EXECUTION VERSION

 

 

CREDIT AGREEMENT

by and among

SECURUS TECHNOLOGIES, INC.

as Parent and as a Borrower

 

THE VARIOUS SUBSIDIARIES OF PARENT PARTY HERETO

 

as Borrowers,

THE LENDERS THAT ARE SIGNATORIES HERETO

as the Lenders,

and

WELLS FARGO FOOTHILL, LLC

as the Arranger and Administrative Agent

Dated as of September 30, 2008

 

 

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TABLE OF CONTENTS

 

Page

 

 

1.

DEFINITIONS AND CONSTRUCTION

1

 

1.1

Definitions

1

 

1.2

Accounting Terms

1

 

1.3

Code

1

 

1.4

Construction

1

 

1.5

Schedules and Exhibits

2

2.

LOAN AND TERMS OF PAYMENT

2

 

2.1

Revolver Advances

2

 

2.2

Borrowing Procedures and Settlements

2

 

2.3

Payments; Reductions of Commitments; Prepayments

7

 

2.4

Overadvances

10

 

2.5

Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations

10

 

2.6

Crediting Payments

11

 

2.7

Designated Account

11

 

2.8

Maintenance of Loan Account; Statements of Obligations

12

 

2.9

Fees

12

 

2.10

Letters of Credit

12

 

2.11

LIBOR Option

15

 

2.12

Capital Requirements

17

 

2.13

Joint and Several Liability of Borrowers

18

3.

CONDITIONS; TERM OF AGREEMENT

20

 

3.1

Conditions Precedent to the Initial Extension of Credit

20

 

3.2

Conditions Precedent to all Extensions of Credit

20

 

3.3

Term

21

 

3.4

Effect of Termination

21

 

3.5

Early Termination by Borrowers

21

4.

REPRESENTATIONS AND WARRANTIES

21

 

4.1

Due Organization and Qualification; Subsidiaries

21

 

4.2

Due Authorization; No Conflict

22

 

4.3

Governmental Consents; Necessary Authorizations

22

 

4.4

Binding Obligations; Perfected Liens

23

 

4.5

Title to Assets; No Encumbrances

23

 

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TABLE OF CONTENTS

(continued)

Page

 

 

 

4.6

Jurisdiction of Organization; Location of Chief Executive Office; Organizational
Identification Number; Commercial Tort
Claims                                    23

 

4.7

Litigation

24

 

4.8

Compliance with Laws

24

 

4.9

No Material Adverse Change

24

 

4.10

Fraudulent Transfer

24

 

4.11

Employee Benefits

24

 

4.12

Environmental Condition

24

 

4.13

Intellectual Property

25

 

4.14

Leases

25

 

4.15

Deposit Accounts and Securities Accounts

25

 

4.16

Complete Disclosure

25

 

4.17

Material Contracts

25

 

4.18

Patriot Act

26

 

4.19

Indebtedness

26

 

4.20

Payment of Taxes

26

 

4.21

Margin Stock

26

 

4.22

Governmental Regulation

27

 

4.23

OFAC

27

 

4.24

Debt Designations

27

 

4.25

Location of Inventory and Equipment

27

 

4.26

Inventory Records

28

 

4.27

Holding Company Status

28

 

4.28

Insurance

28

5.

AFFIRMATIVE COVENANTS

28

 

5.1

Financial Statements, Reports, Certificates

28

 

5.2

[RESERVED]

28

 

5.3

Existence

28

 

5.4

Maintenance of Properties

28

 

5.5

Taxes

28

 

5.6

Insurance

29

 

5.7

Inspection

29

 

5.8

Compliance with Laws

29

 

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TABLE OF CONTENTS

(continued)

Page

 

 

 

5.9

Environmental

29

 

5.10

Disclosure Updates

30

 

5.11

Formation of Subsidiaries

30

 

5.12

Further Assurances

31

 

5.13

Lender Meetings

31

 

5.14

Material Contracts; Necessary Authorizations

31

 

5.15

Location of Inventory and Equipment

31

 

5.16

[RESERVED]

32

 

5.17

Debt Designations

32

 

5.18

Cash Management

32

 

5.19

Post Closing Deliveries

32

6.

NEGATIVE COVENANTS

33

 

6.1

Indebtedness

33

 

6.2

Liens

33

 

6.3

Restrictions on Fundamental Changes

33

 

6.4

Disposal of Assets

33

 

6.5

Change Name

34

 

6.6

Nature of Business

34

 

6.7

Prepayments and Amendments

34

 

6.8

Change of Control

35

 

6.9

Restricted Payments

35

 

6.10

Accounting Methods

36

 

6.11

Investments

36

 

6.12

Transactions with Affiliates

37

 

6.13

Use of Proceeds

37

 

6.14

Inventory and Equipment with Bailees

37

 

6.15

Debt Designations

37

 

6.16

Parent as Holding Company

38

7.

FINANCIAL COVENANTS

38

8.

EVENTS OF DEFAULT

41

9.

RIGHTS AND REMEDIES

43

 

9.1

Rights and Remedies

43

 

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TABLE OF CONTENTS

(continued)

Page

 

 

 

9.2

Remedies Cumulative

44

10.

WAIVERS; INDEMNIFICATION

44

 

10.1

Demand; Protest; etc

44

 

10.2

The Lender Group’s Liability for Collateral

44

 

10.3

Indemnification

44

11.

NOTICES

45

12.

CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER

46

13.

ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS

46

 

13.1

Assignments and Participations

46

 

13.2

Successors

49

14.

AMENDMENTS; WAIVERS

49

 

14.1

Amendments and Waivers

49

 

14.2

Replacement of Holdout Lender

51

 

14.3

No Waivers; Cumulative Remedies

51

15.

AGENT; THE LENDER GROUP

51

 

15.1

Appointment and Authorization of Agent

51

 

15.2

Delegation of Duties

52

 

15.3

Liability of Agent

52

 

15.4

Reliance by Agent

53

 

15.5

Notice of Default or Event of Default

53

 

15.6

Credit Decision

53

 

15.7

Costs and Expenses; Indemnification

54

 

15.8

Agent in Individual Capacity

54

 

15.9

Successor Agent

54

 

15.10

Lender in Individual Capacity

55

 

15.11

Collateral Matters

55

 

15.12

Restrictions on Actions by Lenders; Sharing of Payments

56

 

15.13

Agency for Perfection

56

 

15.14

Payments by Agent to the Lenders

56

 

15.15

Concerning the Collateral and Related Loan Documents

57

 

15.16

Audits and Examination Reports; Confidentiality; Disclaimers by Lenders; Other
Reports and Information                                          
                                            57

 

15.17

Several Obligations; No Liability

58

 

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TABLE OF CONTENTS

(continued)

Page

 

 

 

15.18

Intercreditor Agreement

58

16.

WITHHOLDING TAXES

58

17.

GENERAL PROVISIONS

61

 

17.1

Effectiveness

61

 

17.2

Section Headings

61

 

17.3

Interpretation

61

 

17.4

Severability of Provisions

61

 

17.5

Hedge Agreement Providers

61

 

17.6

Debtor-Creditor Relationship

61

 

17.7

Counterparts; Electronic Execution

61

 

17.8

Revival and Reinstatement of Obligations

62

 

17.9

Confidentiality

62

 

17.10

Lender Group Expenses

62

 

17.11

USA PATRIOT Act

62

 

17.12

Integration

62

 

17.13

Parent as Agent for Borrowers

63

 

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EXHIBITS AND SCHEDULES

Exhibit A-1

Form of Assignment and Acceptance

Exhibit C-1

Form of Compliance Certificate

Exhibit C-2

Form of Credit Amount Certificate

Exhibit L-1

Form of LIBOR Notice

 

Schedule A-1

Agent’s Account

Schedule A-2

Authorized Persons

Schedule C-1

Commitments

Schedule F-1

Facility Manager Business

Schedule D-1

Designated Account

Schedule P-1

Permitted Holders

Schedule P-2

Permitted Investments

Schedule P-3

Permitted Liens

Schedule 1.1

Definitions

Schedule 3.1

Conditions Precedent

Schedule 4.1(b)

Capitalization of Parent

Schedule 4.1(c)

Capitalization of Parent’s Subsidiaries

Schedule 4.3(b)

Necessary Authorizations

Schedule 4.6(a)

States of Organization

Schedule 4.6(b)

Chief Executive Offices

Schedule 4.6(c)

Organizational Identification Numbers

Schedule 4.6(d)

Commercial Tort Claims

Schedule 4.7

Litigation

Schedule 4.12

Environmental Matters

Schedule 4.13

Intellectual Property

Schedule 4.15

Deposit Accounts and Securities Accounts

Schedule 4.17

Material Contracts

Schedule 4.19

Permitted Indebtedness

Schedule 4.25

Locations of Inventory and Equipment

Schedule 4.27

Parent Assets

Schedule 4.28

Insurance

Schedule 5.1

Financial Statements, Reports, Certificates, Collateral Reporting

Schedule 5.19(c)

Post-Closing Control Agreement Accounts

Schedule 5.19(d)

Post-Closing Intellectual Property Releases

 

 

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CREDIT AGREEMENT

THIS CREDIT AGREEMENT (this “Agreement”), is entered into as of September 30,
2008 by and among the lenders identified on the signature pages hereof (such
lenders, together with their respective successors and permitted assigns, are
referred to hereinafter each individually as a “Lender” and collectively as the
“Lenders”), WELLS FARGO FOOTHILL, LLC, a Delaware limited liability company, as
the arranger and administrative agent for the Lenders (in such capacity,
together with its successors and assigns in such capacity, “Agent”), SECURUS
TECHNOLOGIES, INC., a Delaware corporation (“Parent”), and each of Parent’s
Subsidiaries identified on the signature pages hereof (such Subsidiaries,
together with Parent, are referred to hereinafter each individually as a
“Borrower”, and individually and collectively, jointly and severally, as the
“Borrowers”).

The parties agree as follows:

1.

DEFINITIONS AND CONSTRUCTION.

1.1       Definitions. Capitalized terms used in this Agreement shall have the
meanings specified therefor on Schedule 1.1.

1.2       Accounting Terms. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP. When used herein, unless otherwise
specified, the term “financial statements” shall include the notes and schedules
thereto. Whenever the term “Parent” is used in respect of a financial covenant
or a related definition, it shall be understood to mean Parent and its
Subsidiaries on a consolidated basis, unless the context clearly requires
otherwise.

1.3       Code. Any terms used in this Agreement that are defined in the Code
shall be construed and defined as set forth in the Code unless otherwise defined
herein; provided, however, that to the extent that the Code is used to define
any term herein and such term is defined differently in different Articles of
the Code, the definition of such term contained in Article 9 of the Code shall
govern.

1.4       Construction. Unless the context of this Agreement or any other Loan
Document clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, and the terms
“includes” and “including” are not limiting. The words “hereof,” “herein,”
“hereby,” “hereunder,” and similar terms in this Agreement or any other Loan
Document refer to this Agreement or such other Loan Document, as the case may
be, as a whole and not to any particular provision of this Agreement or such
other Loan Document, as the case may be. Section, subsection, clause, schedule,
and exhibit references herein are to this Agreement unless otherwise specified.
Any reference in this Agreement or in any other Loan Document to any agreement,
instrument, or document shall include all alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements, thereto and thereof, as applicable (subject to any restrictions on
such alterations, amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth herein). The
words “asset” and “property” shall be construed to have the same meaning and
effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts, and contract rights. Any
reference herein or in any other Loan Document to the satisfaction or repayment
in full of the Obligations shall mean the repayment in full in cash (or, (i) in
the case of Letters of Credit, providing Letter of Credit Collateralization and
(ii) in the case of Hedge Agreements, providing Hedge Agreement
Collateralization) of all Obligations other than unasserted contingent
indemnification Obligations and other than any Hedge Agreement Obligations that,
at such time, are allowed by the applicable Hedge Agreement Provider to remain
outstanding and that are not required by the provisions of this Agreement to be
repaid or cash collateralized. Any reference herein

 

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to any Person shall be construed to include such Person’s successors and
assigns. Any requirement of a writing contained herein or in any other Loan
Document shall be satisfied by the transmission of a Record. Unless the context
of this Agreement or any other Loan Document clearly requires otherwise, all
references to times of day shall be references to Atlanta, Georgia time.

1.5       Schedules and Exhibits. All of the schedules and exhibits attached to
this Agreement shall be deemed incorporated herein by reference.

2.

LOAN AND TERMS OF PAYMENT.

 

2.1

Revolver Advances.

(a)        Subject to the terms and conditions of this Agreement, and during the
term of this Agreement, each Lender with a Revolver Commitment agrees
(severally, not jointly or jointly and severally) to make advances (“Advances”)
to Borrowers in an amount at any one time outstanding not to exceed such
Lender’s Pro Rata Share of an amount equal to the lesser of (i) the Maximum
Revolver Amount at such time less the Hedge Agreement Reserve at such time, and
(ii) the Credit Amount at such time less (x) the Letter of Credit Usage at such
time and (y) the aggregate amount of reimbursement obligations in respect of
drawn Letters of Credit at such time.

(b)       Amounts borrowed pursuant to this Section 2.1 may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed at any time
during the term of this Agreement. The outstanding principal amount of the
Advances, together with interest accrued thereon, shall be due and payable on
the Maturity Date or, if earlier, on the date on which they are declared due and
payable pursuant to the terms of this Agreement.

 

2.2

Borrowing Procedures and Settlements.

(a)        Procedure for Borrowing. Each Borrowing shall be made by a written
request by an Authorized Person delivered to Agent. Unless Swing Lender is not
obligated to make a Swing Loan pursuant to Section 2.2(b) below, such notice
must be received by Agent no later than 1:00 p.m. (Georgia time) on the Business
Day that is the requested Funding Date specifying (i) the amount of such
Borrowing, and (ii) the requested Funding Date, which shall be a Business Day;
provided, however, that if Swing Lender is not obligated to make a Swing Loan as
to a requested Borrowing, such notice must be received by Agent no later than
1:00 p.m. (Georgia time) on the Business Day prior to the date that is the
requested Funding Date. At Agent’s election, in lieu of delivering the
above-described written request, any Authorized Person may give Agent telephonic
notice of such request by the required time. In such circumstances, Borrowers
agree that any such telephonic notice will be confirmed in writing within 24
hours of the giving of such telephonic notice, but the failure to provide such
written confirmation shall not affect the validity of the request.

(b)       Making of Swing Loans. In the case of a request for an Advance and so
long as either (i) the aggregate amount of Swing Loans made since the last
Settlement Date, minus the amount of Collections or payments applied to Swing
Loans since the last Settlement Date, plus the amount of the requested Advance
does not exceed $3,000,000, or (ii) Swing Lender, in its sole discretion, shall
agree to make a Swing Loan notwithstanding the foregoing limitation, Swing
Lender shall make an Advance in the amount of such Borrowing (any such Advance
made solely by Swing Lender pursuant to this Section 2.2(b) being referred to as
a “Swing Loan” and such Advances being referred to collectively as “Swing
Loans”) available to Borrowers on the Funding Date applicable thereto by
transferring immediately available funds to Borrowers’ Designated Account. Each
Swing Loan shall be deemed to be an Advance hereunder and shall be subject to
all the terms and conditions applicable to other Advances, except that all

 

 

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payments on any Swing Loan shall be payable to Swing Lender solely for its own
account. Subject to the provisions of Section 2.2(d)(ii), Swing Lender shall not
make and shall not be obligated to make any Swing Loan if Swing Lender has
actual knowledge that (i) one or more of the applicable conditions precedent set
forth in Section 3 will not be satisfied on the requested Funding Date for the
applicable Borrowing, or (ii) the requested Borrowing would exceed the
Availability on such Funding Date. Swing Lender shall not otherwise be required
to determine whether the applicable conditions precedent set forth in Section 3
have been satisfied on the Funding Date applicable thereto prior to making any
Swing Loan. The Swing Loans shall be secured by the Agent’s Liens, constitute
Obligations hereunder, and bear interest at the rate applicable from time to
time to Advances that are Base Rate Loans.

 

(c)

Making of Loans.

(i)        In the event that Swing Lender is not obligated to make a Swing Loan,
then promptly after receipt of a request for a Borrowing pursuant to Section
2.2(a), Agent shall notify the Lenders, not later than 4:00 p.m. (Georgia time)
on the Business Day immediately preceding the Funding Date applicable thereto,
by telecopy, telephone, or other similar form of transmission, of the requested
Borrowing. Each Lender shall make the amount of such Lender’s Pro Rata Share of
the requested Borrowing available to Agent in immediately available funds, to
Agent’s Account, not later than 1:00 p.m. (Georgia time) on the Funding Date
applicable thereto. After Agent’s receipt of the proceeds of such Advances,
Agent shall make the proceeds thereof available to Borrowers on the applicable
Funding Date by transferring immediately available funds equal to such proceeds
received by Agent to the Designated Account; provided, however, that, subject to
the provisions of Section 2.2(d)(ii), Agent shall not request any Lender to
make, and no Lender shall have the obligation to make, any Advance if (1) one or
more of the applicable conditions precedent set forth in Section 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing unless such
condition has been waived, or (2) the requested Borrowing would exceed the
Availability on such Funding Date.

(ii)       Unless Agent receives notice from a Lender prior to 12:00 p.m.
(Georgia time) on the date of a Borrowing, that such Lender will not make
available as and when required hereunder to Agent for the account of Borrowers
the amount of that Lender’s Pro Rata Share of the Borrowing, Agent may assume
that each Lender has made or will make such amount available to Agent in
immediately available funds on the Funding Date and Agent may (but shall not be
so required), in reliance upon such assumption, make available to Borrowers on
such date a corresponding amount. If any Lender shall not have made its full
amount available to Agent in immediately available funds and if Agent in such
circumstances has made available to Borrowers such amount, that Lender shall on
the Business Day following such Funding Date make such amount available to
Agent, together with interest at the Defaulting Lender Rate for each day during
such period. A notice submitted by Agent to any Lender with respect to amounts
owing under this subsection shall be conclusive, absent manifest error. If such
amount is so made available, such payment to Agent shall constitute such
Lender’s Advance on the date of Borrowing for all purposes of this Agreement. If
such amount is not made available to Agent on the Business Day following the
Funding Date, Agent will notify Administrative Borrower of such failure to fund
and, upon demand by Agent, Borrowers shall pay such amount to Agent for Agent’s
account, together with interest thereon for each day elapsed since the date of
such Borrowing, at a rate per annum equal to the interest rate applicable at the
time to the Advances composing such Borrowing. The failure of any Lender to make
any Advance on any Funding Date shall not relieve any other Lender of any
obligation hereunder to make an Advance on such Funding Date, but no Lender
shall be responsible for the failure of any other Lender to make the Advance to
be made by such other Lender on any Funding Date.

(iii)      Agent shall not be obligated to transfer to a Defaulting Lender any
payments made by Borrowers to Agent for the Defaulting Lender’s benefit, and, in
the absence of such

 

 

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transfer to the Defaulting Lender, Agent shall transfer any such payments to
each other non-Defaulting Lender member of the Lender Group ratably in
accordance with their Commitments (but only to the extent that such Defaulting
Lender’s Advance was funded by the other members of the Lender Group) or, if so
directed by Administrative Borrower and if no Default or Event of Default has
occurred and is continuing (and to the extent such Defaulting Lender’s Advance
was not funded by the Lender Group), retain same to be re-advanced to Borrowers
as if such Defaulting Lender had made Advances to Borrowers. Subject to the
foregoing, Agent may hold and, in its Permitted Discretion, re-lend to Borrowers
for the account of such Defaulting Lender the amount of all such payments
received and retained by Agent for the account of such Defaulting Lender. Solely
for the purposes of voting or consenting to matters with respect to the Loan
Documents, such Defaulting Lender shall be deemed not to be a “Lender” and such
Lender’s Commitment shall be deemed to be zero. This Section shall remain
effective with respect to such Lender until (x) the Obligations under this
Agreement shall have been declared or shall have become immediately due and
payable, (y) the non-Defaulting Lenders, Agent, and Administrative Borrower
shall have waived such Defaulting Lender’s default in writing, or (z) the
Defaulting Lender makes its Pro Rata Share of the applicable Advance and pays to
Agent all amounts owing by Defaulting Lender in respect thereof. The operation
of this Section shall not be construed to increase or otherwise affect the
Commitment of any Lender, to relieve or excuse the performance by such
Defaulting Lender or any other Lender of its duties and obligations hereunder,
or to relieve or excuse the performance by Borrowers of their duties and
obligations hereunder to Agent or to the Lenders other than such Defaulting
Lender. Any such failure to fund by any Defaulting Lender shall constitute a
material breach by such Defaulting Lender of this Agreement and shall entitle
Administrative Borrower at its option, upon written notice to Agent, to arrange
for a substitute Lender to assume the Commitment of such Defaulting Lender, such
substitute Lender to be reasonably acceptable to Agent. In connection with the
arrangement of such a substitute Lender, the Defaulting Lender shall have no
right to refuse to be replaced hereunder, and agrees to execute and deliver a
completed form of Assignment and Acceptance in favor of the substitute Lender
(and agrees that it shall be deemed to have executed and delivered such document
if it fails to do so) subject only to being repaid its share of the outstanding
Obligations (other than Hedge Agreement Obligations, but including an assumption
of its Pro Rata Share of the Risk Participation Liability) without any premium
or penalty of any kind whatsoever; provided, however, that any such assumption
of the Commitment of such Defaulting Lender shall not be deemed to constitute a
waiver of any of the Lender Groups’ or Borrowers’ rights or remedies against any
such Defaulting Lender arising out of or in relation to such failure to fund.

 

(d)

Protective Advances and Optional Overadvances.

(i)        Agent hereby is authorized by Borrowers and the Lenders, from time to
time in Agent’s sole discretion, (A) after the occurrence and during the
continuance of a Default or an Event of Default, or (B) at any time that any of
the other applicable conditions precedent set forth in Section 3 are not
satisfied, to make Advances to Borrowers on behalf of the Lenders that Agent, in
its Permitted Discretion deems necessary or desirable (1) to preserve or protect
the Collateral, or any portion thereof, or (2) to enhance the likelihood of
repayment of the Obligations (other than the Hedge Agreement Obligations) (any
of the Advances described in this Section 2.2(d)(i) shall be referred to as
“Protective Advances”).

(ii)       Any contrary provision of this Agreement notwithstanding, the Lenders
hereby authorize Agent or Swing Lender, as applicable, and either Agent or Swing
Lender, as applicable, may, but is not obligated to, knowingly and
intentionally, continue to make Advances (including Swing Loans) to Borrowers
notwithstanding that an Overadvance exists or thereby would be created, so long
as (A) after giving effect to such Advances, the outstanding Revolver Usage plus
outstanding Letter of Credit Usage does not exceed the Credit Amount by more
than $3,000,000, and (B) after giving effect to such Advances, the outstanding
Revolver Usage (except for and excluding amounts charged to the Loan

 

 

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Account for interest, fees, or Lender Group Expenses) does not exceed the
Maximum Revolver Amount. In the event Agent obtains actual knowledge that the
Revolver Usage exceeds the amounts permitted by the immediately foregoing
provisions, regardless of the amount of, or reason for, such excess, Agent shall
notify the Lenders as soon as practicable (and prior to making any (or any
additional) intentional Overadvances (except for and excluding amounts charged
to the Loan Account for interest, fees, or Lender Group Expenses) unless Agent
determines that prior notice would result in imminent harm to the Collateral or
its value), and the Lenders with Revolver Commitments thereupon shall, together
with Agent, jointly determine the terms of arrangements that shall be
implemented with Borrowers intended to reduce, within a reasonable time, the
outstanding principal amount of the Advances to Borrowers to an amount permitted
by the preceding sentence. In such circumstances, if any Lender with a Revolver
Commitment objects to the proposed terms of reduction or repayment of any
Overadvance, the terms of reduction or repayment thereof shall be implemented
according to the determination of the Required Lenders. Each Lender with a
Revolver Commitment shall be obligated to settle with Agent as provided in
Section 2.2(e) for the amount of such Lender’s Pro Rata Share of any
unintentional Overadvances by Agent reported to such Lender, any intentional
Overadvances made as permitted under this Section 2.2(d)(ii), and any
Overadvances resulting from the charging to the Loan Account of interest, fees,
or Lender Group Expenses.

(iii)      Each Protective Advance and each Overadvance shall be deemed to be an
Advance hereunder, except that no Protective Advance or Overadvance shall be
eligible to be a LIBOR Rate Loan and, prior to Settlement therefor, all payments
on the Protective Advances shall be payable to Agent solely for its own account.
The Protective Advances and Overadvances shall be repayable on demand, secured
by the Agent’s Liens, constitute Obligations hereunder, and bear interest at the
rate applicable from time to time to Advances that are Base Rate Loans. The
provisions of this Section 2.2(d) are for the exclusive benefit of Agent, Swing
Lender, and the Lenders and are not intended to benefit any Borrower in any way.

