of any Credit Party to which a Lender or any Affiliate of a
Lender is a party and (c) all costs and expenses incurred in connection
with enforcement and collection of the Secured Obligations, including
Attorney Costs.

     “Secured Parties” means the holders of the Secured Obligations.

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

     “UCC” means the Uniform Commercial Code as in effect from time to
time in the applicable jurisdiction.

 

 

     2.     Pledge and Grant of Security Interest. To secure the prompt payment
and performance in full when due, whether by lapse of time, acceleration,
mandatory prepayment or otherwise, of the Secured Obligations, each Pledgor
hereby grants, pledges and assigns to the Administrative Agent, for the benefit
of the Secured Parties, a continuing security interest in, and a right to
set-off against, any and all right, title and interest of such Pledgor in and
to the following, whether now owned or existing or owned, acquired, or arising
hereafter (collectively, the “Pledged Collateral”:

		
	 	     (a) Pledged Shares. (i) 100% (or, if less, the full amount owned by
such Pledgor) of the issued and outstanding Capital Stock owned by such
Pledgor of each Domestic Subsidiary set forth on Schedule 2(a) attached
hereto and (ii) 65% (or, if less, the full amount owned by such Pledgor)
of the issued and outstanding shares of Capital Stock entitled to vote
(within the meaning of Treasury Regulation Section 1.956-2(c)(2))
(“Voting Equity”) and 100% (or, if less, the full amount owned by such
Pledgor) of the issued and outstanding Capital Stock not entitled to vote
(within the meaning of Treasury Regulation Section 1.956-2(c)(2))
(“Non-Voting Equity”) owned by such Pledgor of each Foreign Subsidiary
set forth on Schedule 2(a) attached hereto (as such schedule may be
updated from time to time), in each case together with the certificates
(or other agreements or instruments), if any, representing such Capital
Stock, and all options and other rights, contractual or otherwise, with
respect thereto (collectively, together with the Capital Stock described
in Section 2(b) and 2(c) below, the “Pledged Shares”), including the
following:

		
	 	     (A) all shares, securities, membership interests or other
equity interests representing a dividend on any of the Pledged
Shares, or representing a distribution or return of capital upon or
in respect of the Pledged Shares, or resulting from a stock split,
revision, reclassification or other exchange therefor, and any
subscriptions, warrants, rights or options issued to the holder of,
or otherwise in respect of, the Pledged Shares (in each case in
accordance with the provisions set forth in this Section 2(a)); and
	 
	 	     (B) without affecting the obligations of the Pledgors under
any provision prohibiting such action hereunder or under the Credit
Agreement, in the event of any consolidation or merger involving
the issuer of any Pledged Shares and in which such issuer is not
the surviving entity, the Capital Stock of the successor entity
formed by or resulting from such consolidation or merger (in each
case in accordance with the provisions set forth in this Section
2(a)).

		
	 	     (b) Additional Shares. (i) 100% (or, if less, the full amount owned
by such Pledgor) of the issued and outstanding Capital Stock owned by
such Pledgor of any Person that hereafter becomes a Domestic Subsidiary
and (ii) 65% (or, if less, the full amount owned by such Pledgor) of the
Voting Equity and 100% (or, if less, the full amount owned by such
Pledgor) of the Non-Voting Equity owned by such Pledgor of any Person
that hereafter becomes a Foreign Subsidiary, including the certificates
(or other agreements or instruments) representing such Capital Stock.
	 
	 	     (c) Accessions
and Proceeds. All Accessions and all Proceeds of any
and all of the foregoing.

     Without limiting the generality of the foregoing, it is hereby
specifically understood and agreed that a Pledgor may from time to time
hereafter deliver additional Pledged Collateral consisting of Capital Stock
owned by such Pledgor to the Administrative Agent as collateral security for
the Secured Obligations. Upon delivery to the Administrative Agent, such
additional Capital Stock shall be deemed

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to be part of the Pledged Collateral of such Pledgor and shall be subject to
the terms of this Pledge Agreement and Schedule 2(a) shall be deemed amended to
refer to such additional Capital Stock. Notwithstanding anything to the
contrary contained herein, the security interests granted under this Pledge
Agreement and the provisions hereof shall not extend to any Excluded Property.

     3.     Security
for Secured Obligations. The security interest created hereby
in the Pledged Collateral of each Pledgor constitutes continuing collateral
security for all of the Secured Obligations.

     4.     Delivery
of the Pledged Collateral. Each Pledgor hereby agrees that:

		
	 	     (a) Such Pledgor shall deliver to the Administrative Agent (i)
simultaneously with or prior to the execution and delivery of this Pledge
Agreement, all certificates representing the Pledged Shares of such
Pledgor as of the date hereof and (ii) promptly upon the receipt thereof
by or on behalf of a Pledgor, all other certificates and instruments
constituting Pledged Collateral of a Pledgor. Prior to delivery to the
Administrative Agent, all such certificates and instruments constituting
Pledged Collateral of a Pledgor shall be held in trust by such Pledgor
for the benefit of the Administrative Agent pursuant hereto. All such
certificates shall be delivered in suitable form for transfer by delivery
or shall be accompanied by duly executed instruments of transfer or
assignment in blank, substantially in the form provided in Schedule 4(a)
attached hereto.
	 
	 	     (b) Additional
Securities. If such Pledgor shall receive by virtue
of its being or having been the owner of any Pledged Collateral, any (i)
certificate, including any certificate representing a dividend or
distribution in connection with any increase or reduction of capital,
reclassification, merger, consolidation, sale of assets, combination of
shares or other equity interests, stock splits, spin-off or split-off,
promissory notes or other instruments; (ii) option or right, whether as
an addition to, substitution for, or an exchange for, any Pledged
Collateral or otherwise; (iii) dividends payable in securities; or (iv)
distributions of securities in connection with a partial or total
liquidation, dissolution or reduction of capital, capital surplus or
paid-in surplus and such certificate, instrument, option, right or
distribution represents Pledged Collateral under Section 2 hereof, then
such Pledgor shall receive such certificate, instrument, option, right or
distribution in trust for the benefit of the Administrative Agent, shall
segregate it from such Pledgor’s other property and shall deliver it
promptly to the Administrative Agent in the exact form received together
with any necessary endorsement and/or appropriate stock power duly
executed in blank, substantially in the form provided in Schedule 4(a),
to be held by the Administrative Agent as Pledged Collateral and as
further collateral security for the Secured Obligations.
	 
