Exhibit 10.77.1
EXECUTION VERSION
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT (this "Agreement") is made as of the 19th
day of September, 2002 (the "Effective Date") by and among ALLIED CAPITAL
CORPORATION, a Maryland corporation (together with all successors and assigns,
the "Lead"); HEADWATERS INCORPORATED, a Delaware corporation (the "Borrower");
and the persons set forth on Schedule 1 hereto (together with all successors and
assigns, individually a "Participant" and collectively the "Participants").
RECITALS:
A. The Borrower, Industrial Services Group, Inc. and other parties have
entered into an Agreement and Plan of Merger dated July 15, 2002 (as amended,
the "Merger Agreement") pursuant to which Participants are to receive certain
consideration.
B. In accordance with the terms of a Loan Agreement dated as of the
date hereof (the "Loan Agreement"), the Lead has agreed to advance to the
Borrower the aggregate principal amount of Twenty Million Dollars ($20,000,000),
which is evidenced by, and is to be repaid according to the terms of, a senior
subordinated note (the "Senior Subordinated Note") for the purpose of paying a
portion of the consideration pursuant to the Merger Agreement.
C. The Participants desire to receive a portion of the consideration
due under the Merger Agreement by participating in the Senior Subordinated Note
to be held by the Lead, upon the terms and conditions set forth herein.
D. Participants and Lead agree that Borrower shall have the benefit of
certain provisions of this Agreement as set forth more fully herein, and such
benefits shall be part of and their continuation a condition to any assignment
of the Participants' interests under the Loan Agreement and this Participation
Agreement.
NOW, THEREFORE, in consideration of the foregoing Recitals, the mutual
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I: DEFINITIONS
1.01 Defined Terms Generally. Any capitalized term used herein and not
defined herein shall have the meaning given to it in the Loan Agreement.
ARTICLE II: TERMS OF PARTICIPATION INTEREST
2.01 Participation. At the Effective Time (as defined in the Merger
Agreement) the Participants hereby agree to participate with the Lead in the
Senior Subordinated Note to the extent of Ten Million Dollars ($10,000,000) of
the original principal amount of the Senior Subordinated Note and shall receive
and have legal and equitable ownership of all collections relating thereto
(collectively, the "Participation Interest") (constituting an undivided
aggregate percentage interest equal to 50% of the Senior Subordinated Note). The
remaining Ten Million Dollars ($10,000,000) of the original principal amount of
the Senior Subordinated Note and all collections relating thereto (collectively,
the "Retained Interest") (constituting an undivided percentage interest equal to
50% of the Senior Subordinated Note) shall be retained by the Lead for its own
account. The parties agree that the Lead at Closing shall be obligated to
advance only the Retained Interest to Borrower, and that the remaining $10
million principal amount shall have been deemed to have been advanced by Lead as
a result of Participants entering into the Merger Agreement. The Participants
will also share, on a pro rata basis, in any points, structuring, loan
originating or other up-front fees of any nature, paid by the Borrower with
respect to the Senior Subordinated Note. Participants and Lead agree that the
Participants shall not receive, and Borrower has no obligation to pay to the
Participants or to any other party, any Repayment Charges due pursuant to the
terms of the Loan Agreement with respect to the Participation Interest.
2.02 Terms of Participation Interest and Retained Interest. The
Participation Interest and the Retained Interest each shall accrue interest
(before and after default), mature, and be repayable upon the terms and
conditions stated in the Senior Subordinated Note. No preference or priority
shall be made between the Participants and the Lead for purposes of this
Agreement and the Senior Subordinated Note and the performance and enforcement
thereof, including without limitation as to collections and distributions with
respect to the Senior Subordinated Note and in connection with any bankruptcy or
similar proceedings involving the Borrower.