(e)        Settlement. It is agreed that each Lender’s funded portion of the
Advances is intended by the Lenders to equal, at all times, such Lender’s Pro
Rata Share of the outstanding Advances. Such agreement notwithstanding, Agent,
Swing Lender, and the other Lenders agree (which agreement shall not be for the
benefit of any Borrower) that in order to facilitate the administration of this
Agreement and the other Loan Documents, settlement among the Lenders as to the
Advances, the Swing Loans, and the Protective Advances shall take place on a
periodic basis in accordance with the following provisions:

(i)        Agent shall request settlement (“Settlement”) with the Lenders on a
weekly basis, or on a more frequent basis if so determined by Agent (1) on
behalf of Swing Lender, with respect to the outstanding Swing Loans, (2) for
itself, with respect to the outstanding Protective Advances, and (3) with
respect to Parent’s or its Subsidiaries’ Collections or payments received, as to
each by notifying the Lenders by telecopy, telephone, or other similar form of
transmission, of such requested Settlement, no later than 5:00 p.m. (Georgia
time) on the Business Day immediately prior to the date of such requested
Settlement (the date of such requested Settlement being the “Settlement Date”).
Such notice of a Settlement Date shall include a summary statement of the amount
of outstanding Advances, Swing Loans, and Protective Advances for the period
since the prior Settlement Date. Subject to the terms and conditions contained
herein (including Section 2.2(c)(iii)): (y) if a Lender’s balance of the
Advances (including Swing Loans and Protective Advances) exceeds such Lender’s
Pro Rata Share of the Advances (including Swing Loans and Protective Advances)
as of a Settlement Date, then Agent shall, by no later than 3:00 p.m. (Georgia
time) on the Settlement Date, transfer in immediately available funds to a
Deposit Account of such Lender (as such Lender may designate), an amount such
that each such Lender shall, upon receipt of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances (including Swing Loans and
Protective Advances), and (z) if a Lender’s balance of the

 

 

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Advances (including Swing Loans and Protective Advances) is less than such
Lender’s Pro Rata Share of the Advances (including Swing Loans and Protective
Advances) as of a Settlement Date, such Lender shall no later than 3:00 p.m.
(Georgia time) on the Settlement Date transfer in immediately available funds to
the Agent’s Account, an amount such that each such Lender shall, upon transfer
of such amount, have as of the Settlement Date, its Pro Rata Share of the
Advances (including Swing Loans and Protective Advances). Such amounts made
available to Agent under clause (z) of the immediately preceding sentence shall
be applied against the amounts of the applicable Swing Loans or Protective
Advances and, together with the portion of such Swing Loans or Protective
Advances representing Swing Lender’s Pro Rata Share thereof, shall constitute
Advances of such Lenders. If any such amount is not made available to Agent by
any Lender on the Settlement Date applicable thereto to the extent required by
the terms hereof, Agent shall be entitled to recover for its account such amount
on demand from such Lender together with interest thereon at the Defaulting
Lender Rate.

(ii)       In determining whether a Lender’s balance of the Advances, Swing
Loans, and Protective Advances is less than, equal to, or greater than such
Lender’s Pro Rata Share of the Advances, Swing Loans, and Protective Advances as
of a Settlement Date, Agent shall, as part of the relevant Settlement, apply to
such balance the portion of payments actually received in good funds by Agent
with respect to principal, interest, fees payable by Borrowers and allocable to
the Lenders hereunder, and proceeds of Collateral.

(iii)      Between Settlement Dates, Agent, to the extent Protective Advances or
Swing Loans are outstanding, may pay over to Agent or Swing Lender, as
applicable, any Collections or payments received by Agent, that in accordance
with the terms of this Agreement would be applied to the reduction of the
Advances, for application to the Protective Advances or Swing Loans. Between
Settlement Dates, Agent, to the extent no Protective Advances or Swing Loans are
outstanding, may pay over to Swing Lender any Collections or payments received
by Agent, that in accordance with the terms of this Agreement would be applied
to the reduction of the Advances, for application to Swing Lender’s Pro Rata
Share of the Advances. If, as of any Settlement Date, Collections or payments of
Parent or its Subsidiaries received since the then immediately preceding
Settlement Date have been applied to Swing Lender’s Pro Rata Share of the
Advances other than to Swing Loans, as provided for in the previous sentence,
Swing Lender shall pay to Agent for the accounts of the Lenders, and Agent shall
pay to the Lenders, to be applied to the outstanding Advances of such Lenders,
an amount such that each Lender shall, upon receipt of such amount, have, as of
such Settlement Date, its Pro Rata Share of the Advances. During the period
between Settlement Dates, Swing Lender with respect to Swing Loans, Agent with
respect to Protective Advances, and each Lender (subject to the effect of
agreements between Agent and individual Lenders) with respect to the Advances
other than Swing Loans and Protective Advances, shall be entitled to interest at
the applicable rate or rates payable under this Agreement on the daily amount of
funds employed by Swing Lender, Agent, or the Lenders, as applicable.

(f)        Notation. Agent, as a non-fiduciary agent for Borrowers, shall
maintain a register showing the principal amount of the Advances, owing to each
Lender, including the Swing Loans owing to Swing Lender, and Protective Advances
owing to Agent, and the interests therein of each Lender, from time to time and
such records shall, absent manifest error, conclusively be presumed to be
correct and accurate.

(g)       Lenders’ Failure to Perform. All Advances (other than Swing Loans and
Protective Advances) shall be made by the Lenders contemporaneously and in
accordance with their Pro Rata Shares. It is understood that (i) no Lender shall
be responsible for any failure by any other Lender to perform its obligation to
make any Advance (or other extension of credit) hereunder, nor shall any
Commitment of any Lender be increased or decreased as a result of any failure by
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perform its obligations hereunder, and (ii) no failure by any Lender to perform
its obligations hereunder shall excuse any other Lender from its obligations
hereunder.

 

2.3

Payments; Reductions of Commitments; Prepayments.

 

(a)

Payments by Borrowers.

(i)        Except as otherwise expressly provided herein, all payments by
Borrowers shall be made to Agent’s Account for the account of the Lender Group
and shall be made in immediately available funds, no later than 2:00 p.m.
(Georgia time) on the date specified herein. Any payment received by Agent later
than 2:00 p.m. (Georgia time) shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall continue to
accrue until such following Business Day.

(ii)       Unless Agent receives notice from Administrative Borrower prior to
the date on which any payment is due to the Lenders that Borrowers will not make
such payment in full as and when required, Agent may assume that Borrowers have
made (or will make) such payment in full to Agent on such date in immediately
available funds and Agent may (but shall not be so required), in reliance upon
such assumption, distribute to each Lender on such due date an amount equal to
the amount then due such Lender. If and to the extent Borrowers do not make such
payment in full to Agent on the date when due, each Lender severally shall repay
to Agent on demand such amount distributed to such Lender, together with
interest thereon at the Defaulting Lender Rate for each day from the date such
amount is distributed to such Lender until the date repaid.

 

(b)

Apportionment and Application.

(i)        So long as no Application Event has occurred and is continuing and
except as otherwise provided with respect to Defaulting Lenders, all principal
and interest payments shall be apportioned ratably among the Lenders (according
to the unpaid principal balance of the Obligations to which such payments relate
held by each Lender) and all payments of fees and expenses (other than fees or
expenses that are for Agent’s separate account) shall be apportioned ratably
among the Lenders having a Pro Rata Share of the type of Commitment or
Obligation to which a particular fee or expense relates. All payments to be made
hereunder by Borrowers shall be remitted to Agent and all (subject to Section
2.3(b)(iv)) such payments, and all proceeds of Collateral received by Agent,
shall be applied, so long as no Application Event has occurred and is
continuing, to reduce the balance of the Advances outstanding and, thereafter,
to Borrowers (to be wired to the Designated Account) or such other Person
entitled thereto under applicable law.

(ii)       At any time that an Application Event has occurred and is continuing
and except as otherwise provided with respect to Defaulting Lenders, all
payments remitted to Agent and all proceeds of Collateral received by Agent
shall be applied as follows:

(A)       first, to pay any Lender Group Expenses (including cost or expense
reimbursements) or indemnities then due to Agent under the Loan Documents, until
paid in full,

(B)       second, to pay any fees or premiums then due to Agent under the Loan
Documents until paid in full,

(C)       third, to pay interest due in respect of all Protective Advances until
paid in full,

 

 

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(D)       fourth, to pay the principal of all Protective Advances until paid in
full,

(E)       fifth, ratably to pay any Lender Group Expenses (including cost or
expense reimbursements) or indemnities then due to any of the Lenders under the
Loan Documents, until paid in full,

(F)       sixth, ratably to pay any fees or premiums then due to any of the
Lenders under the Loan Documents until paid in full,

(G)       seventh, ratably to pay interest due in respect of the Advances (other
than Protective Advances) and the Swing Loans until paid in full,

(H)       eighth, ratably (i) to pay the principal of all Swing Loans until paid
in full, (ii) to pay the principal of all Advances (other than Swing Loans)
until paid in full, (iii) to Agent, to be held by Agent, for the benefit of
Issuing Lender and those Lenders having a share of the Risk Participation
Liability, as cash collateral in an amount up to 105% of the Letter of Credit
Usage, and (iv) to Agent, to be held by Agent, for the benefit of the Hedge
Agreement Providers, as cash collateral in an amount up to the amount of the
Hedge Agreement Reserve established prior to the occurrence of, and not in
contemplation of, the subject Event of Default,

 

(I)

ninth, to pay any other Obligations, and

(J)        tenth, to Borrowers (to be wired to the Designated Account) or such
other Person entitled thereto under applicable law.

(iii)      Agent promptly shall distribute to each Lender, pursuant to the
applicable wire instructions received from each Lender in writing, such funds as
it may be entitled to receive, subject to a Settlement delay as provided in
Section 2.2(e).

(iv)      In each instance, so long as no Application Event has occurred and is
continuing, Section 2.3(b)(i) shall not apply to any payment made by Borrowers
to Agent and specified by Borrowers to be for the payment of specific
Obligations then due and payable (or prepayable) under any provision of this
Agreement or any other Loan Document.

(v)       For purposes of Section 2.3(b)(ii), “paid in full” means payment in
cash of all amounts owing under the Loan Documents, including loan fees, service
fees, professional fees, interest (and specifically including interest accrued
after the commencement of any Insolvency Proceeding), default interest, interest
on interest, and expense reimbursements, whether or not any of the foregoing
would be or is allowed or disallowed in whole or in part in any Insolvency
Proceeding.

(vi)      In the event of a direct conflict between the priority provisions of
this Section 2.3 and any other provision contained in any other Loan Document,
it is the intention of the parties hereto that such provisions be read together
and construed, to the fullest extent possible, to be in concert with each other.
In the event of any actual, irreconcilable conflict that cannot be resolved as
aforesaid, the terms and provisions of this Section 2.3 shall control and
govern.

 

(c)

Reduction of Commitments.

(i)        Revolver Commitments. The Revolver Commitments shall terminate on the
Maturity Date. Subject to the payment of any fees required to be paid pursuant
to the Fee Letter,

 

 

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Borrowers may reduce the Revolver Commitments to an amount (which may be zero)
not less than the sum of (A) the Revolver Usage as of such date, plus (B) the
principal amount of all Advances not yet made as to which a request has been
given by Administrative Borrower under Section 2.2(a). Each such reduction shall
be in an amount not less than $500,000 and integral multiples of $100,000 in
excess thereof (unless the Revolver Commitments in effect immediately prior to
such reduction are less than $500,000), shall be made by providing not less than
10 Business Days prior written notice to Agent and shall be irrevocable. Once
reduced, the Revolver Commitments may not be increased. Each such reduction of
the Revolver Commitments shall reduce the Revolver Commitments of each Lender
proportionately in accordance with its Pro Rata Share thereof.

(ii)       Letter of Credit Commitments. The Letter of Credit Commitment shall
terminate on the Maturity Date. Subject to the payment of any fees required to
be paid pursuant to the Fee Letter, Borrowers may reduce the Letter of Credit
Commitment to an amount (which may be zero) not less than the sum of (A) the
Letter of Credit Usage as of such date, plus (B) the amount of all Letters of
Credit not yet issued as to which a request has been given by Administrative
Borrower pursuant to Section 2.10(a). Each such reduction shall be in an amount
not less than $500,000 and integral multiples of $100,000 in excess thereof
(unless the Letter of Credit Commitments in effect immediately prior to such
reduction are less than $500,000), shall be made by providing not less than 10
Business Days prior written notice to Agent and shall be irrevocable. Once
reduced, the Letter of Credit Commitment may not be increased.

(d)       Optional Prepayments. Borrowers may prepay the principal of any
Advance at any time in whole or in part.

 

(e)

Mandatory Prepayments.

(i)        Credit Amount. If, at any time, (A) the Revolver Usage plus the
Letter of Credit Usage plus the unreimbursed amounts in respect of drawn Letters
of Credit on such date exceeds (B) the Credit Amount (such excess being referred
to as the “Credit Amount Excess”), then Borrowers shall immediately prepay the
Obligations in accordance with Section 2.4(f) in an aggregate amount equal to
the Credit Amount Excess.

(ii)       Dispositions. Within 1 Business Day of the date of receipt by Parent
or any of its Subsidiaries of the Net Cash Proceeds of any voluntary or
involuntary sale or disposition by Parent or any of its Subsidiaries of assets
(including casualty losses or condemnations but excluding sales or dispositions
which qualify as Permitted Dispositions under clauses (a), (b), (c), (d), (e),
(f), (i), (j) or (l) of the definition of Permitted Dispositions), Borrowers
shall prepay the outstanding principal amount of the Obligations in accordance
with Section 2.3(f) in an amount equal to 100% of such Net Cash Proceeds
(including condemnation awards and payments in lieu thereof) received by such
Person in connection with such sales or dispositions; provided that, so long as
(A) no Default or Event of Default shall have occurred and is continuing, (B)
Borrowers shall have given Agent prior written notice of Borrowers’ intention to
apply such monies to the costs of replacement of the properties or assets that
are the subject of such sale or disposition or the cost of purchase or
construction of other assets useful in the business of Parent or its
Subsidiaries, (C) the monies are held in a Deposit Account in which Agent has a
perfected first-priority security interest, and (D) Parent or its Subsidiaries,
as applicable, complete such replacement, purchase, or construction within 180
days after the initial receipt of such monies, Parent and its Subsidiaries shall
have the option to apply such monies to the costs of replacement of the assets
that are the subject of such sale or disposition or the costs of purchase or
construction of other assets useful in the business of Parent and its
Subsidiaries unless and to the extent that such applicable period shall have
expired without such replacement, purchase or construction being made or
completed, in which case, any amounts remaining in the cash collateral account
shall be paid to Agent and applied in accordance with

 

 

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Section 2.4(f). Nothing contained in this Section 2.3(e) shall permit Parent or
any of its Subsidiaries to sell or otherwise dispose of any assets other than in
accordance with Section 6.4.

(f)        Application of Payments. Each prepayment pursuant to
Section 2.3(e)(i) or 2.3(e)(ii) shall, (A) so long as no Application Event shall
have occurred and be continuing, be applied, first, to the outstanding principal
amount of the Advances (with a corresponding permanent reduction in the Maximum
Revolver Amount to the extent required under the Senior Note Documents
(including, without limitation, Section 4.06(b) of the Indenture)) until paid in
full, and second, to cash collateralize the Letters of Credit (with a
corresponding permanent reduction in the Maximum Letter of Credit Amount to the
extent required under the Senior Note Documents (including, without limitation,
Section 4.06(b) of the Indenture) in an amount equal to 105% of the then extant
Letter of Credit Usage, and (B) if an Application Event shall have occurred and
be continuing, be applied in the manner set forth in Section 2.3(b)(ii).

2.4       Overadvances. If, at any time or for any reason, the amount of
Obligations owed by Borrowers to the Lender Group pursuant to Section 2.1 or
Section 2.10 is greater than any of the limitations set forth in Section 2.1 or
Section 2.10, as applicable (an “Overadvance”), Borrowers shall immediately pay
to Agent, in cash, the amount of such excess, which amount shall be used by
Agent to reduce the Obligations in accordance with the priorities set forth in
Section 2.3(b). Borrowers promise to pay the Obligations (including principal,
interest, fees, costs, and expenses) in Dollars in full on the Maturity Date or,
if earlier, on the date on which the Obligations are declared due and payable
pursuant to the terms of this Agreement.

 

2.5

Interest Rates and Letter of Credit Fee: Rates, Payments, and Calculations.

(a)        Interest Rates. Except as provided in Section 2.5(c), all Obligations
(except for undrawn Letters of Credit and except for Hedge Agreement
Obligations) that have been charged to the Loan Account pursuant to the terms
hereof shall bear interest on the Daily Balance thereof as follows:

(i)        if the relevant Obligation is a LIBOR Rate Loan, at a per annum rate
equal to the LIBOR Rate plus the LIBOR Rate Margin, and

(ii)       otherwise, at a per annum rate equal to the Base Rate plus the Base
Rate Margin.

(b)       Letter of Credit Fee. Borrowers shall pay Agent (for the ratable
benefit of the Lenders with a Letter of Credit Commitment, subject to any
agreements between Agent and individual Lenders), a Letter of Credit fee (in
addition to the charges, commissions, fees, and costs set forth in Section
2.10(e)) which shall accrue at a per annum rate equal to the LIBOR Rate Margin
times the Daily Balance of the undrawn amount of all outstanding Letters of
Credit.

(c)        Default Rate. Upon the occurrence and during the continuation of an
Event of Default and at the election of the Required Lenders,

(i)        all Obligations (except for undrawn Letters of Credit and except for
Hedge Agreement Obligations) that have been charged to the Loan Account pursuant
to the terms hereof shall bear interest on the Daily Balance thereof at a per
annum rate equal to 2 percentage points above the per annum rate otherwise
applicable hereunder, and

(ii)       the Letter of Credit fee provided for in Section 2.5(b) shall be
increased to 2 percentage points above the per annum rate otherwise applicable
hereunder.

 

 

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(d)       Payment. Except as provided to the contrary in Section 2.9 or Section
2.11(a), interest, Letter of Credit fees, and all other fees payable hereunder
shall be due and payable, in arrears, on the first day of each month at any time
that Obligations or Commitments are outstanding. Borrowers hereby authorize
Agent, from time to time without prior notice to Borrowers, to charge all
interest and fees (when due and payable), all Lender Group Expenses (as and when
incurred), all charges, commissions, fees, and costs provided for in Section
2.10(e) (as and when accrued or incurred), all fees and costs provided for in
Section 2.9 (as and when accrued or incurred), and all other payments as and
when due and payable under any Loan Document (including any amounts due and
payable to the Hedge Agreement Providers in respect of Hedge Agreements) to the
Loan Account, which amounts thereafter shall constitute Advances hereunder and
shall accrue interest at the rate then applicable to Advances that are Base Rate
Loans. Any interest not paid when due shall be compounded by being charged to
the Loan Account and shall thereafter constitute Advances hereunder and shall
accrue interest at the rate then applicable to Advances that are Base Rate
Loans.

(e)        Computation. All interest and fees chargeable under the Loan
Documents shall be computed on the basis of a 360 day year, in each case, for
the actual number of days elapsed in the period during which the interest or
fees accrue. In the event the Base Rate is changed from time to time hereafter,
the rates of interest hereunder based upon the Base Rate automatically and
immediately shall be increased or decreased by an amount equal to such change in
the Base Rate.

(f)        Intent to Limit Charges to Maximum Lawful Rate. In no event shall the
interest rate or rates payable under this Agreement, plus any other amounts paid
in connection herewith, exceed the highest rate permissible under any law that a
court of competent jurisdiction shall, in a final determination, deem
applicable. Borrowers and the Lender Group, in executing and delivering this
Agreement, intend legally to agree upon the rate or rates of interest and manner
of payment stated within it; provided, however, that, anything contained herein
to the contrary notwithstanding, if said rate or rates of interest or manner of
payment exceeds the maximum allowable under applicable law, then, ipso facto, as
of the date of this Agreement, Borrowers are and shall be liable only for the
payment of such maximum as allowed by law, and payment received from Borrowers
in excess of such legal maximum, whenever received, shall be applied to reduce
the principal balance of the Obligations to the extent of such excess.

2.6       Crediting Payments. The receipt of any payment item by Agent shall not
be considered a payment on account unless such payment item is a wire transfer
of immediately available federal funds made to the Agent’s Account or unless and
until such payment item is honored when presented for payment. Should any
payment item not be honored when presented for payment, then Borrowers shall be
deemed not to have made such payment and interest shall be calculated
accordingly. Anything to the contrary contained herein notwithstanding, any
payment item shall be deemed received by Agent only if it is received into the
Agent’s Account on a Business Day on or before 2:00 p.m. (Georgia time). If any
payment item is received into the Agent’s Account on a non-Business Day or after
2:00 p.m. (Georgia time) on a Business Day, it shall be deemed to have been
received by Agent as of the opening of business on the immediately following
Business Day.

2.7       Designated Account. Agent is authorized to make the Advances, and
Issuing Lender is authorized to issue the Letters of Credit, under this
Agreement based upon telephonic or other instructions received from anyone
purporting to be an Authorized Person or, without instructions, if pursuant to
Section 2.5(d). Administrative Borrower agrees to establish and maintain the
Designated Account with the Designated Account Bank for the purpose of receiving
the proceeds of the Advances requested by Borrowers and made by Agent or the
Lenders hereunder. Unless otherwise agreed by Agent and Administrative Borrower,
any Advance, Protective Advance, or Swing Loan requested by Borrowers and made
by Agent or the Lenders hereunder shall be made to the Designated Account.

 

 

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2.8       Maintenance of Loan Account; Statements of Obligations. Agent shall
maintain an account on its books in the name of Borrowers (the “Loan Account”)
on which Borrowers will be charged with all Advances (including Protective
Advances and Swing Loans) made by Agent, Swing Lender, or the Lenders to
Borrowers or for Borrowers’ account, the Letters of Credit issued by Issuing
Lender for Borrowers’ account, and with all other payment Obligations hereunder
or under the other Loan Documents (except for Hedge Agreement Obligations),
including, accrued interest, fees and expenses, and Lender Group Expenses. In
accordance with Section 2.6, the Loan Account will be credited with all payments
received by Agent from Borrowers or for Borrowers’ account. Agent shall render
statements regarding the Loan Account to Borrowers, including principal,
interest, fees, and including an itemization of all charges and expenses
constituting Lender Group Expenses owing, and such statements, absent manifest
error, shall be conclusively presumed to be correct and accurate and constitute
an account stated between Borrowers and the Lender Group unless, within 30 days
after receipt thereof by Administrative Borrower, Administrative Borrower shall
deliver to Agent written objection thereto describing the error or errors
contained in any such statements.

 

2.9

Fees. Borrowers shall pay to Agent,

(a)        for the account of Agent, as and when due and payable under the terms
of the Fee Letter, the fees set forth in the Fee Letter.

(b)       for the ratable account of those Lenders with Revolver Commitments, on
the first day of each month from and after the Closing Date up to the first day
of the month prior to the Payoff Date and on the Payoff Date, an unused line fee
in an amount equal to 0.375% per annum times the result of (i) the Maximum
Revolver Amount plus the Maximum Letter of Credit Amount, less (ii) the average
Daily Balance of the Revolver Usage during the immediately preceding month (or
portion thereof) plus the average Daily Balance of the Letter of Credit Usage
during the immediately preceding month (or portion thereof).

 

2.10

Letters of Credit.

(a)        Subject to the terms and conditions of this Agreement, the Issuing
Lender agrees to issue letters of credit for the account of Borrowers (each, an
“L/C”) or to purchase participations or execute indemnities, guarantees, or
reimbursement obligations (each such undertaking, an “L/C Undertaking”) with
respect to letters of credit issued by an Underlying Issuer (as of the Closing
Date, the prospective Underlying Issuer is to be Wells Fargo) for the account of
Borrowers. Each request for the issuance of a Letter of Credit, or the
amendment, renewal, or extension of any outstanding Letter of Credit, shall be
made in writing by an Authorized Person and delivered to the Issuing Lender and
Agent via hand delivery, telefacsimile, or other electronic method of
transmission reasonably in advance of the requested date of issuance, amendment,
renewal, or extension. Each such request shall be in form and substance
reasonably satisfactory to the Issuing Lender in its Permitted Discretion and
shall specify (i) the amount of such Letter of Credit, (ii) the date of
issuance, amendment, renewal, or extension of such Letter of Credit, (iii) the
expiration date of such Letter of Credit, (iv) the name and address of the
beneficiary thereof (or the beneficiary of the Underlying Letter of Credit, as
applicable), and (v) such other information (including, in the case of an
amendment, renewal, or extension, identification of the outstanding Letter of
Credit to be so amended, renewed, or extended) as shall be necessary to prepare,
amend, renew, or extend such Letter of Credit. Anything contained herein to the
contrary notwithstanding, the Issuing Lender may, but shall not be obligated to
issue a Letter of Credit that supports the obligations of a Loan Party or its
Subsidiaries in respect of (1) a lease of real property, or (2) an employment
contract. If requested by the Issuing Lender, Borrowers also shall be an
applicant under the application with respect to any Underlying Letter of Credit
that is to be the subject of an L/C

 

 

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Undertaking. The Issuing Lender shall have no obligation to issue a Letter of
Credit if any of the following would result after giving effect to the issuance
of such requested Letter of Credit:

(i)        the Letter of Credit Usage would exceed the Credit Amount less the
outstanding amount of Advances, or

(ii)       the Letter of Credit Usage would exceed the Maximum Letter of Credit
Amount.