	 	     (c) Financing
Statements. Each Pledgor authorizes the
Administrative Agent to prepare and file such financing statements
(including renewal statements) or amendments thereof or other instruments
as the Administrative Agent may from time to time reasonably deem
necessary or appropriate in order to perfect and maintain the security
interests granted hereunder in accordance with the UCC. The collateral
descriptions on any such financing statements may be broader or more
general than the description of the Pledged Collateral under this Pledge
Agreement. Each Pledgor shall deliver to the Administrative Agent such
agreements, assignments or instruments as the Administrative Agent may
reasonably request to assure the Administrative Agent of the continued
priority and perfection of the security interests granted hereunder.

     5.     Representations
and Warranties.
 Each Pledgor hereby represents and
warrants to the Administrative Agent, for the benefit of the Secured Parties,
that as of the date hereof, the date of each

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 Request for Credit Extension (excluding conversions and continuations) and
the date of each Credit Extension:

		
	 	     (a) Authorization of Pledged Shares. The Pledged Shares are duly
authorized and validly issued, are fully paid and nonassessable and are
not subject to the preemptive rights of any Person.
	 
	 	     (b) Title. Such Pledgor has good and indefeasible title to the
Pledged Collateral of such Pledgor and will at all times be the legal and
beneficial owner of such Pledged Collateral free and clear of any Lien,
other than Permitted Liens. There exists no “adverse claim” within the
meaning of Section 8-102 of the UCC with respect to the Pledged Shares of
such Pledgor.
	 
	 	     (c) Exercising of Rights. The exercise by the Administrative Agent
of its rights and remedies hereunder will not violate any applicable Law
or any material contractual restriction binding on or affecting a Pledgor
or any of its property.
	 
	 	     (d) Pledgor’s Authority. Subject, in the case of any Pledged
Collateral issued by a Foreign Subsidiary of such Pledgor, to applicable
Law, no authorization, approval or action by, and no notice or filing
(except, as applicable, UCC financing statements and continuation
statements) with any Governmental Authority or with the issuer of any
Pledged Stock is required either (i) for the pledge made by such Pledgor
or for the granting of the security interest by such Pledgor pursuant to
this Pledge Agreement (except as have been already obtained) or (ii) for
the exercise by the Administrative Agent of its rights and remedies
hereunder (except as may be required by laws affecting the offering and
sale of securities).
	 
	 	     (e) Security Interest/Priority. This Pledge Agreement creates a
valid security interest in favor of the Administrative Agent for the
benefit of the Secured Parties in the Pledged Collateral. Subject, in
the case of any Pledged Collateral issued by a Foreign Subsidiary of such
Pledgor, to applicable Law, (i) delivery of the certificates evidencing
such Pledged Collateral to the Administrative Agent, together with duly
executed stock powers in respect thereof, will perfect and establish the
first priority of the Administrative Agent’s security interest in any
certificated Pledged Collateral of such Pledgor that constitutes a
Security, (ii) filing of appropriate UCC financing statements in the
appropriate filing offices in the jurisdiction of organization of such
Pledgor or obtaining “control” over such interests in accordance with the
provisions of Section 8-106 of the UCC will perfect and establish the
first priority of the Administrative Agent’s security interest in any
uncertificated Pledged Collateral of such Pledgor that constitutes a
Security, (iii) the filing of appropriate UCC financing statements in the
appropriate filing offices in the jurisdiction of organization of such
Pledgor will perfect and establish the first priority of the
Administrative Agent’s security interest in any Pledged Collateral of
such Pledgor that does not constitute a Security, and (iv) except as set
forth in this Section 5(e), no action is necessary to perfect the
security interests granted by such Pledgor under this Pledge Agreement.
	 
	 	     (f) Partnership and Membership Interests. Except as previously
disclosed to the Administrative Agent, none of the Pledged Shares
consisting of partnership or limited liability company interests (i) is
dealt in or traded on a securities exchange or in a securities market,
(ii) by its terms expressly provides that it is a security governed by
Article 8 of the UCC, (iii) is an investment company security, (iv) is
held in a securities account or (v) constitutes a Security or a Financial
Asset.

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	 	     (g) No Other Interests. Subject to Section 7.13 of the Credit
Agreement, no Pledgor owns any Capital Stock in any Subsidiary other than
as set forth on Schedule 2(a) attached hereto.

     6.     Covenants. Each Pledgor hereby covenants, that so long as any of the
Secured Obligations remains outstanding and until all of the commitments
relating thereto have been terminated, such Pledgor shall:

		
	 	     (a) Defense of Title. Warrant and defend title to and ownership of
the Pledged Collateral of such Pledgor at its own expense against the
claims and demands of all other parties claiming an interest therein,
keep the Pledged Collateral free from all Liens, except for Permitted
Liens, and not sell, exchange, transfer, assign, lease or otherwise
dispose of Pledged Collateral of such Pledgor or any interest therein,
except as permitted under the Credit Agreement and the other Credit
Documents.
	 
	 	     (b) Further Assurances. Promptly execute and deliver at its expense
all further instruments and documents and take all further action that
may be necessary and desirable or that the Administrative Agent may
reasonably request in order to (i) perfect and protect the security
interest created hereby in the Pledged Collateral of such Pledgor
(including any and all action necessary to satisfy the Administrative
Agent that the Administrative Agent has obtained a first priority
perfected security interest in all Pledged Collateral); (ii) enable the
Administrative Agent to exercise and enforce its rights and remedies
hereunder in respect of the Pledged Collateral of such Pledgor; and (iii)
otherwise effect the purposes of this Pledge Agreement, including and if
requested by the Administrative Agent, delivering to the Administrative
Agent irrevocable proxies in respect of the Pledged Collateral of such
Pledgor.
	 
	 	     (c) Amendments. Not make or consent to any amendment or other
modification or waiver with respect to any of the Pledged Collateral of
such Pledgor or enter into any agreement or allow to exist any
restriction with respect to any of the Pledged Collateral of such Pledgor
other than pursuant hereto or as may be permitted under the Credit
Agreement.
	 
	 	     (d) Compliance with Securities Laws. File all reports and other
information now or hereafter required to be filed by such Pledgor with
the United States Securities and Exchange Commission and any other state,
federal or foreign agency in connection with the ownership of the Pledged
Collateral of such Pledgor.
	 
	 	     (e) Issuance or Acquisition of Capital Stock. Not, without
executing and delivering, or causing to be executed and delivered, to the
Administrative Agent such agreements, documents and instruments as the
Administrative Agent may require, issue or acquire any Capital Stock
consisting of an interest in a partnership or a limited liability company
that (i) is dealt in or traded on a securities exchange or in a
securities market, (ii) by its terms expressly provides that it is a
security governed by Article 8 of the UCC, (iii) is an investment company
security, (iv) is held in a securities account or (v) constitutes a
Security or a Financial Asset.

