EXHIBIT 10.1
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
BETWEEN
AMERICA SERVICE GROUP INC.
PRISON HEALTH SERVICES, INC.
EMSA GOVERNMENT SERVICES, INC.
EMSA CORRECTIONAL CARE, INC.
EMSA MILITARY SERVICES, INC.
EMSA LIMITED PARTNERSHIP
PRISON HEALTH SERVICES OF INDIANA, L.L.C.
CORRECTIONAL HEALTH SERVICES, INC.
SECURE PHARMACY PLUS, INC.
and
CAPITALSOURCE FINANCE LLC
DATED AS OF
OCTOBER 31, 2002
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
TABLE OF CONTENTS
Page
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT 1
I. DEFINITIONS 1
1.1 General Terms 1
II. ADVANCES, PAYMENT AND INTEREST 2
2.1 The Revolving Facility 2
2.2 The Revolving Notes; Maturity 2
2.3 Interest on the Revolving Note 3
2.4 Revolving Facility Disbursements; Requirement to Deliver Borrowing Certificate 3
2.5 Collections; Repayment; Borrowing Availability and Lockbox 4
2.6 Term Loan 4
2.7 Interest on the Term Note 5
2.8 Repayment of Term Loan; Maturity 5
2.9 Manner of Payment; Promise to Pay 5
2.10 Repayment of Excess Advances 5
2.11 INTENTIONALLY OMITTED 5
2.12 Other Mandatory Prepayments 6
2.13 INTENTIONALLY OMITTED 6
2.14 Payments by Agent 6
2.15 Grant of Security Interest; Collateral 6
2.16 Collateral Administration 8
2.17 Power of Attorney 9
2.18 Letters of Credit 9
III. FEES AND OTHER CHARGES; ALLOCATION OF PURCHASE PRICE 11
3.1 Commitment Fee; Structuring Fee 11
3.2 Unused Line Fee 12
3.3 Collateral Management Fee 12
3.4 Letter of Credit Fee 12
3.5 Early Termination Fee; Finance Fee 12
3.6 Computation of Fees; Lawful Limits 13
3.7 Default Rate of Interest 13
IV. CONDITIONS PRECEDENT 13
4.1 Conditions to Initial Advance and Closing 13
4.2 Conditions to Each Advance and Issuance of Each Letter of Credit 15
V. REPRESENTATIONS AND WARRANTIES 16
5.1 Organization and Authority 16
5.2 Loan Documents 16
5.3 Subsidiaries, Capitalization and Ownership Interests 17
5.4 Properties 17
5.5 Other Agreements 17
5.6 Litigation 18
5.7 Hazardous Materials 18
5.8 Tax Returns; Governmental Reports 18
5.9 Financial Statements and Reports 18
5.10 Compliance with Law 19
5.11 Intellectual Property 19
5.12 Licenses and Permits; Labor 19
5.13 No Default 20
5.14 Disclosure 20
5.15 Existing Indebtedness; Investments, Guarantees and Certain Contracts 20
5.16 Other Agreements 20
5.17 Insurance 20
5.18 Names; Location of Offices, Records and Collateral 20
5.19 Non-Subordination 21
5.20 Accounts 21
5.21 Survival 21
5.22 Performance and Payment Bonds for Government Contracts 21
VI. AFFIRMATIVE COVENANTS 21
6.1 Financial Statements, Reports and Other Information 21
6.2 Payment of Obligations 23
6.3 Conduct of Business and Maintenance of Existence and Assets 23
6.4 Compliance with Legal and Other Obligations 23
6.5 Insurance 24
6.6 True Books 24
6.7 Inspection; Periodic Audits 24
6.8 Further Assurances; Post Closing 25
6.9 Payment of Indebtedness 25
6.10 Lien Terminations 25
6.11 Use of Proceeds 25
6.12 Collateral Documents; Security Interest in Collateral 25
6.13 Taxes and Other Charges 26
6.14 New Subsidiaries 26
6.15 Schedules to the Loan Agreement 27
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6.16 New Government Contracts 27
VII. NEGATIVE COVENANTS 27
7.1 Financial Covenants 27
7.2 Permitted Indebtedness 27
7.3 Permitted Liens 28
7.4 Investments; New Facilities or Collateral; Subsidiaries 29
7.5 Dividends; Redemptions; Equity 29
7.6 Transactions with Affiliates 29
7.7 Charter Documents; Fiscal Year; Dissolution; Collateral Assignment 30
7.8 Transfer of Assets 30
7.9 Contingent Obligations 30
7.10 Truth of Statements 31
7.11 Payment on Subordinated Debt 31
7.12 IRS Form 8821 31
VIII. EVENTS OF DEFAULT 31
IX. RIGHTS AND REMEDIES AFTER DEFAULT 33
9.1 Rights and Remedies 33
9.2 Application of Proceeds 34
9.3 Rights of Agent to Appoint Receiver 34
9.4 Rights and Remedies not Exclusive 35
X. WAIVERS AND JUDICIAL PROCEEDINGS 35
10.1 Waivers 35
10.2 Delay; No Waiver of Defaults 35
10.3 Jury Waiver 36
10.4 Cooperation in Discovery and Litigation 36
10.5 Amendment and Waivers 36
XI. EFFECTIVE DATE AND TERMINATION 37
11.1 Effectiveness and Xxxxxxxxxxx 00
00.0 Xxxxxxxx 00
XX-X. AGENCY PROVISIONS 38
11-A.1 Agent 38
11-A.2 Consents 42
11-A.3 Set Off and Sharing of Payments 42
11-A.4 Disbursement of Funds 42
11-A.5 Settlements; Payments and Information 43
11-A.6 Dissemination of Information 44
XI-B. BORROWING AGENCY 44
11-B.1 Borrowing Agency Provisions 44
11-B.2 Waiver of Subrogation 45
XII. MISCELLANEOUS 45
12.1 Governing Law; Jurisdiction; Service of Process; Venue 45
12.2 Successors and Assigns; Assignments and Participation; New Lenders 46
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12.3 Application of Payments 48
12.4 Indemnity 48
12.5 Notice 49
12.6 Severability; Captions; Counterparts; Facsimile Signatures 49
12.7 Expenses 49
12.8 Entire Agreement 50
12.9 Agent Approvals 50
12.10 Confidentiality and Publicity 50
12.11 Release of Agent and Lenders 50
1) Minimum EBITDA 1
2) Fixed Charge Coverage Ratio (EBITDA/Fixed Charges) 1
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Execution Copy
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
THIS REVOLVING CREDIT, TERM AND SECURITY AGREEMENT (the
"AGREEMENT") dated as of October 31, 2002, is entered into between AMERICA
SERVICE GROUP INC. ("ASG") a Delaware corporation, PRISON HEALTH SERVICES, INC.
("PHS"), a Delaware corporation, EMSA GOVERNMENT SERVICES, INC. ("EMSA") a
Florida corporation, EMSA CORRECTIONAL CARE, INC. ("EMSA CORRECTIONAL"), a
Florida corporation, EMSA MILITARY SERVICES, INC. ("EMSA MILITARY"), a Florida
corporation, EMSA LIMITED PARTNERSHIP ("EMSA LP"), a Florida limited
partnership, PRISON HEALTH SERVICES OF INDIANA, L.L.C. ("PHS INDIANA"), an
Indiana limited liability company, CORRECTIONAL HEALTH SERVICES, INC. ("CHS"), a
New Jersey corporation, and SECURE PHARMACY PLUS, INC. ("SPP"), a Tennessee
corporation (ASG, PHS, EMSA, EMSA CORRECTIONAL, EMSA MILITARY, EMSA LP, PHS
INDIANA, CHS AND SPP are hereinafter referred to, individually and collectively
as the "BORROWER"), CAPITALSOURCE FINANCE LLC, a Delaware limited liability
company ("CAPITALSOURCE"), as administrative agent and collateral agent for
Lenders (in such capacities, the "AGENT"), and the Lenders party hereto.
WHEREAS, Borrower has requested that Lenders make available to
Borrower up to Sixty Million Dollars ($60,000,000) (the "MAXIMUM LOAN AMOUNT")
including (a) a revolving credit facility (the "REVOLVING FACILITY") in a
maximum principal amount at any time outstanding of up to Fifty Five Million
Dollars ($55,000,000), (the "FACILITY CAP") and within the Facility Cap, (i) a
sublimit of Ten Million Dollars ($10,000,000) to be used to obtain standby
letters of credit or to cash collateralize obligations currently secured by
existing letters of credit having an aggregate face value of Six Million Two
Hundred and Fifty Thousand Dollars ($6,250,000) (the "L/C SUBLIMIT"), and (ii) a
sublimit of Ten Million Dollars ($10,000,000) to be available only upon the
addition of an additional Lender, and (b) a term loan (the "TERM LOAN") in the
original principal amount of Five Million Dollars ($5,000,000), the proceeds of
such Revolving Facility and Term Loan shall be used by Borrower for refinancing
Borrower's existing obligations and indebtedness pursuant to that certain
Amended and Restated Credit Agreement, dated as of August 1, 2000 (as amended),
by and among ASG, the subsidiaries of ASG who are parties thereto and Bank of
America, N.A., as agent (the "BOFA INDEBTEDNESS"), general corporate matters and
purposes, and working capital needs in connection with its provision of medical
and related services to correctional facilities; and
WHEREAS, Lenders are willing to make the Revolving Facility,
including an Advance of up to $6,250,000 to cash collateralize existing letters
of credit pursuant to that certain Letter Agreement dated as of October 31, 2002
(the "L/C REPLACEMENT ADVANCE"), and the Term Loan available to Borrower upon
the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and adequacy of which hereby
are acknowledged, Borrower, Agent and Lenders hereby agree as follows:
I. DEFINITIONS
1.1 GENERAL TERMS
For purposes of this Agreement, in addition to the definitions
above and elsewhere in this Agreement, the terms listed in Appendix A hereto
shall have the meanings given such terms in Appendix
A, which is incorporated herein and made a part hereof. All capitalized terms
used which are not specifically defined shall have meanings provided in Article
9 of the UCC in effect on the date hereof to the extent the same are used or
defined therein. Unless otherwise specified herein or in Appendix A, any
agreement or contract referred to herein or in Appendix A shall mean such
agreement as modified, amended or supplemented from time to time. Unless
otherwise specified, as used in the Loan Documents or in any certificate,
report, instrument or other document made or delivered pursuant to any of the
Loan Documents, all accounting terms not defined in Appendix A or elsewhere in
this Agreement shall have the meanings given to such terms in and shall be
interpreted in accordance with GAAP.
II. ADVANCES, PAYMENT AND INTEREST
2.1 THE REVOLVING FACILITY
(a) Subject to the provisions of this Agreement, each Lender
agrees to make available its Pro Rata Share of Advances, including Advances in
connection with the issuance or collateralization of Letters of Credit, to
Borrower under the Revolving Facility from time to time during the Term;
provided, that (i) the Pro Rata Share of the Advances of any Lender shall not at
any time exceed its separate Commitment, and (ii) the aggregate amount of all
Advances at any time outstanding under the Revolving Facility shall not exceed
the lesser of (A) the Facility Cap and (B) the Availability. The obligations of
Lenders hereunder shall be several and not joint up to the amount of the
Commitments. The Revolving Facility is a revolving credit facility, which may be
drawn, repaid and redrawn, from time to time as permitted under this Agreement.
Any determination as to whether there is availability within the Borrowing Base
for Advances shall be made by Agent in its Permitted Discretion and is final and
binding upon Borrower. Unless otherwise permitted by Agent, each Advance shall
be in an amount of at least $100,000. Subject to the provisions of this
Agreement, Borrower may request Advances under the Revolving Facility up to and
including the value, in Dollars, of 85% of the Borrowing Base (such calculated
amount being referred to herein as the "AVAILABILITY"). Advances under the
Revolving Facility automatically shall be made for the payment of interest on
the Revolving Notes and other Obligations on the date when due to the extent
available and as provided for herein.
(b) Agent has established the above-referenced advance rate
for Availability and, following an audit and review of Borrower's financial
statements and with not less than three (3) Business Days prior notice to
Borrower (except that upon the occurrence, and during the continuance, of a
Default or Event of Default, such notice shall not be required), may further
adjust the Availability and such advance rate by applying percentages (known as
"LIQUIDITY FACTORS") to Eligible Receivables based upon Borrower's actual recent
collection history all in a manner consistent with Agent's underwriting
practices and procedures, including, without limitation, Agent's review and
analysis of, among other things, Borrower's historical returns, rebates,
discounts, credits and allowances (collectively, the "DILUTION ITEMS"). Such
liquidity factors and the advance rate for Availability may be adjusted by
Agent, throughout the Term, subject to prior notice to Borrower, as warranted by
Agent's underwriting practices and procedures in its Permitted Discretion. Also,
Agent shall have the right to establish and readjust from time to time, in its
Permitted Discretion, reserves against the Borrowing Base, which reserves shall
have the effect of reducing the amounts otherwise eligible to be disbursed to
Borrower under the Revolving Facility pursuant to this Agreement.
2.2 THE REVOLVING NOTES; MATURITY
(a) All Advances under the Revolving Facility shall be
evidenced by the Revolving Notes, payable to the order of each Lender in the
principal amount of the Commitment of such Lender, duly executed and delivered
by Borrower. The Revolving Notes shall evidence the aggregate Indebtedness of
Borrower to Lenders resulting from Advances under the Revolving Facility from
time to
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time. Each Lender hereby is authorized, but is not obligated, to enter the
amount of such Lender's Pro Rata Share of each Advance under the Revolving
Facility, and the amount of each payment or prepayment of principal or interest
thereon in the appropriate spaces on the reverse of or on an attachment to such
Lender's Revolving Note(s). Agent will account to Borrower monthly with a
statement of Advances under the Revolving Facility, and charges and payments
made pursuant to this Agreement, and in the absence of manifest error, such
accounting rendered by Agent shall be deemed final, binding and conclusive
unless Agent is notified by Borrower in writing to the contrary within 60
calendar days of Receipt of each accounting, which notice shall be deemed an
objection only to items specifically objected to therein.
(b) All amounts outstanding under the Revolving Notes and
other Obligations under the Revolving Facility shall be due and payable in full,
if not earlier in accordance with this Agreement, upon the earliest of (i) any
automatic acceleration upon an Event of Default as provided for herein; (ii)
Agent's acceleration and demand for payment following an Event of Default, and
(iii) the last day of the Term (such earlier date being the "MATURITY DATE").
2.3 INTEREST ON THE REVOLVING NOTE
Interest on outstanding Advances under the Revolving Notes,
other than an L/C Replacement Advance, shall be payable monthly in arrears on
the first day of each calendar month at an annual rate of Prime Rate plus 1%,
provided, however, that, notwithstanding any provision of any Loan Document, the
interest on outstanding Advances under the Revolving Notes shall not be less
than 5.75%, calculated on the basis of a 360-day year and for the actual number
of calendar days elapsed in each interest calculation period. Interest accrued
on each Advance under the Revolving Notes shall be payable in accordance with
the procedures provided for in Section 2.5 and Section 2.9, commencing December
1, 2002 and continuing until the later of the expiration of the Term and the
full performance and irrevocable payment in full in cash of the Obligations and
termination of this Agreement. Interest on outstanding Advances under the
Revolving Notes shall accrue from the respective funding dates of the Advances.
2.4 REVOLVING FACILITY DISBURSEMENTS; REQUIREMENT TO DELIVER BORROWING
CERTIFICATE
So long as no Default or Event of Default shall have occurred
and be continuing, Borrower may give Agent irrevocable written notice requesting
an Advance under the Revolving Facility by notifying Agent not later than 11:00
a.m. (New York City time) at least one (1) but not more than four (4) Business
Days before the proposed borrowing date of such requested Advance (the
"BORROWING DATE"), and delivering to Agent by noon (New York City time) on the
date of the proposed borrowing, a completed Borrowing Certificate and relevant
supporting documentation satisfactory to Agent in its Permitted Discretion
(which shall only include an Accounts re-aging once each month, as specified
below), which shall (a) specify the proposed Borrowing Date of such Advance
which shall be a Business Day, (b) specify the principal amount of such
requested Advance, (c) certify the matters contained in Section 4.2, and (d)
specify the amount of any known recoupments or setoffs by any third party payor
being sought, requested or claimed, or, to Borrower's knowledge, threatened
against Borrower to the extent not otherwise reflected in the calculation of
Availability. Each time a request for an Advance is made, and, in any event and
regardless of whether an Advance is being requested, each month during the Term
until the Obligations are indefeasibly paid in cash in full and this Agreement
is terminated, Borrower shall deliver to Agent a Borrowing Certificate
accompanied by a separate detailed aging and categorization of Borrower's
accounts receivable, and such other supporting documentation with respect to the
figures and information in the Borrowing Certificate as Agent shall request in
its Permitted Discretion from a credit or security perspective or otherwise. On
each Borrowing Date, Borrower irrevocably authorizes Agent to disburse the
proceeds of the requested Advance to the Borrower's account(s) as set forth on
Schedule 2.4, in all cases for credit to the Borrower (or to such other account
as
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to which the Borrower shall instruct Agent) via Federal funds wire transfer no
later than 4:00 p.m. New York City time. If Borrower's Borrowing Certificate
does not request the same dollar amount as that which Borrower estimated in its
notification to Agent, Borrower agrees to pay any interest cost incurred by
Agent in connection with such estimated funds.
2.5 COLLECTIONS; REPAYMENT; BORROWING AVAILABILITY AND LOCKBOX
Borrower shall maintain a lockbox together with a blocked
account (individually and collectively, the "BLOCKED ACCOUNT") with one or more
banks acceptable to Agent (each, a "LOCKBOX BANK"), and shall execute with each
Lockbox Bank one or more agreements acceptable to Agent in its Permitted
Discretion (individually and collectively, the "LOCKBOX AGREEMENT"), and such
other agreements related thereto as Agent may require in its Permitted
Discretion. Borrower shall ensure that all collections of its Accounts and all
other cash payments received by Borrower are paid and delivered directly from
Account Debtors and other Persons into the Blocked Account. The Lockbox
Agreements shall provide that the Lockbox Banks on each Business Day will
promptly transfer all funds paid into the Blocked Accounts into a depository
account or accounts maintained by Agent or an Affiliate of Agent at such bank as
Agent may communicate to Borrower from time to time (the "CONCENTRATION
ACCOUNT"). Notwithstanding and without limiting any other provision of any Loan
Document, Agent shall apply, on a daily basis, all funds transferred into the
Concentration Account pursuant to the Lockbox Agreement and this Section 2.5 in
such order and manner as determined by Agent. To the extent that any Accounts
collections of Borrower or any other cash payments received by Borrower are not
sent directly to the Blocked Account but are received by Borrower or any of its
Affiliates, such collections and proceeds shall be held in trust for the benefit
of Agent and Lenders and promptly remitted (and in any event within two (2)
Business Days), to the Blocked Account for transfer to the Concentration
Account. Borrower acknowledges and agrees that compliance with the terms of this
Section 2.5 is an essential term of this Agreement, and that, in addition to and
notwithstanding any other rights Agent may have hereunder, under any other Loan
Document, under applicable law or at equity, upon each material failure by
Borrower to comply with any such terms which is not promptly remedied, Agent
shall be entitled to assess a non-compliance fee which shall operate to increase
the Applicable Rate by two percent (2.0%) per annum during any period of
non-compliance, whether or not a Default or an Event of Default occurs or is
declared; provided, that nothing shall prevent Agent from considering any
failure to comply with the terms of this Section 2.5 to be a Default or an Event
of Default. All funds transferred to the Concentration Account for application
to the Obligations under the Revolving Facility shall be applied to reduce the
Obligations under the Revolving Facility, but, only for purposes of calculating
interest hereunder, shall be subject to a three (3) Business Day clearance
period. If as the result of collections of Accounts and/or any other cash
payments received by Borrower pursuant to this Section 2.5 a credit balance
exists with respect to the Concentration Account, such credit balance shall not
accrue interest in favor of a Borrower, but shall be available to Borrower upon
Borrower's demand therefor. If applicable, at any time prior to the execution of
all or any of the Lockbox Agreements and operation of the Blocked Account,
Borrower and its Subsidiaries shall direct all collections or proceeds it
receives on Accounts or from other Collateral to the accounts(s) and in the
manner specified by Agent in its sole discretion.
2.6 TERM LOAN
Subject to the terms and conditions set forth in this
Agreement, Lender agrees to loan to Borrower on the Closing Date $5,000,000 in
the form of the Term Loan to be constituted of a single draw equal to such
amount to be disbursed to the appropriate Borrower's account(s) as set forth on
Schedule 2.6. The Term Loan is not a revolving credit facility, and any
repayments of principal shall be applied to permanently reduce the Term Loan.
The Term Loan shall be evidenced by the Term Note.
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2.7 INTEREST ON THE TERM NOTE
Interest on the outstanding balance of the Term Loan under the
Term Note shall be payable monthly in arrears on the first day of each calendar
month at an annual rate of Prime Rate plus 3.5%, provided, however, that,
notwithstanding, any other provision of any Loan Document, the interest on the
Term Loan shall be not less than 8.5%, in each case calculated on the basis of a
360-day year and for the actual number of calendar days elapsed in each interest
calculation period. Interest accrued on the Term Loan shall be due and payable
on the first day of each calendar month commencing December 1, 2002, and
continuing until the later of the expiration of the Term and the full
performance and irrevocable payment in full in cash of the Obligations and
termination of this Agreement. Advances under the Revolving Facility shall be
made automatically for the payment of interest on the Term Loan and other
Obligations on the date when due to the extent available and as provided for
herein.
2.8 REPAYMENT OF TERM LOAN; MATURITY
Payment of principal and all other amounts outstanding under
the Term Loan and all other Obligations due hereunder shall be due and payable
monthly, amortizing on a straight line basis, over the Term. The Term Note shall
mature, if not earlier in accordance with this Agreement, and any obligations
outstanding thereunder shall be due and payable on the Maturity Date. The
Borrower may prepay the principal amount of the Term Loan in whole at any time
or in part from time to time without penalty or premium, except as provided in
Section 3.5(b), and such payments will be applied pro rata to each Term Note and
the Obligations related thereto.
2.9 MANNER OF PAYMENT; PROMISE TO PAY
(a) Any payments made by Borrower (other than payments
automatically paid through Advances under the Revolving Facility as provided
herein), shall be made only by ACH or wire transfer on the date when due,
without offset or counterclaim, in Dollars, in immediately available funds to
such account as may be indicated in writing by Agent to Borrower from time to
time. Any such payment received after 4:00 p.m. New York City time on any date
shall be deemed received on the following Business Day. Whenever any payment
hereunder shall be stated to be due or shall become due and payable on a day
other than a Business Day, the due date thereof shall be extended to, and such
payment shall be made on, the next succeeding Business Day, and such extension
of time in such case shall be included in the computation of payment of any
interest (at the interest rate then in effect during such extension) and/or
fees, as the case may be. Agent will provide detailed monthly invoices of such
charges and payments.
(b) Borrower promises to pay the Obligations hereunder in
accordance with the manner and terms hereof, without any deduction whatsoever,
without setoff, recoupment or counterclaim, each of which claim or defense
hereby is waived.
2.10 REPAYMENT OF EXCESS ADVANCES
Any balance of Advances under the Revolving Facility
outstanding at any time in excess of the lesser of the Facility Cap, less the
L/C Exposure, or the Availability shall be immediately due and payable by
Borrower without the necessity of any demand, at the Payment Office, whether or
not a Default or Event of Default has occurred or is continuing and shall be
paid in the manner specified in Section 2.9.
2.11 INTENTIONALLY OMITTED
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2.12 OTHER MANDATORY PREPAYMENTS
In addition to and without limiting any provision of any Loan
Document:
(a) if a Change of Control occurs, on or prior to the first
Business Day following the date of such Change of Control, Borrower shall prepay
the Loans and all other Obligations in full in cash together with accrued
interest thereon to the date of prepayment and all other amounts owing to Agent
and Lenders under the Loan Documents; and
(b) if Borrower (i) sells any material portion of its assets
or properties (provided that only the portion of such proceeds that equals (A)
any overadvance under the Revolving Facility or the amount by which the Loans
under the Revolving Facility exceed Availability, plus (B) the face value of
each Account of Borrower sold in such asset sale, must be applied to the Loans
under the Revolving Facility), (ii) sells or issues any securities (debt, other
than Permitted Indebtedness, or equity), capital stock, or ownership interests
(other than, in the case of ASG, sales or issuances in connection with warrants
and options under any employee stock purchase plan in effect), (iii) receives
any property damage award in excess of $50,000 which is not necessary to the
repair or replacement of the property covered thereby or paid to a third-party
as a result of or relating to the incidents giving rise to such award, or (iv)
incurs any Indebtedness, except for Permitted Indebtedness, then in each case it
shall apply 100% of the proceeds thereof, less reasonable and customary
transaction costs, to the prepayment of the Term Loan together with accrued
interest thereon and Obligations relating thereto, without premium or penalty
except as set forth in Section 3.5(b), and, after the Term Loan is repaid in
full, to all other Obligations owing to Agent and Lenders under the Loan
Documents, such payment to be applied at such time and in such manner and order
as Agent shall decide in its sole discretion.