Borrowers and the Lender Group acknowledge and agree that certain Underlying
Letters of Credit may be issued to support letters of credit that already are
outstanding as of the Closing Date. Each Letter of Credit (and corresponding
Underlying Letter of Credit) shall be in form and substance acceptable to the
Issuing Lender (in the exercise of its Permitted Discretion), including the
requirement that the amounts payable thereunder must be payable in Dollars. If
Issuing Lender is obligated to advance funds under a Letter of Credit, Borrowers
shall reimburse such L/C Disbursement to Issuing Lender by paying to Agent an
amount equal to such L/C Disbursement not later than 5:00 p.m., Georgia time, on
the date that such L/C Disbursement is made, if Administrative Borrower shall
have received written or telephonic notice of such L/C Disbursement prior to
1:00 p.m., Georgia time, on such date, or, if such notice has not been received
by Administrative Borrower prior to such time on such date, then not later than
5:00 p.m., Georgia time, on the Business Day that Administrative Borrower
receives such notice, if such notice is received prior to 1:00 p.m., Georgia
time, on the date of receipt, and, in the absence of such reimbursement, the L/C
Disbursement immediately and automatically shall bear interest at the rate then
applicable to Advances that are Base Rate Loans until such time as Borrowers
have paid to Agent the amount of such L/C Disbursement in accordance with this
paragraph. Promptly following receipt by Agent of any payment from Borrowers
pursuant to this paragraph, Agent shall distribute such payment to the Issuing
Lender or, to the extent that Lenders have made payments pursuant to Section
2.10(b) to reimburse the Issuing Lender, then to such Lenders and the Issuing
Lender as their interests may appear.

(b)       By the issuance of a Letter of Credit (or an amendment to a Letter of
Credit increasing the amount thereof) and without any further action on the part
of the Issuing Lender or the Lenders with Letter of Credit Commitments, the
Issuing Lender shall be deemed to have granted to each Lender with a Letter of
Credit Commitment, and each Lender with a Letter of Credit Commitment shall be
deemed to have purchased, a participation in each Letter of Credit, in an amount
equal to its Pro Rata Share of the Risk Participation Liability of such Letter
of Credit, and each such Lender agrees to pay to Agent, for the account of the
Issuing Lender, such Lender’s Pro Rata Share of any payments made by the Issuing
Lender under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Lender with a Letter of Credit Commitment hereby absolutely and
unconditionally agrees to pay to Agent, for the account of the Issuing Lender,
such Lender’s Pro Rata Share of each L/C Disbursement made by the Issuing Lender
and not reimbursed by Borrowers on the date due as provided in Section 2.10(a),
or of any reimbursement payment required to be refunded to Borrowers for any
reason. Each Lender with a Letter of Credit Commitment acknowledges and agrees
that its obligation to deliver to Agent, for the account of the Issuing Lender,
an amount equal to its respective Pro Rata Share of each L/C Disbursement made
by the Issuing Lender pursuant to this Section 2.10(b) shall be absolute and
unconditional and such remittance shall be made notwithstanding the occurrence
or continuation of an Event of Default or Default or the failure to satisfy any
condition set forth in Section 3. If any such Lender fails to make available to
Agent the amount of such Lender’s Pro Rata Share of each L/C Disbursement made
by the Issuing Lender in respect of such Letter of Credit as provided in this
Section, such Lender shall be deemed to be a Defaulting Lender and Agent (for
the account of the Issuing Lender) shall be entitled to recover such amount on
demand from such Lender together with interest thereon at the Defaulting Lender
Rate until paid in full.

 

 

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(c)        Each Borrower hereby agrees to indemnify, save, defend, and hold the
Lender Group harmless from any loss, cost, expense, or liability, and reasonable
attorneys fees incurred by the Lender Group arising out of or in connection with
any Letter of Credit; provided, however, that no Borrower shall be obligated
hereunder to indemnify for any loss, cost, expense, or liability to the extent
that it is caused by the gross negligence or willful misconduct of the Issuing
Lender or any other member of the Lender Group. Each Borrower agrees to be bound
by the Underlying Issuer’s regulations and interpretations of any Underlying
Letter of Credit or by Issuing Lender’s interpretations of any L/C issued by
Issuing Lender to or for such Borrower’s account, even though this
interpretation may be different from such Borrower’s own, and each Borrower
understands and agrees that the Lender Group shall not be liable for any error,
negligence, or mistake, whether of omission or commission, in following
Borrowers’ instructions or those contained in the Letter of Credit or any
modifications, amendments, or supplements thereto, except to the extent caused
by the gross negligence or willful misconduct of a member of the Lender Group.
Each Borrower understands that the L/C Undertakings may require Issuing Lender
to indemnify the Underlying Issuer for certain costs or liabilities arising out
of claims by Borrowers against such Underlying Issuer. Each Borrower hereby
agrees to indemnify, save, defend, and hold the Lender Group harmless with
respect to any loss, cost, expense (including reasonable attorneys fees), or
liability incurred by the Lender Group under any L/C Undertaking as a result of
the Lender Group’s indemnification of any Underlying Issuer; provided, however,
that no Borrower shall be obligated hereunder to indemnify for any loss, cost,
expense, or liability to the extent that it is caused by the gross negligence or
willful misconduct of the Issuing Lender or any other member of the Lender
Group. Each Borrower hereby acknowledges and agrees that neither the Lender
Group nor the Issuing Lender shall be responsible for delays, errors, or
omissions resulting from the malfunction of equipment in connection with any
Letter of Credit.

(d)       Each Borrower hereby authorizes and directs any Underlying Issuer to
deliver to the Issuing Lender all instruments, documents, and other writings and
property received by such Underlying Issuer pursuant to such Underlying Letter
of Credit and to accept and rely upon the Issuing Lender’s instructions with
respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.

(e)        Any and all issuance charges, commissions, fees, and costs incurred
by the Issuing Lender relating to Underlying Letters of Credit shall be Lender
Group Expenses for purposes of this Agreement and shall be reimbursable
immediately by Borrowers to Agent for the account of the Issuing Lender; it
being acknowledged and agreed by each Borrower that, as of the Closing Date, the
issuance charge imposed by the prospective Underlying Issuer is a one-time
issuance charge of .825% per annum times the face amount of each Underlying
Letter of Credit, that such issuance charge may be changed from time to time,
and that the Underlying Issuer also imposes a schedule of charges for
amendments, extensions, drawings, and renewals.

(f)        If by reason of (i) any change after the Closing Date in any
applicable law, treaty, rule, or regulation or any change in the interpretation
or application thereof by any Governmental Authority, or (ii) compliance by the
Underlying Issuer or the Lender Group with any direction, request, or
requirement (irrespective of whether having the force of law) of any
Governmental Authority or monetary authority including, Regulation D of the
Federal Reserve Board as from time to time in effect (and any successor
thereto):

(i)        any reserve, deposit, or similar requirement is or shall be imposed
or modified in respect of any Letter of Credit issued hereunder, or

(ii)       there shall be imposed on the Underlying Issuer or the Lender Group
any other condition regarding any Underlying Letter of Credit or any Letter of
Credit issued pursuant hereto,

 

 

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and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay within 30 days after
demand therefor, such amounts as Agent may specify to be necessary to compensate
the Lender Group for such additional cost or reduced receipt, together with
interest on such amount from the date of such demand until payment in full
thereof at the rate then applicable to Base Rate Loans hereunder; provided that
Borrowers shall not be required to compensate a Lender pursuant to this Section
for any such amounts incurred more than 180 days prior to the date that such
Lender first demands payment from Borrowers of such amounts; provided further
that if an event or circumstance giving rise to such amounts is retroactive,
then the 180-day period referred to above shall be extended to include the
period of retroactive effect thereof. The determination by Agent of any amount
due pursuant to this Section, as set forth in a certificate setting forth the
calculation thereof in reasonable detail, shall, in the absence of manifest or
demonstrable error, be final and conclusive and binding on all of the parties
hereto.

 

2.11

LIBOR Option.

(a)        Interest and Interest Payment Dates. In lieu of having interest
charged at the rate based upon the Base Rate, Borrowers shall have the option
(the “LIBOR Option”) to have interest on all or a portion of the Advances be
charged (whether at the time when made (unless otherwise provided herein), upon
conversion from a Base Rate Loan to a LIBOR Rate Loan, or upon continuation of a
LIBOR Rate Loan as a LIBOR Rate Loan) at a rate of interest based upon the LIBOR
Rate. Interest on LIBOR Rate Loans shall be payable on the earliest of (i) the
last day of the Interest Period applicable thereto; (ii) the date on which all
or any portion of the Obligations are accelerated pursuant to the terms hereof,
or (iii) the date on which this Agreement is terminated pursuant to the terms
hereof. On the last day of each applicable Interest Period, unless
Administrative Borrower properly has exercised the LIBOR Option with respect
thereto, the interest rate applicable to such LIBOR Rate Loan automatically
shall convert to the rate of interest then applicable to Base Rate Loans of the
same type hereunder. At any time that an Event of Default has occurred and is
continuing, Borrowers no longer shall have the option to request that Advances
bear interest at a rate based upon the LIBOR Rate.

 

(b)

LIBOR Election.

(i)        Administrative Borrower may, at any time and from time to time, so
long as no Event of Default has occurred and is continuing, elect to exercise
the LIBOR Option by notifying Agent prior to 2:00 p.m. (Georgia time) at least 3
Business Days prior to the commencement of the proposed Interest Period (the
“LIBOR Deadline”). Notice of Administrative Borrower’s election of the LIBOR
Option for a permitted portion of the Advances and an Interest Period pursuant
to this Section shall be made by delivery to Agent of a LIBOR Notice received by
Agent before the LIBOR Deadline, or by telephonic notice received by Agent
before the LIBOR Deadline (to be confirmed by delivery to Agent of a LIBOR
Notice received by Agent prior to 5:00 p.m. (Georgia time) on the same day).
Promptly upon its receipt of each such LIBOR Notice, Agent shall provide a copy
thereof to each of the affected Lenders.

(ii)       Each LIBOR Notice shall be irrevocable and binding on Borrowers. In
connection with each LIBOR Rate Loan, each Borrower shall indemnify, defend, and
hold Agent and the Lenders harmless against any loss, cost, or out-of-pocket
expense actually incurred by Agent or any Lender as a result of (A) the payment
of any principal of any LIBOR Rate Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (B) the conversion of any LIBOR Rate Loan other than on the last day
of the Interest Period applicable thereto, or (C) the failure to borrow,
convert, continue or prepay any LIBOR Rate Loan on the date specified in any
LIBOR

 

 

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Notice delivered pursuant hereto (such losses, costs, or expenses, “Funding
Losses”). A certificate of Agent or a Lender delivered to Administrative
Borrower setting forth in reasonable detail any amount or amounts that Agent or
such Lender is entitled to receive pursuant to this Section 2.11 shall be
conclusive absent manifest error. Borrowers shall pay such amount to Agent or
the Lender, as applicable, within 30 days of the date of its receipt of such
certificate. If a payment of a LIBOR Rate Loan on a day other than the last day
of the applicable Interest Period would result in a Funding Loss, Agent may, in
its sole discretion at the request of Administrative Borrower, hold the amount
of such payment as cash collateral in support of the Obligations until the last
day of such Interest Period and apply such amounts to the payment of the
applicable LIBOR Rate Loan on such last day, it being agreed that Agent has no
obligation to so defer the application of payments to any LIBOR Rate Loan and
that, in the event that Agent does not defer such application, Borrowers shall
be obligated to pay any resulting Funding Losses.

(iii)      Borrowers shall have not more than 10 LIBOR Rate Loans in effect at
any given time. Borrowers only may exercise the LIBOR Option for LIBOR Rate
Loans of at least $500,000.

(c)        Conversion. Borrowers may convert LIBOR Rate Loans to Base Rate Loans
at any time; provided, however, that in the event that LIBOR Rate Loans are
converted or prepaid on any date that is not the last day of the Interest Period
applicable thereto, including as a result of any automatic prepayment through
the required application by Agent of proceeds of Parent’s and its Subsidiaries’
Collections in accordance with Section 2.3(b) or for any other reason, including
early termination of the term of this Agreement or acceleration of all or any
portion of the Obligations pursuant to the terms hereof, each Borrower shall
indemnify, defend, and hold Agent and the Lenders and their Participants
harmless against any and all Funding Losses in accordance with Section 2.11
(b)(ii) above.

 

(d)

Special Provisions Applicable to LIBOR Rate.

(i)        The LIBOR Rate may be adjusted by Agent with respect to any Lender on
a prospective basis to take into account any additional or increased costs to
such Lender of maintaining or obtaining any eurodollar deposits or increased
costs, in each case, due to changes in applicable law occurring subsequent to
the commencement of the then applicable Interest Period, including changes in
tax laws (except changes of general applicability in corporate income tax laws)
and changes in the reserve requirements imposed by the Board of Governors of the
Federal Reserve System (or any successor), excluding the Reserve Percentage,
which additional or increased costs would increase the cost of funding or
maintaining loans bearing interest at the LIBOR Rate. In any such event, the
affected Lender shall give Administrative Borrower and Agent notice of such a
determination and adjustment and Agent promptly shall transmit the notice to
each other Lender and, upon its receipt of the notice from the affected Lender,
Administrative Borrower may, by notice to such affected Lender (y) require such
Lender to furnish to Administrative Borrower a statement setting forth the basis
for adjusting such LIBOR Rate and the method for determining the amount of such
adjustment, or (z) repay the LIBOR Rate Loans with respect to which such
adjustment is made (together with any amounts due under Section 2.11(b)(ii)).

(ii)       In the event that any change in market conditions or any law,
regulation, treaty, or directive, or any change therein or in the interpretation
or application thereof, shall at any time after the date hereof, in the
reasonable opinion of any Lender, make it unlawful or impractical for such
Lender to fund or maintain LIBOR Rate Loans or to continue such funding or
maintaining, or to determine or charge interest rates at the LIBOR Rate, such
Lender shall give notice of such changed circumstances to Agent and
Administrative Borrower and Agent promptly shall transmit the notice to each
other Lender and (y) in the case of any LIBOR Rate Loans of such Lender that are
outstanding, the date specified in such Lender’s notice shall be deemed to be
the last day of the Interest Period of such LIBOR Rate Loans, and interest upon
the LIBOR Rate Loans of such Lender thereafter shall accrue

 

 

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interest at the rate then applicable to Base Rate Loans, and (z) Borrowers shall
not be entitled to elect the LIBOR Option until such Lender determines that it
would no longer be unlawful or impractical to do so.

(e)        No Requirement of Matched Funding. Anything to the contrary contained
herein notwithstanding, neither Agent, nor any Lender, nor any of their
Participants, is required actually to acquire eurodollar deposits to fund or
otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate.

 

2.12

Capital Requirements.

(a)        If, after the date hereof, any Lender determines that (i) the
adoption of or change in any law, rule, regulation or guideline regarding
capital requirements for banks or bank holding companies, or any change in the
interpretation or application thereof by any Governmental Authority charged with
the administration thereof, or (ii) compliance by such Lender or its parent bank
holding company with any guideline, request or directive of any such entity
regarding capital adequacy (whether or not having the force of law), has the
effect of reducing the return on such Lender’s or such holding company’s capital
as a consequence of such Lender’s Commitments hereunder to a level below that
which such Lender or such holding company could have achieved but for such
adoption, change, or compliance (taking into consideration such Lender’s or such
holding company’s then existing policies with respect to capital adequacy and
assuming the full utilization of such entity’s capital) by any amount deemed by
such Lender to be material, then such Lender may notify Administrative Borrower
and Agent thereof. Following receipt of such notice, Borrowers agree to pay such
Lender on demand the amount of such reduction of return of capital as and when
such reduction is determined, payable within 30 days after presentation by such
Lender of a statement in the amount and setting forth in reasonable detail such
Lender’s calculation thereof and the assumptions upon which such calculation was
based (which statement shall be deemed true and correct absent manifest error).
In determining such amount, such Lender may use any reasonable averaging and
attribution methods. Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender’s right to demand such compensation; provided that Borrowers shall not be
required to compensate a Lender pursuant to this Section for any reductions in
return incurred more than 180 days prior to the date that such Lender notifies
Administrative Borrower of such law, rule, regulation or guideline giving rise
to such reductions and of such Lender’s intention to claim compensation
therefor; provided further that if such claim arises by reason of the adoption
of or change in any law, rule, regulation or guideline that is retroactive, then
the 180-day period referred to above shall be extended to include the period of
retroactive effect thereof.

(b)       If any Lender requests additional or increased costs referred to in
Section 2.11(d)(i) or amounts under Section 2.12(a) (any such Lender, a
“Affected Lender”), then such Affected Lender shall use reasonable efforts to
promptly designate a different one of its lending offices or to assign its
rights and obligations hereunder to another of its offices or branches, if (i)
in the reasonable judgment of such Affected Lender, such designation or
assignment would eliminate or reduce amounts payable pursuant to Section
2.11(d)(i) or Section 2.12(a), as applicable, and (ii) in the reasonable
judgment of such Affected Lender, such designation or assignment would not
subject it to any material unreimbursed cost or expense and would not otherwise
be materially disadvantageous to it. Borrowers agree to pay all reasonable
out-of-pocket costs and expenses incurred by such Affected Lender in connection
with any such designation or assignment. If, after such reasonable efforts, such
Affected Lender does not so designate a different one of its lending offices or
assign its rights to another of its offices or branches so as to eliminate
Borrowers’ obligation to pay any future amounts to such Affected Lender pursuant
to Section 2.11(d)(i) or Section 2.12(a), as applicable, then Administrative
Borrower (without prejudice to any amounts then due to such Affected Lender
under Section 2.11(d)(i) or Section 2.12(a), as applicable) may, unless prior to
the effective date of any such assignment the Affected Lender withdraws its
request

 

 

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for such additional amounts under Section 2.11(d)(i) or Section 2.12(a), as
applicable, designate another Lender reasonably acceptable to Agent to purchase
the Obligations owed to such Affected Lender and such Affected Lender’s
Commitments hereunder (a “Replacement Lender”), such Affected Lender shall
assign to the Replacement Lender its Obligations and Commitments, pursuant to an
Assignment and Acceptance Agreement, and upon such purchase by the Replacement
Lender, such Replacement Lender shall be deemed to be a “Lender” for purposes of
this Agreement and such Affected Lender shall cease to be a “Lender” for
purposes of this Agreement.

 

2.13

Joint and Several Liability of Borrowers.

(a)        Each Borrower is accepting joint and several liability hereunder and
under the other Loan Documents in consideration of the financial accommodations
to be provided by the Lender Group under this Agreement, for the mutual benefit,
directly and indirectly, of each Borrower and in consideration of the
undertakings of the other Borrowers to accept joint and several liability for
the Obligations.

(b)       Each Borrower, jointly and severally, hereby irrevocably and
unconditionally accepts, not merely as a surety but also as a co-debtor, joint
and several liability with the other Borrowers, with respect to the payment and
performance of all of the Obligations (including any Obligations arising under
this Section 2.13), it being the intention of the parties hereto that all the
Obligations shall be the joint and several obligations of each Borrower without
preferences or distinction among them.

(c)        If and to the extent that any Borrower shall fail to make any payment
with respect to any of the Obligations as and when due or to perform any of the
Obligations in accordance with the terms thereof, then in each such event the
other Borrowers will make such payment with respect to, or perform, such
Obligation.

(d)       The Obligations of each Borrower under the provisions of this Section
2.13 constitute the absolute and unconditional, full recourse Obligations of
each Borrower enforceable against each Borrower to the full extent of its
properties and assets, irrespective of the validity, regularity or
enforceability of this Agreement or any other circumstances whatsoever.

(e)        Except as otherwise expressly provided in this Agreement, each
Borrower hereby waives notice of acceptance of its joint and several liability,
notice of any Advances or Letters of Credit issued under or pursuant to this
Agreement, notice of the occurrence of any Default, Event of Default, or of any
demand for any payment under this Agreement, notice of any action at any time
taken or omitted by Agent or Lenders under or in respect of any of the
Obligations, any requirement of diligence or to mitigate damages and, generally,
to the extent permitted by applicable law, all demands, notices and other
formalities of every kind in connection with this Agreement (except as otherwise
provided in this Agreement). Each Borrower hereby assents to, and waives notice
of, any extension or postponement of the time for the payment of any of the
Obligations, the acceptance of any payment of any of the Obligations, the
acceptance of any partial payment thereon, any waiver, consent or other action
or acquiescence by Agent or Lenders at any time or times in respect of any
default by any Borrower in the performance or satisfaction of any term,
covenant, condition or provision of this Agreement, any and all other
indulgences whatsoever by Agent or Lenders in respect of any of the Obligations,
and the taking, addition, substitution or release, in whole or in part, at any
time or times, of any security for any of the Obligations or the addition,
substitution or release, in whole or in part, of any Borrower. Without limiting
the generality of the foregoing, each Borrower assents to any other action or
delay in acting or failure to act on the part of any Agent or Lender with
respect to the failure by any Borrower to comply with any of its respective
Obligations, including, without limitation, any failure strictly or diligently
to assert any right or to pursue any remedy or to comply fully with applicable
laws or regulations thereunder, which might,

 

 

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but for the provisions of this Section 2.13 afford grounds for terminating,
discharging or relieving any Borrower, in whole or in part, from any of its
Obligations under this Section 2.13, it being the intention of each Borrower
that, so long as any of the Obligations hereunder remain unsatisfied, the
Obligations of each Borrower under this Section 2.13 shall not be discharged
except by performance and then only to the extent of such performance. The
Obligations of each Borrower under this Section 2.13 shall not be diminished or
rendered unenforceable by any winding up, reorganization, arrangement,
liquidation, reconstruction or similar proceeding with respect to any Borrower
or any Agent or Lender.

(f)        Each Borrower represents and warrants to Agent and Lenders that such
Borrower is currently informed of the financial condition of Borrowers and of
all other circumstances which a diligent inquiry would reveal and which bear
upon the risk of nonpayment of the Obligations. Each Borrower further represents
and warrants to Agent and Lenders that such Borrower has read and understands
the terms and conditions of the Loan Documents. Each Borrower hereby covenants
that such Borrower will continue to keep informed of Borrowers’ financial
condition, the financial condition of guarantors, if any, and of all other
circumstances which bear upon the risk of nonpayment or nonperformance of the
Obligations.

(g)       Each Borrower waives all rights and defenses arising out of an
election of remedies by Agent or any Lender, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for a
guaranteed obligation, has destroyed Agent’s or such Lender’s rights of
subrogation and reimbursement against such Borrower by the operation of Section
580(d) of the California Code of Civil Procedure or otherwise:

(h)       Each Borrower waives all rights and defenses that such Borrower may
have because the Obligations are secured by Real Property. This means, among
other things:

(i)        Agent and Lenders may collect from such Borrower without first
foreclosing on any Real Property Collateral or personal property Collateral
pledged by Borrowers.

(ii)       If Agent or any Lender forecloses on any Real Property Collateral
pledged by Borrowers:

(A)       The amount of the Obligations may be reduced only by the price for
which that collateral is sold at the foreclosure sale, even if the collateral is
worth more than the sale price.

(B)       Agent and Lenders may collect from such Borrower even if Agent or
Lenders, by foreclosing on the Real Property Collateral, has destroyed any right
such Borrower may have to collect from the other Borrowers.

This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure.

(i)        The provisions of this Section 2.13 are made for the benefit of
Agent, Lenders and their respective successors and assigns, and may be enforced
by it or them from time to time against any or all Borrowers as often as
occasion therefor may arise and without requirement on the part of Agent,
Lender, successor or assign first to marshal any of its or their claims or to
exercise any of its or their rights against any Borrower or to exhaust any
remedies available to it or them against any Borrower or to resort to any other
source or means of obtaining payment of any of the Obligations hereunder or to

 

 

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elect any other remedy. The provisions of this Section 2.13 shall remain in
effect until all of the Obligations shall have been paid in full or otherwise
fully satisfied. If at any time, any payment, or any part thereof, made in
respect of any of the Obligations, is rescinded or must otherwise be restored or
returned by Agent or any Lender upon the insolvency, bankruptcy or
reorganization of any Borrower, or otherwise, the provisions of this Section
2.13 will forthwith be reinstated in effect, as though such payment had not been
made.

(j)        Until the Obligations have been paid in full and all of the
Commitments terminated, each Borrower hereby agrees that it will not enforce any
of its rights of contribution or subrogation against any other Borrower with
respect to any liability incurred by it hereunder or under any of the other Loan
Documents, any payments made by it to Agent or Lenders with respect to any of
the Obligations or any collateral security therefor until such time as all of
the Obligations have been paid in full in cash. Any claim which any Borrower may
have against any other Borrower with respect to any payments to any Agent or
Lender hereunder or under any other Loan Documents are hereby expressly made
subordinate and junior in right of payment, without limitation as to any
increases in the Obligations arising hereunder or thereunder, to the prior
payment in full in cash of the Obligations and, in the event of any insolvency,
bankruptcy, receivership, liquidation, reorganization or other similar
proceeding under the laws of any jurisdiction relating to any Borrower, its
debts or its assets, whether voluntary or involuntary, all such Obligations
shall be paid in full in cash before any payment or distribution of any
character, whether in cash, securities or other property, shall be made to any
other Borrower therefor.