     7.     Advances by the Administrative Agent. On failure of any Pledgor to
perform any of the covenants and agreements contained herein, the
Administrative Agent may, at its sole option and in its sole discretion,
perform the same and in so doing may expend such sums as the Administrative
Agent may reasonably deem advisable in the performance thereof, including the
payment of any insurance premiums, the payment of any taxes, a payment to
obtain a release of a Lien or potential Lien, expenditures made in defending
against any adverse claim and all other expenditures that the Administrative
Agent may make for the protection of the security hereof or may be compelled to
make by operation of law. All such sums and

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amounts so expended shall be repayable by the Pledgors on a joint and several
basis (subject to Section 25) promptly upon timely notice thereof and demand
therefor, shall constitute additional Secured Obligations and shall bear
interest from the date said amounts are expended at the Default Rate specified
in the Credit Agreement for Revolving Loans that are Base Rate Loans. No such
performance of any covenant or agreement by the Administrative Agent on behalf
of any Pledgor, and no such advance or expenditure therefor, shall relieve the
Pledgors of any default under the terms of this Pledge Agreement, the other
Credit Documents or any other documents relating to the Secured Obligations.
The Administrative Agent may make any payment hereby authorized in accordance
with any bill, statement or estimate procured from the appropriate public
office or holder of the claim to be discharged without inquiry into the
accuracy of such bill, statement or estimate or into the validity of any tax
assessment, sale, forfeiture, tax lien, title or claim except to the extent
such payment is being contested in good faith by a Pledgor in appropriate
proceedings and against which adequate reserves are being maintained in
accordance with GAAP.

     8.     Remedies.

		
	 	     (a) General Remedies. Upon the occurrence of an Event of Default
and during the continuation thereof, the Administrative Agent shall have,
in addition to the rights and remedies provided herein, in the Credit
Documents, in any other documents relating to the Secured Obligations, or
by law (including levy of attachment and garnishment), the rights and
remedies of a secured party under the UCC of the jurisdiction applicable
to the affected Pledged Collateral.
	 
	 	     (b) Sale of Pledged Collateral. Upon the occurrence of an Event of
Default and during the continuation thereof, without limiting the
generality of this Section 8 and without notice, the Administrative Agent
may, in its sole discretion, sell or otherwise dispose of or realize upon
the Pledged Collateral, or any part thereof, in one or more parcels, at
public or private sale, at any exchange or broker’s board or elsewhere,
at such price or prices and on such other terms as the Administrative
Agent may deem commercially reasonable, for cash, credit or for future
delivery or otherwise in accordance with applicable law. To the extent
permitted by law, any Secured Party may in such event, bid for the
purchase of such securities. Each Pledgor agrees that, to the extent
notice of sale shall be required by law and has not been waived by such
Pledgor, any requirement of reasonable notice shall be met if notice,
specifying the place of any public sale or the time after which any
private sale is to be made, is personally served on or mailed, postage
prepaid, to such Pledgor, in accordance with the notice provisions of
Section 16 at least ten days before the time of such sale. The
Administrative Agent shall not be obligated to make any sale of Pledged
Collateral of such Pledgor regardless of notice of sale having been
given. The Administrative Agent may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and place
to which it was so adjourned.
	 
	 	     (c) Private Sale. Upon the occurrence of an Event of Default and
during the continuation thereof, the Pledgors recognize that the
Administrative Agent may deem it impracticable to effect a public sale of
all or any part of the Pledged Shares or any of the securities
constituting Pledged Collateral and that the Administrative Agent may,
therefore, determine to make one or more private sales of any such
Pledged Collateral to a restricted group of purchasers who will be
obligated to agree, among other things, to acquire such Pledged
Collateral for their own account, for investment and not with a view to
the distribution or resale thereof. Each Pledgor acknowledges that any
such private sale may be at prices and on terms less favorable to the
seller than the prices and other terms that might have been obtained at a
public sale and, notwithstanding the foregoing, agrees that such private
sale shall be deemed to have been made in a commercially reasonable
manner and that the Administrative Agent shall have no obligation to
delay sale of any such Pledged Collateral for the period of time
necessary

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	 	to permit the issuer of such Pledged Collateral to register such Pledged
Collateral for public sale under the Securities Act. Each Pledgor
further acknowledges and agrees that any offer to sell such Pledged
Collateral that has been (i) publicly advertised on a bona fide basis in
a newspaper or other publication of general circulation in the financial
community of New York, New York (to the extent that such offer may be
advertised without prior registration under the Securities Act), or (ii)
made privately in the manner described above shall be deemed to involve a
“public sale” under the UCC, notwithstanding that such sale may not
constitute a “public offering” under the Securities Act, and the
Administrative Agent may, in such event, bid for the purchase of such
Pledged Collateral.
	 
	 	     (d) Retention of Pledged Collateral. To the extent permitted under
applicable law, in addition to the rights and remedies hereunder, upon
the occurrence of an Event of Default, the Administrative Agent may,
after providing the notices required by Sections 9-620 and 9-621 of the
UCC or otherwise complying with the requirements of applicable law of the
relevant jurisdiction, accept or retain all or any portion of the Pledged
Collateral in satisfaction of the Secured Obligations. Unless and until
the Administrative Agent shall have provided such notices, however, the
Administrative Agent shall not be deemed to have accepted or retained any
Pledged Collateral in satisfaction of any Secured Obligations for any
reason.
	 
	 	     (e) Deficiency. In the event that the proceeds of any sale,
collection or realization are insufficient to pay all amounts to which
the Administrative Agent or the Secured Parties are legally entitled, the
Pledgors shall be jointly and severally liable for the deficiency
(subject to Section 25), together with interest thereon at the Default
Rate specified in the Credit Agreement for Revolving Loans that are Base
Rate Loans, together with the reasonable costs of collection and Attorney
Costs. Any surplus remaining after the full payment and satisfaction of
the Secured Obligations shall be returned promptly to the Pledgors or to
whomsoever a court of competent jurisdiction shall determine to be
entitled thereto.