2.13 INTENTIONALLY OMITTED
2.14 PAYMENTS BY AGENT
Should any amount required to be paid under any Loan Document
remain unpaid for ten (10) Business Days from the date due, such amount may be
paid by Agent, for the account of Lenders, which payment shall be deemed a
request for an Advance under the Revolving Facility as of the date such payment
is due, and Borrower irrevocably authorizes disbursement of any such funds to
Agent, for the benefit of Lenders, by way of direct payment of the relevant
amount, interest or Obligations. No payment or prepayment of any amount by
Agent, Lenders or any other Person shall entitle any Person to be subrogated to
the rights of Agent and/or Lenders under any Loan Document unless and until the
Obligations have been fully performed and paid irrevocably in cash and this
Agreement has been terminated. Any sums expended by Agent and/or Lenders as a
result of Borrower's or any Guarantor's failure to pay, perform or comply with
any Loan Document or any of the Obligations may be charged to Borrower's account
as an Advance under the Revolving Facility and added to the Obligations.
2.15 GRANT OF SECURITY INTEREST; COLLATERAL
(a) To secure the payment and performance of the Obligations,
Borrower hereby grants to Agent, for the benefit of itself and the Lenders, a
continuing first priority security interest in and Lien upon, and pledges to
Agent, for the benefit of itself and the Lenders, all of its right, title and
interest in and to the following, together with property of a similar nature
which the Borrower owns or in which the Borrower hereafter acquires any right,
title or interest (collectively and each individually, the "COLLATERAL"):
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(i) all of Borrower's tangible personal property,
including without limitation all present and future Inventory and Equipment
(including items of Equipment which are or become Fixtures), now owned or
hereafter acquired, but excluding any leased or financed Equipment;
(ii) all of Borrower's intangible personal property,
including without limitation all present and future Accounts, securities,
contract rights, Permits, General Intangibles, Chattel Paper, Investment
Property, Intellectual Property including goodwill, Documents, Instruments and
Deposit Accounts, Letter of Credit Rights and supporting obligations rights to
the payment of money or other forms of consideration of any kind, tax refunds,
insurance proceeds (including, without limitation, proceeds of any life
insurance policy), now owned or hereafter acquired, and all intangible and
tangible personal property relating to or arising out of any of the foregoing;
(iii) all of Borrower's present and future Government
Contracts and rights thereunder and the related Government Accounts and proceeds
thereof, now or hereafter owned or acquired by Borrower; provided, however, that
Agent shall not have a Lien in any rights under any Government Contract of
Borrower or in the related Government Account where the taking of such security
interest would be prohibited by applicable law (for purposes of this limitation,
the fact that a Government Contract is subject to, or otherwise refers to, Title
31, ss. 3727 or Title 41, ss. 15 of the United States Code shall not be deemed
an express prohibition against assignment thereof); and
(iv) any and all additions to any of the foregoing, and
any and all replacements, products and proceeds (including insurance proceeds)
of any of the foregoing.
(b) Notwithstanding the foregoing provisions of this Section
2.15, such grant of a security interest shall not extend to, and the term
"Collateral" shall not include, any General Intangibles of Borrower to the
extent that (but only to the extent that) (i) such General Intangibles are not
assignable or capable of being encumbered as a matter of law or under the terms
of any license or other agreement applicable thereto (but solely to the extent
that any such restriction shall be enforceable under applicable law) without the
consent of the licensor thereof or other applicable party thereto, and (ii) such
consent has not been obtained; provided, however, that the foregoing grant of a
security interest shall extend to, and the term "Collateral" shall include, each
of the following: (a) any General Intangible which is in the nature of an
Account or a right to the payment of money or a proceed of, or otherwise related
to the enforcement or collection of, any Account or right to the payment of
money, or goods which are the subject of any Account or right to the payment of
money, (b) any and all proceeds of any General Intangible that is otherwise
excluded to the extent that the assignment, pledge or encumbrance of such
proceeds is not so restricted, and (c) upon obtaining the consent of any such
licensor or other applicable party with respect to any such otherwise excluded
General Intangible, such General Intangible as well as any and all proceeds
thereof that might theretofor have been excluded from such grant of a security
interest and from the term "Collateral."
(c) In addition to the foregoing, to secure the payment and
performance of the Obligations, ASG has pledged to Agent, for the benefit of the
Lenders, all of the securities of its Subsidiaries pursuant to the Stock Pledge
Agreement.
(d) Borrower has full right and power to grant to Agent a
perfected, first priority security interest and Lien in the Collateral pursuant
to this Agreement. Upon the application of the proceeds of the Initial Advance
to the repayment of the BofA Indebtedness, and upon the filing of the necessary
financing statements, which Borrower hereby authorizes Agent to file, and
delivery of any necessary stock certificates, without any further action, Agent
will have a good, valid and perfected first priority Lien and security interest
in the Collateral, subject to no transfer or other restrictions or Liens of any
kind in favor of any other Person except for Permitted Liens. No financing
statement relating to any
7
of the Collateral will be, on the date of the Initial Advance, on file in any
public office except those (a) on behalf of Agent, (b) those with respect to the
BofA Indebtedness as to which Agent shall have received termination statements
in the form and substance satisfactory to it, and/or (c) in connection with
Permitted Liens. Except with respect to the BofA Indebtedness, Borrower is not a
party to any agreement, document or instrument that conflicts with this Section
2.15 or that otherwise relates to the Collateral.
2.16 COLLATERAL ADMINISTRATION
(a) All Collateral (except Deposit Accounts and Collateral
having an aggregate value of $50,000 or less at any one location) will at all
times be kept by Borrower at the locations set forth on Schedule 5.4 hereto,
which may be amended from time to time, and shall not, without thirty (30)
calendar days prior written notice to Agent, be moved therefrom, and in any case
shall not be moved outside the continental United States. Whether or not an
Event of Default has occurred, any of the Agent's officers, employees,
representatives or agents shall have the right, at any time during normal
business hours, in the name of Agent, any designee of Agent, or Borrower, to
verify the validity, amount or any other matter relating to the Collateral.
Borrower shall cooperate fully with Agent in an effort to facilitate and
promptly conclude such verification process. Notwithstanding anything in this
subsection to the contrary, Agent shall have the right at all times after the
occurrence and during the continuation of an Event of Default to notify Persons
owing Accounts to Borrower that their Accounts have been assigned to Agent and
to collect such Accounts directly in its own name and to charge collection costs
and expenses, including reasonable attorney's fees, to Borrower.
(b) As and when determined by Agent in its Permitted
Discretion, Agent will perform the searches described in clauses (i) and (ii)
below against Borrower or any Guarantor (the results of which are to be
consistent with Borrower's representations and warranties under this Agreement),
on a quarterly basis at Borrower's expense, unless an Event of Default has
occurred and is continuing in which case such searches shall be conducted as
often as Agent deems reasonably appropriate at Borrower's expense: (i) UCC
searches with the Secretary of State and local filing offices of each
jurisdiction where Borrower and/or any Guarantors are organized; and (ii)
judgment, federal tax lien and corporate and partnership tax lien searches, in
each jurisdiction searched under clause (i) above, and in any jurisdiction where
Borrower or Guarantors maintain their respective offices or place of business or
material assets to the extent that the UCC would permit a filing in such
jurisdiction to attach a security interest in or Lien upon any Collateral. Agent
will (i) upon Borrower's request and at Borrower's expense, provide copies of
any such searches to Borrower and (ii) will use a search service with which
Agent has a discount arrangement in an effort to minimize the expense of such
searches.
(c) Upon Agent's request, Borrower shall immediately deliver
to Agent all items for which Lender must receive possession to obtain a
perfected Lien and all notes, certificates, and documents of title, Chattel
Paper, warehouse receipts, Instruments, and any other similar instruments
constituting Collateral.
(d) Borrower shall keep accurate and complete records of its
Accounts and all payments and collections thereon and shall submit such records
to Agent on such periodic bases as Agent may request in its Permitted
Discretion. In addition, if Accounts of Borrower in an aggregate face amount in
excess of $500,000 become ineligible because they fall within one of the
specified categories of ineligibility set forth in the definition of Eligible
Billed Receivables or Eligible Unbilled Receivables, Borrower shall notify Agent
of such occurrence within two (2) Business Days following its discovery of such
occurrence and the Borrowing Base shall thereupon be adjusted to reflect such
occurrence. After the occurrence and during the continuation of an Event of
Default, and upon Agent's request, Borrower shall execute and deliver to Agent
formal written assignments of all of its Accounts weekly or daily as Agent
8
may request, including all Accounts created since the date of the last
assignment, together with copies of claims, invoices and/or other information
related thereto.
(e) Borrower (i) shall provide prompt written notice to its
current bank to transfer all items, collections and remittances to the
Concentration Account, and to any Account Debtor not remitting to the Blocked
Account, to do so promptly, and (ii) after the occurrence and during the
continuation of an Event of Default, and upon Agent's request, shall provide
prompt written notice to each Account Debtor that Agent has been granted a lien
and security interest in, upon and to all Accounts applicable to such Account
Debtor, and shall direct each Account Debtor to make payments directly to
Lender's Concentration Account. Borrower hereby authorizes Agent, for purposes
of clause (i) hereof, upon any failure to send such notices and directions
within twenty (20) calendar days after the date of this Agreement (or twenty
(20) calendar days after the Person becomes an Account Debtor), and for purposes
of clause (ii) hereof, promptly following the occurrence and continuation of
such Event of Default, to send any and all similar notices and directions to
such Account Debtors, and (iii) shall do anything further that may be lawfully
required by Agent to secure Agent, for the benefit of itself and Lenders, and to
effectuate the intentions of the Loan Documents.
2.17 POWER OF ATTORNEY
Agent hereby is irrevocably made, constituted and appointed the true
and lawful attorney for Borrower (without requiring Borrower to act as such)
with full power of substitution, coupled with an interest, to do the following:
(i) upon the occurrence and during the continuance of an Event of Default,
endorse the name of any such Person upon any and all checks, drafts, money
orders and other instruments for the payment of money that are payable to such
Person and constitute collections on such Person's Accounts; (ii) upon the
occurrence and during the continuance of an Event of Default, execute in the
name of Borrower any financing statements, schedules, assignments, instruments,
documents, and statements that it is obligated to give Agent under any of the
Loan Documents; and (iii) do such other and further acts and deeds in the name
of Borrower that Agent may deem necessary or desirable to enforce or to perfect
Agent's security interest or lien or rights in any Collateral. In addition, if
the Borrower breaches its obligation hereunder to direct payments of Accounts
within the time periods specified herein to the Blocked Account, Agent, as the
irrevocably made, constituted and appointed true and lawful attorney for the
Borrower pursuant to this paragraph, may, by the signature or other act of any
of Agent's officers or authorized signatories (without requiring any of them to
do so), direct any federal, state or private payor or fiscal intermediary to pay
proceeds of Accounts or any other Collateral to the Blocked Account.
2.18 LETTERS OF CREDIT
(a) Letter of Credit Commitment. On the terms and subject to
the conditions herein set forth, the Borrower may, at any time and from time to
time after the date hereof and prior to the Termination Date, request that Agent
issue, and on the terms and subject to the conditions contained herein, Agent,
if so requested, shall issue or shall cause to be issued, for the account of the
Borrower designated in the relevant request from the Borrower, one or more
Letters of Credit; provided that no Letter of Credit shall be issued if and to
the extent that after giving effect to its issuance, the Unfunded L/C Exposure
(i) exceeds the L/C Sublimit or (ii) taken together with the outstanding
Advances, including any Funded L/C Exposure, would exceed the lesser of the
Facility Cap or the Availability, without duplication. Borrower acknowledges
that Availability shall be reduced by a reserve in the full face amount of any
such Letter of Credit.
(b) Related Letter of Credit Restrictions. If a requested
Letter of Credit is to have or is for the purpose of replacing an existing
Letter of Credit that has, an expiry date falling after the Maturity Date, then
Borrower shall, on or before the Termination Date provide a "back-to-back"
letter of credit to
9
Agent in form and substance satisfactory to Agent, in its sole discretion,
issued by a bank satisfactory to Agent, in an amount equal to the face amount of
the then undrawn stated amount of all outstanding Letters of Credit and/or (y)
deposit cash in the Agent Collateral Account in an amount equal to 105% of the
then undrawn stated amount of each such Letter of Credit with respect to which a
"back-to-back" letter of credit was not issued to Agent; provided, however, that
notwithstanding the provision of such "back-to-back" letter(s) of credit and/or
the funding of such Agent Collateral Account, and the occurrence of the
Termination Date, Borrower shall remain liable with respect to all Funded L/C
Exposure and Unfunded L/C Exposure, pursuant to the terms of this Agreement
until the earlier of such time as each such Letter of Credit expires by its
terms without any draws being made in respect thereof or Agent has received
confirmation from the relevant L/C Bank that such Letter of Credit has been
returned to the L/C Bank undrawn and marked "cancelled".
(c) Issuance of Letters of Credit. If the Borrower wishes
Agent to issue a Letter of Credit, the Borrower shall give Agent notice to that
effect, specifying the proposed issuance date for such Letter of Credit (which
shall be a Business Day), the stated amount of the Letter of Credit so
requested, the proposed expiration date of such Letter of Credit and the name
and address of the beneficiary of such Letter of Credit (as well as such further
information, relating to the use of such Letter of Credit and otherwise, as
Agent may reasonably request), at least two Business Days before the proposed
issuance date (or such shorter period as may be agreed upon in writing by Agent
and the Borrower).
(d) Advances Arising from Letter of Credit Payments. Any
payment by Agent in respect of any Letter of Credit shall constitute for all
purposes of this Agreement the making by Agent of an Advance in the amount of
such payment. With respect to each Advance made pursuant to this Section 2.18,
the Borrower shall be deemed to have certified the statements contained in
Section 5 as of the date the payment constituting such Advance was made by
Agent; provided, however, that in the event any such statement was not true and
correct as of such date, such Advance shall be repayable on demand; provided,
further, that upon any such repayment on demand, the failure of any such
statement to be true and correct as of such date shall not constitute an Event
of Default hereunder, unless the failure of any such statement to be true and
correct as of such date would have constituted an Event of Default hereunder
even if such repaid Advance had never been made.
(e) Absolute Nature of Loan Obligations Relating to Letters of
Credit. The obligations of the Borrower in respect of Advances that arise as a
result of payments under Letters of Credit shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, to the extent permitted by law, including,
without limitation: (i) any lack of validity or enforceability of any Letter of
Credit; (ii) the existence of any claim, setoff, defense or other right which
the Borrower may have at any time against a beneficiary of any Letter of Credit
or the L/C Bank; (iii) the fact that, or any allegation that, any draft, demand,
certificate or other document presented under such Letter of Credit is or was
forged, fraudulent, invalid or insufficient in any respect, or any statement
therein is or was untrue or inaccurate in any respect; (iv) any breach of
contract or dispute among or between the Borrower, Agent, the L/C Bank, any
Lender, or any other Person; (v) payment by the L/C Bank under any Letter of
Credit against presentation of a demand, draft or certificate or other document
which does not comply with the terms of such Letter of Credit, except for any
such payment resulting from the L/C Bank's gross negligence or willful
misconduct; (vi) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or (vii) the fact that any Event of Default
shall have occurred and be continuing (it being understood that any such payment
by the Borrower of its obligations hereunder in respect of any such Advance
shall be without prejudice to, and shall not constitute a waiver of, any rights
any Party hereto may have or might acquire against the beneficiary of any Letter
of Credit or against any L/C Bank).
10
(f) Risks Related to Letters of Credit. Each Borrower and each
Guarantor hereto assumes all risks of the acts or omissions of any beneficiary
or transferee of any Letter of Credit with respect to the use of any Letter of
Credit. Each party hereto agrees that the L/C Bank, the Agent, the Lenders and
their respective directors, officers or employees shall not be liable or
responsible, except that any such Person shall not be excused hereby on account
of its gross negligence or willful misconduct, for (i) the use which may be made
of any Letter of Credit or for any acts or omissions of any beneficiary or
transferee in connection therewith; (ii) any reference which may be made to this
Agreement or to any Letter of Credit in any agreements, instruments or other
documents; (iii) the validity, sufficiency or genuineness of any document, or of
any endorsement thereon, even if such document or endorsement should in fact
prove to be in any or all respects invalid, insufficient, fraudulent or forged
or any statement therein prove to be untrue or inaccurate in any respect
whatsoever; (iv) payment by the L/C Bank (acting in good faith) against
presentation of documents which do not strictly comply with the terms of any
Letter of Credit; or (v) any other circumstances whatsoever in making or failing
to make payment under any Letter of Credit, but the foregoing is without
prejudice to any claim that any Loan Party may have against any L/C Bank. Agent
may, in connection with any Letter of Credit accept any document that appears on
its face to be in order, without responsibility for further investigation. The
determination whether a demand is properly presented under any Letter of Credit
prior to its expiration or whether a demand presented under any Letter of Credit
is in proper and sufficient form may be made by the Agent in its sole
discretion, and such determination shall be conclusive and binding upon the
Borrower and each other Loan Party to the extent permitted by law. The Borrower
and each Guarantor hereby waives any right to object to any payment made under
any Letter of Credit on presentation of any demand that is in the form provided
in the Letter of Credit but varies with respect to punctuation, capitalization,
spelling or similar matters of form.
(g) Letter of Credit Fee. On the first day of each month,
commencing on the first such day following the Closing Date and continuing
thereafter until the date the Unfunded L/C Exposure has been reduced to zero,
including on the Termination Date, the Borrower shall pay to the Agent, for the
account of Agent and each other Lender in accordance with their respective
participations in each Letter of Credit, a letter of credit fee (the "LETTER OF
CREDIT FEE"), computed by applying the Letter of Credit Fee rate set forth in
Section 3.4, below, to the Unfunded L/C Exposure from day to day in the prior
month or partial month, as the case may be (and, in the case of the first
payment of this fee, without duplication of fees paid under Section 3.4, from
the Closing Date).
(h) The aggregate stated amount available for Letters of
Credit guaranteed or issued by Lender from time to time outstanding shall not
exceed the L/C Sublimit.
(i) Any Participant secured by Agent may participate in the
issuance of the Letters of Credit contemplated by this Section pursuant to the
terms hereof, at such percentage interest as is acceptable to Agent and such
Participant without any consent of any other party or any further amendment
hereto.
III. FEES AND OTHER CHARGES; ALLOCATION OF PURCHASE PRICE
3.1 COMMITMENT FEE; STRUCTURING FEE
On or before the Closing Date, and at such time as an
additional Lender is added to this Agreement, Borrower shall pay to Agent, for
the ratable benefit of Lenders, the Commitment Fee then due. On or before the
Closing Date, Borrower shall pay to Agent as a nonrefundable Structuring Fee,
such amounts as set forth in that certain Letter Agreement dated as of October
21, 2002.
11
3.2 UNUSED LINE FEE
Borrower shall pay to Agent, for the ratable benefit of
Lenders, an unused line fee (the "UNUSED LINE FEE") in an amount equal to 0.6%
per annum of the difference derived by subtracting (a) the daily average amount
of the balances under the Revolving Facility (including any Unfunded L/C
Exposure under the L/C Sublimit) outstanding during the preceding month, from
(b) either (i) $45,000,000 until such time as an additional Lender is added to
this Agreement, or (ii) the amount of the Facility Cap on the last day of such
month, as applicable. The Unused Line Fee shall be payable monthly in arrears on
the first day of each successive calendar month (starting with December 1,
2002).
3.3 COLLATERAL MANAGEMENT FEE
Borrower shall pay Agent a monthly collateral management fee
(the "COLLATERAL MANAGEMENT FEE") as set forth in that certain Letter Agreement
dated as of October 21, 2002. The Collateral Management Fee shall be payable
monthly in arrears on the first day of each successive calendar month (starting
with December 1, 2002).
3.4 LETTER OF CREDIT FEE
If Agent issues or otherwise obtains Letters of Credit for
Borrower, Borrower shall pay Agent a monthly fee of 3.5% per annum of the face
amount of such Letters of Credit plus any administrative bank charges or
expenses (excluding application, fronting and issuance fees charged by such
bank) incurred by Agent in obtaining such Letters of Credit.
3.5 EARLY TERMINATION FEE; FINANCE FEE
(a) If (i) Borrower terminates the Revolving Facility under
Section 11.1 hereof, (ii) Agent or any Lender accelerates any Revolving Note or
Borrower is otherwise required to make payment in full of the Obligations
relating to the Revolving Facility or Lender's obligation to make Advances
pursuant to the Revolving Facility shall terminate upon the occurrence of an
Event of Default, or (iii) a Change of Control or final payment of the Revolving
Facility pursuant to Section 11.1 occurs, any voluntary or involuntary
termination of the Revolving Facility and final prepayment of the Obligations
relating to the Revolving Facility by Borrower or any other Person occurs (other
than reductions to zero of the outstanding balance of the Revolving Facility
resulting from the ordinary course operation of the provisions of Section 2.5),
whether by virtue of Agent's exercising its right of set off or otherwise; or
(vi) any payment in full of the principal amount of any Revolving Note or other
satisfaction of the outstanding balance of any Revolving Note and/or the
Revolving Facility is made during a bankruptcy, reorganization or other
proceeding or is made pursuant to any plan of reorganization or liquidation or
any Debtor Relief Law (each, a "REVOLVER TERMINATION"), then, at the effective
date of any such Revolver Termination, Borrower shall pay Agent, for the account
of Lenders (in addition to the then outstanding principal, accrued interest and
other Obligations pursuant to the terms of this Agreement and any other Loan
Document), as yield maintenance for the loss of bargain and not as a penalty, an
amount equal to the Termination Fee. Notwithstanding any other provision hereof,
no Termination Fee shall be due if Borrower merges or enters into a business
combination with another person and the surviving person becomes the Borrower
hereunder, or enters into economically similar, financing arrangements with
Agent in which Agent remains, at least, a co-lead lender and collateral agent.
(b) If Borrower makes any final prepayment or any payment in
full of the principal amount of any Term Note or other satisfaction of the
outstanding balance of the Term Note and/or the Term Loan is otherwise
terminated, in each case for any reason, then, on such date, Borrower shall pay
Agent, for the account of Lenders (in addition to any other Obligations relating
to the Term Loan pursuant to the terms of this Agreement and any other Loan
Document), an amount equal to the Finance Fee.
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3.6 COMPUTATION OF FEES; LAWFUL LIMITS
All fees hereunder shall be computed on the basis of a year of
360 days and for the actual number of days elapsed in each calculation period,
as applicable. In no contingency or event whatsoever, whether by reason of
acceleration or otherwise, shall the interest and other charges paid or agreed
to be paid to Agent, for the benefit of Lenders, for the use, forbearance or
detention of money hereunder exceed the maximum rate permissible under
applicable law which a court of competent jurisdiction shall, in a final
determination, deem applicable hereto. If, due to any circumstance whatsoever,
fulfillment of any provision hereof, at the time performance of such provision
shall be due, shall exceed any such limit, then, the obligation to be so
fulfilled shall be reduced to such lawful limit, and, if Agent or the Lenders
shall have received interest or any other charges of any kind which might be
deemed to be interest under applicable law in excess of the maximum lawful rate,
then such excess shall be applied first to any unpaid fees and charges
hereunder, then to unpaid principal balance owed by Borrower hereunder, and if
the then remaining excess interest is greater than the previously unpaid
principal balance, Agent and the Lenders shall promptly refund such excess
amount to Borrower and the provisions hereof shall be deemed amended to provide
for such permissible rate. The terms and provisions of this Section 3.6 shall
control to the extent any other provision of any Loan Document is inconsistent
herewith.
3.7 DEFAULT RATE OF INTEREST
Upon the occurrence and during the continuation of an Event of
Default, the Applicable Rate of interest in effect at such time with respect to
the Obligations shall be increased by 3.0% per annum (the "DEFAULT RATE").
