-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O4Vw/bRti7Kbb9xnjMHNU3QWWAtRqNr5miCavP7VklVPC2ZZcNak2QpkIChWyU3V y31QoI4us770PK2TPtTiAg== 0001112451-04-000023.txt : 20041012 0001112451-04-000023.hdr.sgml : 20041011 20041012151456 ACCESSION NUMBER: 0001112451-04-000023 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20041012 DATE AS OF CHANGE: 20041012 GROUP MEMBERS: ARTHUR A. HUTCHINS GROUP MEMBERS: DRG IRREVOCABLE TRUST GROUP MEMBERS: J. RICHARD KNOP GROUP MEMBERS: JOSEPH H. SAUL GROUP MEMBERS: PETER BELFORD, SR. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ANALEX CORP CENTRAL INDEX KEY: 0000044800 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 112120726 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-32462 FILM NUMBER: 041074718 BUSINESS ADDRESS: STREET 1: 5904 RICHMOND HIGHWAY STREET 2: SUITE 300 CITY: ALEXANDRIA STATE: VA ZIP: 22303 BUSINESS PHONE: 703-329-9400 MAIL ADDRESS: STREET 1: 5904 RICHMOND HIGHWAY STREET 2: SUITE 300 CITY: ALEXANDRIA STATE: VA ZIP: 22303 FORMER COMPANY: FORMER CONFORMED NAME: HADRON INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: BIORAD INC DATE OF NAME CHANGE: 19710304 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: GILLULY C W CENTRAL INDEX KEY: 0000904244 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 415 FIRST ST SE CITY: WASHINGTON STATE: DC ZIP: 20003 BUSINESS PHONE: 2025464367 MAIL ADDRESS: STREET 1: 625 N. WASHINGTON ST. STREET 2: STE 301 CITY: ALEXANDRIA STATE: VA ZIP: 22314 SC 13D/A 1 s13d1.txt SCHEDULE 13D - AMENDMENT #1 DATED 9/15/04 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under The Securities Exchange Act of 1934 (Amendment No. 1) ANALEX CORPORATION (Name of Issuer) Common Stock, par value $0.02 per share (Title of Class of Securities) 032653107 (CUSIP Number of Class of Securities) Sterling E. Phillips, Jr. c/o Analex Corporation 5904 Richmond Highway, Suite 300 Alexandria, VA 22303 (703) 329-9400 Copy To: Jane K. P. Tam 2099 Pennsylvania Avenue, N.W. Suite 100 Washington, D.C. 20006 (202) 457-7114 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) September 15, 2004 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of 240.13d- 1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. 1. Name of Reporting Person I.R.S. Identification No. of above person J. Richard Knop 2. Check the Appropriate Box if a Member of a Group (a) X (b) 3. SEC Use Only 4. Source of Funds PF 5. Check Box if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) 6. Citizenship or Place of Organization United States of America NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTINGPERSON WITH 7. Sole Voting Power 1,074,982 8. Shared Voting Power 0(1) 9. Sole Dispositive Power 1,074,982 10. Shared Dispositive Power 0 11. Aggregate Amount Beneficially Owned by Each Reporting Person 1,074,982(1) 12. Check Box if the Aggregate Amount In Row (11) Excludes Certain Shares 13. Percent of Class Represented by Amount In Row (11) 7%(1) 14. Type of Reporting Person IN (1) Reporting person is a member of a group of stockholders (the "Voting Stockholders") party to a Stockholders Agreement, dated as of May 28, 2004, and as a result may be deemed to beneficially own all shares beneficially owned by all persons in the Voting Stockholders' group. On September 15, 2004, stockholders approved (i) the automatic conversion of aggregate principal amount of $12,000,000 of Senior Subordinated Notes into 3,428,571 shares of Series B Preferred Stock, which are convertible into 4,285,713 shares of Common Stock at the conversion price of $2.80 per share; and (ii) exercise of the Common Stock Warrants by certain Voting Stockholders to purchase an aggregate of 857,142 shares of Common Stock: Therefore, the Voting Group as a whole beneficially owns an aggregate of 22,562,002 shares of Common Stock, representing approximately 69.4% of the shares of the Company's Common Stock. 