(k)       Each Borrower hereby agrees that, after the occurrence and during the
continuance of any Event of Default, the payment of any amounts due with respect
to the indebtedness owing by any Borrower to any other Borrower is hereby
subordinated to the prior payment in full in cash of the Obligations. Each
Borrower hereby agrees that after the occurrence and during the continuance of
any Event of Default, such Borrower will not demand, sue for or otherwise
attempt to collect any indebtedness of any other Borrower owing to such Borrower
until the Obligations shall have been paid in full in cash. If, notwithstanding
the foregoing sentence, such Borrower shall collect, enforce or receive any
amounts in respect of such indebtedness, such amounts shall be collected,
enforced and received by such Borrower as trustee for Agent, and such Borrower
shall deliver any such amounts to Agent for application to the Obligations in
accordance with Section 2.3(b).

3.

CONDITIONS; TERM OF AGREEMENT.

3.1       Conditions Precedent to the Initial Extension of Credit. The
obligation of each Lender to make its initial extension of credit provided for
hereunder, is subject to the fulfillment, to the satisfaction of Agent and each
Lender of each of the conditions precedent set forth on Schedule 3.1 (the making
of such initial extension of credit by a Lender being conclusively deemed to be
its satisfaction or waiver of the conditions precedent, unless expressly stated
otherwise herein or by separate agreement).

3.2       Conditions Precedent to all Extensions of Credit. The obligation of
the Lender Group (or any member thereof) to make any Advances hereunder (or to
extend any other credit hereunder) at any time shall be subject to the following
conditions precedent:

(a)        the representations and warranties of Parent or its Subsidiaries
contained in this Agreement or in the other Loan Documents shall be true and
correct in all material respects (except that such materiality qualifier shall
not be applicable to any representations and warranties that already are
qualified or modified by materiality in the text thereof) on and as of the date
of such extension of credit, as though made on and as of such date (except to
the extent that such representations and warranties relate solely to an earlier
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(b)       no Default or Event of Default shall have occurred and be continuing
on the date of such extension of credit, nor shall either result from the making
thereof.

3.3       Term. This Agreement shall continue in full force and effect for a
term ending on June 9, 2011 (the “Maturity Date”). The foregoing
notwithstanding, the Lender Group, upon the election of the Required Lenders,
shall have the right to terminate its obligations under this Agreement
immediately and without notice upon the occurrence and during the continuation
of an Event of Default.

3.4       Effect of Termination. On the date of termination of this Agreement,
all Obligations (including contingent reimbursement obligations of Borrowers
with respect to outstanding Letters of Credit and including all Hedge Agreement
Obligations) immediately shall become due and payable without notice or demand
(including the requirement that Borrowers provide (a) Letter of Credit
Collateralization, and (b) Hedge Agreement Collateralization). No termination of
this Agreement, however, shall relieve or discharge Parent or its Subsidiaries
of their duties, Obligations, or covenants hereunder or under any other Loan
Document and the Agent’s Liens in the Collateral shall remain in effect until
all Obligations have been paid in full and the Lender Group’s obligations to
provide additional credit hereunder have been terminated. When this Agreement
has been terminated and all of the Obligations have been paid in full and the
Lender Group’s obligations to provide additional credit under the Loan Documents
have been terminated irrevocably, Agent will, at Borrowers’ sole expense,
execute and deliver any termination statements, lien releases, mortgage
releases, re-assignments of trademarks, discharges of security interests, and
other similar discharge or release documents (and, if applicable, in recordable
form) as are reasonably necessary to release, as of record, the Agent’s Liens
and all notices of security interests and liens previously filed by Agent with
respect to the Obligations.

3.5       Early Termination by Borrowers. Borrowers have the option, subject to
the payment of any fees required to be paid pursuant to the Fee Letter, at any
time upon 10 Business Days prior written notice to Agent (which notice may
provide that such notice of termination is contingent upon the occurrence of
certain events), to terminate this Agreement and terminate the Commitments
hereunder by paying to Agent the Obligations (including (a) providing Letter of
Credit Collateralization with respect to the then existing Letter of Credit
Usage, and (b) providing Hedge Agreement Collateralization with respect to the
then existing Hedge Agreements), in full.

4.

REPRESENTATIONS AND WARRANTIES.

In order to induce the Lender Group to enter into this Agreement, each of Parent
and each Borrower makes the following representations and warranties to the
Lender Group which shall be true, correct, and complete, in all material
respects, as of the date hereof, and shall be true, correct, and complete, in
all material respects, as of the Closing Date and at and as of the date of the
making of each Advance (or other extension of credit) made thereafter, as though
made on and as of the date of such Advance (or other extension of credit)
(except to the extent that such representations and warranties relate solely to
an earlier date) and such representations and warranties shall survive the
execution and delivery of this Agreement:

 

4.1

Due Organization and Qualification; Subsidiaries.

(a)        Each Loan Party (i) is duly organized and existing and in good
standing under the laws of the jurisdiction of its organization, (ii) is
qualified to do business in any state where the failure to be so qualified
reasonably could be expected to result in a Material Adverse Change, and (iii)
has all requisite power and authority to own and operate its properties, to
carry on its business as now conducted and as proposed to be conducted, to enter
into the Loan Documents to which it is a party and to carry out the transactions
contemplated thereby.

 

 

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(b)       Set forth on Schedule 4.1(b) is a complete and accurate description of
the authorized capital Stock of Parent and each Borrower, by class, and, as of
the Closing Date, a description of the number of shares of each such class that
are issued and outstanding. Other than as described on Schedule 4.1(b), as of
the Closing Date, there are no subscriptions, options, warrants, or calls
relating to any shares of Parent’s or any Borrower’s capital Stock, including
any right of conversion or exchange under any outstanding security or other
instrument. Other than as described on Schedule 4.1(b), neither Parent nor any
Borrower is subject to any obligation (contingent or otherwise) to repurchase or
otherwise acquire or retire any shares of its capital Stock or any security
convertible into or exchangeable for any of its capital Stock.

(c)        Set forth on Schedule 4.1(c) (as such Schedule may be updated from
time to time to reflect changes permitted to be made under Section 5.11), is a
complete and accurate list of each Borrower’s direct and indirect Subsidiaries,
showing: (i) the number of shares of each class of common and preferred Stock
authorized for each of such Subsidiaries, and (ii) the number and the percentage
of the outstanding shares of each such class owned directly or indirectly by the
applicable Borrower. All of the outstanding capital Stock of each such
Subsidiary has been validly issued and is fully paid and non-assessable.

(d)       Except as set forth on Schedule 4.1(c), there are no subscriptions,
options, warrants, or calls relating to any shares of Parent’s Subsidiaries’
capital Stock, including any right of conversion or exchange under any
outstanding security or other instrument. Neither Parent nor any of its
Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of Parent’s Subsidiaries’
capital Stock or any security convertible into or exchangeable for any such
capital Stock.

 

4.2

Due Authorization; No Conflict.

(a)        As to each Loan Party, the execution, delivery, and performance by
such Loan Party of the Loan Documents to which it is a party have been duly
authorized by all necessary action on the part of such Loan Party.

(b)       As to each Loan Party, the execution, delivery, and performance by
such Loan Party of the Loan Documents to which it is a party do not and will not
(i) violate any material provision of federal, state, or local law or regulation
applicable to any Loan Party or its Subsidiaries, the Governing Documents of any
Loan Party or its Subsidiaries, or any order, judgment, or decree of any court
or other Governmental Authority binding on any Loan Party or its Subsidiaries,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any Material Contract of any Loan Party
or its Subsidiaries, (iii) result in or require the creation or imposition of
any Lien of any nature whatsoever upon any assets of any Loan Party, other than
Permitted Liens, or (iv) require any approval of any Loan Party’s
interestholders or any approval or consent of any Person under any Material
Contract of any Loan Party, other than consents or approvals that have been
obtained and that are still in force and effect.

 

4.3

Governmental Consents; Necessary Authorizations.

(a)        The execution, delivery, and performance by each Loan Party of the
Loan Documents to which such Loan Party is a party and the consummation of the
transactions contemplated by the Loan Documents do not and will not require any
registration with, consent, or approval of, or notice to, or other action with
or by, any Governmental Authority, other than consents or approvals that have
been obtained and that are still in force and effect and except for filings and
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to the Collateral to be made, or otherwise delivered to the Agent for filing or
recordation, as of the Closing Date.

(b)       Set forth on Schedule 4.3(b) is a complete and accurate list of all
Necessary Authorizations of the Closing Date. Parent and each of its
Subsidiaries has obtained all Necessary Authorizations, and all such Necessary
Authorizations are in full force and effect. None of such Necessary
Authorizations is the subject of any pending or, to the best of each Borrower’s
knowledge, threatened revocation, by the grantor of the Necessary Authorization.
Neither Parent nor any of its Subsidiaries is required to obtain any additional
Necessary Authorizations in connection with the execution, delivery, and
performance of this Agreement or any other Loan Document, in accordance with
their respective terms, or the consummation of the transactions contemplated
hereby or thereby.

 

4.4

Binding Obligations; Perfected Liens.

(a)        Each Loan Document has been duly executed and delivered by each Loan
Party that is a party thereto and is the legally valid and binding obligation of
such Loan Party, enforceable against such Loan Party in accordance with its
respective terms, except as enforcement may be limited by equitable principles
or by bankruptcy, insolvency, reorganization, moratorium, or similar laws
relating to or limiting creditors’ rights generally.

(b)       The Agent’s Liens are validly created, perfected (other than in
respect of (i) motor vehicles, (ii) the recordation of Liens in any leasehold
interest in Real Property and (iii) any Deposit Accounts and Securities Accounts
not subject to a Control Agreement as permitted by Section 6.11, and subject
only to the filing of financing statements and the recordation of the Mortgages
(if any)), and first priority Liens, subject only to Permitted Liens.

4.5       Title to Assets; No Encumbrances. Each of the Loan Parties and its
Subsidiaries has (i) good, sufficient and legal title to (in the case of fee
interests in Real Property), (ii) valid leasehold interests in (in the case of
leasehold interests in real or personal property), and (iii) good and valid
title to (in the case of all other personal property), all of their respective
assets reflected in their most recent financial statements delivered pursuant to
Section 5.1, in each case except for assets disposed of since the date of such
financial statements to the extent permitted hereby. All of such assets are free
and clear of Liens except for Permitted Liens.

4.6       Jurisdiction of Organization; Location of Chief Executive Office;
Organizational Identification Number; Commercial Tort Claims.

(a)        The name of (within the meaning of Section 9-503 of the Code) and
jurisdiction of organization of each Loan Party and each of its Subsidiaries is
set forth on Schedule 4.6(a) (as such Schedule may be updated from time to time
to reflect changes permitted to be made under Section 6.5).

(b)       The chief executive office of each Loan Party and each of its
Subsidiaries is located at the address indicated on Schedule 4.6(b) (as such
Schedule may be updated from time to time to reflect changes permitted to be
made under Section 5.15).

(c)        Each Loan Party’s and each of its Subsidiaries’ tax identification
numbers and organizational identification numbers, if any, are identified on
Schedule 4.6(c) (as such Schedule may be updated from time to time to reflect
changes permitted to be made under Section 6.5).

(d)       As of the Closing Date, no Loan Party and no Subsidiary of a Loan
Party holds any commercial tort claims that exceed $100,000 in amount, except as
set forth on Schedule 4.6(d).

 

 

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4.7

Litigation.

(a)        There are no actions, suits, or proceedings pending or, to the best
knowledge of any Borrower, threatened in writing against a Loan Party or any of
its Subsidiaries that either individually or in the aggregate could reasonably
be expected to result in a Material Adverse Change.

(b)       Schedule 4.7(b) sets forth a complete and accurate description, with
respect to each of the actions, suits, or proceedings that, as of the Closing
Date, is pending or, to the best knowledge of any Borrower, threatened in
writing against a Loan Party or any of its Subsidiaries, of (i) the parties to
such actions, suits, or proceedings, (ii) the nature of the dispute that is the
subject of such actions, suits, or proceedings, (iii) the Borrowers’ reasonable
estimate of the maximum amount of the liability of Loan Parties and their
Subsidiaries in connection with such actions, suits, or proceedings, (iv) the
status, as of the Closing Date, with respect to such actions, suits, or
proceedings, and (v) whether any liability of the Loan Parties’ and their
Subsidiaries in connection with such actions, suits, or proceedings is, in the
reasonable opinion of the Loan Parties, covered by insurance.

4.8       Compliance with Laws. No Loan Party nor any of its Subsidiaries (a) is
in violation of any applicable laws, rules, regulations, executive orders, or
codes (including Environmental Laws) that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Change, or (b) is
subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court or any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Change.

4.9       No Material Adverse Change. All financial statements relating to the
Loan Parties and their Subsidiaries that have been delivered by Borrowers to
Agent have been prepared in accordance with GAAP (except, in the case of
unaudited financial statements, for the lack of footnotes and being subject to
year-end audit adjustments) and present fairly in all material respects, the
Loan Parties’ and their Subsidiaries’ consolidated financial condition as of the
date thereof and results of operations for the period then ended. Since June 30,
2008, no event, circumstance, or change has occurred that has or could
reasonably be expected to result in a Material Adverse Change with respect to
the Loan Parties and their Subsidiaries.

 

4.10

Fraudulent Transfer.

 

(a)

Each Loan Party is Solvent.

(b)       No transfer of property is being made by any Loan Party and no
obligation is being incurred by any Loan Party in connection with the
transactions contemplated by this Agreement or the other Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of such
Loan Party.

4.11     Employee Benefits. No Loan Party, none of their Subsidiaries, nor any
of their ERISA Affiliates maintains or contributes to any Benefit Plan.

4.12     Environmental Condition. Except as set forth on Schedule 4.12, (a) to
each Borrower’s knowledge, no Loan Party’s or its Subsidiaries’ properties or
assets has ever been used by a Loan Party, its Subsidiaries, or by previous
owners or operators in the disposal of, or to produce, store, handle, treat,
release, or transport, any Hazardous Materials, where such disposal, production,
storage, handling, treatment, release or transport was in violation, in any
material respect, of any applicable Environmental Law, (b) to each Borrower’s
knowledge, no Loan Party’s or its Subsidiaries’ properties or assets has ever

 

 

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been designated or identified in any manner pursuant to any environmental
protection statute as a Hazardous Materials disposal site, (c) no Loan Party nor
any of its Subsidiaries has received written notice that a Lien arising under
any Environmental Law has attached to any revenues or to any Real Property owned
or operated by a Loan Party or its Subsidiaries, and (d) no Loan Party nor any
of its Subsidiaries nor any of their respective facilities or operations is
subject to any outstanding written order, consent decree, or settlement
agreement with any Person relating to any Environmental Law or Environmental
Liability that, individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Change.

4.13     Intellectual Property. Each Loan Party and its Subsidiaries own, or
hold licenses in, all trademarks, trade names, copyrights, patents, and licenses
that are necessary to the conduct of its business as currently conducted, and
attached hereto as Schedule 4.13 (as updated from time to time) is a true,
correct, and complete listing of all material trademarks, trade names,
copyrights, patents, and licenses as to which Parent or one of its Subsidiaries
is the owner or is an exclusive licensee, which Schedule 4.13 shall include,
without limitation, an indication of whether such intellectual property is
registered with the United States Patent and Trademark Office or the United
States Copyright Office; provided, however, that Borrowers may amend Schedule
4.13 to add additional intellectual property so long as such amendment occurs by
written notice to Agent not less than 30 days after the date on which the
applicable Loan Party or its Subsidiary acquires any such property after the
Closing Date.

4.14     Leases. Each Loan Party and its Subsidiaries enjoy peaceful and
undisturbed possession under all leases material to their business and to which
they are parties or under which they are operating, and, subject to Permitted
Protests, all of such material leases are valid and subsisting and no material
default by the applicable Loan Party or its Subsidiaries exists under any of
them.

4.15     Deposit Accounts and Securities Accounts. Set forth on Schedule 4.15
(as updated pursuant to the provisions of the Security Agreement from time to
time) is a listing of all of the Loan Parties’ and their Subsidiaries’ Deposit
Accounts and Securities Accounts, including, with respect to each bank or
securities intermediary (a) the name and address of such Person, and (b) the
account numbers of the Deposit Accounts or Securities Accounts maintained with
such Person.

4.16     Complete Disclosure. All factual information (taken as a whole)
furnished by or on behalf of a Loan Party or its Subsidiaries in writing to
Agent or any Lender (including all information contained in the Schedules hereto
or in the other Loan Documents) for purposes of or in connection with this
Agreement, the other Loan Documents, or any transaction contemplated herein or
therein is, and all other such factual information (taken as a whole) hereafter
furnished by or on behalf of a Loan Party or its Subsidiaries in writing to
Agent or any Lender will be, true and accurate, in all material respects, on the
date as of which such information is dated or certified and not incomplete by
omitting to state any fact necessary to make such information (taken as a whole)
not misleading in any material respect at such time in light of the
circumstances under which such information was provided. On the Closing Date,
the Closing Date Projections represent, and as of the date on which any other
Projections are delivered to Agent, such additional Projections represent
Borrowers’ good faith estimate of the Loan Parties’ and their Subsidiaries
future performance for the periods covered thereby based upon assumptions
believed by Borrowers to be reasonable at the time of the delivery thereof to
Agent (it being understood that such projections and forecasts are subject to
uncertainties and contingencies, many of which are beyond the control of the
Loan Parties and their Subsidiaries and no assurances can be given that such
projections or forecasts will be realized).

4.17     Material Contracts. Set forth on Schedule 4.17 (as updated from time to
time) is a descriptive list of the Material Contracts of each Loan Party and its
Subsidiaries; provided, however, that Borrowers may amend Schedule 4.17 to add
additional Material Contracts so long as such amendment

 

 

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occurs by written notice to Agent at the time that Parent provides its quarterly
financial statements pursuant to Section 5.1. Except for matters which, either
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Change, each Material Contract (other than those that have
expired at the end of their normal terms) (a) is in full force and effect and is
binding upon and enforceable against the applicable Loan Party or its Subsidiary
and, to the best of Borrowers’ knowledge, each other Person that is a party
thereto in accordance with its terms, (b) has not been otherwise amended or
modified (other than amendments or modifications permitted by Section 6.7(b)),
and (c) is not in default due to the action or inaction of the applicable Loan
Party or its Subsidiary.

4.18     Patriot Act. To the extent applicable, each Loan Party is in
compliance, in all material respects, with the (a) Trading with the Enemy Act,
as amended, and each of the foreign assets control regulations of the Untied
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any
other enabling legislation or executive order relating thereto, and (b) Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism (USA Patriot Act of 2001) (the “Patriot Act”). No part of
the proceeds of the loans made hereunder will be used, directly or indirectly,
for any payments to any governmental official or employee, political party,
official of a political party, candidate for political office, or anyone else
acting in an official capacity, in order to obtain, retain or direct business or
obtain any improper advantage, in violation of the United States Foreign Corrupt
Practices Act of 1977, as amended.

4.19     Indebtedness. Set forth on Schedule 4.19 is a true and complete list of
all Indebtedness of each Loan Party and each of its Subsidiaries outstanding
immediately prior to the Closing Date that is to remain outstanding after the
Closing Date (other than any Indebtedness of the Loan Parties which, in the
aggregate, does not exceed $100,000), and such schedule accurately sets forth
the aggregate principal amount of such Indebtedness as of the Closing Date.

4.20     Payment of Taxes. Except as otherwise permitted under Section 5.5, (i)
all income tax returns and reports and (ii) all other tax returns and reports
(other than any such other tax returns and reports with respect to which the
estimated tax liability associated with any such single tax return or report is
less than $10,000, and with respect to which the estimated tax liability
associated with all such tax returns and reports is less than $30,000 in the
aggregate), in each case of each Loan Party and its Subsidiaries required to be
filed by any of them have been timely filed, and all taxes shown on such tax
returns to be due and payable and all assessments, fees and other governmental
charges upon a Loan Party and its Subsidiaries and upon their respective assets,
income, businesses and franchises that are due and payable have been paid when
due and payable. Each Loan Party and each of its Subsidiaries have made adequate
provision in accordance with GAAP for all taxes not yet due and payable. No
Borrower knows of any proposed tax assessment against a Loan Party or any of its
Subsidiaries that is not being actively contested by such Loan Party or such
Subsidiary diligently, in good faith, and by appropriate proceedings; provided
such reserves or other appropriate provisions, if any, as shall be required in
conformity with GAAP shall have been made or provided therefor. No Loan Party
nor any of its Subsidiaries has ever been a party to any understanding or
arrangement constituting a “tax shelter” within the meaning of Section
6662(d)(2)(C)(iii) of the IRC or within the meaning of Section 6111(c) or
Section 6111(d) of the IRC as in effect immediately prior to the enactment of
the American Jobs Creation Act of 2004, or has ever “participated” in a
“reportable transaction” within the meaning of Treasury Regulation Section
1.6011-4, except as would not be reasonably expected to, individually or in the
aggregate, result in a Material Adverse Change.

4.21     Margin Stock. No Loan Party nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying any Margin Stock. No part of
the proceeds of the loans made to Borrowers will be used to purchase or carry
any such Margin Stock or to extend credit to others for the purpose of
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carrying any such margin stock or for any purpose that violates, or is
inconsistent with, the provisions of Regulation T, U or X of said Board of
Governors.

4.22     Governmental Regulation. No Loan Party nor any of its Subsidiaries is
subject to regulation under the Federal Power Act or the Investment Company Act
of 1940 or under any other federal or state statute or regulation which may
limit its ability to incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable. No Loan Party nor any of its
Subsidiaries is a “registered investment company” or a company “controlled” by a
“registered investment company” or a “principal underwriter” of a “registered
investment company” as such terms are defined in the Investment Company Act of
1940.

4.23     OFAC. No Loan Party nor any of its Subsidiaries is in violation of any
of the country or list based economic and trade sanctions administered and
enforced by OFAC. No Loan Party nor any of its Subsidiaries (a) is a Sanctioned
Person or a Sanctioned Entity, (b) has a more than 10% of its assets located in
Sanctioned Entities, or (c) derives more than 10% of its revenues from
investments in, or transactions with Sanctioned Persons or Sanctioned Entities.
The proceeds of any Advance will not be used to fund any operations in, finance
any investments or activities in, or make any payments to, a Sanctioned Person
or a Sanctioned Entity.

 

4.24

Debt Designations.

(a)        For all purposes under each of the Indenture and the Intercreditor
Agreement, (i) the Obligations constitute “First-Lien Indebtedness” and “Senior
Lender Claims” (as such terms are defined in the Intercreditor Agreement) and
“First-Priority Lien Obligations” (as such term is defined in the Indenture),
(ii) this Agreement constitutes the “Credit Agreement” and the “Senior Credit
Agreement” (as such terms are defined in the Intercreditor Agreement) and the
“Credit Agreement” (as such term is defined in the Indenture), (iii) the Loan
Documents constitute “Senior Lender Documents” (as such term is defined in the
Intercreditor Agreement), (iv) the Security Agreement, the Shareholder Pledge
Agreement and each other Loan Document creating or purporting to create a Lien
on any Collateral constitute “Senior Collateral Documents” (as such term is
defined in the Intercreditor Agreement), (v) the Collateral constitutes “Senior
Lender Collateral” (as such term is defined in the Intercreditor Agreement),
(vi) the Lenders constitute “Senior Lenders” (as such term is defined in the
Intercreditor Agreement) and (vii) the Agent constitutes the “Intercreditor
Agent” (as such term is defined in the Intercreditor Agreement), and the Agent
and the Lenders are and shall be entitled to all of the rights of the holders of
“First-Lien Indebtedness,” “Senior Lender Claims” and “First-Priority Lien
Obligations” (as so defined).

(b)       For all purposes under each of the Note Purchase Agreement and the
Subordination Agreement, (i) the Obligations constitute “Senior Debt” (as such
term is defined in the Subordination Agreement), (ii) this Agreement constitutes
the “Credit Facility” (as such term is defined in the Note Purchase Agreement),
(iii) the Loan Documents constitute “Senior Debt Documents” and “Refinancing
Senior Debt Documents” (as such terms are defined in the Subordination
Agreement) and (iv) the Agent constitutes the “Agent” (as such term is defined
in the Subordination Agreement), and the Agent and the Lenders are and shall be
entitled to all of the rights of the holders of “Senior Debt” (as so defined).

4.25     Location of Inventory and Equipment. The Inventory and Equipment (other
than vehicles or Equipment out for repair or in transit) of the Loan Parties and
their Subsidiaries are not stored with a bailee, warehouseman, or similar party
and are stored only at the locations identified on Schedule 4.25 (as such
Schedule may be updated pursuant to Section 5.15).

 

 

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4.26     Inventory Records. Each Loan Party keeps records itemizing and
describing the type, quality, and quantity of its and its Subsidiaries’
Inventory and the book value thereof, such records being correct and accurate in
all material respects.

4.27     Holding Company Status. Except as disclosed on Schedule 4.27, Parent
does not own or lease, directly or indirectly, any real, personal, intangible or
tangible property of any nature, other than the Stock of its Subsidiaries. The
Parent does not own any Necessary Authorizations other than its qualification to
do business in the state of Delaware. The Parent does not conduct, transact or
otherwise engage in any material business or operations other than those
incidental to the ownership of such Stock of its Subsidiaries. The Parent does
not have any material obligations or liabilities other than under the Loan
Documents, the Senior Note Documents and the Subordinated Note Documents.