IV. CONDITIONS PRECEDENT
4.1 CONDITIONS TO INITIAL ADVANCE AND CLOSING
The obligations of Lenders to consummate the transactions
contemplated herein and to make the initial Advance under the Revolving Facility
(the "INITIAL ADVANCE") are subject to the satisfaction, in the judgment of
Agent in its Permitted Discretion, of the following:
(a) (i) Borrower shall have delivered to Agent the Loan
Documents to which it is a party, each duly executed by an authorized officer of
Borrower and the other parties thereto, and a Borrowing Certificate for the
Initial Advance under the Revolving Facility executed by an authorized officer
of Borrower;
(b) all in form and substance satisfactory to Agent in its
Permitted Discretion, Agent shall have received (i) a report of Uniform
Commercial Code financing statement, tax and judgment lien searches performed
with respect to Borrower and Guarantor in each jurisdiction determined by Agent
in its Permitted Discretion, and such report shall show no Liens on the
Collateral (other than Permitted Liens), (ii) each document (including, without
limitation, any Uniform Commercial Code financing statement) required by any
Loan Document or under law or requested by Agent to be filed, registered or
recorded to create, in favor of Agent, for the benefit of Lenders, a perfected
first priority security interest upon the Collateral;
(c) Agent shall have received (i) the Charter and Good
Standing Documents, except as may be delivered post-closing as set forth on
Schedule 6.8 hereto, all in form and substance reasonably acceptable to Agent,
(ii) a certificate of the corporate secretary or assistant secretary of Borrower
dated the Closing Date, as to the incumbency and signature of the Persons
executing the Loan Documents, in form and substance acceptable to Agent, (iii)
the written legal opinion of counsel for Borrower, in form and substance
satisfactory to Agent in its Permitted Discretion; and (iv) a certificate
executed by an
13
authorized officer of Borrower, which shall constitute a representation and
warranty by Borrower as of the Closing Date and the applicable Borrowing Date
that the conditions contained in this Section 4.1 have been satisfied;
(d) Agent shall have received a certificate of the chief
financial officer (or, in the absence of a chief financial officer, the chief
executive officer) of Borrower, in form and substance satisfactory to Agent
(each, a "SOLVENCY CERTIFICATE"), certifying (i) the solvency of Borrower after
giving effect to the transactions and the Indebtedness contemplated by the Loan
Documents, and (ii) as to Borrower's financial resources and ability to meet its
obligations and liabilities as they become due, to the effect that as of the
Closing Date and the Borrowing Date for the Initial Advance and after giving
effect to such transactions and Indebtedness: (A) the assets of such Person, at
a Fair Valuation, exceed the total liabilities (including contingent,
subordinated, unmatured and unliquidated liabilities) of such Person, and (B) no
unreasonably small capital base with which to engage in its anticipated business
exists with respect to Borrower;
(e) Agent shall have completed examinations, the results of
which shall be satisfactory in form and substance to Agent, of the Collateral,
the financial statements and the books, records, business, obligations,
financial condition and operational state of Borrower, and Borrower shall have
demonstrated to Agent's satisfaction that (i) its operations comply, in all
respects reasonably deemed material by Agent, in its reasonable judgment, with
all applicable federal, state, foreign and local laws, statutes and regulations,
(ii) its operations are not the subject of any governmental investigation,
evaluation or any remedial action which could reasonably result in any Material
Adverse Effect, and (iii) it has no liability (whether contingent or otherwise)
that could reasonably give rise to a Material Adverse Effect;
(f) Agent shall have received all fees, charges and expenses
payable to Agent and Lenders on or prior to the Closing Date pursuant to the
Loan Documents;
(g) all in form and substance satisfactory to Agent in its
Permitted Discretion, Agent shall have received such consents, approvals and
agreements, including, without limitation, Landlord Waivers and Consents with
respect to the leases for those locations specifically identified on Schedule
5.18B where a complete set of books and records relating to Accounts or the
Borrower's Inventory is kept, from such third parties as Agent and its counsel
shall determine are reasonably necessary or desirable with respect to (i) the
Loan Documents and/or the transactions contemplated thereby, and/or (ii) claims
against Borrower or the Collateral;
(h) Borrower shall be in compliance with Section 5.17 and
Section 6.5, and Agent shall have received (i) copies of all such insurance
policies, and (ii) original certificates of such insurance policies as Agent
shall request in its Permitted Discretion confirming that they are in effect and
that the premiums due and owing with respect thereto have been paid in full and
naming Agent, for the benefit of itself and Lenders, as loss payee on Borrower's
property insurance;
(i) all corporate and other proceedings, documents,
instruments and other legal matters in connection with the transactions
contemplated by the Loan Documents (including, but not limited to, those
relating to corporate and capital structures of Borrower) shall be reasonably
satisfactory to Agent;
(j) No default shall exist pursuant to any of Borrower's
obligations under any material contract; Borrower shall be in compliance with
all applicable laws in all material respects;
14
(k) Borrower shall have established a Lockbox and Blocked
Account pursuant to Section 2.5;
(l) Agent shall have received copies of all (i) material
licenses and permits required for Borrower to conduct the business in which it
is currently engaged or is contemplated pursuant to the Loan Documents, and (ii)
all intercompany agreements, management agreements, documents related to
borrowed money, capital leases and other material contracts;
(m) Agent shall have completed its legal due diligence
examinations of Borrower, the results of which shall be satisfactory in form and
substance to Agent, as evidenced by Agent's execution of the Loan Documents;
(n) Agent shall have received evidence that upon payment of an
amount which shall be specified, (i) the BofA Indebtedness shall be paid in full
and termination of all liabilities and obligations of Borrower and all related
documents, agreements and instruments shall have occurred, and (ii) Agent shall
be authorized to release and terminate of any and all Liens and/or Uniform
Commercial Code financing statements in, on, against or with respect to any of
the Collateral to the extent arising through or under the BofA Indebtedness
(other than Permitted Liens);
(o) there shall not have occurred any Material Adverse Change
or Material Adverse Effect from that which was reflected on the financial
statements dated August 31, 2002 and provided to Agent;
(p) Borrower shall have executed and filed IRS Form 8821 with
the appropriate office of the Internal Revenue Service; and
(q) Agent shall have received such other documents,
certificates, information or legal opinions as Agent may reasonably request, all
in form and substance reasonably satisfactory to Agent in its Permitted
Discretion.
4.2 CONDITIONS TO EACH ADVANCE AND ISSUANCE OF EACH LETTER OF CREDIT
The obligations of Lenders to make any Advance (including,
without limitation, the Initial Advance) are subject to the satisfaction, in the
reasonable judgment of Agent, of the following conditions precedent:
(a) Borrower shall have delivered to Agent a Borrowing
Certificate for the Advance, executed by an authorized officer of Borrower,
which shall constitute a representation and warranty by Borrower as of the
Borrowing Date, that the conditions contained in this Section 4.2 have been
satisfied; provided, however, that any determination as to whether or extend
credit shall be made by Agent in its Permitted Discretion;
(b) each of the representation and warranties made by Borrower
in or pursuant to this Agreement shall be accurate, before and after giving
effect to such Advance, and no Default or Event of Default shall have occurred
or be continuing or would exist after giving effect to the requested Advance on
such date; provided, however, that for any representation or warranty limited to
the date of closing, such limitation shall not apply, and the representation
shall be true as if made at the time of any request for an Advance or issuance
of a Letter of Credit, except with respect to representations that would be
inconsistent with Section 6.15;
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(c) immediately after giving effect to the requested Advance,
the sum of (i) the aggregate outstanding principal amount of Advances under the
Revolving Facility, including Advances in connection with the Letters of Credit,
and (ii) the Unfunded L/C Exposure, shall not exceed the lesser of the
Availability and the Facility Cap, and the L/C Exposure shall not exceed the L/C
Sublimit;
(d) except as disclosed in the financial information delivered
to Agent hereunder, there shall be no liabilities or obligations with respect to
Borrower of any nature whatsoever which, either individually or in the
aggregate, reasonably would be likely to have a Material Adverse Effect;
(e) Agent shall have received all fees, charges and expenses
due and payable to Agent on or prior to such date pursuant to the Loan
Documents;
(f) there shall not have occurred any Material Adverse Change
or Material Adverse Effect; and
(g) no default or Event of Default shall have occurred or be
continuing or would exist after giving effect to the Advance under the Revolving
Facility or the issuance of a Letter of Credit.
V. REPRESENTATIONS AND WARRANTIES
Each Borrower, jointly and severally, represents and warrants
as of the date hereof, the Closing Date, and each Borrowing Date as follows:
5.1 ORGANIZATION AND AUTHORITY
Borrower is a corporation, limited partnership or limited
liability company duly organized, validly existing and in good standing under
the laws of its state of formation. Borrower (a) has all requisite power and
authority to own its properties and assets and to carry on its business as now
being conducted and as contemplated in the Loan Documents, (b) is duly qualified
to do business in every jurisdiction in which it is a party to a Government
Contract, and every other jurisdiction in which failure so to qualify could
reasonably be expected to have a Material Adverse Effect, and (c) has all
requisite power and authority (i) to execute, deliver and perform the Loan
Documents to which it is a party, (ii) to borrow hereunder, (iii) to consummate
the transactions contemplated under the Loan Documents, and (iv) to grant the
Liens with regard to the Collateral pursuant to the Security Documents to which
it is a party. Borrower is not an "investment company" registered or required to
be registered under the Investment Company Act of 1940, as amended, and is not
controlled by such an "investment company."
5.2 LOAN DOCUMENTS
The execution, delivery and performance by Borrower of the
Loan Documents to which it is a party, and the consummation of the transactions
contemplated thereby, (a) have been duly authorized by all requisite action of
Borrower and have been duly executed and delivered by or on behalf of Borrower;
(b) do not violate any provisions of (i) applicable law, statute, rule,
regulation, ordinance or tariff, (ii) any order of any Governmental Authority
binding on Borrower or any of its properties, or (iii) the certificate of
incorporation or bylaws (or any other equivalent governing agreement or
document) of Borrower, or any agreement between Borrower and its shareholders,
members, partners or equity owners or among any such shareholders, members,
partners or equity owners; (c) are not in conflict with, and do not result in a
breach or default of or constitute an event of default, or an event, fact,
condition or circumstance which, with notice or passage of time, or both, would
constitute or result in a conflict, breach, default or event of default under,
any indenture, agreement or other instrument to which Borrower is a party, or by
which the properties or assets of Borrower are bound, the effect of which could
16
reasonably be expected to have a Material Adverse Effect; and (d) except as set
forth therein, will not result in the creation or imposition of any Lien of any
nature upon any of the properties or assets of Borrower, and (e) except as set
forth on Schedule 5.2, do not require the consent, approval or authorization of,
or filing, registration or qualification with, any Governmental Authority or any
other Person. When executed and delivered, each of the Loan Documents to which
Borrower is a party will constitute the legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms, subject to
the effect of any applicable bankruptcy, moratorium, insolvency, reorganization
or other similar law affecting the enforceability of creditors' rights generally
and to the effect of general principles of equity which may limit the
availability of equitable remedies (whether in a proceeding at law or in
equity).
5.3 SUBSIDIARIES, CAPITALIZATION AND OWNERSHIP INTERESTS
As of the date of this Agreement, Borrower has no Subsidiaries
other than those Persons listed as Subsidiaries on Schedule 5.3, each of which
either are other Borrowers or Guarantors of the Obligations of Borrower herein.
Schedule 5.3 also states the authorized and issued capitalization of Borrower
and each such Subsidiary, and the number and class of equity securities and/or
ownership, voting or partnership interests (except for ASG) issued and
outstanding (including options, warrants and other rights to acquire any of the
foregoing). The ownership or partnership interests of each Borrower that is a
limited partnership or a limited liability company are not certificated, the
documents relating to such interests do not expressly state that the interests
are governed by Article 8 of the Uniform Commercial Code, and the interests are
not held in a securities account. Schedule 5.3 also lists the directors,
members, managers and/or partners of Borrower, as well as any beneficial or
record holders of more than twenty-five percent (25%) of the equity of ASG, and
ASG owns, directly or indirectly, all of the issued and outstanding equity
securities and/or ownership or voting or partnership interests of each other
Borrower. The outstanding equity securities and/or ownership, voting or
partnership interests of each Borrower have been duly authorized and validly
issued and are fully paid and nonassessable. Except as listed on Schedule 5.3,
Borrower does not own an interest or participate or engage in any joint venture,
partnership or similar arrangements with any Person.
5.4 PROPERTIES
Borrower (a) is the sole owner and has good, valid and
marketable title to all of its properties and assets, including the Collateral,
whether personal or real, subject to no transfer restrictions or Liens of any
kind except for Permitted Liens, and (b) is in compliance in all material
respects with each lease to which it is a party or otherwise bound, except for
such noncompliance as would not reasonably be expected to have a Material
Adverse Effect. Schedule 5.4 lists all real properties (and their locations)
owned or leased by or to Borrower, and all assets or property that are leased
pursuant to capital leases or licensed by Borrower, and any other material
leases. Borrower enjoys peaceful and undisturbed possession under all such
leases and such leases are all the leases necessary for the operation of such
properties and are valid and subsisting and are in full force and effect.
5.5 OTHER AGREEMENTS
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Except as set forth on Schedule 5.5, Borrower is not (a) a
party to any judgment, order or decree or any agreement, document or instrument,
or subject to any restriction, which would materially adversely affect its
ability to execute and deliver, or perform under, any Loan Document or to pay
the Obligations, (b) in default in the performance, observance or fulfillment of
any obligation, covenant or condition contained in any agreement, document or
instrument to which it is a party or to which any of its properties or assets
are subject, which default, if not remedied within any applicable grace or cure
period, could reasonably be expected to have a Material Adverse Effect, nor is
there any event, fact, condition or circumstance which, with notice or passage
of time or both, would constitute or result in a conflict, breach, default or
event of default under, any of the foregoing which, if not remedied within any
applicable grace or cure period could reasonably be expected to have a Material
Adverse Effect; or (c) a party or subject to any agreement, document or
instrument with respect to, or obligation to pay any, management fee with
respect to, the ownership, operation, leasing or performance of any of its
business.
5.6 LITIGATION
Except as set forth on Schedule 5.6, there is no action, suit,
proceeding or investigation pending or, to its knowledge, threatened against
Borrower that (a) questions or could prevent the validity of any of the Loan
Documents or the right of Borrower to enter into any Loan Document or to
consummate the transactions contemplated thereby, (b) would reasonably be likely
to have, either individually or in the aggregate, any Material Adverse Change or
Material Adverse Effect, or (c) would reasonably be likely to result in any
Change of Control or other change in the current ownership, control or
management of Borrower. Except as set forth on Schedule 5.6, as of the date
hereof Borrower is not a party or subject to any order, writ, injunction,
judgment or decree of any Governmental Authority. Except as set forth on
Schedule 5.6, as of the date hereof there is no action, suit, proceeding or
investigation initiated by Borrower currently pending, and Borrower has no
existing accrued and/or unpaid Indebtedness to any Governmental Authority or any
other governmental payor, except for Permitted Indebtedness.
5.7 HAZARDOUS MATERIALS
Borrower is in compliance in all material respects with all
applicable Environmental Laws. Borrower has not been notified of any action,
suit, proceeding or investigation (a) relating in any way to compliance by or
liability of Borrower under any Environmental Laws, (b) which otherwise deals
with any Hazardous Substance or any Environmental Law, or (c) which seeks to
suspend, revoke or terminate any license, permit or approval necessary for the
generation, handling, storage, treatment or disposal of any Hazardous Substance
which, in any case, could have a Material Adverse Effect.
5.8 TAX RETURNS; GOVERNMENTAL REPORTS
Borrower (a) has filed all material federal, state, foreign
(if applicable) and local tax returns and other reports which are required by
law to be filed by Borrower, and (b) has paid all material taxes, assessments,
fees and other governmental charges, including, without limitation, payroll and
other employment related taxes, in each case that are due and payable, except
only for items that Borrower is currently contesting in good faith and that are
identified on Schedule 5.8.
5.9 FINANCIAL STATEMENTS AND REPORTS
All financial statements relating to Borrower that have been
or may hereafter be delivered to Agent by Borrower are accurate and complete in
all material respects and have been prepared in accordance with GAAP
consistently applied with prior periods. ASG has no material obligations or
liabilities of any kind not disclosed in such financial statements that would be
required to be disclosed therein in accordance with GAAP, and since the date of
the most recent financial statements submitted to
18
Agent, there has not occurred any Material Adverse Change or Material Adverse
Effect or, to Borrower's knowledge, any other event or condition that could
reasonably be expected to have a Material Adverse Effect.
5.10 COMPLIANCE WITH LAW
Borrower (a) is in compliance with all laws, statutes, rules,
regulations, ordinances and tariffs of any Governmental Authority applicable to
Borrower and/or Borrower's business, assets or operations, including, without
limitation, ERISA and HIPPA, and (b) is not in violation of any order of any
Governmental Authority or other board or tribunal, except where such
noncompliance or violation would not reasonably be likely to have a Material
Adverse Effect. There is no event, fact, condition or circumstance known to
Borrower which, with notice or passage of time, or both, would constitute or
result in any noncompliance with, or any violation of, any of the foregoing, in
each case except where noncompliance or violation could not reasonably be
expected to have a Material Adverse Effect. Borrower has not received any notice
that Borrower is not in compliance in any respect with any of the requirements
of any of the foregoing. Borrower has (i) not engaged in any Prohibited
Transactions as defined in Section 406 of ERISA and Section 4975 of the Internal
Revenue Code of 1986, as amended, and the rules and regulations promulgated
thereunder, (ii) not failed to meet any applicable minimum funding requirements
under Section 302 of ERISA in respect of its plans and no funding requirements
have been postponed or delayed, (iii) no knowledge of any event or occurrence
which would cause the Pension Benefit Guaranty Corporation to institute
proceedings under Title IV of ERISA to terminate any of the employee benefit
plans, (iv) no fiduciary responsibility under ERISA for investments with respect
to any plan existing for the benefit of Persons other than its employees or
former employees, or (v) not withdrawn, completely or partially, from any
multi-employer pension plans so as to incur liability under the MultiEmployer
Pension Plan Amendments of 1980. With respect to Borrower, there exists no event
described in Section 4043 of ERISA, excluding Subsections 4043(b)(2) and
4043(b)(3) thereof, for which the thirty (30) day notice period contained in 12
C.F.R. ss. 2615.3 has not been waived.
5.11 INTELLECTUAL PROPERTY
Except as set forth on Schedule 5.11, as of the date hereof
Borrower does not own, and is not a party to, any patents, patent applications,
trademarks, trademark applications, service marks, registered copyrights,
copyright applications, copyrights, trade names, trade secrets, proprietary
software or licenses (collectively, the "INTELLECTUAL PROPERTY").
5.12 LICENSES AND PERMITS; LABOR
Borrower is in compliance with and has all Permits necessary
or required by applicable law or Governmental Authority for the operation of its
businesses except where the failure to be in compliance would not reasonably be
likely to have a Material Adverse Effect. All of the foregoing are in full force
and effect and not in known conflict with the rights of others, except as would
not reasonably be likely to have a Material Adverse Effect. Borrower (a) is not
in breach of or default under the provisions of any of the foregoing, nor is
there any event, fact, condition or circumstance which, with notice or passage
of time or both, would constitute or result in a conflict, breach, default or
event of default under, any of the foregoing which, if not remedied within any
applicable grace or cure period would reasonably be likely to have a Material
Adverse Effect, and (b) has not been involved in any labor dispute, strike,
walkout or union organization activity which would reasonably be likely to have
a Material Adverse Effect
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5.13 NO DEFAULT
There does not exist any Default or Event of Default or any
event, fact, condition or circumstance which, with the giving of notice or
passage of time or both, would constitute or result in a Default or Event of
Default under any material contract or agreement.
5.14 DISCLOSURE
No Loan Document nor any other agreement, document,
certificate, or statement furnished to Agent by or on behalf of Borrower in
connection with the transactions contemplated by the Loan Documents, nor any
representation or warranty made by Borrower in any Loan Document, contains any
untrue statement of material fact or omits to state any fact necessary to make
the statements therein not materially misleading. There is no fact known to
Borrower which has not been disclosed to Agent in writing which reasonably would
be likely to have a Material Adverse Effect.
5.15 EXISTING INDEBTEDNESS; INVESTMENTS, GUARANTEES AND CERTAIN CONTRACTS
Except as permitted by the Loan Documents and after giving
effect to the repayment of the BofA Indebtedness with the proceeds of the
Initial Advance, Borrower (a) has no outstanding Indebtedness (b) is not subject
or party to any mortgage, note, indenture, indemnity or guarantee of, with
respect to or evidencing any Indebtedness of any other Person, or (c) does not
own or hold any equity or long-term debt investments in, and does not have any
outstanding advances to or any outstanding guarantees for, the obligations of,
or any outstanding borrowings from, any Person other than with respect to a
Guarantor or another Borrower as set forth on Schedule 5.15. Borrower has
performed all material obligations required to be performed by Borrower under
any document evidencing such Indebtedness and there has occurred no breach,
default or event of default under any document evidencing any such items or any
fact, circumstance, condition or event which, with the giving of notice or
passage of time or both, would constitute or result in a breach, default or
event of default thereunder.
5.16 OTHER AGREEMENTS
Except as described in the filings of ASG with the Securities
and Exchange Commission, as of the date hereof there are no existing or proposed
material agreements, arrangements, understandings or transactions between
Borrower and any of Borrower's officers, members, managers, directors,
stockholders, partners, other interest holders, employees or any members of
their respective immediate families.
5.17 INSURANCE
Borrower has in full force and effect such insurance policies
as are customary in its industry and as may be required pursuant to Section 6.5
hereof. All such insurance policies as in force on the date of this Agreement
are listed and described on Schedule 5.17.
5.18 NAMES; LOCATION OF OFFICES, RECORDS AND COLLATERAL
During the preceding five years, Borrower has not conducted
business under or used any name (whether corporate, partnership or assumed)
other than as shown on Schedule 5.18A. Borrower is the sole owner of all of its
names listed on Schedule 5.18A, and any and all business done and invoices
issued having a value in excess of $50,000, in such names are Borrower's sales,
business and invoices. Borrower maintains its places of business and chief
executive offices only at the locations set forth on Schedule 5.18B or with
respect to which notice is provided to the Agent pursuant to Section 7.4(a), and
all Accounts of Borrower arise, originate and are located, and all of the
Collateral and all books and
20
records in connection therewith or in any way relating thereto or evidence the
Collateral are located and shall be only, in and at such locations. All of the
Collateral is located only in the United States.
5.19 NON-SUBORDINATION
The Obligations are not subordinated in any way to any other
obligations of Borrower or to the rights of any other Person.
5.20 ACCOUNTS
In determining which Accounts are Eligible Receivables, Agent
may rely on all statements and representations made by Borrower with respect to
any Account. Unless otherwise indicated in writing to Agent, each Account of
Borrower (a) is genuine and in all respects what it purports to be and is not
evidenced by a judgment, (b) arises out of a completed, bona fide sale and
delivery of goods or rendering of services by Borrower in the ordinary course of
business and in accordance with the terms and conditions of all purchase orders,
contracts, certifications, participations and other documents relating thereto
or forming a part of the contract between Borrower and the Account Debtor, (c)
is for a liquidated amount maturing as stated in a claim or invoice covering
such sale of goods or rendering of services, a copy of which has been furnished
or is available to Agent, (d) if included on a Borrowing Base Certificate, is
not, subject to any known offset, lien, deduction, defense, dispute,
counterclaim or other adverse condition, is absolutely owing to Borrower and is
not contingent in any respect or for any reason, (e) there are no known facts,
events or occurrences which in any way impair the validity or enforceability
thereof or if included on a Borrowing Base Certificate, reduce the amount
payable thereunder from the face amount of the claim or invoice and statements
delivered to Agent with respect thereto, (f) to the best of Borrower's
knowledge, there are no proceedings or actions which are threatened or pending
against any Account Debtor thereunder which in Borrower's opinion is likely to
result in any Material Adverse Change in the collectibility of any such Account,
and (g) Borrower has obtained and currently has all Permits necessary in the
generation thereof except for any failure to obtain a Permit which would not be
reasonably likely to have a Material Adverse Effect. Unless otherwise indicated
in writing to Agent, to the best of Borrower's knowledge, (i) the Account Debtor
under each Account of Borrower had the capacity to contract at the time any
contract or other document giving rise thereto was executed, and (ii) such
Account Debtor is solvent.
5.21 SURVIVAL
Borrowers, jointly and severally, make the representations and
warranties contained herein with the knowledge and intention that Agent and
Lenders are relying and will rely thereon. All such representations and
warranties will survive the execution and delivery of this Agreement, and the
making of the Advances.
5.22 PERFORMANCE AND PAYMENT BONDS FOR GOVERNMENT CONTRACTS
Borrower has posted all bonds required by each Government Contract to
which it is a party, except as set forth on Schedule 5.22.
VI. AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, until full performance and
satisfaction, and indefeasible payment in full in cash, of all the Obligations
and termination of this Agreement:
6.1 FINANCIAL STATEMENTS, REPORTS AND OTHER INFORMATION
(a) Financial Reports. ASG shall furnish to Agent and each
Lender (i) as soon as available and in any event within ninety (90) calendar
days after the end of each fiscal year of ASG,
21
audited annual consolidated financial statements of ASG including the notes
thereto, consisting of a consolidated balance sheet at the end of such completed
fiscal year and the related consolidated statements of income, stockholders'
equity and cash flows for such completed fiscal year, which financial statements
shall be prepared and certified without qualification by an independent
certified public accounting firm reasonably satisfactory to Agent (which shall
include Ernst & Young) and accompanied by related management letters, if
available, (ii) as soon as available and in any event within forty-five (45)
days after the end of each fiscal quarter of ASG, unaudited consolidated
financial statements of ASG consisting of a balance sheet and statements of
income, stockholders' equity and cash flows as of the end of the immediately
preceding fiscal quarter, and (iii) as soon as available and in any event within
thirty (30) calendar days after the end of each calendar month, unaudited
consolidated financial statements of ASG consisting of a balance sheet and a
statement of income, and cash flows as of the end of the immediately preceding
calendar month. All such financial statements shall be prepared in accordance
with GAAP consistently applied with prior periods (except that certain of the
financial statements do not have footnotes), and are subject to year end
adjustments in the case of monthly and quarterly financial statements,
including, without limitation, reserves for incurred but not reported items and
claims payable consistent with past practices). With each quarterly and annual
financial statement, ASG shall also deliver a certificate of its chief financial
officer stating that (A) such person has reviewed the relevant terms of the Loan
Documents and the condition of Borrower, (B) no Default or Event of Default has
occurred or is continuing, or, if any of the foregoing has occurred or is
continuing, specifying the nature and status and period of existence thereof and
the steps taken or proposed to be taken with respect thereto, and (C) ASG (on a
consolidated basis) is in compliance with all financial covenants attached as
Annex I hereto. Such certificate shall be accompanied by the calculations
necessary to show compliance with the financial covenants in a form reasonably
satisfactory to the Agent.