     9.     Rights of the Administrative Agent.

		
	 	     (a) Power of Attorney. In addition to other powers of attorney
contained herein, each Pledgor hereby designates and appoints the
Administrative Agent, on behalf of the Secured Parties, and each of its
designees or agents, as attorney-in-fact of such Pledgor, irrevocably and
with power of substitution, with authority to take any or all of the
following actions upon the occurrence and during the continuation of an
Event of Default:

		
	 	     (i) to demand, collect, settle, compromise and adjust, and
give discharges and releases concerning the Pledged Collateral, all
as the Administrative Agent may reasonably deem appropriate;
	 
	 	     (ii) to commence and prosecute any actions at any court for
the purposes of collecting any of the Pledged Collateral and
enforcing any other right in respect thereof;
	 
	 	     (iii) to defend, settle or compromise any action brought and,
in connection therewith, give such discharge or release as the
Administrative Agent may reasonably deem appropriate;
	 
	 	     (iv) to pay or discharge taxes, liens, security interests or
other encumbrances levied or placed on or threatened against the
Pledged Collateral;

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	 	     (v) to direct any parties liable for any payment in connection
with any of the Pledged Collateral to make payment of any and all
monies due and to become due thereunder directly to the
Administrative Agent or as the Administrative Agent shall direct;
	 
	 	     (vi) to receive payment of and receipt for any and all monies,
claims, and other amounts due and to become due at any time in
respect of or arising out of any Pledged Collateral;
	 
	 	     (vii) to sign and endorse any drafts, assignments, proxies,
stock powers, verifications, notices and other documents relating
to the Pledged Collateral;
	 
	 	     (viii) to execute and deliver all assignments, conveyances,
statements, financing statements, renewal financing statements,
security and pledge agreements, affidavits, notices and other
agreements, instruments and documents that the Administrative Agent
may reasonably deem appropriate in order to perfect and maintain
the security interests and liens granted in this Pledge Agreement
and in order to fully consummate all of the transactions
contemplated therein;
	 
	 	     (ix) to exchange any of the Pledged Collateral or other
property upon any merger, consolidation, reorganization,
recapitalization or other readjustment of the issuer thereof and,
in connection therewith, deposit any of the Pledged Collateral with
any committee, depository, transfer agent, registrar or other
designated agency upon such terms as the Administrative Agent may
reasonably deem appropriate;
	 
	 	     (x) to vote for a shareholder resolution, or to sign an
instrument in writing, sanctioning the transfer of any or all of
the Pledged Collateral into the name of the Administrative Agent or
one or more of the Secured Parties or into the name of any
transferee to whom the Pledged Collateral or any part thereof may
be sold pursuant to Section 8; and
	 
	 	     (xi) to do and perform all such other acts and things as the
Administrative Agent may reasonably deem appropriate or convenient
in connection with the Pledged Collateral.

     This power of attorney is a power coupled with an interest and shall
be irrevocable for so long as any of the Secured Obligations shall remain
outstanding and until all of the commitments relating thereto shall have
been terminated. The Administrative Agent shall be under no duty to
exercise or withhold the exercise of any of the rights, powers,
privileges and options expressly or implicitly granted to the
Administrative Agent in this Pledge Agreement, and shall not be liable
for any failure to do so or any delay in doing so. The Administrative
Agent shall not be liable for any act or omission or for any error of
judgment or any mistake of fact or law in its individual capacity or its
capacity as attorney-in-fact except acts or omissions resulting from its
gross negligence or willful misconduct. This power of attorney is
conferred on the Administrative Agent solely to protect, preserve and
realize upon its security interest in the Pledged Collateral.

     (b) Assignment by the Administrative Agent. The Administrative
Agent may, pursuant to Section 10.09 of the Credit Agreement, from time
to time assign the Secured Obligations and any portion thereof and/or the
Pledged Collateral and any portion thereof, and the assignee shall be
entitled to all of the rights and remedies of the Administrative Agent
under this Pledge Agreement in relation thereto.

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     (c) 
The Administrative Agent’s Duty of Care. Other than the
exercise of reasonable care to assure the safe custody of the Pledged
Collateral while being held by the Administrative Agent hereunder, the
Administrative Agent shall have no duty or liability to preserve rights
pertaining thereto, it being understood and agreed that the Pledgors
shall be responsible for preservation of all rights in the Pledged
Collateral, and the Administrative Agent shall be relieved of all
responsibility for the Pledged Collateral upon surrendering it or
tendering the surrender of it to the Pledgors. The Administrative Agent
shall be deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if such Pledged
Collateral is accorded treatment substantially equal to that which the
Administrative Agent accords its own property, which shall be no less
than the treatment employed by a reasonable and prudent agent in the
industry, it being understood that the Administrative Agent shall not
have responsibility for (i) ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters
relating to any Pledged Collateral, whether or not the Administrative
Agent has or is deemed to have knowledge of such matters, or (ii) taking
any necessary steps to preserve rights against any parties with respect
to any of the Pledged Collateral.

     (d) 
Voting Rights in Respect of the Pledged Collateral.

		
	 	     (i) So long as no Event of Default shall have occurred and be
continuing, to the extent permitted by law, each Pledgor may
exercise any and all voting and other consensual rights pertaining
to the Pledged Collateral of such Pledgor or any part thereof for
any purpose not inconsistent with the terms of this Pledge
Agreement or the Credit Agreement; and
	 
	 	     (ii) Upon the occurrence and during the continuance of an
Event of Default and following delivery by the Administrative Agent
to BioReliance of notice of its intent to exercise the voting and
other consensual rights that the Pledgors would otherwise be
entitled to exercise pursuant to paragraph (i) of this subsection,
all rights of the Pledgors to exercise such rights shall cease and
all such rights shall thereupon become vested in the Administrative
Agent, which shall then have the sole right to exercise such voting
and other consensual rights.

     (e) 
Dividend Rights in Respect of the Pledged Collateral.

		
	 	     (i) So long as no Event of Default shall have occurred and be
continuing and subject to Section 4(b), each Pledgor may receive
and retain any and all dividends (other than stock dividends and
other dividends constituting Pledged Collateral addressed
hereinabove) or interest paid in respect of the Pledged Collateral
to the extent they are allowed under the Credit Agreement.
	 
	 	     (ii) Upon the occurrence and during the continuance of an
Event of Default:

		
	 	     (A) all rights of a Pledgor to receive the dividends and
interest payments that it would otherwise be authorized to
receive and retain pursuant to paragraph (i) of this
subsection shall cease and all such rights shall thereupon be
vested in the Administrative Agent, which shall then have the
sole right to receive and hold as Pledged Collateral such
dividends and interest payments; and

9

 

		
	 	     (B) all dividends and interest payments that are
received by a Pledgor contrary to the provisions of paragraph
(A) of this subsection shall be received in trust for the
benefit of the Administrative Agent, shall be segregated from
other property or funds of such Pledgor, and shall be
forthwith paid over to the Administrative Agent as Pledged
Collateral in the exact form received, to be held by the
Administrative Agent as Pledged Collateral and as further
collateral security for the Secured Obligations.

		
	 	     (f) Release of Pledged Collateral. The Administrative Agent may
release any of the Pledged Collateral from this Pledge Agreement or may
substitute any of the Pledged Collateral for other Pledged Collateral
without altering, varying or diminishing in any way the force, effect,
lien, pledge or security interest of this Pledge Agreement as to any
Pledged Collateral not expressly released or substituted, and this Pledge
Agreement shall continue as a first priority lien (subject to Permitted
Liens on all Pledged Collateral not expressly released or substituted.