2.03 Participation Certificate. Immediately following the Effective
Time, the Lead will promptly deliver to each Participant a certificate of
ownership substantially in the form of Exhibit "A" attached hereto showing the
aggregate principal balance of the Senior Subordinated Note and the
Participation Interest of such Participant. Any subsequent adjustment to the
Participation Interest (other than as a result of payments received on account
of the Participation Interest) shall result in the delivery of a new certificate
of ownership. Each such certificate shall be cumulative, and upon receipt
thereof by the Participant, any prior outstanding certificate shall become void
and shall be promptly returned to the Lead by the Participant.
2.04 Non Recourse. The participation of the Participants in the Senior
Subordinated Note is made WITHOUT RECOURSE to the Lead, and the Lead shall not
be liable to the Participants for any losses, damages or expenses (collectively,
"Losses") suffered or incurred by the Participants or any subsequent holder of
the Participation Interest, except for any Losses resulting from the Lead's
breach of any express obligations under this Agreement.
2.05 No Loan or Joint Venture; No Holder Status. The Participation
Interest shall not constitute a loan from the Participants to the Lead, nor a
purchase of a portion of the Senior Subordinated Note from the Lead, nor a joint
venture by and between the Lead and the Participants. Each Participant
acknowledges and agrees that it shall not constitute a Holder under the terms of
the Loan Documents.
-2-
2.06 Term of Agreement. This Agreement shall continue until such time
as the Senior Subordinated Note (a) has been indefeasibly paid in full, (b) all
Obligations under the Loan Documents have been discharged and (c) all
obligations of the parties hereunder have been satisfied. At such time, this
Agreement shall expire without further action by the parties.
2.07 Acknowledgment of Subordinated Status. The Participants
acknowledge that the Senior Subordinated Note is subject and subordinate to the
rights of General Electric Capital Corporation ("Senior Bank") pursuant to that
certain Credit Agreement of even date, to the full extent provided in that
certain Subordination Agreement between the Lead, the Borrower and Senior Bank,
of even date (as from time to time amended, the "Subordination Agreement").
ARTICLE III: DEALINGS WITH THE BORROWER
3.01 Payments.
(a) By its joinder in this Agreement, the Borrower hereby covenants and
agrees to make payments on account of the Participation Interest directly to
each Participant at its address set forth in Section 6.03 (Notices) below (or to
such other address as such Participant may subsequently direct in a notice sent
to the Borrower and the Lead) and to make payments on account of the Retained
Interest directly to the Lead at its address set forth in the Loan Agreement (or
to such other address as the Lead may subsequently direct in a notice sent to
the Borrower and the Participants).
(b) If the Participants have not received from the Borrower the full
amount of any installment payment (including any principal and interest payable
pursuant to the Senior Subordinated Note) due on account of the Participation
Interest within five days of the due date thereof, then the Participants shall
send written notice to the Lead referencing the amount of the payment due and
the original due date thereof and the amount (if any) received on account
thereof (any such, a "Participant Payment Notice"). If the Lead has actually
received or thereafter receives from the Borrower any sum of money on account of
the same installment payment due under the Senior Subordinated Note that is the
subject of a Participant Payment Notice received from the Participants, then the
Lead shall remit to the Participants, within five Business Days of the Lead's
receipt of the Participation Payment Notice (or if the Lead receives any such
amount after the date of the Lead's receipt of the Participation Payment Notice,
then within five Business Days of the Lead's receipt of such amount), each
Participant's Pro Rata Share (as defined herein) of the payment received by the
Lead (up to the amount due, but unpaid, by the Borrower to the Participants) and
the Lead shall retain the Pro Rata Share of the payment received that is
attributable to the Retained Interest. "Pro Rata" and "Pro Rata Share" shall
mean the pro rata share of the Lead or the Participants (as the case may be) of
the Senior Subordinated Note.
-3-
3.02 Collections.
(a) Except as provided in Section 3.03 below, the Lead and the
Participants shall each be entitled to receive a Pro Rata Share of all amounts
collected on account of the Senior Subordinated Note in accordance with their
respective percentage interests (provided that in no event shall the
Participants be entitled to any portion of any Repayment Charges due to the
Lead), and the Lead and each Participant shall each bear any losses Pro Rata in
accordance with their respective percentage interests.