(b) Other Materials. ASG shall furnish to Agent and each
Lender as soon as available, and in any event within ten (10) calendar days
after the preparation or issuance thereof or at such other time as set forth
below: (i) copies of any pro forma financial statements and any other notes,
reports and other materials related thereto, (ii) any reports, returns,
information, notices and other materials that ASG shall send to its stockholders
at any time, (iii) within thirty (30) calendar days after the end of each
calendar month for such month, an accounts payable detailed aging and
reconciliation of the accounts receivable and accounts payable to the general
ledger and financial statements, (iv) promptly upon receipt thereof, copies of
any reports submitted to ASG by its independent accountants in connection with
any interim audit of the books of ASG or any future Guarantor and copies of each
management control letter provided by such independent accountants, and (v) such
additional information, documents, statements, reports and other materials as
Agent may reasonably request from a credit or security perspective from time to
time.
(c) Notices. Borrower shall promptly, and in any event within
five (5) Business Days after Borrower or any authorized officer of Borrower
obtains knowledge thereof, notify Agent in writing of (i) any pending or
threatened litigation, suit, investigation, arbitration, dispute resolution
proceeding or administrative proceeding brought or initiated by Borrower or
otherwise affecting or involving or relating to Borrower or any of its property
or assets to the extent (A) the amount in controversy exceeds $2,000,000 (other
than in lawsuits brought by or on behalf of inmates that Borrower reasonably
believes will not go to trial), (B) any of the foregoing seeks injunctive relief
(excluding such relief sought in law suits brought by or on behalf of inmates),
or (C) if against Borrower and not covered by insurance, (ii) any Default or
Event of Default, which notice shall specify the nature and status thereof, the
period of existence thereof and what action is proposed to be taken with respect
thereto, (iii) any other development, event, fact, circumstance or condition
that could reasonably be expected to have a Material Adverse Effect, in each
case describing the nature and status thereof and the action proposed to be
taken with respect thereto, (iv) any notice received by Borrower from any payor
of a claim, suit or other action such payor has, claims or has filed against
Borrower in an amount of $100,000 or more, (v) any matter(s)
22
affecting the value, enforceability or collectibility of any of the Collateral,
including, without limitation, claims or disputes in the amount of $100,000 or
more in existence at any one time, (vi) any notice given by Borrower to any
other lender of Borrower and shall furnish to Agent a copy of such notice, (vii)
receipt of any notice or request from any Governmental Authority regarding any
liability or claim of liability in an amount of $100,000 or more, (viii) receipt
of any notice by Borrower regarding termination of any real estate lease, and/or
(ix) if any Account over $100,000 becomes evidenced or secured by an instrument
or chattel paper.
(d) Consents. Borrower shall obtain and deliver from time to
time all consents, approvals and agreements from such third parties as Agent
shall determine are necessary or desirable in its Permitted Discretion for the
protection of its Collateral and that are reasonably satisfactory to Agent with
respect to the Loan Documents and the transactions contemplated thereby, or the
Collateral, including, without limitation, Landlord Waivers and Consents for
each location set forth on Schedule 5.18B, as amended from time to time.
(e) Operating Budget. ASG shall furnish to Agent and each
Lender on or prior to the Closing Date and for each fiscal year of ASG
thereafter on the date on which such operating budgets are approved by ASG's
Board of Directors, and in any case no later than January 1 of each fiscal year,
consolidated month by month projected operating budgets, which shall include
projected profit and loss statements, balance sheets and cash flow reports of
and for Borrower for such upcoming fiscal year in each case prepared in
accordance with GAAP consistently applied with prior periods (except that such
projections will not have footnotes and will be subject to year-end adjustments
in the case of monthly and quarterly projections, including, without limitation,
reserves for incurred but not reported items and claims payable consistent with
past practices.
6.2 PAYMENT OF OBLIGATIONS
Borrower shall make full and timely indefeasible payment in
cash of the principal of and interest on the Loans, Advances and all other
Obligations.
6.3 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE AND ASSETS
Borrower shall (a) conduct its business in accordance with
good business practices customary to the industry, (b) engage principally in the
same or similar lines of business substantially as heretofore conducted, (c)
collect its Accounts in the ordinary course of business, (d) maintain all of its
material properties, assets and equipment used or useful in its business in good
repair, working order and condition (normal wear and tear excepted and except as
may be disposed of in the ordinary course of business and in accordance with the
terms of the Loan Documents), (e) from time to time to make all necessary
repairs, renewals and replacements of its material properties, assets and
equipment, and (f) maintain and keep in full force and effect its existence and
all material Permits and qualifications to do business and good standing in each
jurisdiction in which the ownership or lease of property or the nature of its
business makes such Permits or qualification necessary and in which failure to
maintain such Permits or qualification could reasonably be likely to have a
Material Adverse Effect; and (g) remain in good standing and maintain operations
in all jurisdictions reasonably necessary to conduct its business.
6.4 COMPLIANCE WITH LEGAL AND OTHER OBLIGATIONS
Borrower shall (a) comply with all laws, statutes, rules,
regulations, ordinances and tariffs of all Governmental Authorities applicable
to it or its business, assets or operations, (b) pay all taxes, assessments,
fees, governmental charges, claims for labor, supplies, rent and all other
obligations or liabilities of any kind, except liabilities being contested in
good faith and against which adequate reserves have been established, (c)
perform in accordance with its terms each contract, agreement or other
23
arrangement to which it is a party or by which it or any of the Collateral is
bound, including, but not limited to, any accreditation and survey requirements,
and (d) maintain and comply with all Permits necessary to conduct its business
and comply with any new or additional requirements that may be imposed on it or
its business, except where failure to comply, pay, maintain or perform would not
reasonably be likely to have a Material Adverse Effect. Borrower shall give
Agent prompt notice and a copy of (a) any new material Government Contract, and
(b) any communication from a Governmental Authority concerning nonperformance
(including nonperformance in connection with Hazardous Substances), default,
set-off or bonding issues under any Governmental Contract.
6.5 INSURANCE
Borrower shall (a) keep all of its insurable properties and
assets adequately insured in all material respects against losses, damages and
hazards as are customarily insured against by businesses engaging in similar
activities or owning similar assets or properties in at least the minimum amount
required by applicable law and any agreement to which Borrower is a party,
including, without limitation, property insurance, automobile insurance and
professional liability insurance, as applicable, (b) maintain (i) general public
liability insurance at all times against liability on account of damage to
persons and property having such limits, deductibles, exclusions and
co-insurance and other provisions as are customary for a business engaged in
activities similar to those of Borrower, and (ii) stop loss insurance with
coverage in reasonable amounts as are customary for a business engaged in
activities similar to those of Borrower or as required by any agreement to which
Borrower is a party (i.e., at Closing, Borrower has coverage of 100% of exposure
for amounts in excess of $500,000 per patient with a per patient cap of
$2,000,000); (c) maintain insurance under all applicable workers' compensation
laws, and (d) require all of its healthcare professional employees and
independent contractors to maintain professional liability insurance; all of the
foregoing insurance policies to be satisfactory in form and substance to Agent
in its Permitted Discretion.
6.6 TRUE BOOKS
Borrower shall (a) keep true, complete and accurate books of
record and account in accordance with commercially reasonable business practices
in which true and correct entries are made of all of its and their dealings and
transactions in all material respects; and (b) set up and maintain on its books
such reserves as may be required by GAAP with respect to doubtful accounts and
all taxes, assessments, charges, levies and claims and with respect to its
business, and include such reserves in its quarterly as well as year end
financial statements.
6.7 INSPECTION; PERIODIC AUDITS
Borrower shall permit the representatives of Agent and Lenders
from time to time during normal business hours, upon reasonable notice and at
the expense of Borrower, to (a) (once each quarter at Borrower's expense if no
Default or Event of Default shall have occurred and be continuing, and more
often, at Agent's Permitted Discretion, after the occurrence and during the
continuance of any Default or Event of Default) visit and inspect any of its
offices or properties or any other place where Collateral is located to inspect
the Collateral and/or to examine or audit all of its books of account, records,
reports and other papers, and make copies and extracts therefrom, and (b)
discuss its business, operations, prospects, properties, assets, liabilities,
condition and/or Accounts with its officers and independent public accountants
(and by this provision such officers and accountants are authorized to discuss
the foregoing). Notwithstanding the foregoing, Borrower shall not be required to
provide information to Agent if doing so would require Borrower to waive any
applicable attorney/client privilege or accountant/client privilege existent in
connection with any pending or threatened litigation. Agent shall endeavor to
minimize the expenses of any quarterly audits.
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6.8 FURTHER ASSURANCES; POST CLOSING
At Borrower's cost and expense, Borrower shall (a) within five
(5) Business Days after Agent's demand, take such further actions, obtain such
consents and approvals and duly execute and deliver such further agreements,
assignments, instructions or documents as Agent reasonably may request with
respect to the purposes, terms and conditions of the Loan Documents and the
consummation of the transactions contemplated thereby, whether before, at or
after the performance and/or consummation of the transactions contemplated
hereby or the occurrence of a Default or Event of Default, (b) without limiting
and notwithstanding any other provision of any Loan Document, execute and
deliver, or cause to be executed and delivered, such agreements and documents,
and take or cause to be taken such actions, and otherwise perform, observe and
comply with such obligations, as are set forth on Schedule 6.8, and (c) upon the
exercise by Agent, any Lender or any of their Affiliates of any power, right,
privilege or remedy pursuant to any Loan Document or under applicable law or at
equity which requires any consent, approval, registration, qualification or
authorization of any Governmental Authority, execute and deliver, or cause the
execution and delivery of, within a reasonable time, all applications,
certificates, instruments and other documents that may be so required for such
consent, approval, registration, qualification or authorization. Without
limiting the foregoing, upon the exercise by Agent, any Lender or any of their
Affiliates of any right or remedy under any Loan Document which requires any
consent, approval or registration with, consent, qualification or authorization
by, any Person, Borrower shall execute and deliver, or cause the execution and
delivery of, all applications, certificates, instruments and other documents
that Agent, any Lender or such Affiliate may be required to obtain for such
consent, approval, registration, qualification or authorization.
6.9 PAYMENT OF INDEBTEDNESS
Except as otherwise prescribed in the Loan Documents, Borrower
shall pay, discharge or otherwise satisfy at or before maturity (subject to
applicable grace periods and, in the case of trade payables, to ordinary course
payment practices) all of its material obligations and liabilities, except when
the amount or validity thereof is being contested in good faith by appropriate
proceedings and such reserves as Agent may deem proper and necessary in its sole
discretion shall have been made therefor.
6.10 LIEN TERMINATIONS
If Liens other than Permitted Liens exist, Borrower
immediately shall take, execute and deliver all actions, documents and
instruments necessary to release and terminate such Liens.
6.11 USE OF PROCEEDS
Borrower shall use the proceeds from the Revolving Facility
only for the purposes set forth in the recitals to this Agreement.
6.12 COLLATERAL DOCUMENTS; SECURITY INTEREST IN COLLATERAL
On reasonable request of Agent, Borrower shall make available
to Agent copies of any and all documents, instruments, materials and other items
that relate to, secure, evidence, give rise to or generate or otherwise involve
Collateral, including, without limitation, Accounts of Borrower. Borrower shall
(i) execute, obtain, deliver, file, register and/or record any and all financing
statements, continuation statements, stock powers, instruments and other
documents, or cause the execution, filing, registration, recording or delivery
of any and all of the foregoing, that are necessary or required under law or
otherwise or reasonably requested by Agent to be executed, filed, registered,
obtained, delivered or recorded to create, maintain, perfect, preserve, validate
or otherwise protect the pledge of the Collateral to Agent and Agent's perfected
first priority Lien on the Collateral (and Borrower irrevocably grants Agent the
right, at Agent's option, to file any or all of the foregoing), (ii) maintain,
or cause to be maintained, at
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all times, the pledge of the Collateral to Agent and Agent's perfected first
priority Lien on the Collateral, (iii) promptly upon learning thereof, report to
Agent any reclamation, return or repossession of goods in excess of $500,000
(individually or in the aggregate), and (iv) defend the Collateral and Agent's
perfected first priority Lien thereon against all claims and demands of all
Persons at any time claiming the same or any interest therein adverse to Agent,
and pay all costs and expenses (including, without limitation, reasonable
in-house documentation, diligence fees and legal expenses and other reasonable
attorneys' fees and expenses) in connection with such defense, which shall be
added to the Obligations.
6.13 TAXES AND OTHER CHARGES
All payments and reimbursements to Agent, for the benefit of
Lenders, made under any Loan Document shall be free and clear of and without
deduction for all taxes, levies, imposts, deductions, assessments, charges or
withholdings, and all liabilities with respect thereto of any nature whatsoever,
excluding taxes to the extent imposed on each Lender's net income. If Borrower
shall be required by law to deduct any such amounts from or in respect of any
sum payable under any Loan Document to Agent, for the benefit of Lenders, then
the sum payable to Agent, for the benefit of Lenders, shall be increased as may
be necessary so that, after making all required deductions, each Lender receives
an amount equal to the sum it would have received had no such deductions been
made. Notwithstanding any other provision of any Loan Document, if at any time
after the Closing (a) any change in any existing law, regulation, treaty or
directive or in the interpretation or application thereof, (b) any new law,
regulation, treaty or directive enacted or any interpretation or application
thereof, or (c) compliance by any Lender with any request or directive (whether
or not having the force of law) from any Governmental Authority: (i) subjects
such Lender to any tax, levy, impost, deduction, assessment, charge or
withholding of any kind whatsoever with respect to any Loan Document, or changes
the basis of taxation of payments to Agent, for the benefit of Lenders, of any
amount payable thereunder (except for net income taxes, or franchise taxes
imposed in lieu of net income taxes, imposed generally by federal, state or
local taxing authorities with respect to interest or commitment fees or other
fees payable hereunder or changes in the rate of tax on the overall net income
of each Lender), or (ii) imposes on Lenders any other condition or increased
cost in connection with the transactions contemplated thereby or participations
therein; and the result of any of the foregoing is to increase the cost to
Lenders of making or continuing any Loan hereunder or to reduce any amount
receivable hereunder, then, in any such case, Borrower shall promptly pay to
Agent, for the benefit of Lenders, any additional amounts necessary to
compensate each Lender, on an after-tax basis, for such additional cost or
reduced amount as determined by such Lender. If any Lender becomes entitled to
claim any additional amounts pursuant to this Section 6.13 it shall promptly
notify Borrower of the event by reason of which such Lender has become so
entitled, and each such notice of additional amounts payable pursuant to this
Section 6.13 submitted by such Lender to Borrower shall, absent manifest error,
be final, conclusive and binding for all purposes. Without limiting or being
limited by any other provision of any Loan Document, Borrower at all times shall
retain and use a commercially known and professional payroll company to process,
manage and pay its payroll taxes.
6.14 NEW SUBSIDIARIES
Within thirty (30) calendar days of any Person becoming a
Subsidiary after the Closing Date, Borrower shall (a) deliver to Agent a joinder
to this Agreement and to each other Loan Document to which the Borrower is a
party duly executed by such Person, which joinder shall be in form and substance
satisfactory to the Agent in its Permitted Discretion, (b) provide Agent with
copies of such Person's organizational documents, material contracts, financial
information, and any other information requested by Agent, on behalf of the
Lenders, in order to perform legal and financial diligence and Uniform
Commercial Code, tax and judgment lien searches, and (c) cause such Person to
duly execute and deliver such further agreements, assignments, instructions or
documents as Agent may request in its Permitted Discretion with respect to the
purposes, terms and conditions of the Loan Documents.
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6.15 SCHEDULES TO THE LOAN AGREEMENT
Notwithstanding any other provision in any Loan Document, or
any date limitation set forth in any representation or warranty referencing such
schedules, Borrower shall keep all schedules current in all material respects
and shall provide amended schedules to Agent as necessary to comply herewith.
Notwithstanding the foregoing, the following schedules shall be updated only to
the extent specified hereby:
(a) the disclosure of directors, members, managers and/or
partners of Borrower, as well as any beneficial or record holders of more than
twenty-five percent (25%) of the equity of ASG in Schedule 5.3 shall be updated
as reasonably requested by Agent;
(b) the disclosure of any order, writ, injunction, judgment or
decree of any Governmental Authority to which Borrower is a party or otherwise
subject to in Schedule 5.6, and the disclosure of any action, suit, proceeding
or investigation initiated by Borrower in Schedule 5.6 shall be updated only if
any such information would be reasonably likely to result in a Material Adverse
Effect;
(c) all disclosures in Schedule 5.8 shall be updated only if
any such information would reasonably be likely to result in a Material Adverse
Effect; and
(d) all disclosures of property and business interruption
insurance policies in Schedule 5.17 shall be updated for any material change to
the policy or the addition of any business interruption policy, all other
disclosures of insurance in Schedule 5.17 shall be updated only if any such
information would reasonably be likely to result in a Material Adverse Effect.
6.16 NEW GOVERNMENT CONTRACTS
Within ten (10) Business Days of any Borrower entering into a
Government Contract with a Governmental Authority, Borrower shall deliver to
Agent a full copy of such Government Contract so that Agent can determine
whether such contract contains Eligible Receivables and whether it shall be
included on the Borrowing Base.
VII. NEGATIVE COVENANTS
Borrower covenants and agrees that, until full performance and
satisfaction, and indefeasible payment in full in cash, of all the Obligations
and termination of this Agreement:
7.1 FINANCIAL COVENANTS
Borrower shall not violate the financial covenants set forth
on Annex I to this Agreement, which annex is incorporated herein and made a part
hereof.
7.2 PERMITTED INDEBTEDNESS
Borrower shall not create, incur, assume or suffer to exist
any Indebtedness, except the following (collectively, "PERMITTED INDEBTEDNESS"):
(a) Indebtedness under the Loan Documents, (b) any Indebtedness set forth on
Schedule 7.2 or arising after the date hereof pursuant to commitments set forth
in Schedule 7.2 and any refunding or renewals thereof which do not increase the
principal amount of such Indebtedness; (c) Capitalized Lease Obligations
incurred after the Closing Date and Indebtedness incurred pursuant to purchase
money Liens permitted by Section 7.3(e); provided, that the aggregate amount
thereof outstanding at any time shall not exceed $1,000,000, (d) current
liabilities (other than for borrowed money) to the extent (i) incurred in the
ordinary course of business consistent with past practices and (ii) discharged
or satisfied at or before the due date for payment (subject to ordinary course
payment practices), unless the same are being contested in good faith and by
appropriate
27
and lawful proceedings and such reserves, if any, with respect thereto as are
required by GAAP and deemed adequate by Borrower's independent accountants shall
have been reserved, (e) borrowings incurred in the ordinary course of business,
(f) other indebtedness in an amount not exceeding $1,000,000 individually or in
the aggregate outstanding at any one time; (g) indemnities under Government
Contracts, (h) Subordinated Debt in an amount not to exceed $10,000,000 at any
one time outstanding, (i) Indebtedness with respect to financed insurance
premiums to the extent not past due, (j) Contingent Obligations undertaken by
any Borrower with respect to the Indebtedness of any other Borrower, to the
extent such Indebtedness is permitted hereunder as set forth on Schedule 7.2,
(k) intercompany debt between or among Borrowers hereto and (i) reimbursement
obligations with respect to letters of credit that are secured by cash
collateral accounts, provided, however, that in each case under this Section
7.2, all such Indebtedness shall be on an unsecured basis, except for Permitted
Liens relating to money borrowed which shall be subordinated in right of
repayment and remedies to all of the Obligations and to all of the Lenders'
rights in form and substance satisfactory to Agent. Borrower shall not make
prepayments on any existing or future Indebtedness to any Person other than to
Agent, for the benefit of Lenders, or to the extent specifically permitted by
this Agreement or any subsequent agreement between Borrower, Agent and Lenders.
7.3 PERMITTED LIENS
Borrower shall not create, incur, assume or suffer to exist
any Lien upon, in or against, or pledge of, any of the Collateral or any of its
properties or assets or any of its shares, securities or other equity or
ownership or partnership interests, whether now owned or hereafter acquired,
except the following (collectively, "PERMITTED LIENS"): (a) Liens under the Loan
Documents or otherwise arising in favor of Agent, for the benefit of itself and
Lenders, (b) Liens imposed by law for taxes, assessments or charges of any
Governmental Authority for claims not yet due or which are being contested in
good faith by appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being maintained by such Person in
accordance with GAAP, (c) (i) statutory Liens of landlords, carriers,
warehousemen, mechanics, materialmen, and (ii) other Liens imposed by law or
that arise by operation of law in the ordinary course of business, in each case
only for amounts not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves or other
appropriate provisions are being maintained by such Person in accordance with
GAAP to the satisfaction of Agent in its Permitted Discretion, (d) Liens
incurred or deposits made in the ordinary course of business (including, without
limitation, surety bonds and appeal bonds) in connection with workers'
compensation, unemployment insurance and other types of social security benefits
or to secure the performance of tenders, bids, leases, contracts (other than for
the repayment of Indebtedness), statutory obligations and other similar
obligations, (e) purchase money Liens (i) securing Indebtedness permitted under
Section 7.2(c), or (ii) in connection with the purchase by such Person of
equipment in the normal course of business; provided, that such secured
Indebtedness shall not exceed any limits on Indebtedness provided for herein and
shall otherwise be Permitted Indebtedness hereunder, (f) Liens necessary and
desirable for the operation of such Person's business; provided, that Agent has
consented to such Liens in writing before their creation and existence and the
priority of such Liens and the debt secured thereby are both subject and
subordinate in all respects to the Liens securing the Collateral and to the
Obligations and all of the rights and remedies of Agent and each Lender, all in
form and substance satisfactory to Agent in its Permitted Discretion, (g) Liens
disclosed on Schedule 7.3, (h) easements, reservations, exceptions,
rights-of-way, covenants, conditions, restrictions and other similar
encumbrances incurred in the ordinary course of business that, in the aggregate,
are not substantial in amount and that do not in any case materially detract
from the value of the property subject thereto or interfere with the ordinary
conduct of business by the Borrower, (i) liens in respect of any writ of
execution, attachment, garnishment, judgment or award in an amount less than
$100,000, if (x) the time for appeal or petition for rehearing has not expired,
an appeal or appropriate proceeding for review is being prosecuted in good faith
and a stay of execution pending such appeal or proceeding for review has
28
been secured, or (y) the underlying claim is fully covered by insurance, the
insurer has acknowledged in writing its responsibility to pay such claim and no
action has been taken to enforce such execution, attachment, garnishment,
judgment or award, (j) liens of lessors (except liens on Accounts are not
permitted under any circumstances) under or in connection with operating leases,
and (k) liens on cash collateral accounts established to secure Borrower's
reimbursement obligations with respect to letters of credit.
7.4 INVESTMENTS; NEW FACILITIES OR COLLATERAL; SUBSIDIARIES
(a) Except as set forth on Schedule 7.4 and except for any
Borrower's ownership on the date of this Agreement of the equity interests of
another Borrower, Borrower, directly or indirectly, shall not (i) merge with,
purchase, own, hold, invest in or otherwise acquire obligations or stock or
securities of, or any other interest in all or substantially all of the assets
of, any Person or any joint venture unless such Person is or becomes a Borrower
in the manner provided in Section 6.14, or (ii) make or permit to exist any
loans, advances or guarantees to or for the benefit of any Person other than to
or for the benefit of a person who is or becomes a Borrower under the Loan
Documents in the manner provided in Section 6.14, except for ordinary course of
business investments of the type historically made by Borrower, or assume,
guarantee, endorse, contingently agree to purchase or otherwise become liable
for or upon or incur any obligation of any Person (other than those created by
the Loan Documents, Permitted Indebtedness, and other than (x) trade credit
extended in the ordinary course of business, (y) advances for business travel
and similar temporary advances made in the ordinary course of business to
officers, directors and employees, and (z) the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business). Borrower, directly or indirectly, shall not purchase, own,
operate, hold, invest in or otherwise acquire any property or assets or any
Collateral having a value of $50,000 or more that is not located at the
locations set forth on Schedule 5.18B, unless Borrower shall provide to Agent
contemporaneous written notice. Furthermore, Borrower shall update Schedule
5.18B, any time books and records related to Account Collateral and any
Inventory are located at any place other than the places specifically identified
on Schedule 5.18B.
(b) Borrower shall not redirect any Accounts or the proceeds
thereof to or through any subsidiary that is inactive or that is not a party to
the Loan Documents. If any inactive Subsidiary commences business activity
Borrower shall cause it to become a party to the Loan Documents.
7.5 DIVIDENDS; REDEMPTIONS; EQUITY
Borrower shall not (a) declare, pay or make any cash dividend
or distribution on any shares of capital stock or other securities or interests,
or apply any of its funds, property or assets to the acquisition, redemption or
other retirement of any capital stock or other securities or interests or of any
options to purchase or acquire any of the foregoing (collectively, the
"DISTRIBUTIONS"), or (b) other than ASG, issue or create any capital stock or
other equity securities; except, that (i) Borrower may make Distributions or
issue capital stock or other equity securities to or for the benefit of another
Borrower, and (ii) ASG may pay cash in lieu of issuing fractional shares upon
the exercise of options or warrants to purchase shares of its common stock.