     10.     Rights of Required Lenders. Upon resignation of the Administrative
Agent pursuant to the provisions of Section 10.09 of the Credit Agreement, and
until such time, if any, that a successor administrative agent accepts
appointment pursuant to the terms thereof, the Required Lenders shall be
entitled to all of the rights, remedies and indemnities (and to the extent of
the exercise by the Required Lenders of such rights and remedies and claims by
the Required Lenders with respect to such indemnities, subject to all of the
duties and obligations) of the Administrative Agent hereunder.

     11.     Application of Proceeds. Upon the occurrence and during the
continuation of an Event of Default, any payments in respect of the Secured
Obligations and any proceeds of the Pledged Collateral, when received by the
Administrative Agent or any of the Secured Parties in cash or its equivalent,
will be applied in reduction of the Secured Obligations in the order set forth
in the Credit Agreement or other document relating to the Secured Obligations,
and each Pledgor irrevocably waives the right to direct the application of such
payments and proceeds and acknowledges and agrees that the Administrative Agent
shall have the continuing and exclusive right to apply and reapply any and all
such payments and proceeds in the Administrative Agent’s sole discretion,
notwithstanding any entry to the contrary upon any of its books and records.

     12.     Costs of Counsel. At all times hereafter, whether or not upon the
occurrence of an Event of Default, the Pledgors agree to promptly pay upon
demand any and all reasonable costs and expenses (including Attorney Costs) of
the Administrative Agent (a) as required under Section 11.04 of the Credit
Agreement and (b) as necessary to protect the Pledged Collateral or to exercise
any rights or remedies under this Pledge Agreement or with respect to any of
the Pledged Collateral. All of the foregoing costs and expenses shall
constitute Secured Obligations hereunder.

     13.     Continuing Agreement.

		
	 	     (a) This Pledge Agreement shall be a continuing agreement in every
respect and shall remain in full force and effect so long as any of the
Secured Obligations remains outstanding and until all of the commitments
relating thereto have been terminated (other than any obligations with
respect to the indemnities and the representations and warranties set
forth in the Credit Documents). Upon such payment and termination, this
Pledge Agreement shall be automatically terminated and the Administrative
Agent shall, promptly upon the request and at the expense of the
Pledgors, forthwith release all of its liens and security interests
hereunder and shall execute and deliver all UCC termination statements
and/or other documents reasonably requested by the Pledgors evidencing
such termination. Notwithstanding the foregoing, all releases and
indemnities provided hereunder shall survive termination of this Pledge
Agreement.

10

 

		
	 	     (b) This Pledge Agreement shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment, in
whole or in part, of any of the Secured Obligations is rescinded or must
otherwise be restored or returned by the Administrative Agent or any
Secured Party as a preference, fraudulent conveyance or otherwise under
any bankruptcy, insolvency or similar law, all as though such payment had
not been made; provided that in the event payment of all or any part of
the Secured Obligations is rescinded or must be restored or returned, all
reasonable costs and expenses (including Attorney Costs) incurred by the
Administrative Agent or any Secured Party in defending and enforcing such
reinstatement shall be deemed to be included as a part of the Secured
Obligations.

     14.     Amendments and Waivers. This Pledge Agreement and the provisions
hereof may not be amended, waived, modified, changed, discharged or terminated
except as set forth in Section 11.01 of the Credit Agreement.

     15.     Successors in Interest. This Pledge Agreement shall create a
continuing security interest in the Pledged Collateral and shall be binding
upon each Pledgor, its successors and assigns, and shall inure, together with
the rights and remedies of the Administrative Agent hereunder, to the benefit
of the Administrative Agent and its successors and permitted assigns; provided,
however, that none of the Pledgors may assign its rights or delegate its duties
hereunder without the prior written consent of the requisite Lenders under the
Credit Agreement (other than as expressly permitted thereunder). To the
fullest extent permitted by law, each Pledgor hereby releases the
Administrative Agent and each Secured Party, their respective successors and
assigns and their respective officers, attorneys, employees and agents, from
any liability for any act or omission or any error of judgment or mistake of
fact or of law relating to this Pledge Agreement or the Pledged Collateral,
except for any liability arising from the gross negligence or willful
misconduct of the Administrative Agent or such Secured Party, or their
respective officers, attorneys, employees or agents.

     16.     Notices. All notices required or permitted to be given under this
Pledge Agreement shall be given as provided in Section 11.02 of the Credit
Agreement.

     17.     Counterparts. This Pledge Agreement may be executed in any number of
counterparts, each of which where so executed and delivered shall be an
original, but all of which shall constitute one and the same instrument. It
shall not be necessary in making proof of this Pledge Agreement to produce or
account for more than one such counterpart.

     18.     Headings. The headings of the sections and subsections hereof are
provided for convenience only and shall not in any way affect the meaning or
construction of any provision of this Pledge Agreement.

     19.     Governing Law; Submission to Jurisdiction; Venue.

		
	 	     (a) THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Any legal action or
proceeding with respect to this Pledge Agreement may be brought in the
state or federal courts located in Charlotte, North Carolina, and, by
execution and delivery of this Pledge Agreement, each Pledgor hereby
irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the non-exclusive jurisdiction of such courts. Each
Pledgor further irrevocably consents to the service of process out of any
of the aforementioned courts in any such action or proceeding by the
mailing of copies thereof by registered or certified

11

 

		
	 	mail, postage prepaid, to it at the address for notices pursuant to
Section 16, such service to become effective three days after such
mailing. Nothing herein shall affect the right of the Administrative
Agent to serve process in any other manner permitted by law or to
commence legal proceedings or to otherwise proceed against any Pledgor in
any other jurisdiction.
	 
	 	     (b) Each Pledgor hereby irrevocably waives any objection that it may
now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Pledge
Agreement brought in the courts referred to in subsection (a) hereof and
hereby further irrevocably waives and agrees not to plead or claim in any
such court that any such action or proceeding brought in any such court
has been brought in an inconvenient forum.

     20.     Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH
OF THE PARTIES TO THIS PLEDGE AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS PLEDGE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

     21.     Severability. If any provision of this Pledge Agreement is determined
to be illegal, invalid or unenforceable, such provision shall be fully
severable and the remaining provisions shall remain in full force and effect
and shall be construed without giving effect to the illegal, invalid or
unenforceable provisions.

     22.     Entirety. This Pledge Agreement, the other Credit Documents and the
other documents relating to the Secured Obligations represent the entire
agreement of the parties hereto and thereto, and supersede all prior agreements
and understandings, oral or written, if any, including any commitment letters
or correspondence relating to the Credit Documents, any other documents
relating to the Secured Obligations, or the transactions contemplated herein
and therein.