4.28     Insurance. Parent and its Subsidiaries have insurance meeting the
requirements of Section 5.6, and such insurance policies are in full force and
effect. As of the Closing Date, all insurance maintained by Parent and its
Subsidiaries is described in all material respects on Schedule 4.28.

5.

AFFIRMATIVE COVENANTS.

Each of Parent and each of the other Loan Parties each covenants and agrees
that, until termination of all of the Commitments and payment in full of the
Obligations, the Loan Parties shall and shall cause each of their Subsidiaries
to comply with each of the following:

5.1       Financial Statements, Reports, Certificates. Deliver to Agent, with
copies to each Lender, each of the financial statements, reports, and other
items set forth on Schedule 5.1 at the times specified therein. In addition,
each of Parent and each of the Borrowers agrees that no Subsidiary of a Loan
Party will have a fiscal year different from that of Parent. In addition, Parent
agrees to maintain a system of accounting that enables Parent to produce
financial statements in accordance with GAAP, consistently applied. Each Loan
Party shall also maintain its billing systems/practices as approved by Agent
prior to the Closing Date and shall only make material modifications thereto
with reasonable prior notice to Agent.

 

5.2

[RESERVED].

5.3       Existence. Except as otherwise permitted under Section 6.3, each Loan
Party to, and cause each of its Subsidiaries to, at all times preserve and keep
in full force and effect its existence (including being in good standing in its
jurisdiction of organization) and Necessary Authorizations and all other rights
and franchises, licenses and permits material to its business.

5.4       Maintenance of Properties. Maintain and preserve all of its assets
that are necessary or useful in the proper conduct of its business in good
working order and condition, ordinary wear, tear, and casualty excepted and
Permitted Dispositions excepted, and comply with the material provisions of all
material leases to which it is a party as lessee, so as to prevent the loss or
forfeiture thereof, unless such provisions are the subject of a Permitted
Protest.

5.5       Taxes. Cause all assessments and taxes imposed, levied, or assessed
against any Loan Party or its Subsidiaries, or any of their respective assets or
in respect of any of its income, businesses, or franchises to be paid in full,
before delinquency or before the expiration of any extension period, except to
the extent that (i) the validity of such assessment or tax shall be the subject
of a Permitted Protest and so long as, in the case of an assessment or tax that
has or may become a Lien against any of the Collateral, such contest proceedings
conclusively operate to stay the sale of any portion of the Collateral to
satisfy such assessment or tax or (ii) such taxes and assessments do not relate
to federal or state income taxes and

 

 

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otherwise involve amounts in the aggregate then outstanding less than or equal
to $10,000. Parent will and will cause each of its Subsidiaries to make timely
payment or deposit of all tax payments and withholding taxes required of it and
them by applicable laws, including those laws concerning F.I.C.A., F.U.T.A.,
state disability, and local, state, and federal income taxes, and will, upon
request, furnish Agent with proof reasonably satisfactory to Agent indicating
that Parent and its Subsidiaries have made such payments or deposits.

5.6       Insurance. At Borrowers’ expense, maintain insurance respecting each
of the Loan Parties’ and their Subsidiaries’ assets wherever located, covering
loss or damage by fire, theft, explosion, and all other hazards and risks as
ordinarily are insured against by other Persons engaged in the same or similar
businesses of similar size. Borrowers also shall maintain (with respect to each
of the Loan Parties and their Subsidiaries) business interruption, public
liability, and product liability insurance, as well as insurance against
larceny, embezzlement, and criminal misappropriation. All such policies of
insurance shall be with responsible and reputable insurance companies and in
such amounts as is carried generally in accordance with sound business practice
by companies in similar businesses similarly situated and located and in any
event in amount, adequacy and scope reasonably satisfactory to Agent. All
property insurance policies covering the Collateral are to be made payable to
Agent for the benefit of Agent and the Lenders, as their interests may appear,
in case of loss, pursuant to a standard loss payable endorsement with a standard
non contributory “lender” or “secured party” clause and are to contain such
other provisions as Agent may reasonably require to fully protect the Lenders’
interest in the Collateral and to any payments to be made under such policies.
All certificates of insurance are to be delivered to Agent, with the loss
payable and additional insured endorsement in favor of Agent and shall provide
for not less than 10 days prior written notice to Agent of the exercise of any
right of cancellation. If Borrowers fail to maintain such insurance, Agent may
arrange for such insurance, but at Borrowers’ expense and without any
responsibility on Agent’s part for obtaining the insurance, the solvency of the
insurance companies, the adequacy of the coverage, or the collection of claims.
Administrative Borrower shall give Agent prompt notice of any loss exceeding
$500,000 covered by its casualty or business interruption insurance. Upon the
occurrence and during the continuance of an Event of Default, Agent shall have
the sole right to file claims under any insurance policies, to receive, receipt
and give acquittance for any payments that may be payable under any such
insurance policies, and to execute any and all endorsements, receipts, releases,
assignments, reassignments or other documents that may be necessary to effect
the collection, compromise or settlement of any such claims under any such
insurance policies.

5.7       Inspection. Permit Agent and each of its duly authorized
representatives or agents to visit any of its properties and, during normal
business hours, inspect any of its assets or books and records, to examine and
make copies of its books and records, and to discuss its affairs, finances, and
accounts with, and to be advised as to the same by, its officers and employees
at such reasonable times and intervals as Agent may designate and, so long as no
Default or Event of Default exists, with reasonable prior notice to
Administrative Borrower.

5.8       Compliance with Laws. Comply with the requirements of all applicable
laws, rules, regulations, and orders of any Governmental Authority, other than
laws, rules, regulations, and orders the non-compliance with which, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Change.

 

5.9

Environmental.

(a)        Keep any property either owned or operated by Parent or its
Subsidiaries free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
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(b)       comply, in all material respects, with Environmental Laws and provide
to Agent documentation of such compliance which Agent reasonably requests,

(c)        promptly notify Agent of any release of a Hazardous Material in any
reportable quantity from or onto property owned or operated by Parent or its
Subsidiaries and take any reasonable Remedial Actions required to abate said
release or otherwise to come into compliance with applicable Environmental Law,
and

(d)       promptly, but in any event within 5 Business Days of its receipt
thereof, provide Agent with written notice of any of the following: (i) notice
that an Environmental Lien has been filed against any of the real or personal
property of Parent or its Subsidiaries, (ii) commencement of any Environmental
Action or notice that an Environmental Action will be filed against Parent or
its Subsidiaries, and (iii) notice of a violation, citation, or other
administrative order which could reasonably be expected to result in a Material
Adverse Change.

5.10     Disclosure Updates. Promptly and in no event later than 5 Business Days
after a Responsible Officer of any of the Loan Parties obtaining knowledge
thereof, notify Agent if any written information, exhibit, or report furnished
to the Lender Group contained, at the time it was furnished, any untrue
statement of a material fact or omitted to state any material fact necessary to
make the statements contained therein not misleading in light of the
circumstances in which made. The foregoing to the contrary notwithstanding, any
notification pursuant to the foregoing provision will not cure or remedy the
effect of the prior untrue statement of a material fact or omission of any
material fact nor shall any such notification have the effect of amending or
modifying this Agreement or any of the Schedules hereto.

5.11     Formation of Subsidiaries. At the time that any Loan Party forms any
direct or indirect Subsidiary or acquires any direct or indirect Subsidiary
after the Closing Date, such Loan Party shall (a) within 10 days of such
formation or acquisition cause any such new Subsidiary to provide to Agent a
joinder to this Agreement and the Security Agreement, together with such other
security documents (including mortgages with respect to any Real Property owned
in fee of such new Subsidiary with a fair market value of at least $500,000, and
including a collateral assignment of acquisition agreements, if applicable), as
well as appropriate financing statements (and with respect to all property
subject to a mortgage, fixture filings), all in form and substance reasonably
satisfactory to Agent (including being sufficient to grant Agent a first
priority Lien (subject to Permitted Liens) in and to the assets of such newly
formed or acquired Subsidiary); provided that joinder to this Agreement, the
Security Agreement, and such other security documents shall not be required to
be provided to Agent with respect to any Subsidiary of Parent that is a CFC if
providing such documents would result in adverse tax consequences or the costs
to the Loan Parties of providing such joinder to this Agreement, executing any
security documents or perfecting the security interests created thereby are
unreasonably excessive (with the determination as to whether such costs are
unreasonably excessive to be determined by Agent in consultation with
Administrative Borrower) in relation to the benefits of Agent and the Lenders of
the security or other recourse afforded thereby, (b) within 10 days of such
formation or acquisition (or such later date as permitted by Agent in its sole
discretion) provide to Agent a pledge agreement and appropriate certificates and
powers or financing statements, hypothecating all of the direct or beneficial
ownership interest in such new Subsidiary reasonably satisfactory to Agent;
provided that only 65% of the total outstanding voting Stock of any first tier
Subsidiary of Parent that is a CFC and none of the total outstanding voting
Stock of any other Subsidiary of such CFC shall be required to be pledged if
hypothecating a greater amount would result in adverse tax consequences or the
costs to the Loan Parties of providing such pledge or perfecting the security
interests created thereby are unreasonably excessive (with the determination as
to whether such tax consequences or costs are unreasonably excessive to be
determined by Agent in consultation with Administrative Borrower) in relation to
the benefits of Agent and the Lenders of the security afforded thereby (which
pledge, if reasonably requested by Agent, shall be

 

 

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governed by the laws of the jurisdiction of such Subsidiary), and (c) within 10
days of such formation or acquisition (or such later date as permitted by Agent
in its sole discretion) provide to Agent all other documentation, including one
or more opinions of counsel reasonably satisfactory to Agent, which in its
reasonable discretion is appropriate with respect to the execution and delivery
of the applicable documentation referred to above (including policies of title
insurance or other documentation with respect to all Real Property owned in fee
and subject to a mortgage). Any document, agreement, or instrument executed or
issued pursuant to this Section 5.11 shall be a Loan Document.

5.12     Further Assurances. At any time upon the reasonable request of Agent,
execute or deliver to Agent any and all financing statements, fixture filings,
security agreements, pledges, assignments, endorsements of certificates of
title, mortgages, deeds of trust, opinions of counsel, and all other documents
(collectively, the “Additional Documents”) that Agent may reasonably request in
form and substance reasonably satisfactory to Agent, to create, perfect, and
continue perfected or to better perfect the Agent’s Liens in all of the assets
of Parent and its Subsidiaries (whether now owned or hereafter arising or
acquired, tangible or intangible, real or personal), to create and perfect Liens
in favor of Agent in any fee simple interests in Real Property acquired by
Parent or its Subsidiaries after the Closing Date with a fair market value in
excess of $500,000, and in order to fully consummate all of the transactions
contemplated hereby and under the other Loan Documents); provided that the
foregoing shall not apply to any Subsidiary of Parent that is a CFC if providing
such documents would result in adverse tax consequences or the costs to the Loan
Parties of providing such documents are unreasonably excessive (as determined by
Agent in consultation with Administrative Borrower) in relating to the benefits
of Agent and the Lenders of the benefits afforded thereby. To the maximum extent
permitted by applicable law, each of Parent and each Borrower authorizes Agent
to execute any such Additional Documents in the applicable Loan Party’s or its
Subsidiary’s name, as applicable, and authorizes Agent to file such executed
Additional Documents in any appropriate filing office. In furtherance and not in
limitation of the foregoing, each Loan Party shall take such actions as Agent
may reasonably request from time to time to ensure that the Obligations are
guarantied by the Guarantors and are secured by substantially all of the assets
of Parent and its Subsidiaries and all of the outstanding Capital Stock of
Parent’s Subsidiaries (subject to limitations contained in the Loan Documents
with respect to foreign Subsidiaries).

5.13     Lender Meetings. Within 90 days after the close of each fiscal year of
Parent, at the request of Agent or of the Required Lenders and upon reasonable
prior notice, hold a meeting (at a mutually agreeable location and time or, at
the option of Agent, by conference call) with all Lenders who choose to attend
such meeting at which meeting shall be reviewed the financial results of the
previous fiscal year and the financial condition of Parent and its Subsidiaries
and the projections presented for the current fiscal year of Parent.

5.14     Material Contracts; Necessary Authorizations. Contemporaneously with
the delivery of the quarterly financial statements pursuant hereto, provide
Agent with copies of (a) each Material Contract entered into or obtained since
the delivery of the previous Compliance Certificate, and (b) each material
amendment or modification of any Material Contract entered into since the
delivery of the previous Compliance Certificate. Promptly following Agent’s
request, Borrowers shall provide Agent with copies of any Necessary
Authorizations not previously delivered to the Agent.

5.15     Location of Inventory and Equipment. Keep each Loan Parties’ and its
Subsidiaries’ Inventory and Equipment (other than vehicles and Equipment out for
repair or in transit) only at the locations identified on Schedule 4.25 and
their chief executive offices only at the locations identified on Schedule
4.6(b); provided, however, that Borrowers may amend Schedule 4.25 or Schedule
4.6(b) so long as such amendment occurs by written notice to Agent not less than
10 days prior to the date on which such Inventory or Equipment is moved to such
new location or such chief executive office is relocated

 

 

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and so long as (i) such new location is within the continental United States if
the previous location was situated therein, (ii) at the time of such written
notification, Borrowers provide Agent a Collateral Access Agreement with respect
thereto, (iii) neither Parent’s and its Subsidiaries’ nor the Agent’s right of
entry upon the premises where such Inventory or Equipment is stored or its right
to remove the Inventory or Equipment therefrom, is restricted, and (iv) all
negotiable documents and receipts in respect of any Collateral maintained at
such premises are promptly delivered to the Agent and any non-negotiable
documents and receipts in respect of any Collateral maintained at such premises
are issued to the Agent and promptly delivered to the Agent.

 

5.16

[RESERVED].

5.17     Debt Designations. Take all necessary and appropriate actions,
including, without limitation, any such actions reasonably requested by the
Agent, to ensure at all times that the Agent and the Lenders are and shall be
entitled to all of the rights of the holders of “First-Lien Indebtedness,”
“Senior Lender Claims” (as each such term is defined in the Intercreditor
Agreement), “First-Priority Lien Obligations” (as such term in defined in the
Indenture) and “Senior Debt” (as such term in defined in the Subordination
Agreement).

5.18     Cash Management. Comply with all cash management obligations set forth
in the Security Agreement including, without limitation, Section 6(l) thereof.

 

5.19

Post Closing Deliveries.

(a)        On or before October 30, 2008, deliver to the Agent a stock
certificate representing 65% of the voting stock with respect to Syscon Justice
Systems International Pty. Limited, together with undated powers endorsed in
blank.

(b)       Unless otherwise dissolved prior to October 30, 2008 in accordance
with this Agreement, on or before October 30, 2008, deliver to the Agent a stock
certificate representing 65% of the voting stock with respect to Syscon Justice
Systems Ltd., together with undated powers endorsed in blank by the applicable.

(c)        On or before October 30, 2008, deliver to the Agent duly executed
Control Agreements in respect of each of the accounts listed on Schedule
5.19(c), such Control Agreement to be in form and substance satisfactory to the
Agent in its reasonable discretion.

(d)       On or before October 30, 2008, provide to Agent satisfactory evidence
that each of the Intellectual Property filings identified on Schedule 5.19(d)
have been properly released.

(e)        On or before October 30, 2008, deliver to Agent a duly executed
Collateral Access Agreement with respect to the Company headquarters located at
14651 Dallas Parkway, Suite 600, Dallas, Texas, 75254.

(f)        On or before October 3, 2008, deliver to the Agent a stock
certificate representing 65% of the voting stock with respect to Syscon UK
Limited, together with undated powers endorsed in blank.

(g)       On or before October 6, 2008, deliver to the Agent the Articles of
Incorporation for T-Netix Telecommunications, Inc., certified as of a recent
date by the appropriate Governmental Authority.

 

 

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(h)       On or before October 6, 2008, deliver to the Agent the Articles of
Incorporation for Syscon Justice Systems, Inc., certified as of a recent date by
the appropriate Governmental Authority.

(i)        On or before December 1, 2008, deliver to the Agent a Certificate of
Account Status from the Texas Comptroller of Public Accounts with respect to
T-Netix Telecommunications Services, Inc., which certificate shall indicate that
T-Netix Telecommunications Services, Inc. is in good standing in the State of
Texas.

 

6.

NEGATIVE COVENANTS.

Each of Parent and each of the other Loan Parties each covenants and agrees
that, until termination of all of the Commitments and payment in full of the
Obligations, the Loan Parties will not and will not permit any of their
Subsidiaries to do any of the following:

6.1       Indebtedness. Create, incur, assume, suffer to exist, guarantee, or
otherwise become or remain, directly or indirectly, liable with respect to any
Indebtedness, except for Permitted Indebtedness; provided, however, that in no
event shall any Borrower or any other Loan Party create, incur, assume, suffer
to exist, guarantee, or otherwise become or remain, directly or indirectly,
liable with respect to any Indebtedness to the extent such Borrower or any such
Loan Party would be required to make a mandatory payment in respect of any
Indebtedness evidenced by the Senior Note Documents or the Subordinated Note
Documents.

6.2       Liens. Create, incur, assume, or suffer to exist, directly or
indirectly, any Lien on or with respect to any of its assets, of any kind,
whether now owned or hereafter acquired, or any income or profits therefrom,
except for Permitted Liens.

 

6.3

Restrictions on Fundamental Changes.

(a)        Other than in order to consummate a Permitted Acquisition, enter into
any merger, consolidation, reorganization, or recapitalization, or reclassify
its Stock (other than reclassifications of Stock of Parent or its Subsidiaries
to the extent such Stock would not constitute Indebtedness after giving effect
to such reclassification and to the extent such reclassification would not be
adverse to the interests of the Lender Group (including, without limitation, the
Lender Group’s Lien therein) after giving effect thereto), except for (i) any
merger between Loan Parties, provided that a Borrower must be the surviving
entity of any such merger to which it is a party and no merger may occur between
Parent and another Borrower, (ii) any merger between Loan Parties and
Subsidiaries of Parent that are not Loan Parties so long as such Loan Party is
the surviving entity of any such merger, and (iii) any merger between
Subsidiaries of Parent that are not Loan Parties,

(b)       Liquidate, wind up, or dissolve itself (or suffer any liquidation or
dissolution), except for (i) the liquidation or dissolution of non-operating
Subsidiaries of Parent with nominal assets and nominal liabilities, (ii) the
liquidation or dissolution of a Loan Party (other than Parent or a Borrower) or
any of its wholly-owned Subsidiaries so long as all of the assets (including any
interest in any Stock) of such liquidating or dissolving Loan Party or
Subsidiary are transferred to a Loan Party that is not liquidating or
dissolving, or (iii) the liquidation or dissolution of a Subsidiary of Parent
that is not a Loan Party (other than any such Subsidiary the Stock of which (or
any portion thereof) is subject to a Lien in favor of Agent) so long as all of
the assets of such liquidating or dissolving Subsidiary are transferred to a
Subsidiary of Parent that is not liquidating or dissolving; or

 

 

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(c)        Suspend or go out of a substantial portion of its or their business,
except as permitted pursuant to clauses (a) or (b) above or in connection with
the transactions permitted pursuant to Section 6.4.

6.4       Disposal of Assets. Other than Permitted Dispositions, Permitted
Investments, or transactions expressly permitted by Sections 6.3 and 6.11,
convey, sell, lease, license, assign, transfer, or otherwise dispose of (or
enter into an agreement to convey, sell, lease, license, assign, transfer, or
otherwise dispose of unless such agreement expressly requires Agent’s consent to
the subject transaction as a condition precedent to consummation of such
transaction) any of Parent’s or its Subsidiaries assets.

6.5       Change Name. Change Parent’s or any of its Subsidiaries’ name,
organizational identification number, state of organization or organizational
identity; provided, however, that Parent or any of its Subsidiaries may change
their names upon at least 10 days prior written notice to Agent of such change.

6.6       Nature of Business. Make any change in the nature of its or their
business as described in Schedule 6.6 or acquire any properties or assets that
are not reasonably related to the conduct of such business activities; provided
that Parent and its Subsidiaries may engage in any business that is reasonably
related or ancillary to its or their business.

 

6.7

Prepayments and Amendments.

 

(a)

Except in connection with Refinancing Indebtedness permitted by Section 6.1,

(i)        optionally prepay, redeem, defease, purchase, or otherwise acquire
any Indebtedness of Parent or its Subsidiaries, other than (A) the Obligations
in accordance with this Agreement, (B) Permitted Intercompany Advances, and (C)
so long as no Default or Event of Default then exists or would be caused
thereby, within one hundred eighty (180) days after the end of each calendar
year (or such longer period as shall be required under any applicable securities
laws and regulations), purchase Securities (as defined in the Indenture on the
Closing Date) tendered for purchase pursuant to an Excess Cash Flow Offer (as
defined in the Indenture on the Closing Date) in an aggregate amount not to
exceed for such calendar year, together with the amount of any Restricted
Payments made pursuant to Section 6.9(g), the Excess Cash Flow Amount (as
defined in the Indenture on the Closing Date) for such calendar year,

(ii)       make any payment on account of Indebtedness that has been
contractually subordinated in right of payment if such payment is not permitted
at such time under the subordination terms and conditions, or make any payments
on account of Indebtedness (including, without limitation, payments of interest)
evidenced by the Subordinated Note Documents except as expressly permitted under
Section 6.9 hereof, or

 

(b)  

Directly or indirectly, amend, modify, or change any of the terms or provisions
of,

(i)        any agreement, instrument, document, indenture, or other writing
evidencing or concerning Indebtedness permitted under Section 6.1 and not
specifically mentioned in clause (iii) below, other than (A) the Obligations in
accordance with this Agreement, (B) Permitted Intercompany Advances, and (C)
Permitted Indebtedness other than Permitted Indebtedness described in clause (b)
of the definition of Permitted Indebtedness,

 

 

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(ii)       any Material Contract (other than any Material Contract referenced
under clause (i) above or clauses (iii) or (iv) below) except to the extent that
such amendment, modification, alteration, increase, or change could not,
individually or in the aggregate with other changes to such Material Contract,
reasonably be expected to be materially adverse to the interests of the Lenders,

(iii)      any of the Senior Note Documents or any of the Subordinated Note
Documents in any manner that would (i) have the effect of (A) increasing
principal, interest, fee or other payment obligations thereunder, (B) adding
collateral or other guarantors, (C) shortening the maturity or increasing the
amortization of the obligations thereunder, or (D) making the covenants,
defaults or other provisions thereof more burdensome or (ii) otherwise could
reasonably be expected to be materially adverse to the interests of the Lenders,

(iv)      any of the Management Agreements in any manner that would have the
effect of (i) increasing payment obligations thereunder, or (ii) in a manner
materially adverse to the interests of the Parent or any of its Subsidiaries or
any member of the Lender Group, or

(v)       any Syscon Purchase Document in any manner that would (A) have the
effect of (1) increasing the Syscon Earn Outs or other consideration paid by any
Loan Party in connection with the Syscon Purchase Documents, (2) accelerating
the payment date for the Syscon Earnouts, or (3) in a manner materially adverse
to the interests of the Parent or any of its Subsidiaries or any member of the
Lender Group, or

(vi)      the Governing Documents of any Loan Party or any of its Subsidiaries
if the effect thereof, either individually or in the aggregate, could reasonably
be expected to be materially adverse to the interests of the Lenders.

6.8       Change of Control. Cause, permit, or suffer, directly or indirectly,
any Change of Control.

6.9       Restricted Payments. Directly or indirectly declare or make any
Restricted Payment or Restricted Purchase, or set aside any funds for any such
purpose, other than Dividends on common stock which accrue (but are not paid in
cash) or are paid in kind or Dividends on preferred stock which accrue (but are
not paid in cash) or are paid in kind; provided, however, that:

(a)        the Parent’s Subsidiaries may make Restricted Payments to the Parent
or a direct or indirect wholly owned Domestic Subsidiary of the Parent that is a
Loan Party,

(b)       so long as (i) no Default or Event of Default then exists or would be
caused thereby, (ii) Excess Availability is equal to or greater than $5,000,000
both before and after giving effect thereto, and (iii) to the extent permitted
by the Management Fees Subordination Agreement, Parent and/or its Subsidiaries
may make payments in accordance with the Management Agreements as they exist on
the date hereof or as amended as permitted by this Agreement,

(c)        so long as (i) no Default or Event of Default then exists or would be
caused thereby, (ii) Excess Availability is equal to or greater than $10,000,000
both before and after giving effect thereto, Parent may repurchase Stock from
former employees, former officers and former directors of Parent or any of its
Subsidiaries (but in no event, from the Equity Sponsor) in an aggregate amount
not to exceed $500,000,

(d)       the Parent may pay annual fees to the independent directors of the
Parent (and, so long as no Default or event of Default then exists or would be
caused thereby, to inside directors of the

 

 

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Parent) and annual fees to the former shareholders of the Evercom Holdings, Inc.
in an aggregate amount not to exceed $300,000,

(e)        to the extent permitted by the Subordination Agreement, the Loan
Parties may make non-cash interest payments in accordance with the Subordinated
Note Documents as they exist on the date hereof or as amended as permitted by
this Agreement,

(f)        so long as no Default or Event of Default then exists or would be
caused thereby and Distributable Cash Flow is available on the date thereof for
the payment therefor, the Loan Parties may make cash interest payments in
accordance with the Subordinated Note Documents as they exist on the date hereof
or as amended as permitted by this Agreement, and

(g)       to the extent the Holders (as defined in the Indenture) have not
elected to have their Securities (as defined in the Indenture) redeemed pursuant
to an Excess Cash Flow Offer (as defined in the Indenture) as permitted by
Section 6.7(a)(i), so long as no Default or Event of Default exists, the Parent
and its Subsidiaries may make cash payments on accrued interest in accordance
with the Subordinated Note Documents as the exist on the date hereof or as
amended as permitted by this Agreement; provided, however, in no event shall the
amount of Restricted Payments made pursuant to this Section 6.9(g) in any
calendar year, together with the amount of any repurchase of Securities (as
defined in the Indenture) made with respect to such calendar year under Section
6.7(a)(i) exceed the Excess Cash Flow Amount (as defined in the Indenture) for
such calendar year.