(b) If the Lead shall collect or obtain any amounts owed under the
Senior Subordinated Note that applies to both the Participation Interest and the
Retained Interest, regardless of the source thereof (other than receipt of a
payment by the Borrower governed by Section 3.01 above), then the Lead shall
remit to the Participants, within five Business Days, each Participant's Pro
Rata Share of the net proceeds received, after deducting all costs and expenses
(including, but not limited to, reasonable attorneys' fees and disbursements)
incurred in connection with obtaining or collecting such amount that were not:
(i) proportionately borne by the Participants; (ii) proportionately reimbursed
by the Participants pursuant to the terms of Section 4.04(e) below; or (iii)
reimbursed by the Borrower. If either the Lead or the Participants shall receive
any amounts in excess of what the recipient would be entitled to receive under
the terms of this Agreement (including payments, additional fees, costs or
expenses other than any Repayment Charges in favor of the Lead under the terms
of the Loan Agreement), the recipient shall cause such excess payment to be
shared Pro Rata in accordance with the terms of this Agreement.
(c) Any payments or other amounts received that are required to be
returned to the Borrower, or any bankruptcy estate involving the Borrower, shall
be borne equally by the Lead and the Participants in accordance with their
respective Pro Rata Shares.
3.03 Cost Reimbursement. Notwithstanding the terms of Section 3.02
above, no Participant shall be entitled to receive a Pro Rata Share of any
amounts obtained from the Borrower as reimbursement of any costs or expenditures
made solely by the Lead and not shared Pro Rata by such Participant, and the
Lead shall not be entitled to receive a Pro Rata Share of any amounts obtained
from the Borrower as reimbursement of any costs or expenditures made solely by
the Participants and not shared Pro Rata by the Participants and the Lead.
3.04 Observation Rights Information. Participants, the Borrower and the
Lead agree that Participants shall not be entitled to receive any information
pursuant to Section 6.13 of the Loan Agreement to the extent that such
information is identified by Borrower to be related to performance under the
Merger Agreement or the employment performance or compensation of the
Participants.
3.05 Notices & Deliveries. By its joinder in this Agreement, the
Borrower hereby covenants and agrees to provide directly to the Participants at
the address set forth in Section 6.03 (Notices) below (or to such other address
as the Participants may subsequently direct in a notice sent to the Borrower and
the Lead): (a) a copy of each Notice given to the Lead; and (b) a copy of all
-4-
documents or materials required to be given the Lead. The delivery of such
Notices, documents or other materials to the Participants shall be made
concurrently with their delivery to the Lead.
ARTICLE IV: LOAN DOCUMENTS; ENFORCEMENT
4.01 Title to Loan Documents. Legal title to, and physical possession
of, the Loan Documents shall be held by the Lead. Subject to the confidentiality
provisions of the Loan Agreement which the parties agree are applicable to the
Participants as if the Participants were Holders (as defined in the Loan
Agreement) of the Senior Subordinated Note, the Participants and their
authorized representatives shall be entitled to examine, audit and copy the Loan
Documents at the offices of the Lead during normal business hours upon not less
than 72 hours notice to the Lead and at the sole expense of the Participants.
4.02 Copies of Loan Documents. The Participants acknowledge receipt of
copies of each of the Loan Documents.
4.03 Agency. Subject to the terms of Section 5.02 below, the
Participants hereby appoint the Lead as the Participants duly authorized agent
to represent the Participants in all matters related to the administration and
enforcement of the Senior Subordinated Note and the Loan Documents with full
power and authority to: (a) sue in the name of the Lead or the Participants; (b)
collect and receive any funds owed by the Borrower under the terms of the Loan
Documents; (c) enforce the terms and conditions of the Loan Documents against
the Borrower; and (d) exercise any and all rights, powers and privileges under
any of the Loan Documents related to the Senior Subordinated Note.
4.04 Administration and Enforcement. The Senior Subordinated Note shall
be administered as follows:
(a) The Lead will manage the Senior Subordinated Note, and elect to
exercise any rights, powers and privileges related thereto, in the ordinary
course of business, in accordance with its usual practice and in conformity with
the terms of the Loan Agreement and the other Loan Documents.