     23.     Survival. All representations and warranties of the Pledgors
hereunder shall survive the execution and delivery of this Pledge Agreement,
the other Credit Documents and the other documents relating to the Secured
Obligations, the delivery of the Notes and the extension of credit thereunder
or in connection therewith.

     24.     Other Security. To the extent that any of the Secured Obligations are
now or hereafter secured by property other than the Pledged Collateral
(including real and other personal property owned by a Pledgor), or by a
guarantee, endorsement or property of any other Person, then the Administrative
Agent shall have the right to proceed against such other property, guarantee or
endorsement upon the occurrence and during the continuance of any Event of
Default, and the Administrative Agent shall have the right, in its sole
discretion, to determine which rights, security, liens, security interests or
remedies the Administrative Agent shall at any time pursue, relinquish,
subordinate, modify or take with respect thereto, without in any way modifying
or affecting any of them or the Secured Obligations or any of the rights of the
Administrative Agent or the Secured Parties under this Pledge Agreement, under
any of the other Credit Documents or under any other document relating to the
Secured Obligations.

     25.     Joint and Several Obligations of Pledgors.

     (a)  Subject to subsection (c) of this Section 25, each of the Pledgors is
accepting joint and several liability hereunder in consideration of the
financial accommodation to be provided by the Secured Parties, for the mutual
benefit, directly and indirectly, of each of the Pledgors and in consideration
of the

12

 

undertakings of each of the Pledgors to accept joint and several liability for
the obligations of each of them.

     (b)  Subject to subsection (c) of this Section 25, each of the Pledgors
jointly and severally hereby irrevocably and unconditionally accepts, not
merely as a surety but also as a co-debtor, joint and several liability with
the other Pledgors with respect to the payment and performance of all of the
Secured Obligations arising under this Pledge Agreement, the other Credit
Documents and any other documents relating to the Secured Obligations, it being
the intention of the parties hereto that all the Secured Obligations shall be
the joint and several obligations of each of the Pledgors without preferences
or distinction among them.

     (c)  Notwithstanding any provision to the contrary contained herein, in any
other of the Credit Documents or in any other documents relating to the Secured
Obligations, the obligations of each Guarantor under the Credit Agreement and
the other Credit Documents shall be limited to an aggregate amount equal to the
largest amount that would not render such obligations subject to avoidance
under Section 548 of the Bankruptcy Code of the United States or any other
applicable Debtor Relief Law (including any comparable provisions of any
applicable state law).

     26.     Conditional Exclusion from Pledged Collateral. Notwithstanding
anything to the contrary contained herein, if and to the extent that the
Security Trustee or the Administrative Agent has a valid, perfected and first
priority security interest in all of the Capital Stock of any Foreign
Subsidiary required to be pledged under Section 7.13 of the Credit Agreement
pursuant to a Foreign Pledge Agreement governed by and in accordance with the
laws of the country and/or jurisdiction in which such Foreign Subsidiary is
located, then such Capital Stock shall be deemed to be excluded from the terms
and provisions of this Pledge Agreement and shall not constitute Pledged
Collateral hereunder.

[signature pages follow]

13

 

     Each of the parties hereto has caused a counterpart of this Pledge
Agreement to be duly executed and delivered as of the date first above written.

	 	 	 	 	 	 	 
	PLEDGORS:	 	BIORELIANCE CORPORATION,

a Delaware corporation	 	 
	 	 	 	 	 	 	 
	 	 	
By:	 	 	 	 
	 	 	 	 	
	 	 
	 	 	
Name:

Title:	 	 	 	 
	 	 	 	 	 	 	 
	 	 	BIORELIANCE VIRAL MANUFACTURING, INC., a Delaware
corporation	 	 
	 	 	 	 	 	 	 
	 	 	
By:	 	 	 	 
	 	 	 	 	
	 	 
	 	 	
Name:

Title:	 	 	 	 
	 	 	 	 	 	 	 
	 	 	BIORELIANCE MANUFACTURING, LLC, a Delaware limited

liability company	 	 
	 	 	 	 	 	 	 
	 	 	
By:	 	 	 	 
	 	 	 	 	
	 	 
	 	 	
Name:

Title:	 	 	 	 
	 	 	 	 	 	 	 
	 	 	BIORELIANCE TESTING AND DEVELOPMENT, LLC, a Delaware

limited liability company	 	 
	 	 	 	 	 	 	 
	 	 	
By:	 	 	 	 
	 	 	 	 	
	 	 
	 	 	
Name:

Title:	 	 	 	 
	 	 	 	 	 	 	 
	 	 	BIORELIANCE ACQUISITIONS, INC. , a Delaware corporation	 	 
	 	 	 	 	 	 	 
	 	 	
By:	 	 	 	 
	 	 	 	 	
	 	 
	 	 	
Name:

Title:	 	 	 	 

 

 

Accepted and agreed to as of the date first above written.

	 	 	 	 	 
	BANK OF AMERICA, N.A.,

as Administrative Agent	 	 
	 	 	 	 	 
	By:	 	 	 	 
	 	 	

	 	 
	Name:	 	 	 	 
	Title:	 	 	 	 

 

 

Schedule 2(a)

PLEDGED STOCK

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Number of	 	Certificate	 	 	 	 
	Pledgor	 	Issuer	 	Shares	 	Number	 	Percentage Ownership
	
	 	
	 	
	 	
	 	

	BioReliance Corporation

	[Domestic Guarantors]

 

 

Schedule 4(a)

FORM OF

IRREVOCABLE STOCK POWER

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to
the following shares of capital stock of
                          
[ISSUER], a
               :

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	No. of Shares	 	Certificate No.
	
	 	

and irrevocably appoints
                  
            its agent and
attorney-in-fact to transfer all or any part of such capital stock and to take
all necessary and appropriate action to effect any such transfer. The agent
and attorney-in-fact may substitute and appoint one or more persons to act for
him. The effectiveness of a transfer pursuant to this stock power shall be
subject to any and all transfer restrictions referenced on the face of the
certificates evidencing such interest or in the certificate of incorporation or
bylaws of the subject corporation, to the extent they may from time to time
exist.

	 	 	 	 	 
	 	 	[HOLDER]
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	 	 	Name:

Title:exv4w1

 

Exhibit 4.1

EXHIBIT D-2

CERTIFICATE OF DESIGNATIONS

OF

CLASS 2 UNITS

OF JCM PARTNERS, LLC

(As Created by the Board of Managers

Pursuant to Section 2.1.6 of the Amended and

Restated Operating Agreement, dated as of June 25, 2003)

WHEREAS, Section 2.1.6 of that Amended and Restated Operating Agreement dated
as of June 25, 2003, as it may be amended thereafter (“Agreement”) of JCM
Partners, LLC, a Delaware limited liability company (“Company”), provides that
the Board of Managers may create a class of Units by approving a Certificate of
Designations for such class; and

WHEREAS, this Certificate of Designations sets forth the rights, preferences,
privileges and restrictions of the Class 2 Units.