7.6 TRANSACTIONS WITH AFFILIATES
Borrower shall not enter into or consummate any transaction of
any kind with any of its Affiliates (except any Guarantor or another Borrower)
other than: (a) salary, bonus, employee stock option and other compensation and
employment arrangements with directors or officers in the ordinary course of
business; provided, that no payments of any bonus or otherwise (except normal
salaries, consistent with past practices) shall be permitted if a Default or
Event of Default has occurred and remains in effect or would be caused by or
result from such payment, (b) Distributions and dividends
29
permitted pursuant to Section 7.5, (c) transactions on overall terms at least as
favorable to Borrower as would be the case in an arm's length transaction
between unrelated parties of equal bargaining power, (d) payments permitted
under and pursuant to written agreements entered into by and between Borrower
and one or more of its Affiliates that both (i) reflect and constitute
transactions on overall terms at least as favorable to Borrower as would be the
case in an arm's-length transaction between unrelated parties of equal
bargaining power, and (ii) are subject to such terms and conditions as
determined by Agent in its sole discretion, provided, that notwithstanding the
foregoing Borrower shall not (Y) enter into or consummate any transaction or
agreement pursuant to which it becomes a party to any mortgage, note, indenture
or guarantee evidencing any Indebtedness of any of its Affiliates or otherwise
to become responsible or liable as a guarantor, surety or otherwise, pursuant to
an agreement for any Indebtedness of any such Affiliate in the ordinary course
of business, except that Borrower may enter into such transaction with another
Borrower or Guarantor so long as any and all material transactions are set forth
on Schedule 7.6, or (Z) make any payment to an Affiliate (except another
Borrower or Guarantor in the ordinary course of business) if a Default or Event
of Default has occurred and remains in effect or would be caused by or result
from such payment.
7.7 CHARTER DOCUMENTS; FISCAL YEAR; DISSOLUTION; COLLATERAL ASSIGNMENT
Borrower shall not (a) change its state of organization, or
amend, modify, restate or change its certificate of incorporation or bylaws or
similar charter documents in a manner that would be adverse to Agent or any
Lender, (b) change its fiscal year, (c) amend, alter or suspend or terminate or
make provisional, any material Permit, (d) wind up, liquidate or dissolve
(except for mergers into another party hereto) (voluntarily or involuntarily) or
commence or suffer any proceedings seeking or that would result in any of the
foregoing, or (e) use any proceeds of any Loans for "purchasing" or "carrying"
"margin stock" as defined in Regulations U, T or X of the Board of Governors of
the Federal Reserve System.
7.8 TRANSFER OF ASSETS
Borrower shall not sell, lease, transfer, assign or otherwise
dispose of any interest in any properties or assets, or agree to do any of the
foregoing, except that:
(a) Borrower may lease (other than by a sale-leaseback
transaction) as lessee real or personal property or surrender all or a portion
of a lease of the same, in each case in the ordinary course of business (so long
as such lease does not create or result in and is not otherwise a Capitalized
Lease Obligation prohibited under this Agreement) provided that, if books and
records regarding Collateral or Inventory if included on any Borrowing Base
Certificate, are to be kept at any new leased location, a Landlord Waiver is
executed, satisfactory in form and substance to Agent;
(b) Borrower may sell obsolete or replaced equipment or excess
equipment no longer needed in the ordinary course of business; and
(c) Borrower may sell Inventory in the ordinary course of
business.
7.9 CONTINGENT OBLIGATIONS
Borrower shall not enter into any Contingent Obligations or
assume, guarantee, endorse, contingently agree to purchase or otherwise become
liable for or upon or incur any obligation of any Person, except for (i)
indemnification obligations in the ordinary course of Borrower's business, (ii)
Contingent Obligations permitted pursuant to Section 7.2, and (iii) such other
obligations as are set forth on Schedule 7.9 hereto.
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7.10 TRUTH OF STATEMENTS
Borrower shall not furnish to Agent or any Lender any
certificate or other document that contains any untrue statement of a material
fact or that omits to state a material fact necessary to make it not misleading
in light of the circumstances under which it was furnished.
7.11 PAYMENT ON SUBORDINATED DEBT
Borrower shall not (a) make any prepayment of any part or all
of any Subordinated Debt, (b) repurchase, redeem or retire any instrument
evidencing any such Subordinated Debt prior to maturity, or (c) enter into any
agreement (oral or written) which could in any way be construed to amend,
modify, alter or terminate any one or more instruments or agreements evidencing
or relating to any Subordinated Debt.
7.12 IRS FORM 8821
Borrower shall not alter, amend, restate or otherwise modify,
or withdraw, terminate or refile the IRS Form 8821 required to be filed pursuant
to Section 4.1 hereof.
VIII. EVENTS OF DEFAULT
The occurrence of any one or more of the following shall constitute an
"Event of Default:"
(a) Borrower shall fail to pay any amount on the Obligations,
including any Funded L/C Exposure, or otherwise provided for in any Loan
Document when due (whether on any payment date, at maturity, by reason of
acceleration, by required prepayment or otherwise);
(b) any representation, statement or warranty made or deemed
made by Borrower or any Guarantor in any Loan Document or in any other
certificate, document, report or opinion delivered in conjunction with any Loan
Document to which it is a party, shall not be true and correct in all material
respects or shall have been false or misleading in any material respect on the
date when made or deemed to have been made (except to the extent already
qualified by materiality, in which case it shall be true and correct in all
respects and shall not be false or misleading in any respect);
(c) Borrower or any Guarantor or other party thereto, other
than Agent or any Lender, shall be in violation, breach or default of, or shall
fail to perform, observe or comply with any covenant, obligation or agreement
set forth in, any Loan Document and such violation, breach, default or failure
shall not be cured within the applicable period set forth in the applicable Loan
Document; provided that, with respect to the affirmative covenants set forth in
Article VI (other than Sections 6.1(a), 6.2, 6.3, 6.8, and 6.11 for which there
shall be no cure period), there shall be a thirty (30) calendar day cure period
commencing from the earlier of (i) Receipt by such Person of written notice of
such breach, default, violation or failure, and (ii) the time at which such
Person or any authorized officer of such Person knew or became aware, of such
failure, violation, breach or default;
(d) (i) any of the Loan Documents ceases to be in full force
and effect, or (ii) any Lien created thereunder ceases to constitute a valid
perfected first priority Lien on the Collateral in accordance with the terms
thereof, or Agent, for the benefit of itself and Lenders, ceases to have a valid
perfected first priority security interest in any of the Collateral or any
securities pledged to Agent, for the benefit of itself and Lenders, pursuant to
the Security Documents;
(e) one or more judgments or decrees is rendered against
Borrower or Guarantor in an amount in excess of $500,000, which is/are not
satisfied, stayed, vacated or discharged of record
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within thirty (30) calendar days of being rendered; provided, however, that the
judgment rendered against Borrower in the Circuit Court, 10th Judicial Circuit,
Polk County, Florida in a lawsuit known as the "Cullaton" case shall not
constitute a Default or an Event of Default;
(f) (i) any default occurs, which is not cured or waived, (x)
in the payment of any amount with respect to any Indebtedness (other than the
Obligations) for borrowed money of Borrower or Guarantor in excess of $500,000,
or (y) in the performance or observance of any provision in any agreement,
document or instrument pursuant to which Borrower or any Guarantor issued,
assumed or guaranteed any Indebtedness in an amount in excess of $500,000 to
which any Borrower or Guarantor is a party, or any of their assets are subject
and such default continues for more than any applicable grace period or permits
the holder of any Indebtedness to accelerate the maturity thereof, or (ii) any
Indebtedness of Borrower or Guarantor for borrowed money in an amount greater
than $500,000 individually or in the aggregate at any one time, is declared to
be due and payable or is required to be prepaid (other than by a regularly
scheduled payment) prior to the stated maturity thereof, or any obligation of
such Person for the payment of Indebtedness in an amount greater than $500,000
individually or in the aggregate at any one time (other than the Obligations) is
not paid when due or within any applicable grace period, or any such obligation
becomes or is declared to be due and payable before the expressed maturity
thereof;
(g) Borrower or Guarantor shall (i) be unable to pay its debts
generally as they become due, (ii) file a petition under any Debtor Relief Law,
(iii) make a general assignment for the benefit of its creditors, (iv) commence
a proceeding for the appointment of a receiver, trustee, liquidator or
conservator of itself or of the whole or any substantial part of its property,
or (v) file a petition seeking reorganization or liquidation or similar relief
under any Debtor Relief Law;
(h) (i) a court of competent jurisdiction shall (A) enter an
order, judgment or decree appointing a custodian, receiver, trustee, liquidator
or conservator of Borrower or Guarantor or the whole or any substantial part of
any such Person's properties, which shall continue unstayed and in effect for a
period of sixty (60) calendar days, (B) shall approve a petition filed against
Borrower or Guarantor seeking reorganization, liquidation or similar relief
under the any Debtor Relief Law or any other applicable law or statute, which is
not dismissed within sixty (60) calendar days or, (C) under the provisions of
any Debtor Relief Law or other applicable law or statute, assume custody or
control of Borrower or Guarantor or of the whole or any substantial part of any
such Person's properties, which is not irrevocably relinquished within sixty
(60) calendar days, or (ii) there is commenced against Borrower or Guarantor any
proceeding or petition seeking reorganization, liquidation or similar relief
under any Debtor Relief Law or any other applicable law or statute, which (A) is
not unconditionally dismissed within sixty (60) calendar days after the date of
commencement, or (B) is with respect to which Borrower or Guarantor takes any
action to indicate its approval of or consent to;
(i) (i) any Change of Control occurs or any agreement or
commitment to cause or that may result in any such Change of Control is entered
into, (ii) any Material Adverse Effect or Material Adverse Change occurs, or is
reasonably expected to occur, or (iii) Borrower or Guarantor ceases any material
portion of its business operations as currently conducted;
(j) an Event of Default occurs under any other Loan Document
beyond applicable cure periods;
(k) uninsured damage to, or loss, theft or destruction of, any
portion of the Collateral occurs that exceeds $500,000 in the aggregate
(excluding deductibles);
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(l) Borrower or Guarantor or any of their respective directors
or senior officers is convicted under any law that could lead to a forfeiture of
any material portion of the Collateral;
(m) the issuance of any process for levy, attachment or
garnishment or execution upon or prior to any judgment seeking in any one
instance or in the aggregate a recovery of $500,000 or more against Borrower or
Guarantor or any of their property or assets; or
(n) Borrower or Guarantor does, or enters into or becomes a
party to any agreement or commitment to do, or cause to be done, any of the
things described in this Article VIII or otherwise prohibited by any Loan
Document (subject to any cure periods set forth therein);
then, and during the continuance of any such event, notwithstanding any other
provision of any Loan Document, (I) Agent may (and at the request of Requisite
Lenders, shall), by notice to Borrower (i) terminate Lenders' obligations to
make Loans hereunder, whereupon the same shall immediately terminate, and (ii)
declare all or any of the Notes, all interest thereon and all other Obligations
to be due and payable immediately (except in the case of an Event of Default
under Section 8(d), (g) or (h), in which event all of the foregoing shall
automatically and without further act by Agent or any Lender be due and payable;
provided, that, with respect to non-material breaches or violations that
constitute Events of Default under clause (ii) of Section 8(d), there shall be a
ten (10) Business Day cure period commencing from the earlier of (A) Receipt by
the applicable Person of written notice of such breach or violation or of any
event, fact or circumstance constituting or resulting in any of the foregoing,
and (B) the time at which such Person or any authorized officer thereof knew or
became aware, of any event, fact or circumstance constituting or resulting in
any of the foregoing), in each case without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by
Borrower, and (II) effective immediately, without any action of Agent or
Lenders, no action permitted to be taken under Article VII hereof may be taken.
IX. RIGHTS AND REMEDIES AFTER DEFAULT
9.1 RIGHTS AND REMEDIES
(a) In addition to the acceleration provisions set forth in
Article VIII above, upon the occurrence and continuation of an Event of Default,
Agent shall have the right to (and at the request of Requisite Lenders, shall)
exercise any and all rights, options and remedies provided for in any Loan
Document, under the UCC or at law or in equity, including, without limitation,
the right to (i) apply any property of Borrower held by Agent, for the benefit
of Lenders, or Lenders to reduce the Obligations, (ii) foreclose the Liens
created under the Security Documents, (iii) realize upon, take possession of
and/or sell any Collateral or securities pledged with or without judicial
process, (iv) exercise all rights and powers with respect to the Collateral as
Borrower might exercise, (v) collect and send notices regarding the Collateral,
with or without judicial process, (vi) by its own means or with judicial
assistance, enter any premises at which Collateral and/or pledged securities are
located, or render any of the foregoing unusable or dispose of the Collateral
and/or pledged securities on such premises without any liability for rent,
storage, utilities, or other sums, and no Borrower shall resist or interfere
with such action, (vii) at Borrower's expense, require that all or any part of
the Collateral be assembled and made available to Agent at any place designated
by Agent, (viii) reduce or otherwise change the Facility Cap and/or the Maximum
Loan Amount, and/or (ix) relinquish or abandon any Collateral or securities
pledged or any Lien thereon. Notwithstanding any provision of any Loan Document,
Agent, in its sole discretion, shall have the right, at any time that Borrower
fails to do so, and from time to time, without prior notice, to: (i) obtain
insurance covering any of the Collateral to the extent required hereunder; (ii)
pay for the performance of any of Obligations; (iii) discharge taxes or Liens on
any of the Collateral that are in violation of any Loan document unless Borrower
is in good faith with due diligence by appropriate
33
proceedings contesting those items; and (iv) pay for the maintenance and
preservation of the Collateral. Such expenses and advances shall be added to the
Obligations until reimbursed to Agent and shall be secured by the Collateral,
and such payments by Agent shall not be construed as a waiver by Agent or
Lenders of any Event of Default or any other rights or remedies of Agent and
Lenders.
(b) Borrower agrees that notice received by it at least ten
(10) calendar days before the time of any intended public sale, or the time
after which any private sale or other disposition of Collateral is to be made,
shall be deemed to be reasonable notice of such sale or other disposition. If
permitted by applicable law, any perishable Collateral which threatens to
speedily decline in value or which is sold on a recognized market may be sold
immediately by Agent without prior notice to Borrower. At any sale or
disposition of Collateral or securities pledged, Agent may (to the extent
permitted by applicable law) purchase all or any part thereof free from any
right of redemption by Borrower which right is hereby waived and released.
Borrower covenants and agrees not to, and not to permit or cause any of its
Subsidiaries to, interfere with or impose any obstacle to Agent's exercise of
its rights and remedies with respect to the Collateral. Agent, in dealing with
or disposing of the Collateral or any part thereof, shall not be required to
give priority or preference to any item of Collateral or otherwise to marshal
assets or to take possession or sell any Collateral with judicial process.
9.2 APPLICATION OF PROCEEDS
In addition to any other rights, options and remedies Agent
and Lenders have under the Loan Documents, the UCC, at law or in equity, all
dividends, interest, rents, issues, profits, fees, revenues, income and other
proceeds collected or received from collecting, holding, managing, renting,
selling, or otherwise disposing of all or any part of the Collateral or any
proceeds thereof upon exercise of its remedies hereunder shall be applied in the
following order of priority: (i) first, to the payment of all costs and expenses
of such collection, storage, lease, holding, operation, management, sale,
disposition or delivery and of conducting Borrower's business and of
maintenance, repairs, replacements, alterations, additions and improvements of
or to the Collateral, and to the payment of all sums which Agent or Lenders may
be required or may elect to pay, if any, for taxes, assessments, insurance and
other charges upon the Collateral or any part thereof, and all other payments
that Agent or Lenders may be required or authorized to make under any provision
of this Agreement (including, without limitation, in each such case, in house
documentation and diligence fees and legal expenses, search, audit, recording,
professional and filing fees and expenses and reasonable attorneys' fees and all
expenses, liabilities and advances made or incurred in connection therewith);
(ii) second, to the payment of all Obligations as provided herein and as
determined by Requisite Lenders; (iii) third, to the satisfaction of
Indebtedness secured by any subordinate security interest of record in the
Collateral if written notification of demand therefor is received before
distribution of the proceeds is completed, provided, that, if requested by
Agent, the holder of a subordinate security interest shall furnish reasonable
proof of its interest, and unless it does so, Agent and Lenders need not address
their claims; and (iv) fourth, to the payment of any surplus then remaining to
Borrower, unless otherwise provided by law or directed by a court of competent
jurisdiction, provided that Borrower shall be liable for any deficiency if such
proceeds are insufficient to satisfy the Obligations or any of the other items
referred to in this section.
9.3 RIGHTS OF AGENT TO APPOINT RECEIVER
Without limiting and in addition to any other rights, options
and remedies Agent has under the Loan Documents, the UCC, at law or in equity,
upon the occurrence and continuation of an Event of Default, Agent shall have
the right to apply for and have a receiver appointed by a court of competent
jurisdiction in any action taken by Agent to enforce its and Lenders' rights and
remedies in order to manage, protect and preserve the Collateral and continue
the operation of the business of Borrower and to collect all revenues and
profits thereof and apply the same to the payment of all expenses
34
and other charges of such receivership including the compensation of the
receiver and to the payments as aforesaid until a sale or other disposition of
such Collateral shall be finally made and consummated.
9.4 RIGHTS AND REMEDIES NOT EXCLUSIVE
Agent shall have the right in its sole discretion to determine
which rights, Liens and/or remedies Agent or Lenders may at any time pursue,
relinquish, subordinate or modify, and such determination will not in any way
modify or affect any of Agent's or Lenders' rights, Liens or remedies under any
Loan Document, applicable law or equity. The enumeration of any rights and
remedies in any Loan Document is not intended to be exhaustive, and all rights
and remedies of Agent and Lenders described in any Loan Document are cumulative
and are not alternative to or exclusive of any other rights or remedies which
Agent or Lenders otherwise may have. The partial or complete exercise of any
right or remedy shall not preclude any other further exercise of such or any
other right or remedy.
X. WAIVERS AND JUDICIAL PROCEEDINGS
10.1 WAIVERS
(a) Except as expressly provided for herein, Borrower hereby
waives demand, presentment, protest, all defenses with respect to any and all
instruments and all notices and demands of any description, and the pleading of
any statute of limitations as a defense to any demand under any Loan Document.
Borrower hereby waives any and all defenses and counterclaims it may have or
could interpose in any action or procedure brought by Agent or any Lender to
obtain an order of court recognizing the assignment of, or Lien of Agent, for
the benefit of itself and Lenders, in and to, any Collateral.
(b) If it is at any time determined that any Borrower is
liable as a guarantor of any portion of the Obligations (and not as a co-obligor
or co-borrower), the liability of each Borrower hereunder shall be absolute and
unconditional irrespective of (a) the insolvency of, or the voluntary or
involuntary bankruptcy, assignment for the benefit of creditors, reorganization
or other similar proceedings affecting any Borrower or any of its assets, or (b)
any other circumstance or claim which might otherwise constitute a defense
available to, or a discharge of, any Person that is a Borrower in respect of the
Obligations. No payment made by any Borrower, or received or collected by the
Agent or any Lender from any Borrower by virtue of any action, proceeding or
set-off in reduction or in payment of the Obligations shall be deemed to modify,
release or otherwise affect the liability of any Borrower under the Loan
Documents, and each Borrower shall remain liable for the Obligations until all
Obligations are paid in full.
10.2 DELAY; NO WAIVER OF DEFAULTS
No course of action or dealing, renewal, release or extension
of any provision of any Loan Document, or single or partial exercise of any such
provision, or delay, failure or omission on Agent's or Lenders' part in
enforcing any such provision shall affect the liability of Borrower or Guarantor
or operate as a waiver of such provision or affect the liability of Borrower or
Guarantor or preclude any other or further exercise of such provision. No waiver
by any party to any Loan Document of any one or more defaults by any other party
in the performance of any of the provisions of any Loan Document shall operate
or be construed as a waiver of any future default, whether of a like or
different nature, and each such waiver shall be limited solely to the express
terms and provisions of such waiver. Notwithstanding any other provision of any
Loan Document, by completing the Closing under this Agreement and/or by making
Advances, neither Agent nor any Lender waives any breach of any representation
or warranty under any Loan Document, and all of Agent's and Lenders' claims and
rights resulting from any such breach or misrepresentation are specifically
reserved.
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10.3 JURY WAIVER
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION ARISING UNDER THE LOAN
DOCUMENTS OR IN ANY WAY CONNECTED WITH OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES WITH RESPECT TO THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREBY, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE. EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES
TO THE WAIVER OF THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY.
10.4 COOPERATION IN DISCOVERY AND LITIGATION
In any litigation, arbitration or other dispute resolution proceeding
relating to any Loan Document, Borrower waives any and all defenses, objections
and counterclaims it may have or could interpose with respect to (a) any of its
directors, officers, employees or agents being deemed to be employees or
managing agents of Borrower for purposes of all applicable law or court rules
regarding the production of witnesses by notice for testimony (whether in a
deposition, at trial or otherwise), (b) any discovery deposition of any of them
as if it were an evidence deposition, and/or (c) using all commercially
reasonable efforts to produce in any such dispute resolution proceeding, at the
time and in the manner requested by Agent, all Persons, documents (whether in
tangible, electronic or other form) and/or other things under its control and
relating to the dispute.
10.5 AMENDMENT AND WAIVERS
(a) Except as otherwise provided herein, no amendment,
modification, termination, or waiver of any provision of this Agreement or any
Loan Document, or consent to any departure by Borrower therefrom, shall in any
event be effective unless the same shall be in writing and signed by the
Requisite Lenders; provided, that no amendment, modification, termination, or
waiver shall, unless in writing and signed by each Lender directly affected
thereby, do any of the following: (i) increase the Commitment of any Lender
(which action shall be deemed to directly affect all Lenders); (ii) reduce the
principal of, rate of interest on or fees payable with respect to any Loan;
(iii) extend the scheduled due date or reduce the amount due on any scheduled
due date, of any installment of principal, interest, or fees payable with
respect to any Loan, or waive, forgive, extend, defer or postpone the payment
thereof; (iv) change the percentage of the Commitments, of the aggregate unpaid
principal amount of the Loans, or of Lenders which shall be required for Lenders
or any of them to take any action hereunder (which action shall be deemed to
directly affect all Lenders); (v) except as otherwise permitted herein or in the
other Loan Documents, release any Guaranty or release any material portion of
the Collateral (which action shall be deemed to directly affect all Lenders)
(provided, that consent to such release shall not be required if such release is
made after and during the continuance of an Event of Default in connection with
the sale or disposition of the Collateral by Agent); (vi) amend, modify or waive
this Section 10.5 or the definitions of the terms used in this Section 10.5
insofar as the definitions affect the substance of this Section 10.5 (which
action shall be deemed to directly affect all Lenders); (vii) consent to the
assignment or other transfer by Borrower or any other party (other than any
Lender) to any Loan Documents of any of their rights and obligations under any
Loan Document; or (viii) increase the Advance Rate or change the definition of
Eligible Billed Receivables, Eligible Unbilled Receivables or Borrowing Base;
and, provided, further, that no amendment, modification, termination or waiver
affecting the rights or duties of Agent under any Loan Document shall in any
event be effective, unless in writing and signed by Agent, in addition to
Lenders required herein above to take such action.
36
(b) Each amendment, modification, termination or waiver shall
be effective only in the specific instance and for the specific purpose for
which it was given. No amendment, modification, termination or waiver shall be
required for Agent to take additional Collateral pursuant to any Loan Document.
(c) Any amendment, modification, termination, waiver or
consent effected in accordance with this Section 10.5 shall be binding upon each
Lender and Borrower.
XI. EFFECTIVE DATE AND TERMINATION
11.1 EFFECTIVENESS AND TERMINATION
(a) Borrower may terminate the Term Loan in whole or in part
at any time, subject to Section 3.5(b), upon full performance and indefeasible
payment in full in cash of all Obligations relating to the Term Loan under the
Loan Documents.
(b) Subject to each Lender's right to terminate and cease
making Loans as set forth in this Agreement, this Agreement shall continue in
full force and effect until the full performance and indefeasible payment in
cash of all Obligations, unless terminated sooner as provided in this Section
11.1(b). Borrower may terminate the Revolving Facility or this Agreement at any
time, subject to Section 3.5(a), upon not less than thirty (30) calendar days'
prior notice to Agent and upon full performance and indefeasible payment in full
in cash of all Obligations under the Loan Documents. Upon any termination of the
Revolving Facility or this Agreement by Borrower, the obligation of Lenders to
make Advances under the Revolving Facility shall terminate. All of the
Obligations shall be immediately due and payable upon any such termination on
the termination date stated in any notice of termination (the "TERMINATION
DATE"); provided that, notwithstanding any other provision of any Loan Document,
the Termination Date shall be effective no earlier than the first Business Day
of the month following the expiration of the thirty (30) calendar days' prior
written notice period. Notwithstanding any other provision of any Loan Document,
no notice to terminate this Agreement shall affect any Lender's or Agent's
rights or any of the Obligations existing as of the effective date of such
termination, and the provisions of the Loan Documents shall continue to be fully
operative until the Obligations have been fully and indefeasibly paid in cash in
full. The Liens granted to Agent, for the benefit of itself and Lenders, under
the Security Documents and the financing statements filed pursuant thereto and
the rights and powers of Agent and Lenders shall continue in full force and
effect notwithstanding the fact that Borrower's borrowings hereunder may from
time to time be in a zero or credit position until all of the Obligations have
been indefeasibly paid in full in cash.