6.10     Accounting Methods. Modify or change its fiscal year or its method of
accounting (other than implementation of the Proposed Capitalization Policy and
other than as may be required to conform to GAAP).

6.11     Investments. Except for Permitted Investments, directly or indirectly,
make or acquire any Investment or incur any liabilities (including contingent
obligations) for or in connection with any Investment; provided, however, that
(other than (a) an aggregate amount of not more than $10,000 at any one time, in
the case of Parent and its Subsidiaries (other than those that are CFCs), (b)
amounts deposited into Deposit Accounts specially and exclusively used for
payroll, payroll taxes and other employee wage and benefit payments to or for
Parent’s or its Subsidiaries’ employees, (c) an aggregate amount of not more
than $1,000,000 (calculated at current exchange rates) at any one time, in the
case of Subsidiaries of Parent that are CFCs, (d) an aggregate amount of not
more than $1,700,000 deposited into the Smith Barney Account at any one time and
(e) an aggregate amount of not more than $100,000 deposited into the United Bank
Account at any one time) Parent and its Subsidiaries shall not have Permitted
Investments consisting of cash, Cash Equivalents, or amounts credited to Deposit
Accounts or Securities Accounts unless Parent or its Subsidiary, as applicable,
and the applicable securities intermediary or bank have entered into Control
Agreements with Agent governing such Permitted Investments in order to perfect
(and further establish) the Agent’s Liens in such Permitted Investments. Subject
to the foregoing proviso, Parent shall not and shall not permit its Subsidiaries
to establish or maintain any Deposit Account or Securities Account unless Agent
shall have received a Control Agreement in respect of such Deposit Account or
Securities Account concurrently with the establishment of any such Deposit
Account or Securities Account.

6.12     Transactions with Affiliates. Directly or indirectly enter into or
permit to exist any transaction with any Affiliate of Parent or any of its
Subsidiaries except for:

(a)        transactions (other than the payment of management, consulting,
monitoring, or advisory fees) between Parent or its Subsidiaries, on the one
hand, and any Affiliate of Parent or its Subsidiaries, on the other hand, so
long as such transactions (i) are upon fair and reasonable terms, (ii) are

 

 

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fully disclosed to Agent prior to the consummation thereof, if they involve one
or more payments by, or the transfer of assets by, Parent or its Subsidiaries in
excess of $500,000 for any single transaction or series of related transactions,
and (iii) are no less favorable, taken as a whole, to Parent or its
Subsidiaries, as applicable, than would be obtained in an arm’s length
transaction with a non-Affiliate,

(b)       so long as it has been approved by Parent’s Board of Directors in
accordance with applicable law, any indemnity provided for the benefit of
directors of Parent,

(c)        so long as it has been approved by Parent’s Board of Directors, the
payment of reasonable fees, compensation, or employee benefit arrangements to
employees and officers of Parent in the ordinary course of business and
consistent with industry practice, and

(d)       transactions permitted by Section 6.3 or Section 6.9, or any Permitted
Intercompany Advance.

6.13     Use of Proceeds. Use the proceeds of the Advances for any purpose other
than (a) on the Closing Date, (i) to repay, in full, the outstanding principal,
accrued interest, and accrued fees and expenses under the Existing Credit
Facility, and (ii) to pay transactional fees, costs, and expenses incurred in
connection with this Agreement, the other Loan Documents, and the transactions
contemplated hereby and thereby, and (b) thereafter, consistent with the terms
and conditions hereof, for its lawful and permitted purposes.

6.14     Inventory and Equipment with Bailees. Store the Inventory or Equipment
of Parent or its Subsidiaries having a value in excess of $100,000 in the
aggregate at any time now or hereafter with a bailee, warehouseman, or similar
party unless, prior to the commencement of any such storage, to the extent
requested by Agent, Parent or such Subsidiary has delivered to Agent a duly
executed Collateral Access Agreement in respect of such location.

6.15     Debt Designations. Designate, or cause or permit any other Person to
designate, any Indebtedness of Parent or any of its Subsidiaries (other than the
Obligations) as “First-Lien Indebtedness,” (as such term is defined in the
Intercreditor Agreement), “First-Priority Lien Obligations” (as such term in
defined in the Indenture) or “Senior Debt” (as such term in defined in the
Subordination Agreement).

6.16     Parent as Holding Company. With respect to the Parent, engage in any
material business activity other than its ownership of the Stock of its
Subsidiaries, its performance hereunder and under the other Loan Documents, in
respect of its obligations under the Senior Note Documents, in respect of its
obligations under the Subordinated Note Documents, in respect of its corporate
organizational documents and in respect of the payment of insurance, accounting,
legal or other professional or administrative expenses incurred in the ordinary
course of business.

7.

FINANCIAL COVENANTS.

Each of Parent and each Borrower covenants and agrees that, until termination of
all of the Commitments and payment in full of the Obligations, Parent and each
Borrower will comply with each of the following financial covenants:

 

(a)

Minimum EBITDA.

 

 

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(i)        At all times during which a Monthly Testing Period is not in effect,
achieve EBITDA measured on a quarter-end basis of at least the required amount
set forth in the following table for the applicable period set forth opposite
thereto:

Applicable Amount

Applicable Period

$26,863,000

For the 3 quarter period
ending September 30, 2008

$36,733,000

For the 4 quarter period
ending December 31, 2008

$37,994,000

For the 4 quarter period
ending March 31, 2009

$38,258,000

For the 4 quarter period
ending June 30, 2009

$39,709,000

For the 4 quarter period
ending September 30, 2009

$40,000,000

For the 4 quarter period ending
each quarter thereafter

 

(ii)       At all times during which a Monthly Testing Period is in effect,
achieve EBITDA measured on a month-end basis of at least the required amount set
forth in the following table for the applicable period set forth opposite
thereto:

Applicable Amount

Applicable Period

$26,863,000

For the 9 month period
ending September 30, 2008

$30,177,000

For the 10 month period
ending October 31, 2008

$33,414,000

For the 11 month period
ending November 30, 2008

$36,733,000

For the 12 month period
ending December 31, 2008

$38,072,000

For the 12 month period
ending January 31, 2009

$38,285,000

For the 12 month period
ending February 28, 2009

 

 

 

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$37,994,000

For the 12 month period
ending March 31, 2009

$38,115,000

For the 12 month period
ending April 30, 2009

$37,817,000

For the 12 month period
ending May 31, 2009

$38,258,000

For the 12 month period
ending June 30, 2009

$38,669,000

For the 12 month period
ending July 31, 2009

$39,120,000

For the 12 month period
ending August 31, 2009

$39,709,000

For the 12 month period
ending September 30, 2009

$40,000,000

For the 12 month period ending
each month thereafter

 

 

 

(b)

Fixed Charge Coverage Ratio.

(i)        At all times during which a Monthly Testing Period is not in effect,
have a Fixed Charge Coverage Ratio measured on a quarter-end basis of at least
the applicable ratio set forth in the following table for the applicable period
set forth opposite thereto:

Applicable Ratio

Applicable Period

0.5:1.0

For the 3 quarter period
ending September 30, 2008

0.7:1.0

For the 4 quarter period
ending December 31, 2008

0.7:1.0

For the 4 quarter period
ending March 31, 2009

0.8:1.0

For the 4 quarter period
ending June 30, 2009

0.9:1.0

For the 4 quarter period
ending September 30, 2009

 

 

 

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1.0:1.0

For the 4 quarter period
ending December 31, 2009

1.0:1.0

For the 4 quarter period ending
each quarter thereafter

 

(ii)       At all times during which a Monthly Testing Period is in effect, have
a Fixed Charge Coverage Ratio measured on a month-end basis of at least the
applicable ratio set forth in the following table for the applicable period set
forth opposite thereto:

Applicable Ratio

Applicable Period

0.5:1.0

For the 9 month period
ending September 30, 2008

0.5:1.0

For the 10 month period
ending October 31, 2008

0.6:1.0

For the 11 month period
ending November 30, 2008

0.7:1.0

For the 12 month period
ending December 31, 2008

0.7:1.0

For the 12 month period
ending January 31, 2009

0.7:1.0

For the 12 month period
ending February 28, 2009

0.7:1.0

For the 12 month period
ending March 31, 2009

0.7:1.0

For the 12 month period
ending April 30, 2009

0.7:1.0

For the 12 month period
ending May 31, 2009

0.8:1.0

For the 12 month period
ending June 30, 2009

0.9:1.0

For the 12 month period
ending July 31, 2009

0.9:1.0

For the 12 month period
ending August 31, 2009

 

 

 

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0.9:1.0

For the 12 month period
ending September 30, 2009

1.0:1.0

For the 12 month period
ending October 31, 2009

1.0:1.0

For the 12 month period
ending November 30, 2009

1.0:1.0

For the 12 month period
ending December 31, 2009

1.0:1.0

For the 12 month period ending
each month thereafter

 

 

(c)        Capital Expenditures. Make Capital Expenditures in any fiscal year in
an amount less than or equal to, but not greater than, $22,000,000.

For purposes of clauses (a) and (b) above, a “Monthly Testing Period” shall be
deemed to be in effect beginning on any date on which Average Excess
Availability is less than $10,000,000 and shall continue until the last day of
the first full fiscal quarter ending after commencement of such Monthly Testing
Period during which Average Excess Availability is equal to or greater than
$10,000,000 on each day of such fiscal quarter.

8.

EVENTS OF DEFAULT.

Any one or more of the following events shall constitute an event of default
(each, an “Event of Default”) under this Agreement:

8.1       If Borrowers fail to pay when due and payable, or when declared due
and payable, (a) all or any portion of the Obligations consisting of interest,
fees, or charges due the Lender Group, reimbursement of Lender Group Expenses,
or other amounts (other than any portion thereof constituting principal)
constituting Obligations (including any portion thereof that accrues after the
commencement of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any such Insolvency Proceeding), and
such failure continues for a period of 3 Business Days, or (b) all or any
portion of the principal of the Obligations (including, without limitation, any
reimbursement obligations in respect of Letters of Credit);

 

8.2

If any Loan Party or any of its Subsidiaries:

(a)        fails to perform or observe any covenant or other agreement contained
in any of (i) Sections 5.1, 5.3, 5.6, 5.7, 5.10, 5.11, 5.13, 5.14, or 5.19 of
this Agreement, (ii) Sections 6.1 through 6.16 of this Agreement, (iii) Section
7 of this Agreement, or (iv) Section 6 of the Security Agreement;

(b)       fails to perform or observe any covenant or other agreement contained
in any of Sections 5.5, 5.8, 5.12, and 5.15 of this Agreement and such failure
continues for a period of 10 days after the earlier of (i) the date on which
such failure shall first become known, or should have become known, to any
officer of any Borrower or (ii) the date on which written notice thereof is
given to Administrative Borrower by Agent; or

 

 

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(c)        fails to perform or observe any covenant or other agreement contained
in this Agreement, or in any of the other Loan Documents, in each case, other
than any such covenant or agreement that is the subject of another provision of
this Section 8 (in which event such other provision of this Section 8 shall
govern), and such failure continues for a period of 30 days after the earlier of
(i) the date on which such failure shall first become known, or should have
become known, to any officer of Parent or any Borrower or (ii) the date on which
written notice thereof is given to Administrative Borrower by Agent;

8.3       If one or more judgments, orders, or awards for the payment of money
involving an aggregate amount of $1,000,000, or more (excluding from such amount
the amount covered by insurance pursuant to which the insurer has accepted
liability therefor in writing, and, in the case of the Syscon Litigation,
excluding from such amount the amount covered by the Syscon Escrow Agreement as
determined by the Agent in its reasonable discretion) is entered or filed
against a Loan Party or any of its Subsidiaries, or with respect to any of their
respective assets, and either (a) there is a period of 30 consecutive days at
any time after the entry of any such judgment, order, or award during which a
stay of enforcement thereof is not in effect, or (b) enforcement proceedings are
commenced upon such judgment, order, or award;

8.4       If an Insolvency Proceeding is commenced by a Loan Party or any of its
Subsidiaries;

8.5       If an Insolvency Proceeding is commenced against a Loan Party or any
of its Subsidiaries and any of the following events occur: (a) such Loan Party
or such Subsidiary consents to the institution of such Insolvency Proceeding
against it, (b) the petition commencing the Insolvency Proceeding is not timely
controverted, (c) the petition commencing the Insolvency Proceeding is not
dismissed within 60 calendar days of the date of the filing thereof, (d) an
interim trustee is appointed to take possession of all or any substantial
portion of the properties or assets of, or to operate all or any substantial
portion of the business of, such Loan Party or its Subsidiary, or (e) an order
for relief shall have been issued or entered therein;

8.6       If a Loan Party or any of its Subsidiaries is enjoined, restrained, or
in any way prevented by court order from continuing to conduct all or any
material part of its business affairs;

8.7       If there is a default in one or more agreements to which a Loan Party
or any of its Subsidiaries is a party with one or more third Persons relative to
a Loan Party’s or any of its Subsidiaries’ Indebtedness involving an aggregate
principal amount of $1,000,000 or more (including, without limitation, the
Senior Note Documents and the Subordinated Note Documents), and such default (i)
occurs at the final maturity of the obligations thereunder, or (ii) results in a
right by such third Person, irrespective of whether exercised, to accelerate the
maturity of such Loan Party’s or its Subsidiary’s obligations thereunder
(without regard to any restrictions contained in any subordination terms or
intercreditor agreements with respect thereto);

8.8       If any warranty, representation, statement, or Record made by or on
behalf of Parent or any of its Subsidiaries herein or in any other Loan Document
or delivered in writing and produced by or on behalf of Parent or any of its
Subsidiaries to Agent or any Lender in connection with this Agreement or any
other Loan Document proves to be untrue in any material respect (except that
such materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof) as of the date of issuance or making or deemed making thereof;

8.9       If the obligation of any Guarantor under the Guaranty is limited or
terminated by operation of law or by such Guarantor;

 

 

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8.10     If the Security Agreement or any other Loan Document that purports to
create a Lien, shall, for any reason, fail or cease to create a valid and
perfected and, except to the extent permitted by the terms hereof or thereof,
first priority Lien on the Collateral covered thereby, except as a result of a
disposition of the applicable Collateral in a transaction permitted under this
Agreement;

8.11     The Equity Sponsor shall deliver notice of a breach or default under a
Management Agreement to a Loan Party; or

8.12     Any provision of any Loan Document shall at any time for any reason be
declared to be null and void, or the validity or enforceability thereof shall be
contested by a Loan Party or its Subsidiaries, or a proceeding shall be
commenced by a Loan Party or its Subsidiaries, or by any Governmental Authority
having jurisdiction over a Loan Party or its Subsidiaries, seeking to establish
the invalidity or unenforceability thereof, or a Loan Party or its Subsidiaries
shall deny that such Loan Party or its Subsidiaries has any liability or
obligation purported to be created under any Loan Document.

9.

RIGHTS AND REMEDIES.

9.1       Rights and Remedies. Upon the occurrence and during the continuation
of an Event of Default, Agent may, and, at the instruction of the Required
Lenders, shall, in each case by written notice to Administrative Borrower and in
addition to any other rights or remedies provided for hereunder or under any
other Loan Document or by applicable law, do any one or more of the following on
behalf of the Lender Group:

(a)        declare the Obligations, whether evidenced by this Agreement, by any
of the other Loan Documents, or otherwise, immediately due and payable,
whereupon the same shall become and be immediately due and payable, without
presentment, demand, protest, or further notice or other requirements of any
kind, all of which are hereby expressly waived by Parent and each Borrower; and

(b)       declare the Revolver Commitments terminated, whereupon the Revolver
Commitments shall immediately be terminated together with any obligation of any
Lender hereunder to make Advances and the obligation of the Issuing Lender to
issue Letters of Credit.

The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in Section 8.4 or Section 8.5, in addition to the remedies
set forth above, without any notice to Parent, Borrowers or any other Person or
any act by the Lender Group, the Commitments shall automatically terminate and
the Obligations then outstanding, together with all accrued and unpaid interest
thereon and all fees and all other amounts due under this Agreement and the
other Loan Documents, shall automatically and immediately become due and
payable, without presentment, demand, protest, or notice of any kind, all of
which are expressly waived by Parent and Borrowers.

9.2       Remedies Cumulative. The rights and remedies of the Lender Group under
this Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it.

10.

WAIVERS; INDEMNIFICATION.

10.1     Demand; Protest; etc. Each of Parent and each Borrower waives demand,
protest, notice of protest, notice of default or dishonor, notice of payment and
nonpayment, nonpayment at

 

 

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maturity, release, compromise, settlement, extension, or renewal of documents,
instruments, chattel paper, and guarantees at any time held by the Lender Group
on which any Borrower may in any way be liable.

10.2     The Lender Group’s Liability for Collateral. Each of Parent and each
Borrower hereby agrees that: (a) so long as Agent complies with its obligations,
if any, under the Code, the Lender Group shall not in any way or manner be
liable or responsible for: (i) the safekeeping of the Collateral, (ii) any loss
or damage thereto occurring or arising in any manner or fashion from any cause,
(iii) any diminution in the value thereof, or (iv) any act or default of any
carrier, warehouseman, bailee, forwarding agency, or other Person, and (b) all
risk of loss, damage, or destruction of the Collateral shall be borne by
Borrowers.

10.3     Indemnification. Each of Parent and each Borrower shall pay, indemnify,
defend, and hold the Agent-Related Persons, the Lender-Related Persons, and each
Participant (each, an “Indemnified Person”) harmless (to the fullest extent
permitted by law) from and against any and all claims, demands, suits, actions,
investigations, proceedings, liabilities, fines, costs, penalties, and damages,
and all reasonable fees and disbursements of attorneys, experts, or consultants
and all other costs and out-of-pocket expenses actually incurred in connection
therewith or in connection with the enforcement of this indemnification (as and
when they are incurred and irrespective of whether suit is brought), at any time
asserted against, imposed upon, or incurred by any of them (a) in connection
with or as a result of or related to the execution and delivery (provided that
Borrowers shall not be liable for costs and expenses (including attorneys fees)
of any Lender (other than WFF) incurred in advising, structuring, drafting,
reviewing, administering or syndicating the Loan Documents), enforcement,
performance, or administration (including any restructuring or workout with
respect hereto) of this Agreement, any of the other Loan Documents, or the
transactions contemplated hereby or thereby or the monitoring of Parent’s and
its Subsidiaries’ compliance with the terms of the Loan Documents (other than
disputes solely between the Lenders), (b) with respect to any investigation,
litigation, or proceeding related to this Agreement, any other Loan Document, or
the use of the proceeds of the credit provided hereunder (irrespective of
whether any Indemnified Person is a party thereto), or any act, omission, event,
or circumstance in any manner related thereto, and (c) in connection with or
arising out of any presence or release of Hazardous Materials at, on, under, to
or from any assets or properties owned, leased or operated by any Loan Party or
any of its Subsidiaries or any Environmental Actions, Environmental Liabilities
and Costs or Remedial Actions related in any way to any such assets or
properties of any Loan Party or any of its Subsidiaries (each and all of the
foregoing, the “Indemnified Liabilities”). The foregoing to the contrary
notwithstanding, neither Parent nor any Borrower shall have any obligation to
any Indemnified Person under this Section 10.3 with respect to any Indemnified
Liability that a court of competent jurisdiction finally determines to have
resulted from the gross negligence or willful misconduct of such Indemnified
Person or its officers, directors, employees, attorneys, or agents. This
provision shall survive the termination of this Agreement and the repayment of
the Obligations. If any Indemnified Person makes any payment to any other
Indemnified Person with respect to an Indemnified Liability as to which Parent
or Borrowers were required to indemnify the Indemnified Person receiving such
payment, the Indemnified Person making such payment is entitled to be
indemnified and reimbursed by Parent and Borrowers with respect thereto. WITHOUT
LIMITATION, THE FOREGOING INDEMNITY SHALL APPLY TO EACH INDEMNIFIED PERSON WITH
RESPECT TO INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED BY OR
ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH INDEMNIFIED PERSON OR OF ANY
OTHER PERSON.

11.

NOTICES.

Unless otherwise provided in this Agreement, all notices or demands relating to
this Agreement or any other Loan Document shall be in writing and (except for
financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally

 

 

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delivered or sent by registered or certified mail (postage prepaid, return
receipt requested), overnight courier, electronic mail (at such email addresses
as a party may designate in accordance herewith), or telefacsimile. In the case
of notices or demands to Parent or any Borrower or Agent, as the case may be,
they shall be sent to the respective address set forth below:

If to Administrative Borrower:

Securus Technologies, Inc.

 

c/o Evercom Systems, Inc.

 

8201 Tristar Drive

 

Irving, Texas 75063

 

Attn: William Markert

 

Fax No. (972) 988-3774

 

 

with copies to:

H.I.G. Capital, LLC

 

1001 Brickell Bay Drive, 27th Floor

 

Miami, Florida 33131

 

Attn: Rob Wolfson

 

Fax No.: (305) 379-2013

 

 

 

 

 

 

If to Agent:

Wells Fargo Foothill, LLC

 

1100 Abernathy Road

 

Suite 1600

 

Atlanta, Georgia

 

Attn: Loan Portfolio Manager

 

Fax No.: (770)864-0785

 

 

with copies to:

Jones Day

 

1420 Peachtree Street, N.E.

 

Suite 800

 

Atlanta, Georgia 30309

 

Attn: Aldo LaFiandra, Esq.

 

Fax No.: (404) 581-8330

 

 

Any party hereto may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
party. All notices or demands sent in accordance with this Section 10, shall be
deemed received on the earlier of the date of actual receipt or 4 Business Days
after the deposit thereof in the mail; provided, that (a) notices sent by
overnight courier service shall be deemed to have been given when received, (b)
notices by facsimile shall be deemed to have been given when sent (except that,
if not given during normal business hours for the recipient, shall be deemed to
have been given at the opening on business on the next Business Day for the
recipient) and (c) notices by electronic mail shall be deemed received upon the
sender’s receipt of an acknowledgment from the intended recipient (such as by
the “return receipt requested” function, as available, return email or other
written acknowledgment).

12.

CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

(a)        THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS
EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH
OTHER LOAN DOCUMENT), THE CONSTRUCTION,

 

 

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INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE
PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

(b)       THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION
WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. PARENT, EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP
WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO
ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 12(b).

(c)        PARENT, EACH BORROWER AND EACH MEMBER OF THE LENDER GROUP HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. PARENT,
BORROWERS AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED
THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

13.

ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

 

13.1

Assignments and Participations.

(a)        With the prior written consent of Administrative Borrower, which
consent of Administrative Borrower shall not be unreasonably withheld, delayed
or conditioned, and shall not be required (1) if an Event of Default has
occurred and is continuing, or (2) in connection with an assignment to a Person
that is a Lender or an Affiliate (other than individuals) of a Lender and with
the prior written consent of Agent, which consent of Agent shall not be
unreasonably withheld, delayed or conditioned, and shall not be required in
connection with an assignment to a Person that is a Lender or an Affiliate
(other than individuals) of a Lender, any Lender may assign and delegate to one
or more assignees (each an “Assignee”; provided that no Loan Party, Affiliate of
a Loan Party, Equity Sponsor, or Affiliate of Equity Sponsor shall be permitted
to become an Assignee) all or any portion of the Obligations, the Commitments
and the other rights and obligations of such Lender hereunder and under the
other Loan Documents, in a minimum amount (unless waived by the Agent) of
$5,000,000 (except such minimum amount shall not apply to (x) an assignment or
delegation by any Lender to any other Lender or an Affiliate of any Lender or
(y) a group of new Lenders, each of which is an Affiliate of each other or a
Related Fund of such new Lender to the extent that the aggregate amount to be
assigned to all such new Lenders is at least $5,000,000); provided, however,
that Borrowers and Agent may continue to deal solely and directly with such
Lender in connection with the interest so assigned to an Assignee until (i)
written notice of such assignment, together with payment instructions,
addresses, and related

 

 

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information with respect to the Assignee, have been given to Administrative
Borrower and Agent by such Lender and the Assignee, (ii) such Lender and its
Assignee have delivered to Administrative Borrower and Agent an Assignment and
Acceptance and Agent has notified the assigning Lender of its receipt thereof in
accordance with Section 13.1(b), and (iii) unless waived by the Agent, the
assigning Lender or Assignee has paid to Agent for Agent’s separate account a
processing fee in the amount of $3,500. Each partial assignment shall be made as
an assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement, including, without limitation, such assigning
Lender’s rights and obligations in respect of outstanding Advances, its
Revolving Commitment and its Letter of Credit Commitment.