1. Name of Reporting Person I.R.S. Identification No. of above person C.W. Gilluly 2. Check the Appropriate Box if a Member of a Group (a) X (b) 3. Sec Use Only 4. Source of Funds PF 5. Check Box If Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) 6. Citizenship or Place of Organization United States of America NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. Sole Voting Power 708,512(1) 8. Shared Voting Power 0(2) 9. Sole Dispositive Power 708,512 (1) 10. Shared Dispositive Power 0 11. Aggregate Amount Beneficially Owned by Each Reporting Person 708,512 (1)(2) 12. Check Box if the Aggregate Amount In Row (11) Excludes Certain Shares 13. Percent of Class Represented by Amount In Row (11) 4.6%(2) 14. Type of Reporting Person IN (1) Includes 1,667 shares issuable upon the exercise of options held by Mr. Gilluly. (2) Reporting person is a member of a group of stockholders (the "Voting Stockholders") party to a Stockholders Agreement, dated as of May 28, 2004, and as a result may be deemed to beneficially own all shares beneficially owned by all persons in the Voting Stockholders' group. On September 15, 2004, stockholders approved (i) the automatic conversion of aggregate principal amount of $12,000,000 of Senior Subordinated Notes into 3,428,571 shares of Series B Preferred Stock, which are convertible into 4,285,713 shares of Common Stock at the conversion price of $2.80 per share; and (ii) exercise of the Common Stock Warrants by certain Voting Stockholders to purchase an aggregate of 857,142 shares of Common Stock: Therefore, the Voting Group as a whole beneficially owns an aggregate of 22,562,002 shares of Common Stock, representing approximately 69.4% of the shares of the Company's Common Stock. 1. Name of Reporting Person, I.R.S. Identification No. of above person Peter Belford, Sr. 2. Check the Appropriate Box if a Member of a Group (a) X (b) 3. SEC Use Only 4. Source of Funds SC 5. Check Box if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) 6. Citizenship or Place of Organization United States of America NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. Sole Voting Power 1,038,733 8. Shared Voting Power 0(1) 9. Sole Dispositive Power 1,038,733 10. Shared Dispositive Power 0 11. Aggregate Amount Beneficially Owned by Each Reporting Person 1,038,733 (1) 12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares 13. Percent of Class Represented by Amount in Row (11) 6.8%(1) 14. Type of Reporting Person IN (1) Reporting person is a member of a group of stockholders (the "Voting Stockholders") party to a Stockholders Agreement, dated as of May 28, 2004, and as a result may be deemed to beneficially own all shares beneficially owned by all persons in the Voting Stockholders' group. On September 15, 2004, stockholders approved (i) the automatic conversion of aggregate principal amount of $12,000,000 of Senior Subordinated Notes into 3,428,571 shares of Series B Preferred Stock, which are convertible into 4,285,713 shares of Common Stock at the conversion price of $2.80 per share; and (ii) exercise of the Common Stock Warrants by certain Voting Stockholders to purchase an aggregate of 857,142 shares of Common Stock: Therefore, the Voting Group as a whole beneficially owns an aggregate of 22,562,002 shares of Common Stock, representing approximately 69.4% of the shares of the Company's Common Stock. 1. Name of Reporting Person, I.R.S. Identification No. of above person Arthur A. Hutchins 2. Check the Appropriate Box if a Member of a Group (a) X (b) 3. SEC Use Only 4. Source of Funds SC 5. Check Box if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) 6. Citizenship or Place of Organization United States of America NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. Sole Voting Power 916,230(1) 8. Shared Voting Power 0(2) 9. Sole Dispositive Power 916,230(1) 10. Shared Dispositive Power 0 11. Aggregate Amount Beneficially Owned by Each Reporting Person 916,230 (1) (2) 12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares 13. Percent of Class Represented by Amount in Row (11) 6%(2) 14. Type of Reporting Person IN (1) Shares acquired pursuant to a Stock Purchase Agreement dated May 6, 2004 by and among Analex Corporation, Beta Analytics, Inc. and other parties named in the agreement. (2) Reporting person is a member of a group of stockholders (the "Voting Stockholders") party to a Stockholders Agreement, dated as of May 28, 2004, and as a result may be deemed to beneficially own all shares beneficially owned by all persons in the Voting Stockholders' group. On September 15, 2004, stockholders approved (i) the automatic conversion of aggregate principal amount of $12,000,000 of Senior Subordinated Notes into 3,428,571 shares of Series B Preferred Stock, which are convertible into 4,285,713 shares of Common Stock at the conversion price of $2.80 per share; and (ii) exercise of the Common Stock Warrants by certain Voting Stockholders to purchase an aggregate of 857,142 shares of Common Stock: Therefore, the Voting Group as a whole beneficially owns an aggregate of 22,562,002 shares of Common Stock, representing approximately 69.4% of the shares of the Company's Common Stock. 