11.2 SURVIVAL
All obligations, covenants, agreements, representations,
warranties, waivers and indemnities made by Borrower in any Loan Document shall
survive the execution and delivery of the Loan Documents, the Closing, the
making of the Loans and any termination of this Agreement until all Obligations
are fully performed and indefeasibly paid in full in cash. The obligations and
provisions of Sections 3.6, 10.1, 10.3, 11.1, 11.2, 12.4 and 12.7 and Article
XI-A shall survive termination of the Loan Documents and any payment, in full of
the Obligations.
37
XI-A. AGENCY PROVISIONS
11-A.1 AGENT
(a) Appointment. Each Lender hereby designates and appoints
CapitalSource as the administrative agent and the collateral agent, under this
Agreement and the other Loan Documents, and each Lender hereby irrevocably
authorizes CapitalSource, as the administrative agent and the collateral agent
for such Lender, to take such action or to refrain from taking such action on
its behalf under the provisions of this Agreement and the other Loan Documents
and to exercise such powers and perform such duties as are delegated to the
Agent by the terms of this Agreement and the other Loan Documents, together with
such other powers as are reasonably incidental thereto. Agent agrees to act as
such on the conditions contained in this Article. The provisions of this Article
are solely for the benefit of Agent and Lenders, and Borrower shall have no
rights as a third-party beneficiary of any of the provisions hereof. Agent may
perform any of its duties hereunder, or under the Loan Documents, by or through
its agents or employees.
(b) Nature of Duties. In performing its functions and duties
under this Agreement, Agent is acting solely on behalf of Lenders and its duties
are administrative in nature and it does not assume and shall not be deemed to
have assumed any obligation toward or relationship of agency or trust with or
for Lenders, other than as expressly set forth herein and in the other Loan
Documents, or Borrower. Agent shall have no duties, obligations or
responsibilities except those expressly set forth in this Agreement or in the
other Loan Documents. Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender. Except for information,
notices, reports, and other documents expressly required to be furnished to
Lenders by the Agent hereunder or given to the Agent for the account of or with
copies for Lenders, each Lender shall make its own independent investigation of
the financial condition and affairs of Borrower in connection with the extension
of credit hereunder and shall make its own appraisal of the creditworthiness of
Borrower, and Agent shall have no duty or responsibility, either initially or on
a continuing basis, to provide any Lender with any credit or other information
with respect thereto, whether coming into its possession before the Closing Date
or at any time or times thereafter. If Agent seeks the consent or approval of
any Lenders to the taking or refraining from taking any action hereunder, then
Agent shall send prior written notice thereof to each Lender. Agent shall
promptly notify (in writing) each Lender any time that the applicable percentage
of Lenders have instructed Agent to act or refrain from acting pursuant hereto.
(c) Rights, Exculpation, Etc. Neither Agent nor any of its
officers, directors, managers, members, equity owners, employees or agents shall
be liable to any Lender for any action lawfully taken or omitted by them
hereunder or under any of the other Loan Documents, or in connection herewith or
therewith. Notwithstanding the foregoing, Agent shall be obligated on the terms
set forth herein for performance of its express duties and obligations
hereunder, and Agent shall be liable with respect to its own gross negligence or
willful misconduct. Agent shall not be liable for any apportionment or
distribution of payments made by it in good faith, and if any such apportionment
or distribution is subsequently determined to have been made in error, the sole
recourse of any Lender to whom payment was due but not made shall be to recover
from other Lenders any payment in excess of the amount to which they are
determined to be entitled (and such other Lenders hereby agree to return to such
Lender any such erroneous payments received by them). In performing its
functions and duties hereunder, Agent shall exercise the same care which it
would in dealing with loans for its own account. Agent shall not be responsible
to any Lender for any recitals, statements, representations or warranties made
by Borrower herein or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility, or sufficiency of this Agreement or any of the
other Loan Documents or the transactions contemplated thereby, or for the
financial condition of Borrower. Agent shall not be required to make any inquiry
concerning either the performance or observance of any of the terms, provisions,
or
38
conditions of this Agreement or any of the Loan Documents or the financial
condition of Borrower, or the existence or possible existence of any Default or
Event of Default. Agent may at any time request instructions from Lenders with
respect to any actions or approvals which by the terms of this Agreement or of
any of the other Loan Documents Agent is permitted or required to take or to
grant, and Agent shall be absolutely entitled to refrain from taking any action
or to withhold any approval and shall not be under any liability whatsoever to
any Person for refraining from taking any action or withholding any approval
under any of the Loan Documents until it shall have received such instructions
from the applicable percentage of Lenders. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against Agent as a result of
Agent acting or refraining from acting under this Agreement or any of the other
Loan Documents in accordance with the instructions of the applicable percentage
of Lenders and notwithstanding the instructions of Lenders, Agent shall have no
obligation to take any action if it, in good faith believes that such action
exposes Agent or any of its officers, directors, managers, members, equity
owners, employees or agents to any personal liability unless Agent receives an
indemnification reasonably satisfactory to it from Lenders with respect to such
action.
(d) Reliance. Agent shall be entitled to rely upon any written
notices, statements, certificates, orders or other documents or any telephone
message or other communication (including any writing, telex, telecopy or
telegram) believed by it in good faith to be genuine and correct and to have
been signed, sent or made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the other Loan Documents and its duties
hereunder or thereunder, upon advice of legal counsel, independent accountants,
and other experts selected by Agent in its sole discretion.
(e) Indemnification. Each Lender, severally and not jointly,
agrees to reimburse and indemnify Agent and its officers, directors, managers,
members, equity owners, employees and agents (to the extent not reimbursed by
Borrower or the Guarantors), ratably according to their respective Pro Rata
Share in effect on the date on which indemnification is sought under this
subsection of the total outstanding obligations (or, if indemnification is
sought after the date upon which the Commitments shall have terminated and the
Loans shall have been paid in full, ratably in accordance with their Pro Rata
Share immediately prior to such date of the total outstanding obligations), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, advances, or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by, or asserted
against Agent or any of its officers, directors, managers, members, equity
owners, employees or agents in any way relating to or arising out of this
Agreement or any of the other Loan Documents or any action taken or omitted by
Agent under this Agreement or any of the other Loan Documents; provided,
however, that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, advances or disbursements resulting from Agent's gross
negligence or willful misconduct. The obligations of Lenders under this Article
XI-A shall survive the payment in full of the Obligations and the termination of
this Agreement.
(f) CapitalSource Individually. With respect to the Loans made
by it, and the Notes issued to it, CapitalSource shall have and may exercise the
same rights and powers hereunder and under the other Loan Documents and is
subject to the same obligations and liabilities as and to the extent set forth
herein and the other Loan Documents as any other Lender. The terms "Lenders" or
"Requisite Lenders" or any similar terms shall, unless the context clearly
otherwise indicates, include CapitalSource in its individual capacity as a
Lender or one of the Requisite Lenders. CapitalSource may lend money to, and
generally engage in any kind of banking, trust or other business with Borrower
or any subsidiary of Borrower as if it were not acting as Agent pursuant hereto.
39
(g) Successor Agent.
(i) Resignation. Agent may resign from the performance of
all its functions and duties hereunder at any time by giving at least thirty
(30) days' prior written notice to Borrower and Lenders. Such resignation shall
take effect upon the acceptance by a successor Agent of appointment pursuant to
clause (ii) below or as otherwise provided below.
(ii) Appointment of Successor. Upon any such notice of
resignation pursuant to clause (g)(i) above, Requisite Lenders shall appoint a
successor Agent. If a successor Agent shall not have been so appointed within
said thirty (30) day period, the retiring Agent, upon notice to Borrower, may,
on behalf of Lenders, then appoint a successor Agent who shall serve as Agent
until such time, as Requisite Lenders, appoint a successor Agent as provided
above. If no successor Agent has been appointed pursuant to the foregoing within
said thirty (30) day period, the resignation shall become effective and
Requisite Lenders shall thereafter perform all the duties of Agent hereunder,
until such time, if any, as Requisite Lenders appoint a successor Agent as
provided above.
(iii) Successor Agent. Upon the acceptance of any
appointment as Agent under the Loan Documents by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and, upon the
earlier of such acceptance or the effective date of the retiring Agent's
resignation, the retiring Agent shall be discharged from its duties and
obligations under the Loan Documents, except that any indemnity rights or other
rights in favor of such retiring Agent shall continue. After any retiring
Agent's resignation as Agent under the Loan Documents, the provisions of this
Article XI-A shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent under the Loan Documents.
(h) Collateral Matters.
(i) Collateral. Each Lender agrees that any action taken
by the Agent or the Requisite Lenders (or, where required by the express terms
of this Agreement, a greater proportion of Lenders) in accordance with the
provisions of this Agreement or of the other Loan Documents relating to the
Collateral, and the exercise by the Agent or the Requisite Lenders (or, where so
required, such greater proportion) of the powers set forth herein or therein,
together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of Lenders and the Agent. Without limiting the
generality of the foregoing, the Agent shall have the sole and exclusive right
and authority to (i) act as the disbursing and collecting agent for Lenders with
respect to all payments and collections arising in connection herewith and with
the Loan Documents in connection with the Collateral; (ii) execute and deliver
each Loan Document relating to the Collateral and accept delivery of each such
agreement delivered by Borrower or any of its Subsidiaries; (iii) act as
collateral agent for Lenders for purposes of the perfection of all security
interests and Liens created by such agreements and all other purposes stated
therein; (iv) manage, supervise and otherwise deal with the Collateral; (v) take
such action as is necessary or desirable to maintain the perfection and priority
of the security interests and Liens created or purported to be created by the
Loan Documents relating to the Collateral, and (vi) except as may be otherwise
specifically restricted by the terms hereof or of any other Loan Document,
exercise all remedies given to such Agent and Lenders with respect to the
Collateral under the Loan Documents relating thereto, applicable law or
otherwise.
(ii) Release of Collateral. Lenders hereby irrevocably
authorize Agent, at its option and in its discretion, to release any Lien
granted to or held by Agent for the benefit of Lenders upon any property covered
by this Agreement or the Loan Documents (A) upon termination of this Agreement
and payment and satisfaction in full of all Obligations; or (B) constituting
property being sold or disposed of outside of Borrowers' ordinary course of
business if Borrower certifies to Agent that the
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sale or disposition is made in compliance with the provisions of this Agreement
(and Agent may rely in good faith conclusively on any such certificate, without
further inquiry).
(iii) Confirmation of Authority; Execution of Releases.
Without in any manner limiting Agent's authority to act without any specific or
further authorization or consent by Lenders (as set forth in Section
11-A.1(h)(i) and (ii)), each Lender agrees to confirm in writing, upon request
by Borrower, the authority to release any property covered by this Agreement or
the Loan Documents conferred upon Agent under Section 11-A.1(h)(ii). So long as
no Event of Default is then continuing, upon receipt by Agent of confirmation
from the Requisite Lenders, of its authority to release any particular item or
types of property covered by this Agreement or the Loan Documents, and upon at
least five (5) Business Days prior written request by Borrower, Agent shall (and
is hereby irrevocably authorized by Lenders to) execute such documents as may be
necessary to evidence the release of the Liens granted to Agent for the benefit
of Lenders herein or pursuant hereto upon such Collateral; provided, however,
that (A) Agent shall not be required to execute any such document on terms
which, in Agent's opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (B) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens upon (or obligations of
Borrower or any subsidiary of Borrower, in respect of), all interests retained
by Borrower or any subsidiary of Borrower, including, without limitation, the
proceeds of any sale, all of which shall continue to constitute part of the
property covered by this Agreement or the Loan Documents.
(iv) Absence of Duty. Agent shall have no obligation
whatsoever to any Lender or any other Person to assure that the property covered
by this Agreement or the Loan Documents exists or is owned by Borrower or is
cared for, protected or insured or has been encumbered or that the Liens granted
to Agent on behalf of Lenders herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure, or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
Agent in this Section 11-A.1(h) or in any of the Loan Documents, it being
understood and agreed that in respect of the property covered by this Agreement
or the Loan Documents or any act, omission, or event related thereto, Agent may
act in any manner it may deem appropriate, in its discretion, given Agent's own
interest in property covered by this Agreement or the Loan Documents as one of
Lenders and that Agent shall have no duty or liability whatsoever to any of the
other Lenders; provided, that Agent shall exercise the same care which it would
in dealing with loans for its own account. Notwithstanding the foregoing, Agent
shall be liable with respect to its own gross negligence or willful misconduct.
(i) Agency for Perfection. Each Lender hereby appoints Agent
as agent for the purpose of perfecting Lenders' security interest in Collateral
which, in accordance with Article 9 of the UCC in any applicable jurisdiction,
can be perfected only by possession. Should any Lender (other than Agent) obtain
possession of any such Collateral, such Lender shall notify Agent thereof, and,
promptly upon Agent's request therefor, shall deliver such Collateral to Agent
or in accordance with Agent's instructions.
(j) Exercise of Remedies. Except as set forth in Section
11-A.3, each Lender agrees that it will not have any right individually to
enforce or seek to enforce this Agreement or any Loan Document or to realize
upon any collateral security for the Loans, it being understood and agreed that
such rights and remedies may be exercised only by Agent.
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11-A.2 CONSENTS
In the event Agent requests the consent of a Lender in a
situation where such Lender's consent would be required and such consent is
denied, then Agent may, at its option, require such Lender to assign its
interest in the Loans to Agent for a price equal to the then outstanding
principal amount thereof plus accrued and unpaid interest and fees due such
Lender, which interest and fees will be paid when collected from Borrower. In
the event that Agent elects to require any Lender to assign its interest to
Agent pursuant to this Section 11-A.2, Agent will so notify such Lender in
writing within forty-five (45) days following such Lender's denial, and such
Lender will assign its interest to Agent no later than five (5) days following
receipt of such notice.
11-A.3 SET OFF AND SHARING OF PAYMENTS
In addition to any rights and remedies now or hereafter
granted under applicable law and not by way of limitation of any such rights,
upon the occurrence and during the continuance of any Event of Default, each
Lender is hereby authorized by Borrower at any time or from time to time, to the
fullest extent permitted by law, with reasonably prompt subsequent notice to
Borrower or to any other Person (any prior or contemporaneous notice being
hereby expressly waived) to set off and to appropriate and to apply any and all
(a) balances (general or special, time or demand, provisional or final) held by
such Lender or such holder at any of its offices for the account of Borrower or
any of its Subsidiaries (regardless of whether such balances are then due to
Borrower or its Subsidiaries), and (b) other property at any time held or owing
by such Lender or such holder to or for the credit or for the account of
Borrower or any of its Subsidiaries, against and on account of any of the
Obligations which are not paid when due; except that no Lender or any such
holder shall exercise any such right without the prior written notice to Agent;
provided, however, that the failure to give notice to Borrower or to any other
Person shall not affect the validity of such set-off and application. Any Lender
which has exercised its right to set off or otherwise has received any payment
on account of the Obligations shall, to the extent the amount of any such set
off or payment exceeds its Pro Rata Share of payments obtained by all of the
Lenders on account of such Obligations, purchase for cash participations in each
such other Lender's or holder's Pro Rata Share of Obligations as would be
necessary to cause such Lender to share such excess with each other Lender or
holder in accordance with their respective Pro Rata Shares; provided, however,
that if all or any portion of such excess payment or benefits is thereafter
recovered from such purchasing Lender, such purchase shall be rescinded, and the
purchase price and benefits returned, to the extent of such recovery. Borrower
agrees, to the fullest extent permitted by law, that (a) any Lender or holder
may exercise its right to set off with respect to amounts in excess of its Pro
Rata Share of the Obligations and may sell participations in such excess to
other Lenders and holders, and (b) any Lender or holder so purchasing a
participation in the Loans made or other Obligations held by other Lenders or
holders may exercise all rights of set-off, bankers' lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender or
holder were a direct holder of Loans and other Obligations in the amount of such
participation.
11-A.4 DISBURSEMENT OF FUNDS
Agent may, on behalf of Lenders, disburse funds to Borrower
for Advances requested. Each Lender shall reimburse Agent on demand for its Pro
Rata Share of all funds disbursed on its behalf by Agent, or if Agent so
requests, each Lender will remit to Agent its Pro Rata Share of any Advance
before Agent disburses same to Borrower. If Agent elects to require that funds
be made available prior to disbursement to Borrower, Agent shall advise each
Lender by telephone, telex or telecopy of the amount of such Lender's Pro Rata
Share of such requested Advance no later than one (1) Business Day prior to
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the funding date applicable thereto, and each such Lender shall pay Agent such
Lender's Pro Rata Share of such requested Loan, in same day funds, by wire
transfer to Agent's account not later than 3:00 p.m. (Eastern Time) on the day
prior to the funding date. If any Lender fails to pay the amount of its Pro Rata
Share forthwith upon Agent's demand, Agent shall promptly notify Borrower, and
Borrower shall immediately repay such amount to Agent. Any repayment required
pursuant to this Section 11-A.4 shall be without premium or penalty. Nothing in
this Section 11-A.4 or elsewhere in this Agreement or the other Loan Documents,
including without limitation the provisions of Section 11-A.5, shall be deemed
to require Agent to advance funds on behalf of any Lender or to relieve any
Lender from its obligation to fulfill its commitments hereunder or to prejudice
any rights that Agent or Borrower may have against any Lender as a result of any
default by such Lender hereunder.
11-A.5 SETTLEMENTS; PAYMENTS AND INFORMATION
(a) Advances and Payments; Interest and Fee Payments.
(i) The amount outstanding pursuant to Advances may
fluctuate from day to day through Agent's disbursement of funds to, and receipt
of funds from, Borrower. In order to minimize the frequency of transfers of
funds between Agent and each Lender notwithstanding terms to the contrary set
forth in Section 11-A.4, Advances and repayments may be settled according to the
procedures described in Sections 11-A.5(a)(ii) and 11-A.5(a)(iii) of this
Agreement. Payments of principal, interest and fees in respect of the Loans will
be settled, in accordance with each Lender's Pro Rata Share on the first
Business Day after such payments are received. Notwithstanding these procedures,
each Lender's obligation to fund its Pro Rata Share of any advances made by
Agent to Borrower will commence on the date such advances are made by Agent.
Such payments will be made by such Lender without set-off, counterclaim or
reduction of any kind.
(ii) Once each week, or more frequently (including daily),
if Agent so elects (each such day being a "SETTLEMENT DATE"), Agent will advise
each Lender by 1 p.m. (Eastern Time) by telephone, telex, or telecopy of the
amount of each such Lender's Pro Rata Share of the outstanding Advances. In the
event payments are necessary to adjust the amount of such Lender's share of the
Advances to such Lender's Pro Rata Share of the Advances, the party from which
such payment is due will pay the other, in same day funds, by wire transfer to
the other's account not later than 3:00 p.m. (Eastern Time) on the Business Day
following the Settlement Date.
(iii) On the first Business Day of each month ("INTEREST
SETTLEMENT DATE"), Agent will advise each Lender by telephone, telefax or
telecopy of the amount of interest and fees charged to and collected from
Borrower for the proceeding month in respect of the Advances. Provided that such
Lender has made all payments required to be made by it under this Agreement,
Agent will pay to such Lender, by wire transfer to such Lender's account (as
specified by such Lender on Schedule 1 of this Agreement as amended by such
Lender from time to time after the date hereof pursuant to the notice provisions
contained herein or in the applicable Lender Addition Agreement) not later than
3 p.m. (Eastern Time) on the next Business Day following the Interest Settlement
Date such Lender's share of such interest and fees.
(b) Availability of Lenders' Pro Rata Share.
(i) Unless Agent has been notified by a Lender prior to
any proposed funding date of such Lender's intention not to fund its Pro Rata
Share of the Advance amount requested by Borrower, Agent may assume that such
Lender will make such amount available to Agent on the proposed funding date or
the Business Day following the next Settlement Date, as applicable. If such
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amount is not, in fact, made available to Agent by such Lender when due, Agent
will be entitled to recover such amount on demand from such Lender without
set-off, counterclaim, or deduction of any kind.
(ii) Nothing contained in this Section 11-A.5(b) will be
deemed to relieve a Lender of its obligation to fulfill its commitments or to
prejudice any rights Agent or Borrower may have against such Lender as a result
of any default by such Lender under this Agreement.
(c) Return of Payments.
(i) If Agent pays an amount to a Lender under this
Agreement in the belief or expectation that a related payment has been or will
be received by Agent from Borrower and such related payment is not received by
Agent, then Agent will be entitled to recover such amount from such Lender
without set-off, counterclaim or deduction of any kind.
(ii) If Agent determines at any time that any amount
received by Agent under this Agreement must be returned to Borrower or paid to
any other person pursuant to any solvency law or otherwise, then,
notwithstanding any other term or condition of this Agreement, Agent will not be
required to distribute any portion thereof to any Lender. In addition, each
Lender will repay to Agent on demand any portion of such amount that Agent has
distributed to such Lender, together with interest at such rate, if any, as
Agent is required to pay to Borrower or such other Person, without set-off,
counterclaim or deduction of any kind.
11-A.6 DISSEMINATION OF INFORMATION
The Agent will distribute promptly to each Lender copies of
all notices, schedules, reports, projections, financial statements, agreements
and other material and other information, including, but not limited to,
Borrower's requests for Advances and financial and reporting information
received from Borrower or its Subsidiaries or generated by a third party (and
excluding only internal information generated by CapitalSource for its own use
as a Lender or as Agent), as provided for in this Agreement and the other Loan
Documents as received by the Agent. The Agent shall promptly give notice to
Lenders of the receipt or sending of any notice, schedule, report, projection,
financial statement or other document or information pursuant to this Agreement
or any of the other Loan Documents and shall promptly forward a copy thereof to
each Lender. Agent shall request information from Borrower or its Subsidiaries
as Lenders may request from time to time. Agent shall not be liable to Lenders
for any failure to comply with its obligations under this Section 11-A.6, except
to the extent that such failure is attributable to Agent's gross negligence or
willful misconduct.
XI-B. BORROWING AGENCY
11-B.1 BORROWING AGENCY PROVISIONS
(a) Each Borrower hereby irrevocably designates ASG to be its
attorney and agent and in such capacity to borrow, sign and endorse notes, and
execute and deliver all instruments, documents, writings and further assurances
now or hereafter required hereunder, on behalf of such Borrower or Borrowers,
and hereby authorizes Agent to pay over or credit all loan proceeds hereunder in
accordance with the request of ASG.
(b) The handling of this credit facility as a co-borrowing
facility and the designation by each Borrower of ASG as its borrowing agent in
the manner set forth in this Agreement is solely as an
44
accommodation to Borrowers and at their request. None of Agent, any L/C Bank or
any Lender shall incur liability to Borrowers as a result thereof. To induce
Agent and Lenders to do so and in consideration thereof, each Borrower hereby
indemnifies Agent, each L/C Bank and each Lender and holds Agent, each L/C Bank
and each Lender harmless from and against any and all liabilities, expenses,
losses, damages and claims of damage or injury asserted against Agent, any L/C
Bank or any Lender by any Person arising from or incurred by reason of the
handling of the financing arrangements of Borrowers as provided herein, reliance
by Agent or any Lender on any request or instruction from ASG or any other
action taken by Agent or any Lender with respect to this Section 11-B except due
to willful misconduct or gross negligence by the indemnified party.
(c) All Obligations shall be joint and several, and each
Borrower shall make payment upon the maturity of the Obligations by acceleration
or otherwise, and such obligation and liability on the part of each Borrower
shall in no way be affected by any extensions, renewals and forbearance granted
by Agent or any Lender to any Borrower, failure of Agent or any Lender to give
any Borrower notice of borrowing or any other notice, any failure of Agent or
any Lender to pursue or preserve its rights against any Borrower, the release by
Agent or any Lender of any Collateral now or thereafter acquired from any
Borrower, and such agreement by each Borrower to pay upon any notice issued
pursuant thereto is unconditional and unaffected by prior recourse by Agent or
any Lender to the other Borrowers or any Collateral for such Borrower's
Obligations or the lack thereof.
11-B.2 WAIVER OF SUBROGATION
Each Borrower expressly waives any and all rights of
subrogation, reimbursement, indemnity, exoneration, contribution of any other
claim which such Borrower may now or hereafter have against the other Borrowers
or other Person directly or contingently liable for the Obligations hereunder,
or against or with respect to the other Borrowers' property (including, without
limitation, any property which is Collateral for the Obligations), arising from
the existence or performance of this Agreement, until termination of this
Agreement and repayment in full of the Obligations.
XII. MISCELLANEOUS
12.1 GOVERNING LAW; JURISDICTION; SERVICE OF PROCESS; VENUE
The Loan Documents shall be governed by and construed in
accordance with the internal laws of the State of Maryland without giving effect
to its choice of law provisions. Any judicial proceeding against Borrower with
respect to the Obligations, any Loan Document or any related agreement may be
brought in any federal or state court of competent jurisdiction located in the
State of Maryland. By execution and delivery of each Loan Document to which it
is a party, Borrower (i) accepts the non-exclusive jurisdiction of the aforesaid
courts and irrevocably agrees to be bound by any judgment rendered thereby, (ii)
waives personal service of process, (iii) agrees that service of process upon it
may be made by certified or registered mail, return receipt requested, pursuant
to Section 12.5 hereof, (iv) waives any objection to jurisdiction and venue of
any action instituted hereunder and agrees not to assert any defense based on
lack of jurisdiction, venue or convenience and (v) agrees that this Loan was
made in Maryland, that Lender has accepted in Maryland the Loan Documents
executed by Borrower and has disbursed Advances and Loans under the Loan
Documents in Maryland. Nothing shall affect the right of Agent or any Lender to
serve process in any manner permitted by law or shall limit the right of Agent
or any Lender to bring proceedings against Borrower in the courts of any other
jurisdiction having jurisdiction. Any judicial proceedings against Agent or any
Lender involving, directly or indirectly, the Obligations, any Loan Document or
any related agreement shall be brought only in a federal or state court located
in the State of Maryland. All parties acknowledge that they participated in the
negotiation and drafting of this Agreement and that, accordingly, no party shall
move or petition a court construing this Agreement to construe it more
stringently against one party than against any other.