(b) All decisions concerning the enforcement of the rights under the
Loan Documents shall be made solely by the Lead and the Lead shall have no duty
to obtain the consent of the Participants in taking or pursuing any such
actions.
(c) The Participants shall not be entitled to send any notice of
default or other notice relating to the collection of the Senior Subordinated
Note or enforcement of any rights under the Loan Documents to the Borrower.
(d) The Lead shall bear its own internal and usual expenses of
servicing the Senior Subordinated Note.
-5-
(e) All out-of-pocket costs and expenses paid to third parties
(including, but not limited to, reasonable attorneys' fees and disbursements)
reasonably incurred by the Lead in connection with administering the Senior
Subordinated Note, or enforcing the Lead's or the Participants' rights under the
Loan Documents shall be shared pro rata by the Lead and the Participants in
accordance with their respective undivided percentage interests of the Senior
Subordinated Note and the Lead shall be promptly reimbursed by the Participants
for any such payments made by the Lead on behalf of the Participants.
(f) Simultaneously with the delivery of any notice of default or other
notice to the Borrower, or execution of any amendment of or waiver under the
Loan Documents, the Lead shall furnish a copy to the Participants in accordance
with Section 6.03 below.
ARTICLE V: RELATIONSHIP BETWEEN LEAD AND PARTICIPANT
5.01 Required Consents.
(a) The Lead will not take or cause to be taken any of the following
actions without the prior written consent of Participants holding a majority of
the outstanding principal balance of the Participation Interest, which consent
shall not be unreasonably withheld, conditioned or delayed: (i) reduce the
principal of, or the stated interest rate on, the Senior Subordinated Note, or
(ii) discharge the Borrower or any other obligor, except as required by the
terms of the Loan Documents, or (iii) agree to or make any modifications to or
amendments, supplements or waivers of any provision of any of the Loan Documents
(other than actions taken in accordance with the terms of the Loan Agreement)
which materially adversely affect the rights and/or benefits of the Participants
under this Agreement or the Senior Subordinated Note.
(b) Except where the consent of the Participants is required by the
terms of subsection (a) of this Section 5.01, the Lead may agree to modify,
amend, supplement or waive any of the provisions of any of the Loan Documents,
and may exercise any rights, powers and privileges thereunder, without the need
to obtain the Participants' prior consent. The Lead shall furnish written notice
to the Participants of any such modification, amendment, supplement, waiver or
exercise involving any of the Loan Documents.
5.02 Liability to Participants.
(a) The Lead shall not be deemed to constitute or act as a trustee or
fiduciary for the Participants in connection with this Agreement and the
Participation Interest. The Lead shall not be liable to the Participants for any
action taken or omitted or for errors in judgment, except for actions or
omissions or errors taken or made in bad faith or for the Lead's gross
negligence or willful misconduct. The Lead will have the right to consult with
legal counsel of the Lead's choice and to be fully exonerated from liability for
any action taken in good faith in accordance with the advice of such counsel.
(b) The Lead does not assume or warrant and shall have no
responsibility or liability (express or implied) for:
-6-
(i) any acts or omissions of the Lead in conducting due
diligence and other investigations into the Borrower;
(ii) the financial condition or legal status of the Borrower
or any other obligor or any credit or other information furnished by it
to the Participants;
(iii) the collectibility, enforceability, genuineness,
sufficiency, or validity of the Senior Subordinated Note or the Loan
Documents; or
(iv) any obligation to inquire into or ensure performance by
the Borrower of any of the terms, covenants, conditions, or obligations
of the Borrower under the Loan Documents.