NOW, THEREFORE, BE IT RESOLVED, that the Class 2 Units shall have the rights,
preferences, privileges and restrictions set forth herein. Capitalized terms
not otherwise defined herein have the meaning set forth in the Agreement.

	1.	 	Designation of Class.
	 
	 	 	The Company shall have a class of Units which shall be designated “Class
2 Units” (the “Class 2 Units”).
	 
	2.	 	Number of Class 2 Units.
	 
	 	 	The number of Class 2 Units that may be issued shall not exceed the
number of Units authorized for issuance as Units under Section 2.1.2 of
the Agreement.
	 
	3.	 	Status of Class 2 Units.
	 
	 	 	All Class 2 Units shall remain Class 2 Units until converted in
accordance with Section 7 of this Certificate of Designations and the
terms of the Agreement.

 

	4.	 	Distributions to Holders of Class 2 Units.

			
	 	4.1	Priority of Distributions.

		
	 	The holders of Class 2 Units shall have the right to receive Class
2 Mandatory Monthly Distributions (see Section 4.2 below). The
Class 2 Mandatory Monthly Distributions shall be paid in full each
month prior to payment of any distributions on any series of
Preferred Units or any Additional Distributions to any class of
Units. In addition, the Company shall not issue any class of Units
with the right to receive any distribution prior to payment of the
Class 2 Mandatory Monthly Distributions; provided, however, that
the Company is authorized to issue classes of Units or series of
Preferred Units with the right to receive Mandatory Distributions
on the terms set forth in Section 2.1.4.2(b) of the Agreement
without the need to obtain any additional authorization or vote of
the Class 2 Units. Class 2 Units shall have the same priority as
Class 1 Units for participating in any shortfall as set forth in
Section 2.1.4.2(b)(1) of the Agreement. Subject to Section
2.1.4.2(c) of the Agreement, the Class 2 Units shall receive
Additional Distributions as determined by the Board in its sole
discretion, but at no time will the amount of Additional
Distributions be less than the amount that the Class 1 Units
receive on a per Unit basis.

			
	 	4.2	Class 2 Mandatory Monthly Distributions.

		
	 	The Company shall make a monthly distribution to the holders of
Class 2 Units in an amount equal to one-twelfth (1/12th) of eight
cents ($0.08) per Class 2 Unit (the “Class 2 Mandatory Monthly
Distributions”). If the Company fails, for any reason, to pay any
Class 2 Mandatory Monthly Distribution(s) in a timely manner
(“Overdue Class 2 Mandatory Monthly Distributions”), the Company
shall begin liquidating its assets as quickly as commercially
reasonable and shall pay the holders of Class 2 Units interest on
any Overdue Class 2 Mandatory Monthly Distributions at the rate of
ten percent (10%) per annum. The Company may cease liquidating its
assets when the Company no longer has any Overdue Class 2 Mandatory
Monthly Distributions.

			
	 	4.3	Payment.

		
	 	The Class 2 Mandatory Monthly Distributions shall be paid to the
holders of record of Class 2 Units as of the first day of the month
and mailed by the Company to such holders of record no later than
the last day of each month. In lieu of mailing, the Company may
transmit payment to a holder of Class 2 Units in any other manner
agreed to in writing by a holder of Class 2 Units.

2

 

			
	 	4.4	Termination of Class 2 Mandatory Monthly Distributions.

		
	 	The Class 2 Mandatory Monthly Distributions shall remain in effect
until the first to occur of the following events (each, a “Class 2
Mandatory Distribution Termination Event”):

			
	 	4.4.1	The monthly record date immediately prior to the
dissolution of the Company pursuant to Section 5.1.1 of the
Agreement; or

			
	 	4.4.2	The closing of a Change of Control Merger or
Consolidation. “Change of Control Merger or Consolidation”
means any merger or consolidation in which the Company is not
the surviving entity, except a transaction that results in the
Members of the Company immediately prior to the transaction
owning securities representing at least fifty percent (50%) of
the voting power of the surviving entity after the
transaction.

	5.	 	Class 2 Unit Put Option.

			
	 	5.1	Timing of Class 2 Put Right.

		
	 	Each holder of Class 2 Units as of June 30, 2010 (the “Tenth
Anniversary Date” or the “Class 2 Put Right Record Date”) will have
the right (the “Class 2 Put Right”) to require the Company to
redeem some or all such holder’s Class 2 Units for the Exercise
Price (defined in Section 5.4 below) on June 30, 2012 (the “Twelfth
Anniversary Date”).

			
	 	5.2	Exercise Notice.

		
	 	Within twenty (20) days after the Class 2 Put Right Record Date,
the Company shall send a notice (“Exercise Notice”) by first class
mail to all holders of record of the Class 2 Units informing such
holders of the Exercise Price and the time in which to notify the
Company of their election to exercise their Class 2 Put Right.

			
	 	5.3	Notice of Exercise by Class 2 Holders.

		
	 	Each holder of Class 2 Units who desires to exercise his/her Class
2 Put Right shall do so by notifying the Company of such exercise
no later than the ninetieth (90th) day after the Tenth Anniversary
Date (the “Put Close Date”), on an exercise form to be prepared by
the Company and delivered to the holders of Class 2 Units
concurrent with the Exercise Notice. Any holder of Class 2 Units
who fails to timely exercise its Class 2 Put Right will forfeit
such Class 2 Put Right.

3

 

			
	 	5.4	Exercise Price.

		
	 	The “Exercise Price” for each Class 2 Unit will be determined as
follows:

			
	 	5.4.1	Within ninety (90) days preceding the Class 2
Put Right Record Date, the Company will obtain an appraisal on
each of its real properties from one or more MAI appraisers to
be selected by the Board of Managers (the “Board”), and may
retain a business appraiser, investment bank, or other
qualified Person, to appraise the Company’s other assets.
Such appraisals are collectively referred to as the
“Appraisals.”

			
	 	5.4.2	The Company’s Board shall retain Certified
Public Accountants (“CPAs”) to calculate the collective value
of all classes of issued and outstanding Units by preparing a
pro forma balance sheet using the appraised values from the
Appraisals with allowance for all anticipated costs and
expenses (including but not limited to the estimated costs and
expenses of liquidating all of the Company’s assets), and
using the profit and loss allocation provisions of Article 7
of the Agreement, and otherwise in accordance with generally
accepted accounting principles, all of which may be determined
by the Board pursuant to specific written instructions to the
CPAs.