(b)       From and after the date that Agent notifies the assigning Lender (with
a copy to Administrative Borrower) that it has received an executed Assignment
and Acceptance and, if applicable, payment of the required processing fee, (i)
the Assignee thereunder shall be a party hereto and, to the extent that rights
and obligations hereunder have been assigned to it pursuant to such Assignment
and Acceptance, shall have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assigning Lender shall, to the extent that rights and
obligations hereunder and under the other Loan Documents have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights (except
with respect to Section 10.3 hereof) and be released from any future obligations
under this Agreement (and in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender’s rights and obligations
under this Agreement and the other Loan Documents, such Lender shall cease to be
a party hereto and thereto), and such assignment shall effect a novation among
Borrowers, the assigning Lender, and the Assignee; provided, however, that
nothing contained herein shall release any assigning Lender from obligations
that survive the termination of this Agreement, including such assigning
Lender’s obligations under Section 15 and Section 17.9(a) of this Agreement.

(c)        By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document furnished
pursuant hereto, (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Loan Party or the performance or observance by any Loan Party of any of its
obligations under this Agreement or any other Loan Document furnished pursuant
hereto, (iii) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance, (iv) such Assignee will, independently and without
reliance upon Agent, such assigning Lender or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement, (v) such Assignee appoints and authorizes Agent to take such
actions and to exercise such powers under this Agreement and the other Loan
Documents as are delegated to Agent, by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto, and (vi) such Assignee
agrees that it will perform all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.

(d)       Immediately upon Agent’s receipt of the required processing fee, if
applicable, and delivery of notice to the assigning Lender pursuant to Section
13.1(b), this Agreement shall be deemed to be amended to the extent, but only to
the extent, necessary to reflect the addition of the Assignee and the resulting
adjustment of the Commitments arising therefrom. The Commitment allocated to
each Assignee shall reduce such Commitments of the assigning Lender pro tanto.

 

 

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(e)        Any Lender may at any time sell to one or more commercial banks,
financial institutions, or other Persons (a “Participant”) participating
interests in all or any portion of its Obligations, its Commitment, and the
other rights and interests of that Lender (the “Originating Lender”) hereunder
and under the other Loan Documents; provided, however, that (i) the Originating
Lender shall remain a “Lender” for all purposes of this Agreement and the other
Loan Documents and the Participant receiving the participating interest in the
Obligations, the Commitments, and the other rights and interests of the
Originating Lender hereunder shall not constitute a “Lender” hereunder or under
the other Loan Documents and the Originating Lender’s obligations under this
Agreement shall remain unchanged, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) Parent,
Borrowers, Agent, and the Lenders shall continue to deal solely and directly
with the Originating Lender in connection with the Originating Lender’s rights
and obligations under this Agreement and the other Loan Documents, (iv) no
Lender shall transfer or grant any participating interest under which the
Participant has the right to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document, except to the extent
such amendment to, or consent or waiver with respect to this Agreement or of any
other Loan Document would (A) extend the final maturity date of the Obligations
hereunder in which such Participant is participating, (B) reduce the interest
rate applicable to the Obligations hereunder in which such Participant is
participating, (C) release all or substantially all of the Collateral or
guaranties (except to the extent expressly provided herein or in any of the Loan
Documents) supporting the Obligations hereunder in which such Participant is
participating, (D) postpone the payment of, or reduce the amount of, the
interest or fees payable to such Participant through such Lender, or (E) change
the amount or due dates of scheduled principal repayments or prepayments or
premiums, and (v) all amounts payable by Borrowers hereunder shall be determined
as if such Lender had not sold such participation, except that, if amounts
outstanding under this Agreement are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of Default,
each Participant shall be deemed to have the right of set off in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement. The rights of any Participant only shall be
derivative through the Originating Lender with whom such Participant
participates and no Participant shall have any rights under this Agreement or
the other Loan Documents or any direct rights as to the other Lenders, Agent,
Parent, Borrowers, the Collections of Parent or its Subsidiaries, the
Collateral, or otherwise in respect of the Obligations. No Participant shall
have the right to participate directly in the making of decisions by the Lenders
among themselves.

(f)        In connection with any such assignment or participation or proposed
assignment or participation or any grant of a security interest in, or pledge
of, its rights under and interest in this Agreement, a Lender may, subject to
the provisions of Section 17.9, disclose all documents and information which it
now or hereafter may have relating to Parent and its Subsidiaries and their
respective businesses.

(g)       Any other provision in this Agreement notwithstanding, any Lender may
at any time create a security interest in, or pledge, all or any portion of its
rights under and interest in this Agreement in favor of any Federal Reserve Bank
in accordance with Regulation A of the Federal Reserve Bank or U.S. Treasury
Regulation 31 CFR §203.24, and such Federal Reserve Bank may enforce such pledge
or security interest in any manner permitted under applicable law.

13.2     Successors. This Agreement shall bind and inure to the benefit of the
respective successors and assigns of each of the parties; provided, however,
that neither Parent nor any other Borrower may assign this Agreement or any
rights or duties hereunder without the Lenders’ prior written consent and any
prohibited assignment shall be absolutely void ab initio. No consent to
assignment by the Lenders shall release Parent or Borrowers from its
Obligations. A Lender may assign this Agreement and the other Loan Documents and
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hereof and, except as expressly required pursuant to Section 2.2(c)(iii) and
Section 13.1 hereof, no consent or approval by Parent or any Borrower is
required in connection with any such assignment.

14.

AMENDMENTS; WAIVERS.

 

14.1

Amendments and Waivers.

(a)        No amendment, waiver or other modification of any provision of this
Agreement or any other Loan Document (other than Hedge Agreements or the Fee
Letter), and no consent with respect to any departure by any Loan Party
therefrom, shall be effective unless the same shall be in writing and signed by
the Required Lenders (or by Agent at the written request of the Required
Lenders) and Administrative Borrower (on behalf of all Borrowers) and then any
such waiver or consent shall be effective, but only in the specific instance and
for the specific purpose for which given; provided, however, that no such
waiver, amendment, or consent shall, unless in writing and signed by all of the
Lenders directly affected thereby and Administrative Borrower (on behalf of all
Borrowers), do any of the following:

(i)        increase the amount of or extend the expiration date of any
Commitment of any Lender affected thereby,

(ii)       postpone or delay any date fixed by this Agreement or any other Loan
Document for any payment of principal, interest, fees, or other amounts due
hereunder or under any other Loan Document,

(iii)      reduce the principal of, or the rate of interest on, any loan or
other extension of credit hereunder, or reduce any fees or other amounts payable
hereunder or under any other Loan Document (except (y) in connection with the
waiver of applicability of Section 2.5(c) (which waiver shall be effective with
the written consent of the Required Lenders), and (z) that any amendment or
modification of defined terms used in the financial covenants in this Agreement
shall not constitute a reduction in the rate of interest or a reduction of fees
for purposes of this clause (iii)),

(iv)      amend or modify this Section or any provision of this Agreement
providing for consent or other action by all Lenders,

(v)       other than as permitted by Section 15.11, release Agent’s Lien in and
to any of the Collateral,

 

(vi)

change the definition of “Required Lenders” or “Pro Rata Share”,

 

(vii)

contractually subordinate any of the Agent’s Liens,

(viii)    other than in connection with a merger, liquidation, dissolution or
sale of such Person expressly permitted by the terms hereof or the other Loan
Documents, release any Loan Party from any obligation for the payment of money
or consent to the assignment or transfer by any Loan Party of any of its rights
or duties under this Agreement or the other Loan Documents,

(ix)      amend any of the provisions of Section 2.3(b)(i) or (ii) or Section
2.3(e) or (f),

(x)       amend Section 13.1(a) to permit a Loan Party, an Affiliate of a Loan
Party, Equity Sponsor, or an Affiliate of Equity Sponsor to be permitted to
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(xi)      change the definition of Credit Amount or any of the defined terms
(including the definition of TTM EBITDA) that are used in such definition to the
extent that any such change results in more credit being made available to
Borrowers based upon the Credit Amount, but not otherwise, or the definitions of
Maximum Revolver Amount and Maximum Letter of Credit Amount.

(b)       No amendment, waiver, modification, or consent shall amend, modify, or
waive (i) the definition of, or any of the terms or provisions of, the Fee
Letter, without the written consent of Agent and Administrative Borrower (on
behalf of all Borrowers) (and shall not require the written consent of any of
the Lenders), and (ii) any provision of Section 15 pertaining to Agent, or any
other rights or duties of Agent under this Agreement or the other Loan
Documents, without the written consent of Agent, Administrative Borrower (on
behalf of all Borrowers), and the Required Lenders,

(c)        No amendment, waiver, modification, or consent shall amend, modify,
or waive any provision of this Agreement or the other Loan Documents pertaining
to Issuing Lender, or any other rights or duties of Issuing Lender under this
Agreement or the other Loan Documents, without the written consent of Issuing
Lender, Agent, Administrative Borrower (on behalf of all Borrowers), and the
Required Lenders,

(d)       No amendment, waiver, modification, or consent shall amend, modify, or
waive any provision of this Agreement or the other Loan Documents pertaining to
Swing Lender, or any other rights or duties of Swing Lender under this Agreement
or the other Loan Documents, without the written consent of Swing Lender, Agent,
Administrative Borrower (on behalf of all Borrowers), and the Required Lenders,

(e)        Notwithstanding anything contained herein to the contrary, this
Agreement may be amended and restated without the consent of any Lender (but
with the consent of the Administrative Borrower (on behalf of all Borrowers) and
the Agent) if, upon giving effect to such amendment and restatement, such Lender
shall no longer be a party to this Agreement (as so amended and restated), the
Commitments, if applicable, of such Lender shall have terminated (but such
Lender shall be entitled to the benefit of Section 2.12, Section 10.3 and
Section 17.10), such Lender shall have no other commitment or other obligation
hereunder and shall have been paid in full all principal, interest and other
amounts owing to it or accrued for its account under this Agreement,

(f)        Anything in this Section 14.1 to the contrary notwithstanding, any
amendment, modification, waiver, consent, termination, or release of, or with
respect to, any provision of this Agreement or any other Loan Document that
relates only to the relationship of the Lender Group among themselves, and that
does not affect the rights or obligations of Borrowers, shall not require
consent by or the agreement of Borrowers.

(g)       Anything in this Section 14.1 to the contrary notwithstanding, the
Agent may require the written consent of all Borrowers (in addition to the
Administrative Borrower) in respect of any amendment, modification, waiver,
consent, termination, or release of, or with respect to, any provision of this
Agreement or any other Loan Document that requires the consent of the
Administrative Borrower, in which case any such amendment, modification, waiver,
consent, termination, or release shall be effective only if consented to in
writing by all Borrowers (in addition to any other required consents).

 

14.2

Replacement of Holdout Lender.

(a)        If any action to be taken by the Lender Group or Agent hereunder
requires the unanimous consent, authorization, or agreement of all Lenders and
if such action has received the consent, authorization, or agreement of the
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at least 5 Business Days prior irrevocable notice, may permanently replace any
Lender (a “Holdout Lender”) that failed to give its consent, authorization, or
agreement with one or more Replacement Lenders, and the Holdout Lender shall
have no right to refuse to be replaced hereunder. Such notice to replace the
Holdout Lender shall specify an effective date for such replacement, which date
shall not be later than 15 Business Days after the date such notice is given.

(b)       Prior to the effective date of such replacement, the Holdout Lender
and each Replacement Lender shall execute and deliver an Assignment and
Acceptance, subject only to the Holdout Lender being repaid its share of the
outstanding Obligations (including an assumption of its Pro Rata Share of the
Risk Participation Liability) without any premium or penalty of any kind
whatsoever. If the Holdout Lender shall refuse or fail to execute and deliver
any such Assignment and Acceptance prior to the effective date of such
replacement, the Holdout Lender shall be deemed to have executed and delivered
such Assignment and Acceptance. The replacement of any Holdout Lender shall be
made in accordance with the terms of Section 13.1. Until such time as the
Replacement Lenders shall have acquired all of the Obligations, the Commitments,
and the other rights and obligations of the Holdout Lender hereunder and under
the other Loan Documents, the Holdout Lender shall remain obligated to make the
Holdout Lender’s Pro Rata Share of Advances and to purchase a participation in
each Letter of Credit, in an amount equal to its Pro Rata Share of the Risk
Participation Liability of such Letter of Credit.

14.3     No Waivers; Cumulative Remedies. No failure by Agent or any Lender to
exercise any right, remedy, or option under this Agreement or any other Loan
Document, or delay by Agent or any Lender in exercising the same, will operate
as a waiver thereof. No waiver by Agent or any Lender will be effective unless
it is in writing, and then only to the extent specifically stated. No waiver by
Agent or any Lender on any occasion shall affect or diminish Agent’s and each
Lender’s rights thereafter to require strict performance by Parent and Borrowers
of any provision of this Agreement. Agent’s and each Lender’s rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy that Agent or any Lender may have.

15.

AGENT; THE LENDER GROUP.

15.1     Appointment and Authorization of Agent. Each Lender hereby designates
and appoints WFF as its representative under this Agreement and the other Loan
Documents and each Lender hereby irrevocably authorizes Agent to execute and
deliver each of the other Loan Documents on its behalf and to take such other
action on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to Agent by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto. Agent agrees to
act as such on the express conditions contained in this Section 15. The
provisions of this Section 15 are solely for the benefit of Agent and the
Lenders, and Parent and its Subsidiaries shall have no rights as a third party
beneficiary of any of the provisions contained herein. Any provision to the
contrary contained elsewhere in this Agreement or in any other Loan Document
notwithstanding, Agent shall not have any duties or responsibilities, except
those expressly set forth herein, nor shall Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against Agent; it being
expressly understood and agreed that the use of the word “Agent” is for
convenience only, that WFF is merely the representative of the Lenders, and only
has the contractual duties set forth herein. Except as expressly otherwise
provided in this Agreement, Agent shall have and may use its sole discretion
with respect to exercising or refraining from exercising any discretionary
rights or taking or refraining from taking any actions that Agent expressly is
entitled to take or assert under or pursuant to this Agreement and the other
Loan Documents. Without limiting the generality of the foregoing, or of any
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Documents that provides rights or powers to Agent, Lenders agree that Agent
shall have the right to exercise the following powers as long as this Agreement
remains in effect: (a) maintain, in accordance with its customary business
practices, ledgers and records reflecting the status of the Obligations, the
Collateral, the Collections of Parent and its Subsidiaries, and related matters,
(b) execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Loan Documents, (c)
make Advances, for itself or on behalf of Lenders, as provided in the Loan
Documents, (d) exclusively receive, apply, and distribute the Collections of
Parent and its Subsidiaries as provided in the Loan Documents, (e) open and
maintain such bank accounts and cash management arrangements as Agent deems
necessary and appropriate in accordance with the Loan Documents for the
foregoing purposes with respect to the Collateral and the Collections of Parent
and its Subsidiaries, (f) perform, exercise, and enforce any and all other
rights and remedies of the Lender Group with respect to Parent or its
Subsidiaries, the Obligations, the Collateral, the Collections of Parent and its
Subsidiaries, or otherwise related to any of same as provided in the Loan
Documents, and (g) incur and pay such Lender Group Expenses as Agent may deem
necessary or appropriate for the performance and fulfillment of its functions
and powers pursuant to the Loan Documents.

15.2     Delegation of Duties. Agent may execute any of its duties under this
Agreement or any other Loan Document by or through agents, employees or
attorneys in fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. Agent shall not be responsible for the
negligence or misconduct of any agent or attorney in fact that it selects as
long as such selection was made without gross negligence or willful misconduct.

15.3     Liability of Agent. None of the Agent-Related Persons shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (b) be responsible in any manner to any of the Lenders for any recital,
statement, representation or warranty made by Parent or any of its Subsidiaries
or Affiliates, or any officer or director thereof, contained in this Agreement
or in any other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by Agent under or in
connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of Parent or its Subsidiaries or any
other party to any Loan Document to perform its obligations hereunder or
thereunder. No Agent-Related Person shall be under any obligation to any Lender
to ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the books and records or properties of Parent or its
Subsidiaries.

15.4     Reliance by Agent. Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telefacsimile or other electronic
method of transmission, telex or telephone message, statement or other document
or conversation believed by it to be genuine and correct and to have been
signed, sent, or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to any Borrower or counsel to any
Lender), independent accountants and other experts selected by Agent. Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless Agent shall first receive such
advice or concurrence of the Lenders as it deems appropriate and until such
instructions are received, Agent shall act, or refrain from acting, as it deems
advisable. If Agent so requests, it shall first be indemnified to its reasonable
satisfaction by the Lenders against any and all liability and expense that may
be incurred by it by reason of taking or continuing to take any such action.
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
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and such request and any action taken or failure to act pursuant thereto shall
be binding upon all of the Lenders.

15.5     Notice of Default or Event of Default. Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the Lenders and, except
with respect to Events of Default of which Agent has actual knowledge, unless
Agent shall have received written notice from a Lender or Administrative
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a “notice of default.” Agent promptly
will notify the Lenders of its receipt of any such notice or of any Event of
Default of which Agent has actual knowledge. If any Lender obtains actual
knowledge of any Event of Default, such Lender promptly shall notify the other
Lenders and Agent of such Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
Section 15.4, Agent shall take such action with respect to such Default or Event
of Default as may be requested by the Required Lenders in accordance with
Section 8; provided, however, that unless and until Agent has received any such
request, Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable.

15.6     Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Agent hereinafter taken, including any review of the affairs of Parent
and its Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any Lender. Each
Lender represents to Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrowers or any other Person party to a Loan Document, and
all applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to Borrowers. Each Lender also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of Borrowers or any
other Person party to a Loan Document. Except for notices, reports, and other
documents expressly herein required to be furnished to the Lenders by Agent,
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, prospects, operations,
property, financial and other condition or creditworthiness of Borrowers or any
other Person party to a Loan Document that may come into the possession of any
of the Agent-Related Persons.

15.7     Costs and Expenses; Indemnification. Agent may incur and pay Lender
Group Expenses to the extent Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including court costs, attorneys fees and
expenses, fees and expenses of financial accountants, advisors, consultants, and
appraisers, costs of collection by outside collection agencies, auctioneer fees
and expenses, and costs of security guards or insurance premiums paid to
maintain the Collateral, whether or not Borrowers are obligated to reimburse
Agent or Lenders for such expenses pursuant to this Agreement or otherwise.
Agent is authorized and directed to deduct and retain sufficient amounts from
the Collections of Parent and its Subsidiaries received by Agent to reimburse
Agent for such out-of-pocket costs and expenses prior to the distribution of any
amounts to Lenders. In the event Agent is not reimbursed for such costs and
expenses by Parent or its Subsidiaries, each Lender hereby agrees that it is and
shall be obligated to pay to Agent such Lender’s Pro Rata Share thereof. Whether
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consummated, the Lenders shall indemnify upon demand the Agent-Related Persons
(to the extent not reimbursed by or on behalf of Borrowers and without limiting
the obligation of Borrowers to do so), according to their Pro Rata Shares, from
and against any and all Indemnified Liabilities; provided, however, that no
Lender shall be liable for the payment to any Agent-Related Person of any
portion of such Indemnified Liabilities resulting solely from such Person’s
gross negligence or willful misconduct nor shall any Lender be liable for the
obligations of any Defaulting Lender in failing to make an Advance or other
extension of credit hereunder. Without limitation of the foregoing, each Lender
shall reimburse Agent upon demand for such Lender’s Pro Rata Share of any costs
or out of pocket expenses (including attorneys, accountants, advisors, and
consultants fees and expenses) incurred by Agent in connection with the
preparation, execution, delivery, administration, modification, amendment, or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that Agent is not reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of Agent.

15.8     Agent in Individual Capacity. WFF and its Affiliates may make loans to,
issue letters of credit for the account of, accept deposits from, acquire equity
interests in, and generally engage in any kind of banking, trust, financial
advisory, underwriting, or other business with Parent and its Subsidiaries and
Affiliates and any other Person party to any Loan Documents as though WFF were
not Agent hereunder, and, in each case, without notice to or consent of the
other members of the Lender Group. The other members of the Lender Group
acknowledge that, pursuant to such activities, WFF or its Affiliates may receive
information regarding Parent or its Affiliates or any other Person party to any
Loan Documents that is subject to confidentiality obligations in favor of Parent
or such other Person and that prohibit the disclosure of such information to the
Lenders, and the Lenders acknowledge that, in such circumstances (and in the
absence of a waiver of such confidentiality obligations, which waiver Agent will
use its reasonable best efforts to obtain), Agent shall not be under any
obligation to provide such information to them. The terms “Lender” and “Lenders”
include WFF in its individual capacity.

15.9     Successor Agent. Agent may resign as Agent upon 30 days prior written
notice to the Lenders (unless such notice is waived by the Required Lenders) and
Administrative Borrower (unless such notice is waived by Administrative
Borrower). If Agent resigns under this Agreement, the Required Lenders shall be
entitled, with (so long as no Event of Default has occurred and is continuing)
the consent of Administrative Borrower (such consent not to be unreasonably
withheld, delayed, or conditioned), appoint a successor Agent for the Lenders.
If, at the time that Agent’s resignation is effective, it is acting as the
Issuing Lender or the Swing Lender, such resignation shall, subject to the
immediately following proviso, also operate to effectuate its resignation as the
Issuing Lender or the Swing Lender, as applicable, and it shall automatically be
relieved of any further obligation to issue Letters of Credit or make Swing
Loans; provided that, to the extent the Agent continues to be a Lender following
any such resignation, such resignation shall not operate to effectuate the
Agent’s resignation as Issuing Lender until the earlier to occur of (x) the date
on which it is no longer has a Revolving Commitment and (y) the date on which a
successor Agent is appointed. If no successor Agent is appointed prior to the
effective date of the resignation of Agent, Agent may appoint, after consulting
with the Lenders and Administrative Borrower, a successor Agent. If Agent has
materially breached or failed to perform any material provision of this
Agreement or of applicable law, the Required Lenders may agree in writing to
remove and replace Agent with a successor Agent from among the Lenders. In any
such event, upon the acceptance of its appointment as successor Agent hereunder,
such successor Agent shall succeed to all the rights, powers, and duties of the
retiring Agent and the term “Agent” shall mean such successor Agent and the
retiring Agent’s appointment, powers, and duties as Agent shall be terminated.
After any retiring Agent’s resignation hereunder as Agent, the provisions of
this Section 15 shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement. If no successor

 

 

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Agent has accepted appointment as Agent by the date which is 30 days following a
retiring Agent’s notice of resignation, the retiring Agent’s resignation shall
nevertheless thereupon become effective and the Lenders shall perform all of the
duties of Agent hereunder until such time, if any, as the Lenders appoint a
successor Agent as provided for above.

15.10   Lender in Individual Capacity. Any Lender and its respective Affiliates
may make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting, or other business with Parent and its
Subsidiaries and Affiliates and any other Person party to any Loan Documents as
though such Lender were not a Lender hereunder without notice to or consent of
the other members of the Lender Group. The other members of the Lender Group
acknowledge that, pursuant to such activities, such Lender and its respective
Affiliates may receive information regarding Parent or its Affiliates or any
other Person party to any Loan Documents that is subject to confidentiality
obligations in favor of Parent or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender shall not be under any obligation to provide such
information to them.

 

15.11

Collateral Matters.

(a)        The Lenders hereby irrevocably authorize Agent, at its option and in
its sole discretion, to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Borrowers
of all Obligations, (ii) constituting property being sold or disposed of if a
release is required or desirable in connection therewith and if Administrative
Borrower certifies to Agent that the sale or disposition is permitted under
Section 6.4 of this Agreement or the other Loan Documents (and Agent may rely
conclusively on any such certificate, without further inquiry), (iii)
constituting property in which Parent or its Subsidiaries owned no interest at
the time the Agent’s Lien was granted nor at any time thereafter, or
(iv) constituting property leased to Parent or its Subsidiaries under a lease
that has expired or is terminated in a transaction permitted under this
Agreement. Except as provided above, Agent will not execute and deliver a
release of any Lien on any Collateral without the prior written authorization of
(y) if the release is of all or substantially all of the Collateral, all of the
Lenders, or (z) otherwise, the Required Lenders. Upon request by Agent or
Administrative Borrower at any time, the Lenders will confirm in writing Agent’s
authority to release any such Liens on particular types or items of Collateral
pursuant to this Section 15.11; provided, however, that (1) Agent shall not be
required to execute any document necessary to evidence such release on terms
that, in Agent’s opinion, would expose Agent to liability or create any
obligation or entail any consequence other than the release of such Lien without
recourse, representation, or warranty, and (2) such release shall not in any
manner discharge, affect, or impair the Obligations or any Liens (other than
those expressly being released) upon (or obligations of Borrowers in respect of)
all interests retained by such Loan Party, including, the proceeds of any sale,
all of which shall continue to constitute part of the Collateral.

(b)       Agent shall have no obligation whatsoever to any of the Lenders to
assure that the Collateral exists or is owned by Parent or its Subsidiaries or
is cared for, protected, or insured or has been encumbered, or that the Agent’s
Liens 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 pursuant to any of the Loan
Documents, it being understood and agreed that in respect of the Collateral, or
any act, omission, or event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem appropriate, in its
sole discretion given Agent’s own interest in the Collateral in its capacity as
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Lenders and that Agent shall have no other duty or liability whatsoever to any
Lender as to any of the foregoing, except as otherwise provided herein.