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12.2 SUCCESSORS AND ASSIGNS; ASSIGNMENTS AND PARTICIPATION; NEW LENDERS
(a) Each Lender may at any time assign all or a portion of its
rights and delegate all or a portion of its obligations under this Agreement and
the other Loan Documents (including all its rights and obligations with respect
to the Loans) to one or more Persons (a "TRANSFEREE"); provided, that if
CapitalSource Finance LLC, in its capacity as Agent or Lender ("CAPITALSOURCE")
is the assignor of such rights and obligations, then such Transferee shall not
be known to CapitalSource to be principally engaged in the provision of medical
services to inmates at correctional facilities (and provided, further, that such
restriction is binding upon CapitalSource only and is not binding on any
successor Agent or Lender), and such assigning Lender shall execute and deliver
to Agent for acceptance and recording in the Register, a Lender Addition
Agreement, satisfactory to Agent. Agent shall give Borrower notice if Agent
sells or assigns its rights and obligations hereunder. Upon such execution,
delivery, acceptance and recording, from and after the effective date determined
pursuant to such Lender Addition Agreement, (i) the Transferee thereunder shall
be a party hereto and, to the extent provided in such Lender Addition Agreement,
shall have the same rights, benefits and obligations as it would if it were a
Lender hereunder, and (ii) the assigning Lender shall be relieved of its
obligations hereunder with respect to its Commitment or assigned portion
thereof, as the case may be, to the extent that such obligations shall have been
expressly assumed by the Transferee pursuant to such Lender Addition Agreement.
Borrower hereby acknowledges and agrees that any assignment will give rise to a
direct obligation of Borrower to the Transferee and that the Transferee shall be
considered to be a "Lender" hereunder. Borrower may not sell, assign or transfer
any interest in this Agreement, any of the other Loan Documents, or any of the
Obligations, or any portion thereof, including Borrower's rights, title,
interests, remedies, powers, and duties hereunder or thereunder.
(b) Each Lender may at any time sell participations in all or
any part of its rights and obligations under this Agreement and the other Loan
Documents (including all its rights and obligations with respect to the Loans)
to one or more Persons (a "PARTICIPANT"), provided that if Agent is the seller
of any such participation, then such Participant shall not be known to Agent to
be principally engaged in the provision of medical services to inmates at
correctional facilities (and provided, further, that such restriction is binding
upon CapitalSource Finance LLC as Agent only and is not binding on any successor
Agent). In the event of any such sale by a Lender of a participation to a
Participant, such Lender's obligations under this Agreement to the other parties
to this Agreement shall remain unchanged, such Lender shall remain solely
responsible for the performance thereof, such Lender shall remain the holder of
any such Loan (and any Note evidencing such Loan) for all purposes under this
Agreement and the other Loan Documents and the Borrower and the Agent shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Loan
Documents. Any agreement pursuant to which any Lender shall sell any such
participation shall provide that such Lender shall retain the sole right and
responsibility to exercise such Lender's rights and enforce each of the
Borrower's obligations hereunder, including the right to consent to any
amendment, supplement, modification or waiver of any provision of this Agreement
or any of the other Loan Documents; provided, that such participation agreement
may provide that such Lender will not agree, without the consent of the
Participant, to any amendment, supplement, modification or waiver of: (i) any
reduction in the principal amount, interest rate or fees payable with respect to
any Loan in which such holder participates; (ii) any extension of the
termination date of this Agreement or the date fixed for any payment of
principal, interest or fees payable with respect to any Loan in which such
holder participates; and (iii) any release of all or substantially all of the
Collateral (other than in accordance with the terms of this Agreement or the
Loan Documents). Borrower hereby acknowledges and agrees that the Participant
under each participation shall, solely for the purposes of Sections 11-A.5 and
12.4 of this Agreement be considered to be a "Lender" hereunder.
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(c) The Agent, on behalf of the Borrower, shall maintain at
its address referred to in Section 12.5 a copy of each Lender Addition Agreement
delivered to it and a register (the "REGISTER") for the recordation of the names
and addresses of the Lenders and the Commitment of, and the principal amount of
the Loans owing to, and the Notes evidencing such Loans owned by, each Lender
from time to time. Notwithstanding anything in this Agreement to the contrary,
each of the Borrower, the Agent and the Lenders shall treat each Person whose
name is recorded in the Register as the owner of the Loan, the Notes and the
Commitment recorded therein for all purposes of this Agreement. The Register
shall be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(d) Notwithstanding anything in this Agreement to the
contrary, no assignment under Subsection 12.2(a) of any rights or obligations
under or in respect of the Loans or the Notes evidencing such Loans shall be
effective unless and until the Agent shall have recorded the assignment pursuant
to Subsection 12.2(c). Upon its receipt of a Lender Addition Agreement executed
by an assigning Lender and a Transferee, the Agent shall (i) promptly accept
such Lender Addition Agreement and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register and
give prompt notice of such acceptance and recordation to the Lenders and the
Borrower. On or prior to such effective date, the assigning Lender shall
surrender any outstanding Notes held by it all or a portion of which are being
assigned, and the Borrower, at its own expense, shall, upon the request of the
Agent by the assigning Lender or the Transferee, as applicable, execute and
deliver to the Agent new Notes to reflect the interest held by the assigning
Lender and its Transferee.
(e) Except as otherwise provided in this Section 12.2 no
Lender shall, as between Borrower and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participation in, all or any part of the Loans or
other Obligations owed to such Lender. Each Lender may furnish any information
concerning Borrower and its Subsidiaries in the possession of that Lender from
time to time to assignees and participants (including prospective assignees and
participants); provided, however, that prior to the disclosure by a Lender of
information known to the Lender to be confidential and proprietary information
of Borrower, Lender shall inform Borrower of such pending disclosure and shall
afford Borrower, to the extent possible under the circumstances, the opportunity
to obtain a confidentiality agreement from the Person to whom such disclosure is
proposed to be made.
(f) Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security interest in all or any
portion of its rights under this Agreement, including, without limitation, the
Loans owing to it and the Notes held by it.
(g) Borrower agrees to use its commercially reasonable best
efforts to assist any Lender (at Lender's expense) in assigning or selling
participations in all or any part of any Loans made by such Lender to another
Person identified by such Lender.
(h) Borrower acknowledges and agrees that each Lender at any
time and from time to time may divide and restate any Note.
(i) Notwithstanding anything in this Agreement to the
contrary, (i) CapitalSource and its Affiliates shall not be required to execute
and deliver a Lender Addition Agreement in connection with any transaction
involving its Affiliates or lenders, (ii) no lender to or funding source of
CapitalSource or its Affiliates shall be considered a Transferee and (iii) there
shall be no limitation or restriction on CapitalSource's ability to assign or
otherwise transfer any Loan Document to any such Affiliate or lender; provided,
however, CapitalSource shall continue to be liable as a "Lender" under the
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Loan Documents unless such Affiliate or lender executes a Lender Addition
Agreement and thereby becomes a "Lender."
12.3 APPLICATION OF PAYMENTS
To the extent that any payment made or received with respect
to the Obligations is subsequently invalidated, determined to be fraudulent or
preferential, set aside or required to be repaid to a trustee, debtor in
possession, receiver, custodian or any other Person under any Debtor Relief Law,
common law or equitable cause or any other law, then the Obligations intended to
be satisfied by such payment shall be revived and shall continue as if such
payment had not been received by Agent or any Lender. Any payments with respect
to the Obligations received shall be credited and applied in such manner and
order as Agent shall decide in its sole discretion.
12.4 INDEMNITY
Borrowers jointly and severally shall indemnify Agent and each
Lender, their Affiliates and their respective managers, members, officers,
employees, Affiliates, agents, representatives, successors, assigns, accountants
and attorneys (collectively, the "INDEMNIFIED PERSONS") from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, reasonable fees and disbursements of counsel and
reasonable in-house documentation and diligence fees and reasonable legal
expenses) which may be imposed on, incurred by or asserted against any
Indemnified Person with respect to or arising out of, or in any litigation,
proceeding or investigation instituted or conducted by any Person with respect
to any aspect of, or any transaction contemplated by or referred to in, or any
matter related to, any Loan Document or any agreement, document or transaction
contemplated thereby, whether or not such Indemnified Person is a party thereto,
except to the extent that any of the foregoing arises out of the gross
negligence or willful misconduct of such Indemnified Person. If any Indemnified
Person uses in-house counsel for any purpose for which Borrower is responsible
to pay or indemnify, Borrower expressly agrees that its indemnification
obligations include reasonable charges for such work commensurate with the fees
that would otherwise be charged by outside legal counsel selected by such
Indemnified Person in its sole discretion for the work performed; provided,
however, that Borrower shall be provided with a copy of such records of the
hours spent in connection with such work as Lender maintains in its ordinary
course of business. Agent agrees to give Borrower reasonable notice of any event
of which Agent becomes aware for which indemnification may be required under
this Section 12.4, and Agent may elect (but is not obligated) to direct the
defense thereof; provided, that the selection of counsel shall be subject to
Borrower's consent, which consent shall not be unreasonably withheld or delayed.
Any Indemnified Person may, in its reasonable discretion, take such actions as
it deems necessary and appropriate to investigate, defend or settle any event or
take other remedial or corrective actions with respect thereto as may be
necessary for the protection of such Indemnified Person or the Collateral.
Notwithstanding the foregoing, if any insurer agrees to undertake the defense of
an event (an "INSURED EVENT"), Agent agrees not to exercise its right to select
counsel to defend the event if that would cause Borrower's insurer to deny
coverage; provided, however, that Agent reserves the right to retain counsel to
represent any Indemnified Person with respect to an Insured Event at its sole
cost and expense. To the extent that Agent or any Lender obtains recovery from a
third party other than an Indemnified Person of any of the amounts that Borrower
has paid to Agent or any Lender pursuant to the indemnity set forth in this
Section 12.4, then Agent and/or Lender shall promptly pay to Borrower the amount
of such recovery. Without limiting any of the foregoing, Borrowers jointly and
severally indemnify the Indemnified Parties for all claims for brokerage fees or
commissions (other than claims of a broker with whom such Indemnified Party has
directly contracted in writing) which may be made in connection with respect to
any aspect of, or any transaction contemplated by or referred to in, or any
matter related to, any Loan Document or any agreement, document or transaction
contemplated thereby.
48
12.5 NOTICE
Any notice or request under any Loan Document shall be given
to any party to this Agreement at such party's address set forth beneath its
signature on the signature page to this Agreement, or at such other address as
such party may hereafter specify in a notice given in the manner required under
this Section 12.5. Any notice or request hereunder shall be given only by, and
shall be deemed to have been received upon (each, a "RECEIPT"): (i) registered
or certified mail, return receipt requested, on the date on which such notice
was received as indicated in such return receipt, (ii) delivery by a nationally
recognized overnight courier, one (1) Business Day after deposit with such
courier (costs prepaid), or (iii) facsimile or electronic transmission, in each
case upon telephone or further electronic communication from the recipient
acknowledging receipt (whether automatic or manual from recipient), as
applicable.
12.6 SEVERABILITY; CAPTIONS; COUNTERPARTS; FACSIMILE SIGNATURES
If any provision of any Loan Document is adjudicated to be
invalid under applicable laws or regulations, such provision shall be
inapplicable to the extent of such invalidity without affecting the validity or
enforceability of the remainder of the Loan Documents which shall be given
effect so far as possible. The captions in the Loan Documents are intended for
convenience and reference only and shall not affect the meaning or
interpretation of the Loan Documents. The Loan Documents may be executed in one
or more counterparts (which taken together, as applicable, shall constitute one
and the same instrument) and by facsimile transmission, which facsimile
signatures shall be considered original executed counterparts. Each party to
this Agreement agrees that it will be bound by its own facsimile signature and
that it accepts the facsimile signature of each other party.
12.7 EXPENSES
Borrower shall pay, whether or not the Closing occurs, all
costs and expenses incurred by Lenders and/or their Affiliates, including,
without limitation, documentation and diligence fees and expenses, all search,
audit, appraisal, recording, reasonable professional and filing fees and
expenses and all other actual out-of-pocket charges and expenses (including,
without limitation, UCC and judgment and tax lien searches and UCC filings and
fees for post-Closing UCC and judgment and tax lien searches and wire transfer
fees and audit expenses), and reasonable attorneys' fees and expenses, (i) in
any effort to enforce, protect or collect payment of any Obligation or to
enforce any Loan Document or any related agreement, document or instrument, (ii)
in connection with entering into, negotiating, preparing, reviewing and
executing the Loan Documents and/or any related agreements, documents or
instruments, (iii) arising in any way out of administration of the Obligations
or the taking or refraining from taking by Agent of any action requested by
Borrower, (iv) in connection with instituting, maintaining, preserving,
enforcing and/or foreclosing on Agent's or the benefit of itself and Lenders,
Liens in any of the Collateral or securities pledged under the Loan Documents,
whether through judicial proceedings or otherwise, (v) in defending or
prosecuting any actions, claims or proceedings arising out of or relating to
Agent's and Lenders' transactions with Borrower, (vi) in seeking, obtaining or
receiving any advice with respect to enforcing its rights and obligations under
any Loan Document and any related agreement, document or instrument, (vii)
arising out of or relating to any Default or Event of Default, (viii) in
connection with all actions, visits, audits and inspections undertaken by Agent
or its Affiliates pursuant to the Loan Documents, and/or (ix) in connection with
any modification, restatement, supplement, amendment, waiver or extension of any
Loan Document and/or any related agreement, document or instrument. All of the
foregoing shall be charged to Borrower's account and shall be part of the
Obligations. If Agent or any Lender uses in-house counsel for any purpose under
any Loan Document which Borrower is responsible to pay or indemnify, Borrower
expressly agrees that its Obligations include reasonable charges for such work
commensurate with the fees that would otherwise be charged by outside legal
counsel selected by
49
Agent or any Lender, in its sole discretion for the work performed; provided,
however, that Borrower shall be provided with a copy of such records of the
hours spent in connection with such work as each Person maintains in its
ordinary course of business. Without limiting the foregoing, Borrower shall pay
all taxes (other than taxes based upon or measured by each Lender's income or
revenues or any personal property tax), if any, in connection with the issuance
of any Note and the filing and/or recording of any documents and/or financing
statements. Agent acknowledges receipt from ASG of the amount of $75,000 as an
advance against the payment of the expenses referred to in this Section 12.7 and
agrees to apply such amount to the payment of such expenses.
12.8 ENTIRE AGREEMENT
This Agreement and the other Loan Documents to which Borrower
is a party constitute the entire agreement between Borrower, Agent and Lenders
with respect to the subject matter hereof and thereof, and supersede all prior
agreements and understandings (including but not limited to the term sheet dated
on or about September 23, 2002 as revised on October 21, 2002 in accordance with
the Commitment Letter dated the same date), if any, relating to the subject
matter hereof or thereof. Any promises, representations, warranties or
guarantees not herein contained and hereinafter made shall have no force and
effect unless in writing signed by Borrower, Agent and such Lenders. No
provision of this Agreement may be changed, modified, amended, restated, waived,
supplemented, discharged, canceled or terminated orally or by any course of
dealing or in any other manner other than by an agreement in writing signed by
Borrower, Agent and Lenders (or Requisite Lenders, as appropriate). Each party
hereto acknowledges that it has been advised by counsel in connection with the
negotiation and execution of this Agreement and is not relying upon oral
representations or statements inconsistent with the terms and provisions hereof.
12.9 AGENT APPROVALS
Unless expressly provided herein to the contrary, any
approval, consent, waiver or satisfaction of Agent or Lenders with respect to
any matter that is subject of any Loan Document may be granted or withheld by
Agent or Lenders, as applicable, in their Permitted Discretion.
12.10 CONFIDENTIALITY AND PUBLICITY
Agent and each Lender reserve the right to review and approve
all press releases and other written materials for similar publication purposes
that Borrower or any of its Affiliates prepares that contain Agent's or such
Lender's name or describe or refer to any Loan Document, any of the terms
thereof or any of the transactions contemplated thereby. Nothing contained in
any Loan Document is intended to permit or authorize Borrower or any of its
Affiliates to contract on behalf of Agent or any Lender. Further, Borrower
hereby agrees that Agent or any Lender or any Affiliate of Agent or Lender may
(i) disclose a general description of transactions arising under the Loan
Documents for advertising, marketing or other similar purposes to the extent
such information is publicly available, and (ii) use Borrower's or any
Guarantor's name, logo or other indicia germane to such party in connection with
such advertising, marketing or other similar purposes.
12.11 RELEASE OF AGENT AND LENDERS
Notwithstanding any other provision of any Loan Document,
Borrower voluntarily, knowingly, unconditionally and irrevocably, with specific
and express intent, for and on behalf of itself, it managers, members,
directors, officers, employees, shareholders, Affiliates, agents,
representatives, accountants, attorneys, successors and assigns and their
respective Affiliates (collectively, the "RELEASING PARTIES"), hereby fully and
completely releases and forever discharges the Indemnified Parties and any other
Person or insurer which may be responsible or liable for the acts or omissions
of any of the
50
Indemnified Parties, or who may be liable for the injury or damage resulting
therefrom (collectively, with the Indemnified Parties, the "RELEASED PARTIES"),
of and from any and all actions, causes of action, damages, claims, obligations,
liabilities, costs, expenses and demands of any kind whatsoever, at law or in
equity, matured or unmatured, vested or contingent, that any of the Releasing
Parties has against any of the Released Parties as of the date of the Closing.
Borrower acknowledges that the foregoing release is a material inducement to
Agent's and each Lender's decision to extend to Borrower the financial
accommodations hereunder and has been relied upon by Agent and each Lender in
agreeing to make the Loans.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
51
IN WITNESS WHEREOF, each of the parties has duly executed this
Revolving Credit and Security Agreement as of the date first written above.
BORROWER:
AMERICA SERVICE GROUP INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Name: Mr. Xxxxxxx Xxxxxx
Title: Chief Financial Officer
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
E-mail: Xxxxxx@xxxx.xxx
PRISON HEALTH SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Name: Mr. Xxxxxxx Xxxxxx
Title: Senior Vice President
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
E-mail: Xxxxxx@xxxx.xxx
EMSA GOVERNMENT SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Name: Mr. Xxxxxxx Xxxxxx
Title: Senior Vice President
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
E-mail: Xxxxxx@xxxx.xxx
52
EMSA CORRECTIONAL CARE, INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Name: Mr. Xxxxxxx Xxxxxx
Title: Senior Vice President
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
E-mail: Xxxxxx@xxxx.xxx
EMSA MILITARY SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Name: Mr. Xxxxxxx Xxxxxx
Title: Senior Vice President
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
E-mail: Xxxxxx@xxxx.xxx
EMSA LIMITED PARTNERSHIP,
By its General Partner, EMSA CORRECTIONAL
CARE, INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Name: Mr. Xxxxxxx Xxxxxx
Title: Senior Vice President
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
E-mail: Xxxxxx@xxxx.xxx
53
PRISON HEALTH SERVICES OF INDIANA, LLC
By its General Manager, PRISON HEALTH
SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Name: Mr. Xxxxxxx Xxxxxx
Title: Senior Vice President
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
E-mail: Xxxxxx@xxxx.xxx
CORRECTIONAL HEALTH SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Name: Mr. Xxxxxxx Xxxxxx
Title: Senior Vice President
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
E-mail: Xxxxxx@xxxx.xxx
SECURE PHARMACY PLUS, INC.
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Name: Mr. Xxxxxxx Xxxxxx
Title: Senior Vice President
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
E-mail: Xxxxxx@xxxx.xxx
54
AGENT AND LENDER:
CAPITALSOURCE FINANCE LLC
By:
--------------------------------------------------
Name: Xxxxxxxx X. Xxxx
Title: Vice President & Deputy General Counsel
CapitalSource Finance LLC
0000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxx Xxxxx, XX 00000
Attention: Healthcare Finance Group, Portfolio Manager
Telephone: (000) 000-0000
FAX: (000) 000-0000
E-MAIL: xxxxxxx@xxxxxxxxxxxxx.xxx
55
EXHIBITS
A Borrowing Certificate
SCHEDULES
1 Lenders/Commitments
2.4 Borrower's Accounts for Revolving Facility
2.6 Borrower's Accounts for Term Loan
5.2 Required Consents
5.3 Subsidiaries; Authorized and Issued Capital Stock; Capitalization;
Directors, Members, Managers and/or Partners; Joint Venture and
Partnership Arrangements
5.4 Owned or Leased Real Properties; Other Leased or Licensed Assets
5.5 Other Agreements
5.6 Litigation
5.8 Taxes Contested in Good Faith
5.11 Intellectual Property
5.15 Existing Indebtedness
5.17 Insurance Policies
5.18A Corporate Names
5.18B Place of Business/Chief Executive Officers
5.22 Performance and Payment Bonds
6.8 Post Closing Obligations
7.2 Permitted Indebtedness
7.3 Permitted Liens
7.4 Investments; New Facilities or Collateral; Subsidiaries
7.6 Transactions with Affiliates
7.9 Contingent Obligations
ANNEX I
FINANCIAL COVENANTS
1) MINIMUM EBITDA
As of the end of each calendar month after Closing, at no time
shall ASG (on a consolidated basis) permit its EBITDA for the Test Period ending
on the date of such determination to be less than $2,750,000 for a Test Period
that includes any calendar month in the fiscal year ending December 31, 2002 and
$3,000,000 for Test Periods that include only calendar months in the fiscal
years thereafter.
2) FIXED CHARGE COVERAGE RATIO (EBITDA/FIXED CHARGES)
As of November 30, 2002, the Fixed Charge Ratio shall not be
less than 1.0. As of the end of each calendar month thereafter, the Fixed Charge
Ratio shall not be less than 1.5. As of the end of each calendar quarter
beginning June 30, 2003, the Fixed Charge Ratio as measured for the trailing
twelve month period shall not be less than 1.75.
For purposes of the covenants set forth in this Annex I, the terms
listed below shall have the following meanings:
"EBITDA" shall mean, for any Test Period, the sum, without
duplication, of the following for Borrower, on a consolidated basis: Net Income
determined in accordance with GAAP, plus, (a) Interest Expense, (b) any
provision for taxes based on income or profit that was deducted in computing Net
Income, (c) depreciation expense, (d) amortization expense, (e) all other
non-cash, non-recurring charges and expenses, excluding accruals for cash
expenses made in the ordinary course of business, and (f) loss from any sale of
assets, other than sales in the ordinary course of business, all of the
foregoing determined in accordance with GAAP, minus (a) gains from any sale of
assets, other than sales in the ordinary course of business, (b) other
extraordinary or non-recurring gains, and (c) the charges against the loss
contract reserve established on 12/31/2001.
"Fixed Charge Coverage Ratio" shall mean, for Borrower on a
consolidated basis, the ratio of (a) EBITDA for the Test Period, to (b) Fixed
Charges for the Test Period.
"Fixed Charges" shall mean, the sum of the following: (a)
Total Debt Service, (b) Capital Expenditures, (c) cash income taxes paid or
accrued, and (d) cash dividends paid or accrued or declared.
"Interest Expense" shall mean, for any Test Period, total
interest expense (including expense attributable to Capital Leases in accordance
with GAAP) with respect to all outstanding Indebtedness including capitalized
interest net of interest income.
"Net Income" shall mean, the net income (or loss) determined
in conformity with GAAP, provided that there shall be excluded (i) the income
(or loss) of any Person in which any other Person (other than any Borrower) has
a joint interest, except to the extent of the amount of dividends or other
distributions actually paid to a Borrower by such Person, (ii) the income (or
loss) of any Person accrued prior to the date it becomes a Borrower or is merged
into or consolidated with a Borrower or that Person's assets are acquired by a
Borrower, (iii) the income of any Subsidiary of Borrower to the extent that the
declaration or payment of dividends or similar distributions of that income by
that Subsidiary is not at the time permitted by operation of the terms of the
charter or any agreement, instrument, judgment, decree,
Annex I-1
order, statute, rule or governmental regulation applicable to that Subsidiary,
(iv) compensation expense resulting from the issuance of capital stock, stock
options or stock appreciation rights issued to former or current employees,
including officers, of a Borrower, or the exercise of such options or rights, in
each case to the extent the obligation (if any) associated therewith is not
expected to be settled by the payment of cash by a Borrower or any affiliate
thereof, and (v) compensation expense resulting from the repurchase of capital
stock, options and rights described in clause (iv) of this definition of Net
Income.
"Test Period" shall mean the three most recent calendar months
then ended (taken as one accounting period), or such other period as specified
in the Agreement or any Annex thereto.
"Total Debt Service" shall mean the sum of (i) scheduled or
other required payments of principal on Indebtedness, and (ii) Interest Expense
(less amortization of loan arrangement fees and all other non-cash charges to
the extent included in Interest Expense for GAAP purposes), in each case for
such period.