1. Name of Reporting Person I.R.S. Identification No. of above person Joseph H. Saul 2. Check the Appropriate Box if a Member of a Group (a) X (b) 3. SEC Use Only 4. Source of Funds SC 5. Check Box if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) 6. Citizenship or Place of Organization United States of America NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. Sole Voting Power 916,230(1) 8. Shared Voting Power 0 (2) 9. Sole Dispositive Power 916,230(1) 10. Shared Dispositive Power 0 11. Aggregate Amount Beneficially Owned by Each Reporting Person 916,230 (1) (2) 12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares 13. Percent of Class Represented by Amount in Row (11) 6%(2) 14. Type of Reporting Person IN (1) Shares acquired pursuant to a Stock Purchase Agreement dated May 6, 2004 by and among Analex Corporation, Beta Analytics, Inc. and other parties named in the agreement. (2) Reporting person is a member of a group of stockholders (the "Voting Stockholders") party to a Stockholders Agreement, dated as of May 28, 2004, and as a result may be deemed to beneficially own all shares beneficially owned by all persons in the Voting Stockholders' group. On September 15, 2004, stockholders approved (i) the automatic conversion of aggregate principal amount of $12,000,000 of Senior Subordinated Notes into 3,428,571 shares of Series B Preferred Stock, which are convertible into 4,285,713 shares of Common Stock at the conversion price of $2.80 per share; and (ii) exercise of the Common Stock Warrants by certain Voting Stockholders to purchase an aggregate of 857,142 shares of Common Stock: Therefore, the Voting Group as a whole beneficially owns an aggregate of 22,562,002 shares of Common Stock, representing approximately 69.4% of the shares of the Company's Common Stock. 1. Name of Reporting Person I.R.S. Identification No. of above person DRG Irrevocable Trust 2. Check the Appropriate Box if a Member of a Group (a) X (b) 3. SEC Use Only 4. Source of Funds PF 5. Check Box if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) Or 2(e) 6. Citizenship or Place of Organization United States of America NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. Sole Voting Power 700,000 (1) 8. Shared Voting Power 0 (2) 9. Sole Dispositive Power 700,000 (1) 10. Shared Dispositive Power 0 11. Aggregate Amount Beneficially Owned by Each Reporting Person 700,000 (1) (2) 12. Check Box if the Aggregate Amount in Row (11) Excludes Certain Shares 13. Percent of Class Represented by Amount in Row (11) 4.6%(2) 14. Type of Reporting Person OO (1) Mr. Chand N. Gupta is the trustee of DRG Irrevocable Trust, and may therefore be deemed to beneficially own the shares held of record by the DRG Irrevocable Trust. (2) Reporting person is a member of a group of stockholders (the "Voting Stockholders") party to a Stockholders Agreement, dated as of May 28, 2004, and as a result may be deemed to beneficially own all shares beneficially owned by all persons in the Voting Stockholders' group. On September 15, 2004, stockholders approved (i) the automatic conversion of aggregate principal amount of $12,000,000 of Senior Subordinated Notes into 3,428,571 shares of Series B Preferred Stock, which are convertible into 4,285,713 shares of Common Stock at the conversion price of $2.80 per share; and (ii) exercise of the Common Stock Warrants by certain Voting Stockholders to purchase an aggregate of 857,142 shares of Common Stock: Therefore, the Voting Group as a whole beneficially owns an aggregate of 22,562,002 shares of Common Stock, representing approximately 69.4% of the shares of the Company's Common Stock. Reference is made to the Statement on Schedule 13D filed on June 8, 2004 (the "Schedule 13D") on behalf of each of the Reporting Persons. This Amendment No. 1 to Schedule 13D (this "Amendment No. 