 

15.12

Restrictions on Actions by Lenders; Sharing of Payments.

(a)        Each of the Lenders agrees that it shall not, without the express
written consent of Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the written request of Agent, set off against the
Obligations, any amounts owing by such Lender to Parent or its Subsidiaries or
any deposit accounts of Parent or its Subsidiaries now or hereafter maintained
with such Lender. Each of the Lenders further agrees that it shall not, unless
specifically requested to do so in writing by Agent, take or cause to be taken
any action, including, the commencement of any legal or equitable proceedings to
enforce any Loan Document against any Loan Party or to foreclose any Lien on, or
otherwise enforce any security interest in, any of the Collateral.

(b)       If, at any time or times any Lender shall receive (i) by payment,
foreclosure, setoff, or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations, except for any such proceeds or payments
received by such Lender from Agent pursuant to the terms of this Agreement, or
(ii) payments from Agent in excess of such Lender’s Pro Rata Share of all such
distributions by Agent, such Lender promptly shall (A) turn the same over to
Agent, in kind, and with such endorsements as may be required to negotiate the
same to Agent, or in immediately available funds, as applicable, for the account
of all of the Lenders and for application to the Obligations in accordance with
the applicable provisions of this Agreement, or (B) purchase, without recourse
or warranty, an undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be applied ratably
as among the Lenders in accordance with their Pro Rata Shares; provided,
however, that to the extent that such excess payment received by the purchasing
party is thereafter recovered from it, those purchases of participations shall
be rescinded in whole or in part, as applicable, and the applicable portion of
the purchase price paid therefor shall be returned to such purchasing party, but
without interest except to the extent that such purchasing party is required to
pay interest in connection with the recovery of the excess payment.

15.13   Agency for Perfection. Agent hereby appoints each other Lender as its
agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the Agent’s Liens in assets which, in accordance with Article 8 or
Article 9, as applicable, of the Code can be perfected by possession or control.
Should any Lender obtain possession or control of any such Collateral, such
Lender shall notify Agent thereof, and, promptly upon Agent’s request therefor
shall deliver possession or control of such Collateral to Agent or in accordance
with Agent’s instructions.

15.14   Payments by Agent to the Lenders. All payments to be made by Agent to
the Lenders shall be made by bank wire transfer of immediately available funds
pursuant to such wire transfer instructions as each party may designate for
itself by written notice to Agent. Concurrently with each such payment, Agent
shall identify whether such payment (or any portion thereof) represents
principal, premium, fees, or interest of the Obligations.

15.15   Concerning the Collateral and Related Loan Documents. Each member of the
Lender Group authorizes and directs Agent to enter into this Agreement and the
other Loan Documents. Each member of the Lender Group agrees that any action
taken by Agent in accordance with the terms of this Agreement or the other Loan
Documents, or the terms of the Intercreditor Agreement, relating to the
Collateral and the exercise by Agent of its powers set forth therein or herein,
together with such other powers that are reasonably incidental thereto, shall be
binding upon all of the Lenders.

 

 

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15.16   Audits and Examination Reports; Confidentiality; Disclaimers by Lenders;
Other Reports and Information. By becoming a party to this Agreement, each
Lender:

(a)        is deemed to have requested that Agent furnish such Lender, promptly
after it becomes available, a copy of each field audit or examination report
respecting Parent or its Subsidiaries (each a “Report” and collectively,
“Reports”) prepared by or at the request of Agent, and Agent shall so furnish
each Lender with such Reports,

(b)       expressly agrees and acknowledges that Agent does not (i) make any
representation or warranty as to the accuracy of any Report, and (ii) shall not
be liable for any information contained in any Report,

(c)        expressly agrees and acknowledges that the Reports are not
comprehensive audits or examinations, that Agent or other party performing any
audit or examination will inspect only specific information regarding Parent and
its Subsidiaries and will rely significantly upon Parent’s and its Subsidiaries’
books and records, as well as on representations of Borrowers’ personnel,

(d)       agrees to keep all Reports and other material, non-public information
regarding Parent and its Subsidiaries and their operations, assets, and existing
and contemplated business plans in a confidential manner in accordance with
Section 17.9, and

(e)        without limiting the generality of any other indemnification
provision contained in this Agreement, agrees: (i) to hold Agent and any other
Lender preparing a Report harmless from any action the indemnifying Lender may
take or fail to take or any conclusion the indemnifying Lender may reach or draw
from any Report in connection with any loans or other credit accommodations that
the indemnifying Lender has made or may make to any Borrower, or the
indemnifying Lender’s participation in, or the indemnifying Lender’s purchase
of, a loan or loans of any Borrower, and (ii) to pay and protect, and indemnify,
defend and hold Agent, and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages, costs, expenses,
and other amounts (including, attorneys fees and costs) incurred by Agent and
any such other Lender preparing a Report as the direct or indirect result of any
third parties who might obtain all or part of any Report through the
indemnifying Lender.

In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Parent or its Subsidiaries to Agent that has not been
contemporaneously provided by Parent or such Subsidiary to such Lender, and,
upon receipt of such request, Agent promptly shall provide a copy of same to
such Lender, (y) to the extent that Agent is entitled, under any provision of
the Loan Documents, to request additional reports or information from Parent or
its Subsidiaries, any Lender may, from time to time, reasonably request Agent to
exercise such right as specified in such Lender’s notice to Agent, whereupon
Agent promptly shall request of Administrative Borrower the additional reports
or information reasonably specified by such Lender, and, upon receipt thereof
from Parent or such Subsidiary, Agent promptly shall provide a copy of same to
such Lender, and (z) any time that Agent renders to Administrative Borrower a
statement regarding the Loan Account, Agent shall send a copy of such statement
to each Lender.

15.17   Several Obligations; No Liability. Notwithstanding that certain of the
Loan Documents now or hereafter may have been or will be executed only by or in
favor of Agent in its capacity as such, and not by or in favor of the Lenders,
any and all obligations on the part of Agent (if any) to make any credit
available hereunder shall constitute the several (and not joint) obligations of
the respective Lenders on a ratable basis, according to their respective
Commitments, to make an amount of such credit not to exceed, in principal
amount, at any one time outstanding, the amount of their respective Commitments.

 

 

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Nothing contained herein shall confer upon any Lender any interest in, or
subject any Lender to any liability for, or in respect of, the business, assets,
profits, losses, or liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters relating to the Loan
Documents to the extent any such notice may be required, and no Lender shall
have any obligation, duty, or liability to any Participant of any other Lender.
Except as provided in Section 15.7, no member of the Lender Group shall have any
liability for the acts of any other member of the Lender Group. No Lender shall
be responsible to any Borrower or any other Person for any failure by any other
Lender to fulfill its obligations to make credit available hereunder, nor to
advance for it or on its behalf in connection with its Commitment, nor to take
any other action on its behalf hereunder or in connection with the financing
contemplated herein.

15.18   Intercreditor Agreement. Notwithstanding anything herein to the
contrary, the Liens granted to Agent pursuant to the Loan Documents in any
Collateral and the exercise of any right or remedy by Agent with respect to any
Collateral hereunder or under any other Loan Document are subject to the
provisions of the Intercreditor Agreement. In the event of any conflict between
the terms of the Intercreditor Agreement and this Agreement with respect to (a)
the priority of Liens granted to Agent in the Collateral pursuant to the Loan
Documents or (b) the rights of Agent or any Lender Group member under this
Agreement, the terms of the Intercreditor Agreement shall govern and control as
between the Agent and the Lenders, on the one hand, and the Indenture Trustee
and the holder of the Securities (as defined in the Indenture), on the other
hand.

16.

WITHHOLDING TAXES.

(a)        All payments made by any Borrower hereunder or under any note or
other Loan Document will be made without setoff, counterclaim, or other defense.
In addition, all such payments will be made free and clear of, and without
deduction or withholding for, any present or future Taxes, and in the event any
deduction or withholding of Taxes is required, each Borrower shall comply with
the next sentence of this Section 16(a). If any Taxes are so levied or imposed,
each Borrower agree to pay the full amount of such Taxes and such additional
amounts as may be necessary so that every payment of all amounts due under this
Agreement, any note, or Loan Document, including any amount paid pursuant to
this Section 16(a) after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein; provided, however,
that Borrowers shall not be required to increase any such amounts if the
increase in such amount payable results from Agent’s or such Lender’s own
willful misconduct or gross negligence (as finally determined by a court of
competent jurisdiction). Administrative Borrower will furnish to Agent as
promptly as possible after the date the payment of any Tax is due pursuant to
applicable law, certified copies of tax receipts evidencing such payment by any
Borrower.

(b)       Each Borrower agrees to pay any present or future stamp, value added
or documentary taxes or any other excise or property taxes, charges, or similar
levies that arise from any payment made hereunder or from the execution,
delivery, performance, recordation, or filing of, or otherwise with respect to
this Agreement or any other Loan Document.

(c)        If a Lender or Participant is entitled to claim an exemption or
reduction from United States withholding tax, such Lender or Participant agrees
with and in favor of Agent, to deliver to Agent (or, in the case of a
Participant, to the Lender granting the participation only) one of the following
before receiving its first payment under this Agreement:

(i)        if such Lender or Participant is entitled to claim an exemption from
United States withholding tax pursuant to its portfolio interest exception, (A)
a statement of the Lender or Participant, signed under penalty of perjury, that
it is not a (I) a “bank” as described in Section

 

 

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881(c)(3)(A) of the IRC, (II) a 10% shareholder of any Borrower (within the
meaning of Section 871(h)(3)(B) of the IRC), or (III) a controlled foreign
corporation related to any Borrower within the meaning of Section 864(d)(4) of
the IRC, and (B) a properly completed and executed IRS Form W-8BEN or Form
W-8IMY (with proper attachments);

(ii)       if such Lender or Participant is entitled to claim an exemption from,
or a reduction of, withholding tax under a United States tax treaty, a properly
completed and executed copy of IRS Form W-8BEN;

(iii)      if such Lender or Participant is entitled to claim that interest paid
under this Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such Lender, a
properly completed and executed copy of IRS Form W-8ECI;

(iv)      if such Lender or Participant is entitled to claim that interest paid
under this Agreement is exempt from United States withholding tax because such
Lender or Participant serves as an intermediary, a properly completed and
executed copy of IRS Form W-8IMY (with proper attachments); or

(v)       a properly completed and executed copy of any other form or forms,
including IRS Form W-9, as may be required under the IRC or other laws of the
United States as a condition to exemption from, or reduction of, United States
withholding or backup withholding tax.

Each Lender or Participant shall provide new forms (or successor forms) upon the
expiration or obsolescence of any previously delivered forms and to promptly
notify Agent (or, in the case of a Participant, to the Lender granting the
participation only) of any change in circumstances which would modify or render
invalid any claimed exemption or reduction.

(d)       If a Lender or Participant claims an exemption from withholding tax in
a jurisdiction other than the United States, such Lender or such Participant
agrees with and in favor of Agent, to deliver to Agent (or, in the case of a
Participant, to the Lender granting the participation only) any such form or
forms, as may be required under the laws of such jurisdiction as a condition to
exemption from, or reduction of, foreign withholding or backup withholding tax
before receiving its first payment under this Agreement, but only if such Lender
or such Participant is legally able to deliver such forms, provided, however,
that nothing in this Section 16(d) shall require a Lender or Participant to
disclose any information that it deems to be confidential (including without
limitation, its tax returns). Each Lender and each Participant shall provide new
forms (or successor forms) upon the expiration or obsolescence of any previously
delivered forms and to promptly notify Agent (or, in the case of a Participant,
to the Lender granting the participation only) of any change in circumstances
which would modify or render invalid any claimed exemption or reduction.

(e)        If a Lender or Participant claims exemption from, or reduction of,
withholding tax and such Lender or Participant sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of
Borrowers to such Lender or Participant, such Lender or Participant agrees to
notify Agent (or, in the case of a sale of a participation interest, to the
Lender granting the participation only) of the percentage amount in which it is
no longer the beneficial owner of Obligations of Borrowers to such Lender or
Participant. To the extent of such percentage amount, Agent will treat such
Lender’s or such Participant’s documentation provided pursuant to Section 16(c)
or 16(d) as no longer valid. With respect to such percentage amount, such
Participant or Assignee may provide new documentation, pursuant to Section 16(c)
or 16(d), if applicable. Each Borrower agrees that each Participant shall be
entitled to the benefits of this Section 16 with respect to its participation in
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Obligations so long as such Participant complies with the obligations set forth
in this Section 16 with respect thereto.

(f)        If a Lender or a Participant is entitled to a reduction in the
applicable withholding tax, Agent (or, in the case of a Participant, to the
Lender granting the participation) may withhold from any interest payment to
such Lender or such Participant an amount equivalent to the applicable
withholding tax after taking into account such reduction. If the forms or other
documentation required by subsection (c) or (d) of this Section 16 are not
delivered to Agent (or, in the case of a Participant, to the Lender granting the
participation), then Agent (or, in the case of a Participant, to the Lender
granting the participation) may withhold from any interest payment to such
Lender or such Participant not providing such forms or other documentation an
amount equivalent to the applicable withholding tax.

(g)       If the IRS or any other Governmental Authority of the United States or
other jurisdiction asserts a claim that Agent (or, in the case of a Participant,
to the Lender granting the participation) did not properly withhold tax from
amounts paid to or for the account of any Lender or any Participant due to a
failure on the part of the Lender or any Participant (because the appropriate
form was not delivered, was not properly executed, or because such Lender failed
to notify Agent (or such Participant failed to notify the Lender granting the
participation) of a change in circumstances which rendered the exemption from,
or reduction of, withholding tax ineffective, or for any other reason) such
Lender shall indemnify and hold Agent harmless (or, in the case of a
Participant, such Participant shall indemnify and hold the Lender granting the
participation harmless) for all amounts paid, directly or indirectly, by Agent
(or, in the case of a Participant, to the Lender granting the participation), as
tax or otherwise, including penalties and interest, and including any taxes
imposed by any jurisdiction on the amounts payable to Agent (or, in the case of
a Participant, to the Lender granting the participation only) under this Section
16, together with all costs and expenses (including attorneys fees and
expenses). The obligation of the Lenders and the Participants under this
subsection shall survive the payment of all Obligations and the resignation or
replacement of Agent.

(h)       If Agent or a Lender determines, in its sole discretion, that it has
received a refund of any Taxes as to which it has been indemnified by Borrowers
or with respect to which a Borrower has paid additional amounts pursuant to this
Section 16, so long as no Default or Event of Default has occurred and is
continuing, it shall pay over such refund to such Borrower (but only to the
extent of payments made, or additional amounts paid, by such Borrower under this
Section 16 with respect to Taxes giving rise to such a refund), net of all
out-of-pocket expenses of Agent or such Lender and without interest (other than
any interest paid by the relevant Governmental Authority with respect to such a
refund); provided, that such Borrower, upon the request of Agent or such Lender,
agrees to repay the amount paid over to such Borrower (plus any penalties,
interest or other charges, imposed by the relevant Governmental Authority, other
than such penalties, interest or other charges imposed as a result of the
willful misconduct or gross negligence of Agent hereunder) to Agent or such
Lender in the event Agent or such Lender is required to repay such refund to
such Governmental Authority. Notwithstanding anything in this Credit Agreement
to the contrary, this Section 16 shall not be construed to require Agent or any
Lender to make available its tax returns (or any other information which it
deems confidential) to any Borrower or any other Person.

17.

GENERAL PROVISIONS.

17.1     Effectiveness. This Agreement shall be binding and deemed effective
when executed by Parent, each Borrower, Agent, and each Lender whose signature
is provided for on the signature pages hereof.

 

 

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17.2     Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.

17.3     Interpretation. Neither this Agreement nor any uncertainty or ambiguity
herein shall be construed against the Lender Group, Parent or any Borrower,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used so as to
accomplish fairly the purposes and intentions of all parties hereto.

17.4     Severability of Provisions. Each provision of this Agreement shall be
severable from every other provision of this Agreement for the purpose of
determining the legal enforceability of any specific provision.

17.5     Hedge Agreement Providers. Each Hedge Agreement Provider shall be
deemed a third party beneficiary hereof and of the provisions of the other Loan
Documents for purposes of any reference in a Loan Document to the parties for
whom Agent is acting; it being understood and agreed that the rights and
benefits of such Hedge Agreement Provider under the Loan Documents consist
exclusively of such Hedge Agreement Provider’s right to share in payments and
collections out of the Collateral as more fully set forth herein. In connection
with any such distribution of payments and collections, Agent shall be entitled
to assume no amounts are due to any Hedge Agreement Provider unless such Hedge
Agreement Provider has notified Agent in writing of the amount of any such
liability owed to it prior to such distribution.

17.6     Debtor-Creditor Relationship. The relationship between the Lenders and
Agent, on the one hand, and the Loan Parties, on the other hand, is solely that
of creditor and debtor. No member of the Lender Group has (or shall be deemed to
have) any fiduciary relationship or duty to any Loan Party arising out of or in
connection with the Loan Documents or the transactions contemplated thereby, and
there is no agency or joint venture relationship between the members of the
Lender Group, on the one hand, and the Loan Parties, on the other hand, by
virtue of any Loan Document or any transaction contemplated therein.

17.7     Counterparts; Electronic Execution. This Agreement may be executed in
any number of counterparts and by different parties on separate counterparts,
each of which, when executed and delivered, shall be deemed to be an original,
and all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile or other electronic method of transmission shall be equally as
effective as delivery of an original executed counterpart of this Agreement. Any
party delivering an executed counterpart of this Agreement by telefacsimile or
other electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The foregoing shall apply to each other Loan Document mutatis
mutandis.

17.8     Revival and Reinstatement of Obligations. If the incurrence or payment
of the Obligations by any Borrower or any Guarantor or the transfer to the
Lender Group of any property should for any reason subsequently be asserted, or
declared, to be void or voidable under any state or federal law relating to
creditors’ rights, including provisions of the Bankruptcy Code relating to
fraudulent conveyances, preferences, or other voidable or recoverable payments
of money or transfers of property (each, a “Voidable Transfer”), and if the
Lender Group is required to repay or restore, in whole or in part, any such
Voidable Transfer, or elects to do so upon the reasonable advice of its counsel,
then, as to any such Voidable Transfer, or the amount thereof that the Lender
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restore, and as to all reasonable costs, expenses, and attorneys fees of the
Lender Group related thereto, the liability of Borrowers or Guarantors
automatically shall be revived, reinstated, and restored and shall exist as
though such Voidable Transfer had never been made.

 

17.9

Confidentiality.

(a)        Agent and Lenders each individually (and not jointly or jointly and
severally) agree that material, non-public information regarding Parent and its
Subsidiaries, their operations, assets, and existing and contemplated business
plans shall be treated by Agent and the Lenders in a confidential manner, and
shall not be disclosed by Agent and the Lenders to Persons who are not parties
to this Agreement, except: (i) to attorneys for and other advisors, accountants,
auditors, and consultants to any member of the Lender Group, (ii) to
Subsidiaries and Affiliates of any member of the Lender Group (including the
Hedge Agreement Providers), provided that any such Subsidiary or Affiliate shall
have agreed to receive such information hereunder subject to the terms of this
Section 17.9, (iii) as may be required by statute, decision, or judicial or
administrative order, rule, or regulation, (iv) as may be agreed to in advance
by Administrative Borrower or as requested or required by any Governmental
Authority pursuant to any subpoena or other legal process, (v) as to any such
information that is or becomes generally available to the public (other than as
a result of prohibited disclosure by Agent or the Lenders), (vi) in connection
with any assignment, participation or pledge of any Lender’s interest under this
Agreement, provided that any such assignee, participant, or pledgee shall have
agreed in writing to receive such information hereunder subject to the terms of
this Section, and (vii) in connection with any litigation or other adversary
proceeding involving parties hereto which such litigation or adversary
proceeding involves claims related to the rights or duties of such parties under
this Agreement or the other Loan Documents.

(b)       Anything in this Agreement to the contrary notwithstanding, Agent may
provide information concerning the terms and conditions of this Agreement and
the other Loan Documents to loan syndication and pricing reporting services.

17.10   Lender Group Expenses. Borrowers agree to pay any and all Lender Group
Expenses promptly after demand therefor by Agent and agrees that its obligations
contained in this Section 17.10 shall survive payment or satisfaction in full of
all other Obligations.

17.11   USA PATRIOT Act. Each Lender that is subject to the requirements of the
Patriot Act hereby notifies the Borrowers that pursuant to the requirements of
the Act, it is required to obtain, verify and record information that identifies
the Borrowers, which information includes the name and address of the Borrowers
and other information that will allow such Lender to identify the Borrowers in
accordance with the Patriot Act.

17.12   Integration. This Agreement, together with the other Loan Documents,
reflects the entire understanding of the parties with respect to the
transactions contemplated hereby and shall not be contradicted or qualified by
any other agreement, oral or written, before the date hereof.

17.13   Parent as Agent for Borrowers. Each Borrower hereby irrevocably appoints
Parent as the borrowing agent and attorney-in-fact for all Borrowers (the
“Administrative Borrower”) which appointment shall remain in full force and
effect unless and until Agent shall have received prior written notice signed by
each Borrower that such appointment has been revoked and that another Borrower
has been appointed Administrative Borrower. Each Borrower hereby irrevocably
appoints and authorizes the Administrative Borrower (i) to provide Agent with
all notices with respect to Advances and Letters of Credit obtained for the
benefit of any Borrower and all other notices and instructions under this
Agreement and (ii) to take such action as the Administrative Borrower deems
appropriate on its behalf to

 

 

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obtain Advances and Letters of Credit and to exercise such other powers as are
reasonably incidental thereto to carry out the purposes of this Agreement. It is
understood that the handling of the Loan Account and Collateral of Borrowers in
a combined fashion, as more fully set forth herein, is done solely as an
accommodation to Borrowers in order to utilize the collective borrowing powers
of Borrowers in the most efficient and economical manner and at their request,
and that Lender Group shall not incur liability to any Borrower as a result
hereof. Each Borrower expects to derive benefit, directly or indirectly, from
the handling of the Loan Account and the Collateral in a combined fashion since
the successful operation of each Borrower is dependent on the continued
successful performance of the integrated group. To induce the Lender Group to do
so, and in consideration thereof, each Borrower hereby jointly and severally
agrees to indemnify each member of the Lender Group and hold each member of the
Lender Group harmless against any and all liability, expense, loss or claim of
damage or injury, made against the Lender Group by any Borrower or by any third
party whosoever, arising from or incurred by reason of (a) the handling of the
Loan Account and Collateral of Borrowers as herein provided, (b) the Lender
Group’s relying on any instructions of the Administrative Borrower, or (c) any
other action taken by the Lender Group hereunder or under the other Loan
Documents, except that Borrowers will have no liability to the relevant
Agent-Related Person or Lender-Related Person under this Section 17.13 with
respect to any liability that has been finally determined by a court of
competent jurisdiction to have resulted solely from the gross negligence or
willful misconduct of such Agent-Related Person or Lender-Related Person, as the
case may be.

[Signature pages to follow.]

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered as of the date first above written.

BORROWERS:

SECURUS TECHNOLOGIES, INC.
a Delaware corporation, as Parent and as a Borrower

 

 

 

 

 

By:

/s/ Richard Smith

 

Title:

Chief Executive Officer

 

 

 

T-NETIX, INC.
a Delaware corporation, as a Borrower

 

 

 

 

 

By:

/s/ Richard Smith

 

Title:

President

 

 

 

EVERCOM HOLDINGS, INC.
a Delaware corporation, as a Borrower

 

 

 

 

 

By:

/s/ Richard Smith

 

Title:

President

 

 

 

SYSCON JUSTICE SYSTEMS, INC.
a California corporation, as a Borrower

 

 

 

 

 

By:

/s/ Richard Smith

 

Title:

President

 

 

 

TELEQUIP LABS, INC.
a Nevada corporation, as a Borrower

 

 

 

 

 

By:

/s/ Richard Smith

 

Title:

President

 

 

 

T-NETIX TELECOMMUNICATIONS SERVICES, INC.
a Texas corporation, as a Borrower

 

 

 

 

 

By:

/s/ Richard Smith

 

Title:

President

 

 

 

EVERCOM, INC.
a Delaware corporation, as a Borrower

 

 

 

 

 

By:

/s/ Richard Smith

 

 

ATI-2336232v16

 

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Title:

President

 

 

 

MODELING SOLUTIONS LLC
a Nevada limited liability company, as a Borrower

 

 

 

 

 

By:

/s/ Richard Smith

 

Title:

President

 

 

 

EVERCOM SYSTEMS, INC.
a Delaware corporation, as a Borrower

 

 

 

 

 

By:

/s/ Richard Smith

 

Title:

President

 

 

 

MODELING SOLUTIONS, LLC
a Wisconsin limited liability company, as a Borrower

 

 

 

 

 

By:

/s/ Richard Smith

 

Title:

President

 

 

AGENT AND LENDERS

WELLS FARGO FOOTHILL, LLC.,

a Delaware limited liability company, as Agent and as a Lender

 

 

 

By:

/s/ Samantha Alexander

 

Title:

Underwriter, Vice President

 

 

 

 

 

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ATI-2336232v16