ARTICLE VI: MISCELLANEOUS
6.01 Independent Decision; Representation by Counsel. Each Participant,
only as to himself or itself, hereby represents, warrants and confirms for the
Lead that:
(a) The Participant is an experienced, sophisticated investor capable
of evaluating the merits of an investment similar to the Senior Subordinated
Note;
(b) The Participant has had the benefit of consultation with legal
counsel of its own choosing and the ability to consult with additional advisors
as it deemed appropriate;
(c) The Participant has received, prior to the execution of this
Agreement, copies of the Loan Documents and all financial and other information
concerning the Borrower, as the Participant, in the exercise of its own
independent judgment, determined to be necessary or advisable in connection with
its decision to enter into this Agreement;
(d) The Participant has had sufficient opportunity to conduct a
complete investigation and examination of the Senior Subordinated Note and the
Borrower, and is entering into this Agreement based upon its independent
analysis and evaluation of the merits of the Senior Subordinated Note; and
(e) The Participant has reached its own independent decision to
purchase the Participation Interest based upon its expertise, investigation and
analysis, and the Participants did not rely upon any representations, warranties
or undertakings of the Lead not expressly set forth herein.
6.02 Additional Participation Interests. The Lead shall have the right
to sell additional participation interests.
6.03 Notices. All notices or communications under this Agreement or the
Senior Subordinated Note shall be sent by facsimile, mail, postage prepaid, or
delivered to the following addresses (or to such other address as shall at any
time be designated by any party in writing to the other parties):
-7-
To the Lead: Allied Capital Corporation
1919 Pennsylvania Avenue, N.W.
Washington, D.C. 20006-3434
Attention: Thomas Westbrook
Facsimile: (202) 659-2053
With a copy to: Piper Rudnick LLP
1200 Nineteenth Street, N.W.
Washington, D.C. 20036
Attention: Anthony H. Rickert, Esq.
Facsimile: (202) 223-2085
To the Participants: R Steve Creamer
136 East South Temple, Suite 1300
Salt Lake City, UT 84111
Facsimile: (801) 236-9730
With a copy to: Parsons Behle & Latimer
201 South Main Street, Suite 1800
Salt Lake City, UT 84111
Attention: J. Gordon Hansen
Facsimile: (801) 536-6111
To Borrower: Headwaters Incorporated
11778 South Election Road, Suite 210
Draper, UT 84020
Attention: Chief Financial Officer
Facsimile: (801) 984-9410
Rejection or other refusal to accept, or the inability to deliver
because of a changed address of which no notice was given, shall not affect the
effectiveness or the date of delivery for any notice sent in accordance with the
foregoing provisions. Each such notice, request or other communication shall be
deemed sufficiently given, served, sent and received for all purposes at such
time as it is delivered to the addressee (with the return receipt, the delivery
receipt, the affidavit of the messenger or the answer back being deemed
conclusive (but not exclusive) evidence of such delivery) or at such time as
delivery is refused by addressee upon presentation.
6.04 Binding Agreement. This Agreement shall bind and inure to the
benefit of each of the parties hereto, and except as otherwise expressly
provided to the contrary herein, each of their respective heirs, successors and
assigns.
-8-
6.05 Entire Agreement; Integration Clause. This Agreement, together
with the exhibits, constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements
relating to the matters set forth herein.
6.06 No Oral Modifications or Waivers. The terms herein may not be
modified or waived orally, but only by an instrument in writing signed by the
party against which enforcement of the modification or waiver (as the case may
be) is sought.
6.07 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Maryland, without regard to its
conflict of laws principles.
6.08 No Reconveyance by Participants. The Participants shall not sell,
pledge, assign, subparticipate, or otherwise transfer their rights under this
Agreement (each, a "Transfer"), or the certificate of ownership, without the
prior written consent of the Lead and, Borrower, which consent shall not
unreasonably withheld, delayed or conditioned, except for Permitted Assignments.
"Permitted Assigment" means any assignment or delegation of a Participant's
rights or duties with respect to its pro rata portion of the Participation
Interest to (i) an Affiliate of the Participant or as a result of or in
connection with the liquidation or dissolution of the Participant, or (ii) in
the case of a Participant other than an entity, a spouse or relative within the
first degree of consanguinity, or trusts or similar estate planning vehicles for
the benefit of a spouse or a relative within the first degree of consanguinity.