1" and, together with the Schedule 13D, this "Statement") is filed on behalf of each of the Reporting Persons. All capitalized terms used herein without definition shall have the meanings set forth in the Schedule 13D. Item 4. Purpose of Transaction Other than the matters set forth herein, no Reporting Person has any plans or proposals which relate to, or would result in the occurrence of, any of the transactions or events set forth in subparagraphs (a)-(j) of Item 4 of Schedule 13D. On May 28, 2004, pursuant to a Purchase Agreement (the "Series B Purchase Agreement") by and among the Company, General Electric Pension Trust ("GEPT"), New York Life Capital Partners II, L.P. ("NYL"), Pequot Private Equity Fund III, L.P. and Pequot Offshore Private Equity Partners III, L.P. (collectively, the "Pequot Funds" together with GEPT and NYL, the "Investors"), the Company sold to the Investors Senior Subordinated Notes and associated warrants to purchase Common Stock for an aggregate purchase price of $12 million. Subject to certain approval rights by the holders of Series A convertible preferred stock, $0.02 par value per share, of the Company (the "Series A Preferred Stock") and the Series B Preferred Stock, when issued, the Series B Purchase Agreement also provides that the Company has an option to require the Investors to purchase up to an additional $25 million of Series B Preferred Stock, with additional Common Stock Warrants (the "Company Option"), at any one or more times on or prior to May 27, 2005 for the purpose of paying the cost of acquisition of the stock or assets of one or more other companies in each case with an acquisition value (not including transaction expenses) of at least $10 million ("Company Acquisition"). As of June 8, 2004 (the date of the filing of the Schedule 13D), the Senior Subordinated Notes were not convertible into shares of Series B Preferred Stock and the Common Stock Warrants were not exercisable to purchase shares of Common Stock. Stockholders' approval was required for (i) the conversion of the Senior Subordinated Notes into shares of Series B Preferred Stock and the issuance of shares of the Series B Preferred Stock upon such conversion, (ii) the exercise of the Common Stock Warrants by the Investors and the subsequent issuance of shares of Common Stock upon such exercise and (iii) the issuance of shares of Common Stock upon conversion of the shares of Series B Preferred Stock (collectively, the "Stockholder Approval") prior to such conversion and exercise. On September 15, 2004, Stockholder Approval was received at the Company's2004 Annual Stockholders' Meeting. Upon Stockholder Approval, the Senior Subordinated Notes were automatically converted into shares of Series B Preferred Stock at $3.50 per share (the "Series B Original Issue Price"). The Series B Preferred Stock is convertible into such number of shares of Common Stock as is obtained by multiplying the number of shares of Series B Convertible Preferred Stock to be converted by $3.50 (the Series B Original Issue Price) and dividing such result by $2.80 (such price, as adjusted for certain dilutive equity issuances and for stock splits and similar events as provided in Certificate of Designations, Powers, Preferences and Rights of the Series B Convertible Preferred Stock of the Issuer filed with the Secretary of State of Delaware on May 27, 2004, the "Conversion Price"). Also upon Stockholder Approval, the Common Stock Warrants became exercisable for one share of Common Stock for every five shares of Common Stock issued or issuable upon conversion of the shares of Series B Preferred Stock that were issued upon the conversion of the principal amount of the Senior Subordinated Notes. The exercise price of the Common Stock Warrants is $4.32 per share (representing a 25% premium to the trailing average closing price of the Common Stock for the twenty trading days immediately preceding the First Closing Date), subject to adjustments for stock splits, stock dividends and similar events. On May 28, 2004, in connection with the financing, the Investors, J. Richard Knop, C.W. Gilluly, Peter Belford, Sr., Arthur A. Hutchins, Joseph H. Saul, and DRG Irrevocable Trust (collectively, the "Voting Stockholders") entered into an Amended and Restated Stockholders' Voting