			
	 	5.4.3	The total value of all classes of Units as
calculated by the CPAs shall then be divided by the total
number of Units then outstanding of all classes. This
resulting amount is the Exercise Price for each Class 2 Unit
and, if accepted by the Board, shall be final and
incontestable.

			
	 	5.4.4	For the purposes of this Section 5.4 only, all
Units owned by any wholly-owned subsidiary of the Company
shall be treated as if they were not outstanding.

			
	 	5.5	Transactions After Class 2 Put Right Record Date.

			
	 	5.5.1	All distributions made to electing holders of
Class 2 Units subsequent to the Class 2 Put Right Record Date
will be credited against the Exercise Price.

			
	 	5.5.2	The Board may establish procedures, including,
without limitation, the establishment of an escrow and the
requirement that the holders of Class 2 Units deliver
transmittal letters and assignments, as a condition precedent
to distributing the Exercise Price to such holders of Class 2
Units.

4

 

			
	 	5.6	Full or Partial Liquidation to Meet the Put Option.

		
	 	If a sufficient number of holders of Class 2 Units exercise their
Class 2 Put Rights, the continued customary operation of the
Company beyond the Twelfth Anniversary Date may not be reasonably
feasible. Therefore, no later than ninety (90) days after the Put
Close Date, the Board will meet to determine whether the Company
can continue customary operations beyond the Twelfth Anniversary
Date. If the Board determines in its sole discretion that the
Company cannot continue customary operations beyond the Twelfth
Anniversary Date, the following will occur:

			
	 	5.6.1	If the Board determines that the Company can
maintain its existence as a going concern and prudently
satisfy the Company’s obligations to the holders of Class 2
Units who exercised their Class 2 Put Rights through one or
more of the following methods:

			
	 	5.6.1.1	use of available cash and cash equivalents,

			
	 	5.6.1.2	the issuance of new Units or Preferred Units in
capital raising transactions,

			
	 	5.6.1.3	other financing transactions, or

			
	 	5.6.1.4	a partial liquidation of the Company’s assets, then

		
	 	the Company shall not be liquidated and the Company shall
satisfy its obligations to the holders of Class 2 Units who
exercised their Put Option in a timely manner. It is the
intent of this Section 5.6.1 for the Company to remain a
going concern and not to be liquidated, even if substantially
all of the Company’s assets are sold in order to satisfy the
Company’s obligations hereunder.

			
	 	5.6.2	If the Board determines that the Company cannot
meet the test set forth in Section 5.6.1, then the following
will occur:

			
	 	5.6.2.1	The Class 2 Put Rights shall be null and void, and no
holder of Class 2 Units will be entitled to receive the
Exercise Price;

			
	 	5.6.2.2	All of the Company’s assets will be sold as soon as
practicable;

			
	 	5.6.2.3	All owners of Class 2 Units will receive the
liquidation distributions to which they are entitled
under the Agreement; and

			
	 	5.6.2.4	The Company will inform all owners of Units and
Preferred Units of this decision within one hundred
twenty (120) days after the Put Close Date.

5

 

	6.	 	Voting Rights.
	 
	 	 	The holders of the Class 2 Units shall have the voting rights granted to
Units in the Agreement, including the right to vote on certain matters as
a separate class of Units as set forth in Sections 2.2.2 and 2.2.3 of the
Agreement. In addition, provided the Board has first approved such
amendment, any amendment to this Certificate of Designations shall
require that a majority of the Class 2 Units who are present (by person
or proxy) at a duly called and held meeting at which a quorum is present
shall be required to approve such amendment, or if no meeting is to be
held, then upon the written consent executed by a majority in interest of
the outstanding Class 2 Units.
	 
	7.	 	Conversion Rights and Restrictions.

			
	 	7.1	The Right of Holders of Other Units to Convert to Class 2 Units.

			
	 	7.1.1	Any holder of Class 1 Units, who has not
exercised the holder’s Class 1 Put Right pursuant to Section
5.3 of the Certificate of Designations of Class 1 Units, may
convert the holder’s Class 1 Units into Class 2 Units at any
time by complying with the procedures herein.

			
	 	7.1.2	Any holder of Class 1 Units wishing to convert
such Units into Class 2 Units must convert the holder’s Class
1 Units on both a Unit-for-Unit basis and a
certificate-by-certificate basis by delivering properly
completed conversion form(s) to the Company. (The Company has
not issued certificates for existing Units. However, the
Company has an internal system that creates book entry
certificates for the holders of existing Units. The Company
issues distribution checks on a book entry
certificate-by-certificate basis.)

			
	 	7.1.3	The Board shall have the right to impose
reasonable procedures and controls related to the conversion
of other Units to Class 2 Units as permitted by this Section 7
to include requiring holders of other Units to deliver written
notice to the Company that the holder elects to convert those
Units to Class 2 Units. Any conversion shall be processed
according to the Company’s procedures.

			
	 	7.2	The Right of Holders of Class 2 Units to Convert to Other Units.

			
	 	7.2.1	The rights and conditions governing the
conversion of Class 2 Units to other Units are specified in
the Certificates of Designations for those other Units.

			
	 	7.2.2	When Class 2 Units are converted to another
class of Units, the holder shall then hold the new class of
Units, and the converted Class 2 Units shall assume the status
of authorized but unissued Units. The Company 

6

 

			
	 	 	shall at all
time reserve and keep available out of its authorized Units
sufficient Units to satisfy any the conversion rights granted
to holders of Class 2 Units.

	8.	 	No Impairment.
	 
	 	 	The Company will not, by amendment of the Agreement or through any
reorganization, recapitalization, transfer of assets, consolidation,
merger, dissolution, issuance or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Certificate of Designations to be observed or
performed by the Company, but will at all times in good faith assist in
carrying out all the provisions of this Certificate of Designations and
in the taking of all such action as may be necessary or appropriate in
order to protect the rights (including but not limited to the conversion
rights) of the holders of Class 2 Units against impairment.
Notwithstanding any implication to the contrary, the foregoing shall not
have the affect of requiring the unanimous approval or consent of each
holder of Class 2 Units in order to amend the Agreement or this
Certificate of Designations, or to permit the Company to engage in a
reorganization, recapitalization, transfer or sale of assets,
consolidation, merger, dissolution, or issuance of Units or Preferred
Units.
	 
	9.	 	Residual Rights.
	 
	 	 	Except as expressly provided for herein, the Class 2 Units shall be
vested with the rights, preferences, privileges and restrictions accruing
to Units under the Agreement.

	 	 	 	 
	 	 	
JCM PARTNERS, LLC
	 
	 	 	By	/s/ Gayle M. Ing
	 	 	 	

	 	 	 	Gayle M. Ing,

Chief Executive Officer
	 
	 	 	
Dated:  Effective September 24, 2003

7

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