The term "Affiliate" shall have the meaning set forth in the Loan Agreement. As
a condition to any Transfer, such transferee shall agree to be bound to all of
the provisions of this Agreement, including without limitation Sections 2.01,
3.04 and 6.08.
6.09 Counterparts; Facsimile Signatures. This Agreement may be executed
in counterparts and all such counterparts shall together constitute one and the
same agreement. This Agreement may be executed by facsimile signatures.
{Signatures on next page.}
-9-
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement as of the date first above written.
"PARTICIPANTS":
CREAMER INVESTMENTS, INC.
By: /s/ R. Steve Creamer
-----------------------------
Name: R. Steve Creamer
Title: President and C.E.O.
/s/ Raul A. Deju
-----------------------------
Raul A. Deju
/s/ J. I. Everest, II
-----------------------------
J. I. Everest, II
/s/ Brett A Hickman
-----------------------------
Brett A. Hickman
"LEAD":
ALLIED CAPITAL CORPORATION
a Maryland corporation
By: /s/ Thomas H. Westbrook
-----------------------------
Thomas H. Westbrook
Managing Director
SIGNATURE PAGE TO PARTICIPATION AGREEMENT
"BORROWER":
HEADWATERS INCORPORATED
By: /s/ Steven G. Stewart
-----------------------------
Steven G. Stewart
Chief Financial Officer
SIGNATURE PAGE TO PARTICIPATION AGREEMENT
EXHIBIT "A"
CERTIFICATE OF OWNERSHIP
This Certificate evidences that BRETT A. HICKMAN (the "Participant") is
a participant to the extent of Two Hundred Twenty Three Thousand, Seven Hundred
Forty Dollars ($223,740) (the "Participation Amount") from ALLIED CAPITAL
CORPORATION (the "Lead") out of an aggregate principal investment of Twenty
Million Dollars ($20,000,000) made by Allied Capital Corporation (the "Lead") to
Headwaters Incorporated, a Delaware corporation (the "Borrower") pursuant to a
certain Loan Agreement dated September 19, 2002 between the Lead and the
Borrower.
This Certificate is issued pursuant to a Participation Agreement dated
as of September 19, 2002, between the Participant and the Lead (the
"Participation Agreement"), evidences the legal and equitable ownership of the
Participation Interest (as defined in the Participation Agreement) to the extent
of the Participation Amount, and is subject to all the terms and conditions
thereof.
This Certificate is cumulative and supersedes all prior certificates
previously issued and delivered to the Participant pursuant to the Participation
Agreement. Any outstanding prior certificate is automatically null and void upon
Participants' receipt of this Certificate and shall be promptly surrendered to
the Lead for cancellation.
This Certificate is transferable only with the written approval of the
Lead and upon due endorsement and surrender to the Lead.
ALLIED CAPITAL CORPORATION
a Maryland corporation
Dated: September 19, 2002 By: /s/ Thomas H. Westbrook
---------------------------
Name: Thomas H. Westbrook
Title: Managing Director
EXHIBIT "A"
CERTIFICATE OF OWNERSHIP
This Certificate evidences that J. I. EVEREST, II (the "Participant")
is a participant to the extent of Five Hundred Thirty Seven Thousand, Eight
Hundred Eighty Dollars ($537,880) (the "Participation Amount") from ALLIED
CAPITAL CORPORATION (the "Lead") out of an aggregate principal investment of
Twenty Million Dollars ($20,000,000) made by Allied Capital Corporation (the
"Lead") to Headwaters Incorporated, a Delaware corporation (the "Borrower")
pursuant to a certain Loan Agreement dated September 19, 2002 between the Lead
and the Borrower.
This Certificate is issued pursuant to a Participation Agreement dated
as of September 19, 2002, between the Participant and the Lead (the
"Participation Agreement"), evidences the legal and equitable ownership of the
Participation Interest (as defined in the Participation Agreement) to the extent
of the Participation Amount, and is subject to all the terms and conditions
thereof.