Agreement (the "Stockholders' Agreement"), pursuant to which the Voting Stockholders agreed to vote, or cause to be voted, all securities owned by such Voting Stockholders, or over which such Voting Stockholders have voting control, so as to fix the number of directors of the Company at nine, and to nominate and elect the following directors: O the Chief Executive Officer of the Company, currently Mr. Phillips, or if there is no chief executive officer, the Company's President; O two directors designated by the holders of a majority of the stock held by the Pequot Funds; O five directors, independent for the purposes of Section 803 of the American Stock Exchange rules, to be selected for the Company's Nominating Committee, which is comprised solely of independent directors; and O one non-employee director designated by the chief executive officer of the Company (or if there is no chief executive officer, the President of the Issuer) and acceptable to the Investors, who shall initially be Peter C. Belford. In certain circumstances, including the Company's failure to redeem the Series B Preferred Stock as required, the Investors may designate additional directors so that the directors appointed by Investors will comprise a majority of the Board. Item 5. Interest in Securities of the Issuer (a)-(b). The Voting Stockholders beneficially own an aggregate of 22,562,002 shares of Common Stock, representing approximately 69.4% of the shares of the Company's Common Stock. The following table sets forth, with respect to each Reporting Person and the Investors (i) the aggregate number of shares of Common Stock beneficially owned by such person, (ii) the percentage of Common Stock beneficially owned by such person, (iii) the number of shares of Common Stock as to which such person has sole power to vote or direct the vote, (iv) the number of shares Common Stock as to which such person has the sole power to dispose or direct the disposition, (v) the number of shares of Common Stock as to which such person has the shared power to vote or direct the vote, and (vi) the number of shares of Common Stock as to which such person has the shared power to dispose or direct the disposition. Percentages are based upon 15,292,512 shares of Common Stock outstanding as of September 15, 2004. Number of Number of Number of Number of Shares as to Aggregate Shares as to Shares as to Shares as to Which Person Number Percen- Which Person Which Person Which Person has Shared of tage of has Sole Power has Sole Power has Shared Power to Stockholder Shares Class to Vote to Dispose Voting Power Dispose - ----------- -------------- ---------- --------------- --------------- -------------- ------------ J. Richard Knop 1,074,982 7 % 1,074,982 1,074,982 - - C.W. Gilluly 708,512 4.6 % 708,512 708.512 - - Peter Belford, Sr. 1,038,733 6.8 % 1,038,733 1,038,733 - - Arthur A. Hutchins 916,230 6 % 916,230 916,230 - - Joseph H. Saul 916,230 6 % 916,230 916,230 - - DRG Irrevocable Trust 700,000 4.6 % 700,000 700,000 - - General Electric Pension Trust 2,142,855 12.30 % 2,142,855 2,142,855 - - New York Life Capital Partners II, L.P. 1,500,000 8.9 % 1,500,000 1,500,000 - - Pequot Capital Management, Inc. 13,564,460 47 % 13,564,460 13,564,460 - - May be deemed to beneficially own all shares beneficially owned by all persons in the Voting Stockholders' group, or 22,562,002 shares. May be deemed to beneficially own all shares beneficially owned by all persons in the Voting Stockholders' group, or 69.4%. Includes 1,667 shares issuable upon the exercise of options held by Mr. Gilluly. Mr. Chand N. Gupta is the trustee, and may therefore be deemed to beneficially own the shares held of record by DRG Irrevocable Trust. Consists of (i) 1,785,713 shares of Common Stock issuable upon conversion of 1,428,571 shares of Series B Preferred Stock; and (ii) 357,142 shares issuable upon exercise of Common Stock Warrants. In other words, GEPT beneficially owns an aggregate of 2,142,855 shares of Common Stock, or approximately 12.3% of the Company's outstanding Common Stock. (For details, please refer to Item 5 of the Schedule 13D filed by GEPT on September 17, 2004.) Consists of (i) 1,250,000 shares of Common Stock issuable upon conversion of 1,000,000 shares of Series B Preferred Stock; and (ii) 250,000 shares