Annex I-2
APPENDIX A
DEFINITIONS
"Account Debtor" shall mean any Person who is obligated under
an Account.
"Accounts" shall mean all "accounts" (as defined in the UCC)
of Borrower (or, if referring to another Person, of such other Person),
including without limitation, accounts, accounts receivables, monies due or to
become due and obligations in any form (whether arising in connection with
contracts, contract rights, instruments, general intangibles or chattel paper),
in each case whether arising out of goods sold or services rendered or from any
other transaction and whether or not earned by performance, now or hereafter in
existence, and all documents of title or other documents representing any of the
foregoing, and all collateral security and guaranties of any kind, now or
hereafter in existence, given by any Person with respect to any of the
foregoing.
"Advances" shall mean a borrowing under the Revolving
Facility. Any amounts paid by Agent or any Lender on behalf of Borrower or any
Guarantor under any Loan Document shall be an Advance for purposes of the
Agreement.
"Affiliate" shall mean, as to any Person, any other Person (a)
that, directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with such Person, (b) who is a
director or an executive officer (i) of such Person, (ii) of any Subsidiary of
such Person, or (iii) of any Person described in clause (a) above with respect
to such Person, or (c) which directly or indirectly through one or more
intermediaries, is the beneficial or record holder of twenty-five percent (25%)
or more of any class of the outstanding voting stock, securities or other equity
or ownership interests of such Person. For purposes of this definition, the term
"control" (and the correlative term, "controlled by") shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies, whether through ownership of securities or other
interests, by contract or otherwise.
"Agent Collateral Account" means a general interest bearing
deposit account established at and maintained by Agent in the name of and for
the benefit of the Agent on behalf of the Lenders and under the exclusive
dominion and control of the Agent, into which Collateral in the form of cash
shall be deposited for purposes of collateralizing Letter of Credit obligations
as set forth herein, and as to which the Administrative Agent has "control"
pursuant to Section 9-104 of the UCC.
"Applicable Rate" shall mean the interest rates applicable
from time to time to Loans under the Agreement.
"Borrowing Base" shall mean, as of any date of determination,
the value of Eligible Receivables, after applying liquidity factors, reserves
permitted under this Agreement, and the advance rate, as determined with
reference to the most recent Borrowing Certificate and otherwise in accordance
with the Agreement; provided, however, that if as of such date the most recent
Borrowing Certificate is of a date more than four (4) Business Days before or
after such date, the Borrowing Base shall be determined by Agent consistent with
this Agreement.
"Borrowing Certificate" shall mean a Borrowing Certificate
substantially in the form of Exhibit A hereto.
"Business Day" shall mean any day other than a Saturday,
Sunday or other day on which the Federal Reserve or Agent is closed.
Appendix A-1
"Capital Lease" shall mean, as to any Person, a lease of any
interest in any kind of property or asset by that Person as lessee that is,
should be or should have been recorded as a "capital lease" in accordance with
GAAP.
"Capitalized Lease Obligations" shall mean all obligations of
any Person under Capital Leases, in each case, taken at the amount thereof
accounted for as a liability in accordance with GAAP.
"Change of Control" shall mean, with respect to any Person,
the occurrence of any of the following: (i) a merger, consolidation,
reorganization, recapitalization or share or interest exchange, sale or transfer
or any other transaction or series of transactions (other than with another
Borrower or Guarantor) in which its stockholders, managers, partners or interest
holders immediately prior to such transaction or series of transactions receive,
in exchange for the stock or interests owned by them, cash, property or
securities of the resulting or surviving entity or any Affiliate thereof, and,
as a result thereof, Persons who, individually or in the aggregate, were holders
of 50% or more of its voting stock, securities or equity, partnership or
ownership interests immediately prior to such transaction or series of
transactions hold less than 50% of the voting stock, securities or other equity,
partnership or ownership interests of the resulting or surviving entity or such
Affiliate thereof, calculated on a fully diluted basis, or (ii) a direct or
indirect sale, transfer or other conveyance or disposition, in any single
transaction or series of transactions, of all or substantially all of its assets
to any Person other than a Borrower or Guarantor.
"Charter and Good Standing Documents" shall mean, for each
Borrower (i) a copy of the certificate of incorporation or formation (or other
charter document) certified as of a date not more than thirty (30) Calendar Days
before the Closing Date by the applicable Governmental Authority of the
jurisdiction of incorporation or organization of Borrower, (ii) a copy of the
bylaws or similar organizational documents of Borrower certified as of a date
not more than three (3) Business Days before the Closing Date by the corporate
secretary or assistant secretary of Borrower, (iii) an original certificate of
good standing as of a date not more than 30 Calendar Days prior to the Closing
Date issued by the applicable Governmental Authority of the jurisdiction of
incorporation or organization of Borrower and of every other jurisdiction in
which Borrower is otherwise required to be in good standing, and (iv) copies of
the resolutions of the Board of Directors or managers (or other applicable
governing body) and, if required, stockholders, members or other equity owners
authorizing the execution, delivery and performance of the Loan Documents to
which Borrower is a party, certified by an authorized officer of such Person as
of the Closing Date.
"Closing" shall mean the satisfaction, or written waiver by
Agent and Lenders, of all of the conditions precedent set forth in the Agreement
required to be satisfied prior to the consummation of the transactions
contemplated hereby.
"Closing Date" shall mean the date the Closing occurs.
"Collateral" shall mean, collectively and each individually,
all collateral and/or security granted to Agent, for the benefit of itself and
Lenders, by Borrower and/or Guarantors pursuant to the Loan Documents.
"Commitment" or "Commitments" shall mean (a) as to any
Lender, the aggregate commitment of such Lender to make Advances and draws, as
set forth on Schedule 1 or in the most recent Lender Addition Agreement executed
by such Lender, and (b) as to all Lenders, the aggregate commitment of all
Lenders to make Advances and draws.
"Commitment Fee" shall mean a nonrefundable amount equal to
the sum of (a) 0.5% of the Facility Cap, and (b) 2.0% of the Term Loan, which
shall be paid as follows: (i) 0.5% of $45,000,000
Appendix A-2
and 2.0% of the Term Loan on or before the Closing Date, and (ii) 0.5% of
$10,000,000 on such date and at such time as an additional Lender is added to
this Agreement.
"Contingent Obligations" shall mean, as to any Person, any
obligation of such Person guaranteeing or intending to guaranty any
Indebtedness, leases, dividends or other obligations ("PRIMARY OBLIGATIONS") of
any other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (a) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any such primary obligation or
(ii) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary obligor, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (d) otherwise to assure or to
hold harmless the owner of such primary obligation against loss in respect
thereof, provided, however, that the term "Contingent Obligation" shall not
include endorsements of instruments for deposit or collection in the ordinary
course of business.
"Debtor Relief Law" shall mean, collectively, the Bankruptcy
Code of the United States of America and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization or similar debtor relief laws from time to time in
effect affecting the rights of creditors generally, as amended from time to
time.
"Default" shall mean any event, fact, circumstance or
condition that, with the giving of applicable notice or passage of time or both,
would constitute or be or result in an Event of Default.
"Deposit Account" shall mean, collectively, any Lockbox
Account, Blocked Account and all bank or other depository accounts of Borrower.
"Eligible Billed Receivables" shall mean each Account (other
than Eligible Unbilled Receivables) arising in the ordinary course of Borrower's
business from the sale of goods or rendering of services which Agent, in its
Permitted Discretion, deems an Eligible Billed Receivable unless:
(a) it is not subject to a valid perfected first priority
security interest in favor of Agent, for the benefit of itself and Lenders,
subject to no other Lien of equal or higher priority;
(b) it is not evidenced by an invoice, statement or other
documentary evidence satisfactory to Agent; provided, that Agent in its
Permitted Discretion may from time to time include as Accounts that are not
evidenced by an invoice, statement or other documentary evidence satisfactory to
Agent as Eligible Billed Receivables and determine the advance rate, liquidity
factors and reserves applicable to Advances made on any such Accounts;
(c) it arises out of services rendered or a sale made to, or
out of any other transaction between with, one or more Affiliates of Borrower;
(d) it remains unpaid for longer than the earlier of (i) 120
calendar days after the original invoice date, and (ii) 150 calendar days after
the applicable services were rendered;
(e) with respect to all Accounts owed by any particular
Account Debtor or its Affiliates, if more than 50% of the aggregate balance of
all such Accounts owing from such Account Debtor or its Affiliates remains
unpaid for longer than the earlier of (i) 120 calendar days after the original
invoice date, and (ii) 150 calendar days after the applicable services were
rendered;
Appendix A-3
(f) with respect to all Accounts owed by any particular
Account Debtor and/or its Affiliates, 50% or more of all such Accounts are not
deemed Eligible Receivables for any reason hereunder;
(g) with respect to all Accounts owed by any particular
Account Debtor and/or its Affiliates, if such Accounts exceed 50%, (such
percentage or any other percentage hereafter established by Lender for any
particular Account Debtor, a "Concentration Limit") of all Accounts at any one
time;
(h) any covenant, agreement, representation or warranty
contained in any Loan Document with respect to such Account has been breached
and remains uncured;
(i) the Account Debtor for such Account has commenced a
voluntary case under any Debtor Relief Law or has made an assignment for the
benefit of creditors, or a decree or order for relief has been entered by a
court having jurisdiction in respect of such Account Debtor in an involuntary
case under any Debtor Relief Law, or any other petition or application for
relief under any Debtor Relief Law has been filed against such Account Debtor,
or such Account Debtor has failed, suspended business, ceased to be solvent,
called a meeting of its creditors, or has consented to or suffered a receiver,
trustee, liquidator or custodian to be appointed for it or for all or a
significant portion of its assets or affairs;
(j) it arises from the sale of property or services rendered
to one or more Account Debtors outside the continental United States or Canada
or that have their principal place of business or chief executive offices
outside the continental United States or Canada;
(k) it represents the sale of goods to an Account Debtor on a
xxxx-and-hold, guaranteed sale, sale-and-return, sale on approval, consignment
or any other repurchase or return basis or is evidenced by chattel paper or an
instrument of any kind or has been reduced to judgment;
(l) (A) the applicable Account Debtor for such Account is any
Governmental Authority, and the rights to payment of such Account may not be
assigned to Agent by operation of law, (B) any required consent from or notice
to the relevant Governmental Authority has not been obtained, or in the case of
notice, delivered, and (C) Agent has not otherwise agreed to its inclusion in
the Borrowing Base;
(m) it is subject to any known offset, credit (including any
resource or other income credit or offset), deduction, defense, discount,
chargeback, freight claim, allowance, adjustment, dispute or counterclaim, or is
contingent in any respect or for any reason, but only to such extent;
(n) there is any agreement with an Account Debtor for any
deduction from such Account, except for discounts or allowances made in the
ordinary course of business for prompt payment, all of which discounts or
allowances are reflected in the calculation of the face value of each invoice
related thereto, such that only the discounted amount of such Account after
giving effect to such discounts and allowances shall be considered an Eligible
Billed Receivable;
(o) any return, rejection or repossession of goods or services
related to it has occurred, but only to such extent;
(p) it is not payable to Borrower;
(q) Borrower has agreed to accept or has accepted any non-cash
payment for such Account;
Appendix A-4
(r) it constitutes a re-billing of an amount previously
billed, if the amount previously billed was treated as an Eligible Billed
Receivable;
(s) the Account is subject to any known reduction, offset or
recoupment on account of staffing deficiencies under any Government Contract
("Accrued Paybacks") but only to such extent;
(t) the Account is subject to known reduction, offset or
recoupment on account of lower than expected costs ("Risk Sharing Adjustment")
but only to such extent;
(u) the Account is subject to known reduction, offset or
recoupment on account of adjustments due to failure to earn any amounts prepaid
("Deferred Revenue") but only to such extent; and
(v) it fails to meet such other specifications and
requirements which may from time to time be established by Agent or is not
otherwise satisfactory to Agent, as determined in Agent's sole discretion, and
with respect to Accounts arising under contracts with Governmental Authorities
that have enacted anti-assignment laws, including the State of New York and the
U.S. Government, and until Borrower complies with the applicable laws of such
Governmental Authority regarding the assignment of such Government Contracts,
such determination shall be in Agent's sole discretion.
"Eligible Receivables" shall mean Eligible Billed Receivables
and Eligible Unbilled Receivables.
"Eligible Unbilled Receivables" shall mean each Account
meeting the criteria of Eligible Billed Receivables, except:
(i) clause (b) shall not apply;
(ii) clause (d) shall be restated as follows: "if more
than 75% of the aggregate balance of any Unbilled
Account remains unbilled for longer than the
thirtieth (30th) day following the latest date
services were rendered in any thirty (30) day
billing cycle;"
(iii) clause (e) shall be restated as follows: "with
respect to all Accounts owed by any particular
Account Debtor and/or its Affiliates if more than
50% of the aggregate balance of all such Accounts
owing from such Account Debtor or its Affiliates
remains unbilled for longer than the thirtieth
(30th) day following the latest date services were
rendered in any thirty (30) day billing cycle;" and
the eligible unbilled portion of any such Account shall include, with respect to
each Government Contract, revenue earned on each day prior to issuance of an
invoice in an amount equal to the amount of revenue under such Government
Contract in the month most recently closed on Borrower's accounting system or,
in the case of a Government Contract that is in the first month of its term, the
estimated amount of revenue for such month, in each case divided by 30, provided
that, Agent in its sole discretion may from time to time determine the liquidity
factors and reserves applicable to Advances made on any such Accounts.
"Environmental Laws" shall mean, collectively and each
individually, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Superfund Amendment and Reauthorization Act of 1986,
the Resource Conservation and Recovery Act, the Toxic Substances Control Act,
the Clean Air Act, the Clean Water Act, any other "Superfund" or "Superlien" law
and all other federal, state and local and foreign environmental, land use,
zoning, health, chemical use, safety and sanitation laws, statutes, ordinances
and codes relating to the protection of the
Appendix A-5
environment and/or governing the use, storage, treatment, generation,
transportation, processing, handling, production or disposal of Hazardous
Substances, in each case, as amended, and the rules, regulations, policies,
guidelines, interpretations, decisions, orders and directives of Governmental
Authorities with respect thereto.
"Equipment" has the meaning given such term in the UCC.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and the regulations thereunder.
"Event of Default" shall mean the occurrence of any event set
forth in Article VIII.
"Fair Valuation" shall mean the determination of the value of
the consolidated assets of a Person on the basis of the amount which may be
realized by a willing seller within a reasonable time through collection or sale
of such assets at market value on a going concern basis to an interested buyer
who is willing to purchase under ordinary selling conditions in an arm's length
transaction.
"Finance Fee" shall mean an amount equal to 2.0% of the
original principal amount of the Term Loan for any termination occurring during
the Term.
"Fixtures" has the meaning given such term in the UCC.
"Funded L/C Exposure" means the aggregate principal amount,
as of any date of determination, of all payments that were made by Agent under
any Letter of Credit or L/C Guaranty, but which have not been reimbursed to
Agent by the Borrower or converted into Advances pursuant to the terms of this
Agreement.
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time as applied by
nationally recognized accounting firms.
"General Intangibles" has the meaning given such term in the
UCC.
"Governmental Authority" shall mean any federal, state,
municipal, national, local or other governmental department, court, commission,
board, bureau, agency or instrumentality or political subdivision thereof, or
any entity or officer exercising executive, legislative or judicial, regulatory
or administrative functions of or pertaining to any government or any court, in
each case, whether of the United States or a state, territory or possession
thereof, a foreign sovereign entity or country or jurisdiction or the District
of Columbia.
"Government Account" shall be defined to mean all Accounts
arising out of or with respect to any Government Contract.
"Government Contracts" shall mean all contracts with the
United States or any state government or any other Governmental Authority or any
agency of any of the foregoing, and all amendments, modifications and
supplements thereto.
"Guarantor" shall mean, collectively and each individually,
all guarantors of the Obligations or any part thereof.
"Guaranty" shall mean, collectively and each individually, all
guarantees executed by any Guarantors.
Appendix A-6
"Hazardous Substances" shall mean, without limitation, any
flammable explosives, radon, radioactive materials, asbestos, urea formaldehyde
foam insulation, polychlorinated biphenyls, petroleum and petroleum products,
methane, hazardous materials, hazardous wastes, hazardous or toxic substances or
related materials as defined in or subject to any applicable Environmental Law.
"Indebtedness" of any Person shall mean, without duplication,
(a) all items which, in accordance with GAAP, would be included in determining
total liabilities as shown on the liability side of the balance sheet of such
Person as of the date as of which Indebtedness is to be determined, including
any Capital Leases, (b) all indebtedness secured by any mortgage, pledge,
security, Lien or conditional sale or other title retention agreement to which
any property or asset owned or held by such Person is subject, whether or not
the indebtedness secured thereby shall have been assumed by such Person, and (c)
all indebtedness of others which such Person has directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the ordinary
course of business), discounted or sold with recourse or agreed (contingently or
otherwise) to purchase or repurchase or otherwise acquire, or in respect of
which such Person has agreed to supply or advance funds (whether by way of loan,
stock, equity or other ownership interest purchase, capital contribution or
otherwise) or otherwise to become directly or indirectly liable.
"Landlord Waiver and Consent" shall mean a waiver/consent in
form and substance reasonably satisfactory to Agent from the owner/lessor of any
premises not owned by Borrower at which any of the Collateral is now or
hereafter located for the purpose of providing Agent access to such Collateral,
in each case as such may be modified, amended or supplemented from time to time.
"L/C Bank" means, any bank that issues a Letter of Credit for
the account of the Borrower.
"L/C Exposure" means the sum, as of any date of determination,
of the Unfunded L/C Exposure and the Funded L/C Exposure.
"Lender Addition Agreement" shall mean an agreement among
Agent, a Lender and such Lender's assignee regarding their respective rights and
obligations with respect to assignments of the Loans and other interests under
this Agreement.
"Lenders" shall mean the financial institutions, from time to
time named on Schedule 1 under the heading "Lenders", their respective
successors and permitted assigns (but not, except as expressly set forth herein,
any participant that is not otherwise a party to this Agreement).
"Letter of Credit" means each letter of credit issued with the
assistance of an L/C Bank for or on behalf of Borrower, which (i) is a standby
letter of credit, (ii) is issued for the purpose for which the Borrower has
historically obtained letters of credit, or for such other purpose as is
reasonably acceptable to the Agent, and, in all cases, for a purpose permitted
for use of proceeds hereunder, (iii) is denominated in Dollars; (iv) is governed
by the Uniform Customs and Practices for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication 500, except as otherwise agreed by
the Agent, and (v) is in form reasonably satisfactory to the Agent.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, restriction, lien or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement or any lease in the nature thereof), or any other arrangement pursuant
to which title to the property is retained by or vested in some other Person for
security purposes.
"Loan" or "Loans" shall mean, individually and collectively,
all Advances.
Appendix A-7
"Loan Documents" shall mean, collectively and each
individually, the Agreement, the Notes, the Security Documents, the Stock Pledge
Agreement, the Guarantees, the Uniform Commercial Code Financing Statements, the
Landlord Waiver and Consents, the Borrowing Certificates, and all other
agreements, documents, instruments and certificates heretofore or hereafter
executed or delivered to Agent or Lenders in connection with any of the
foregoing or the Loans, as the same may be amended, modified or supplemented
from time to time.
"Material Adverse Effect" or "Material Adverse Change" shall
mean any event, condition or circumstance or set of events, conditions or
circumstances or any change(s) which (i) has or could reasonably be expected to
have any material adverse effect upon or change in the validity or
enforceability of any Loan Document, (ii) has been or could reasonably be
expected to be material and adverse to the value of the Collateral taken as a
whole or to the business, operations, prospects, properties, assets, liabilities
or condition of Borrower or any Guarantors, either individually or taken as a
whole, or (iii) has materially impaired or could reasonably be expected to
materially impair the ability of Borrower or Guarantor to perform the
Obligations or to consummate the transactions under the Loan Documents executed
by such Person.
"Note" shall mean, collectively and each individually, the
Revolving Notes and the Term Notes, as the same may be split, modified, amended
or supplemented from time to time.
"Obligations" shall mean all present and future obligations,
Indebtedness and liabilities of Borrower and/or Guarantors to Agent or Lenders
at any time and from time to time of every kind, nature and description, direct
or indirect, secured or unsecured, joint and several, absolute or contingent,
due or to become due, matured or unmatured, now existing or hereafter arising,
contractual or tortious, liquidated or unliquidated, under any of the Loan
Documents or otherwise relating to Notes and/or Loans, including, without
limitation, all applicable fees, charges and expenses and/or all amounts paid or
advanced by Agent or Lenders on behalf of or for the benefit of Borrower and/or
Guarantor for any reason at any time, including in each case obligations of
performance as well as obligations of payment and interest that accrue after the
commencement of any proceeding under any Debtor Relief Law by or against any
such Person.
"Payment Office" shall mean initially the address set forth
beneath the Agent's name on the signature page of the Agreement, and thereafter,
such other office of Agent, if any, which it may designate by notice to Borrower
to be the Payment Office.
"Permit" shall mean collectively all licenses, leases, powers,
permits, franchises, certificates, authorizations, approvals, certificates of
need, provider numbers and other rights necessary to the conduct of Borrowers'
business.
"Permitted Discretion" shall mean a determination or judgment
made in good faith in the exercise of reasonable (from the perspective of a
secured lender) credit or business judgment.
"Person" shall mean an individual, a partnership, a
corporation, a limited liability company, a business trust, a joint stock
company, a trust, an unincorporated association, a joint venture, a Governmental
Authority or any other entity of whatever nature.
"Prime Rate" shall mean a fluctuating interest rate per annum
equal at all times to the rate of interest announced publicly from time to time
by Citibank, N.A. as its base rate; provided, that such rate is not necessarily
the best rate offered to its customers, and, should Agent be unable to determine
such rate, such other indication of the prevailing prime rate of interest as may
reasonably be chosen by Agent; provided, that each change in the fluctuating
interest rate shall take effect simultaneously with the corresponding change in
the Prime Rate.
Appendix A-8
"Pro Rata Share" shall mean with respect to matters relating
to a particular Commitment of a Lender, the percentage obtained by dividing (i)
such Commitment of that Lender by (ii) all such Commitments of all Lenders;
provided, however, that if any Commitment is terminated pursuant to the terms
hereof, then "Pro Rata Share" means the percentage obtained by dividing (x) the
aggregate amount of such Lender's outstanding Loans related to such Commitment
by (y) the aggregate amount of all outstanding Loans related to such Commitment;
in any case as such percentage may be adjusted by assignments permitted pursuant
to Section 12.2.
"Requisite Lenders" shall mean Lenders holding or being
responsible for (i) 100%, if there are only two Lenders, and (ii) at least
66-2/3% if there are more than two Lenders, in each case, of the sum of (a) all
outstanding Loans and (b) all unutilized Commitments, including Unfunded L/C
Exposure.
"Revolving Note" shall mean the Revolving Note and any
replacement or additional promissory notes payable to the order of each Lender
executed by Borrower evidencing the Revolving Facility, as the same may be
modified, amended or supplemented from time to time.
"Security Documents" shall mean the Notes, this Agreement,
Stock Pledge Agreement, Guarantees, Lockbox Agreements, Uniform Commercial Code
Financing Statements and all other documents or instruments necessary to create
or perfect the Liens in the Collateral, as such may be modified, amended or
supplemented from time to time.
"Stock Pledge Agreement" shall mean, collectively and each
individually, (i) that certain Stock Pledge Agreement, by and between Agent and
ASG executed in connection herewith, and (ii) if applicable, all stock pledge
agreements executed by and between Agent and any Guarantors in each case as such
may be modified, amended or supplemented from time to time.
"Subordinated Debt" shall mean any Indebtedness of Borrower,
which Indebtedness is unsecured, subordinated in right of repayment and remedies
to all of the Obligations and to all of Agent's and Lenders' rights, Liens and
remedies and in form and substance satisfactory to the Requisite Lenders in
their Permitted Discretion.
"Subsidiary" shall mean, (i) as to Borrower, any Person in
which more than 50% of all equity, membership, partnership or other ownership
interests is owned directly or indirectly by Borrower or one or more of its
Subsidiaries, and (ii) as to any other Person, any Person in which more than 50%
of all equity, membership, partnership or other ownership interests is owned
directly or indirectly by such Person or by one or more of such Person's
Subsidiaries.
"Term" shall mean a three (3) year period, commencing on the
Closing Date and ending on the third (3rd) anniversary of the Closing Date.
"Term Note" shall mean the Term Notes and any replacement or
additional promissory notes payable to the order of each Lender executed by
Borrower evidencing the Term Loan, as the same may be modified, amended or
supplemented from time to time.
"Termination Fee" shall mean the amount equal to 1.0% of the
Facility Cap for any Termination of the Revolving Facility occurring during the
Term; provided, however, such fee shall be waived for any Termination under
Section 11.1 hereof during the final three months of the Term.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of Maryland from time to time.
Appendix A-9
"Unfunded L/C Exposure" means the maximum amount which Agent
may be required, under all Letters of Credit and L/C Guaranties outstanding as
of any date of determination, to pay on such date or at any future time.
Unfunded L/C Exposure shall not include any amounts outstanding within the
meaning of Funded L/C Exposure.
Appendix A-10