This Certificate is cumulative and supersedes all prior certificates
previously issued and delivered to the Participant pursuant to the Participation
Agreement. Any outstanding prior certificate is automatically null and void upon
Participants' receipt of this Certificate and shall be promptly surrendered to
the Lead for cancellation.
This Certificate is transferable only with the written approval of the
Lead and upon due endorsement and surrender to the Lead.
ALLIED CAPITAL CORPORATION
a Maryland corporation
Dated: September 19, 2002 By: /s/ Thomas H. Westbrook
----------------------------
Name: Thomas H. Westbrook
Title: Managing Director
SIGNATURE PAGE TO PARTICIPATION AGREEMENT
EXHIBIT "A"
CERTIFICATE OF OWNERSHIP
This Certificate evidences that RAUL A. DEJU (the "Participant") is a
participant to the extent of Seven Hundred Forty Eight Thousand, Three Hundred
Twenty Eight Dollars and 40/100 ($748,328.40) (the "Participation Amount") from
ALLIED CAPITAL CORPORATION (the "Lead") out of an aggregate principal investment
of Twenty Million Dollars ($20,000,000) made by Allied Capital Corporation (the
"Lead") to Headwaters Incorporated, a Delaware corporation (the "Borrower")
pursuant to a certain Loan Agreement dated September 19, 2002 between the Lead
and the Borrower.
This Certificate is issued pursuant to a Participation Agreement dated
as of September 19, 2002, between the Participant and the Lead (the
"Participation Agreement"), evidences the legal and equitable ownership of the
Participation Interest (as defined in the Participation Agreement) to the extent
of the Participation Amount, and is subject to all the terms and conditions
thereof.
This Certificate is cumulative and supersedes all prior certificates
previously issued and delivered to the Participant pursuant to the Participation
Agreement. Any outstanding prior certificate is automatically null and void upon
Participants' receipt of this Certificate and shall be promptly surrendered to
the Lead for cancellation.
This Certificate is transferable only with the written approval of the
Lead and upon due endorsement and surrender to the Lead.
ALLIED CAPITAL CORPORATION
a Maryland corporation
Dated: September 19, 2002 By: /s/ Thomas H. Westbrook
-----------------------------
Name: Thomas H. Westbrook
Title: Managing Director
SIGNATURE PAGE TO PARTICIPATION AGREEMENT
EXHIBIT "A"
CERTIFICATE OF OWNERSHIP
This Certificate evidences that CREAMER INVESTMENTS, INC. (the
"Participant") is a participant to the extent of Eight Million, Four Hundred
Ninety Thousand, Fifty One Dollars and 60/100 ($8,490,051.60) (the
"Participation Amount") from ALLIED CAPITAL CORPORATION (the "Lead") out of an
aggregate principal investment of Twenty Million Dollars ($20,000,000) made by
Allied Capital Corporation (the "Lead") to Headwaters Incorporated, a Delaware
corporation (the "Borrower") pursuant to a certain Loan Agreement dated
September 19, 2002 between the Lead and the Borrower.
This Certificate is issued pursuant to a Participation Agreement dated
as of September 19, 2002, between the Participant and the Lead (the
"Participation Agreement"), evidences the legal and equitable ownership of the
Participation Interest (as defined in the Participation Agreement) to the extent
of the Participation Amount, and is subject to all the terms and conditions
thereof.
This Certificate is cumulative and supersedes all prior certificates
previously issued and delivered to the Participant pursuant to the Participation
Agreement. Any outstanding prior certificate is automatically null and void upon
Participants' receipt of this Certificate and shall be promptly surrendered to
the Lead for cancellation.
This Certificate is transferable only with the written approval of the
Lead and upon due endorsement and surrender to the Lead.
ALLIED CAPITAL CORPORATION
a Maryland corporation
Dated: September 19, 2002 By: /s/ Thomas H. Westbrook
-----------------------------
Name: Thomas H. Westbrook
Title: Managing Director
SIGNATURE PAGE TO PARTICIPATION AGREEMENT