issuable upon exercise of Common Stock Warrants. In other words, NYL beneficially owns an aggregate of 1,500,000 shares of Common Stock, or approximately 8.9% of the Company's outstanding Common Stock. (For details, please refer to Item 5 of the Schedule 13D filed by NYL on September 17, 2004.) Pequot Capital Management, Inc. is an investment adviser registered under the Investment Advisers Act of 1940, and acts as investment adviser to certain managed accounts over which it exercises discretionary authority. Pequot Capital is the investment adviser/manager of, and exercises sole investment discretion over, Pequot Private Equity Fund III, L.P., a Delaware limited partnership and Pequot Offshore Private Equity Partners, III, L.P. a Cayman Islands limited partnership. Such funds are the record owners of the securities listed in note 8 below. Consists of (i) 6,726,457 shares issuable upon conversion of Series A Preferred Stock,(ii) 3,321,707 shares issuable upon conversion of the Convertible Notes, (iii) 2,009,632 shares issuable upon exercise of the Warrants, (iv) 1,250,000 shares of Common Stock issuable upon conversion of the 1,000,000 shares of Series B Preferred Stock; and (v) 250,000 shares issuable upon exercise of Common Stock Warrants held of record by Pequot Private Equity Fund III, L.P. and Pequot Offshore Private Equity Partners III, L.P. Both Gerald A. Poch and Martin A. Hale, a Managing Director and Principal of Pequot Capital Management, Inc., respectively (both of whom are General Partners of Pequot), who serve as Directors of the Company, may be deemed to beneficially own the securities held of record by Pequot. Mr. Poch and Mr. Hale disclaim beneficial ownership of these shares except to the extent of their pecuniary interests therein. The sole director and controlling shareholder of Pequot Capital Management, Inc. is Arthur J. Samberg. Also includes 6,664 shares which may be acquired upon the exercise of options issued to Messrs. Poch and Hale.
Item 6.Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. Series B Purchase Agreement On May 28, 2004, pursuant to a Purchase Agreement (the "Series B Purchase Agreement") by and among the Company, General Electric Pension Trust ("GEPT"), New York Life Capital Partners II, L.P. ("NYL"), Pequot Private Equity Fund III, L.P. and Pequot Offshore Private Equity Partners III, L.P. (collectively, the "Pequot Funds" together with GEPT and NYL, the "Investors"), the Company sold to the Investors Senior Subordinated Notes and associated warrants to purchase Common Stock for an aggregate purchase price of $12 million. Subject to certain approval rights by the holders of Series A convertible preferred stock, $0.02 par value per share, of the Company (the "Series A Preferred Stock") and the Series B Preferred Stock, when issued, the Series B Purchase Agreement also provides that the Company has an option to require the Investors to purchase up to an additional $25 million of Series B Preferred Stock, with additional Common Stock Warrants (the "Company Option"), at any one or more times on or prior to May 27, 2005 for the purpose of paying the cost of acquisition of the stock or assets of one or more other companies in each case with an acquisition value (not including transaction expenses) of at least $10 million ("Company Acquisition"). As of June 8, 2004 (the date of the filing of the Schedule 13D), the Senior Subordinated Notes were not convertible into shares of Series B Preferred Stock and the Common Stock Warrants were not exercisable to purchase shares of Common Stock. Stockholders' approval was required for (i) the conversion of the Senior Subordinated Notes into shares of Series B Preferred Stock and the issuance of shares of the Series B Preferred Stock upon such conversion, (ii) the exercise of the Common Stock Warrants by the Investors and the subsequent issuance of shares of Common Stock upon such exercise and (iii) the issuance of shares of Common Stock upon conversion of the shares of Series B Preferred Stock (collectively, the "Stockholder Approval") prior to such conversion and exercise. On September 15, 2004, Stockholder Approval was received at the Company's 2004 Annual Stockholders' Meeting. Upon Stockholder Approval, the Senior Subordinated Notes were automatically converted into shares of Series B Preferred Stock at $3.50 per share (the "Series B Original Issue Price"). The Series B Preferred Stock is convertible into such number of shares of Common Stock as is obtained by multiplying the number of shares of Series B Convertible Preferred Stock to be converted by $3.50 (the Series B Original Issue Price) and dividing such result by $2.80 (such price, as adjusted for certain dilutive equity issuances and for stock splits and similar events as provided in Certificate of Designations, Powers, Preferences and Rights of the Series B Convertible Preferred Stock of the Issuer filed with the Secretary of State of Delaware on May 27, 2004, the "Conversion Price"). Also upon Stockholder Approval, the Common Stock Warrants became exercisable for one share of Common Stock for every five shares of Common Stock issued or issuable upon conversion of the shares of Series B Preferred Stock that were issued upon the conversion of the principal amount of the Senior Subordinated Notes. The exercise price of the Common Stock Warrants is $4.32 per share (representing a 25% premium to the trailing average closing price of the Common Stock for the twenty trading days immediately preceding the First Closing Date), subject to adjustments for stock splits, stock dividends and similar events. Amended and Restated Stockholders' Voting Agreement On May 28, 2004, in connection with the financing, the Investors, J. Richard Knop, C.W. Gilluly, Peter Belford, Sr., Arthur A. Hutchins, Joseph H. Saul, and DRG Irrevocable Trust (collectively, the "Voting Stockholders") entered into an Amended and Restated Stockholders' Voting Agreement (the "Stockholders' Agreement"), pursuant to which the Voting Stockholders agreed to vote, or cause to be voted, all securities owned by such Voting Stockholders, or over which such Voting Stockholders have voting control, so as to fix the number of directors of the Company at nine, and to nominate and elect the following directors: O the Chief Executive Officer of the Company, currently Mr. Phillips, or if there is no chief executive officer, the Company's President; O two directors designated by the holders of a majority of the stock held by the Pequot Funds; O five directors, independent for the purposes of Section 803 of the American Stock Exchange rules, to be selected for the Company's Nominating Committee, which is comprised solely of independent directors; and O one non-employee director designated by the chief executive officer of the Company (or if there is no chief executive officer, the President of the Issuer) and acceptable to the Investors, who shall initially be Peter C. Belford. In certain circumstances, including the Company's failure to redeem the Series B Preferred Stock as required, the Investors may designate additional directors so that the directors appointed by Investors will comprise a majority of the Board. Voting Agreement In connection with the Series B Purchase Agreement, certain principal stockholders of the Company, including all of the Voting Stockholders (except for GEPT and NYL), who collectively hold a majority of the Company's voting stock as of May 28, 2004, entered into a Voting Agreement, pursuant to which parties have agreed to vote or cause to be voted, all securities of the Company they own or over which they have voting control at the Company's 2004 Annual Stockholders' Meeting in favor of certain proposals relating to the conversion of the Senior Subordinated Notes into Series B Preferred Stock, and the exercise of the Investors' Common Stock Warrants to purchase the Company's Common Stock. Such Voting Agreement has terminated automatically immediately after the Stockholder Approval was obtained at the Company's 2004 Annual Stockholders' Meeting. Item 7. Material to Be Filed as Exhibits All exhibits to Schedule 13D are hereby incorporated by reference. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Schedule 13D is true, complete and correct. Date: October 12, 2004 By: /S/ J. RICHARD KNOP J. Richard Knop By:/S/ C.W. GILLULY C. W. Gilluly By:/S/ PETER BELFORD, SR. Peter Belford, Sr. By:/S/ ARTHUR A. HUTCHINS Arthur A. Hutchins By: /S/ JOSEPH H. SAUL Joseph H. Saul DRG Irrevocable Trust By:/S/ CHAND N. GUPTA Chand N. Gupta, Trustee -----END PRIVACY-ENHANCED MESSAGE-----