Document:

EX-4.3 REGISTRATION RIGHTS AGREEMENT JULY 17, 2003

 

Exhibit 4.3

REGISTRATION RIGHTS AGREEMENT

          This Registration Rights Agreement (this “Agreement”) is dated as of July
17, 2003, by and among WebMD Corporation, a Delaware corporation (“Company”),
Joseph Q. DiMartini, individually and as Trustee U/A dated February 6, 1998
f/b/o Joseph Q. DiMartini, and as Trustee of the Joseph Q. DiMartini 2002
Irrevocable Trust dated October 14, 2002, Eric J. Schaefer, an individual,
Daniel A. Schmitt, individually and as Trustee of the Daniel A. Schmitt
Revocable Trust dated March 26, 1999, and as Trustee of the Daniel Schmitt 2002
Irrevocable Trust dated September 24, 2002, and Dru A. Schmitt, individually
and as Trustee U/A dated October 20, 1997 f/b/o Dru A. Schmitt.

RECITALS

          A. The parties listed in the preamble are also parties to that certain
Stock Purchase Agreement dated as of June 15, 2003 (the “Purchase Agreement”),
pursuant to which the Transferring Sellers have sold to Company on the date
hereof all of the outstanding stock of Advanced Business Fulfillment, Inc.
Each Transferring Seller is also sometimes referred to herein individually as a
“Stockholder”; the Transferring Sellers are also sometimes referred to herein
collectively as “Stockholders.”

          B. The individuals listed in the preamble (the “Individuals”) are parties
to this Agreement both in their individual capacities and in their capacities
as Transferring Sellers (collectively, “Sellers”).

          C. The Purchase Agreement provides for certain Contingent Payments (as
defined in the Purchase Agreement) to be paid by Company to the Transferring
Sellers, which Contingent Payments may be paid in the form of shares of common
stock of Company (“Common Stock”).

          D. The parties desire for the Transferring Sellers to have certain
registration rights and be subject to certain sale limitations with respect to
certain shares of Common Stock issued to them pursuant to the Purchase
Agreement (the “Shares”).

          E. The execution of this Agreement is a closing condition to the Purchase
Agreement.

AGREEMENT

          In consideration of the above recitals and the mutual covenants and
conditions contained in this Agreement, the receipt and sufficiency of which
are hereby acknowledged, the parties, intending to be legally bound, agree as
follows:

 

 

ARTICLE 1

DEFINITIONS.

          1.1 General Rules of Construction. For all purposes of this Agreement:
(i) the terms defined in this Agreement include the plural as well as the
singular; (ii) all references in this Agreement to designated “Articles,”
“Sections” and other subdivisions are to the designated Articles, Sections and
other subdivisions of the body of this Agreement; (iii) pronouns of either
gender or neuter include, as appropriate, the other pronoun forms; (iv) the
words “herein,” “hereof” and “hereunder” and other words of similar import
refer to this Agreement as a whole and not to any particular Article, Section
or other subdivision; (v) “or” is not exclusive; (vi) “including” and
“includes” will be deemed to be followed by “but not limited to” and “but is
not limited to,” respectively; (vii) any definition of or reference to any law,
act, agreement, instrument or other document herein will be construed as
referring to such law, act, agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified; and (viii) any
definition of or reference to any statute will be construed as referring also
to any rules and regulations promulgated thereunder.

          1.2 Definitions. For purposes of this Agreement, the following terms have
the meanings specified or referenced below.

          “Additional Registrable Securities” is defined in Section 2.1(d).

          “Agreement” is defined in the preamble to this Agreement.

          “Blackout Period” is defined in Section 2.3.

          “Closing Date” means the date of this Agreement.

          “Common Stock” is defined in the Recitals to this Agreement.

          “Company” is defined in the preamble to this Agreement.

          “Exchange Act” means the Securities Exchange Act of 1934.

          “First Common Stock Issuance Date” means the first date on which Common
Stock is issued to Stockholders pursuant to the Contingent Payment provisions
set forth in Section 2.4 of the Purchase Agreement.

          “Permitted Transferee” means with respect to any Stockholder (i) the
Individual that is its trustee or (ii) any trust solely for the benefit of an
Individual or one or more of such Individual’s family members for which an
Individual is the trustee, in each case which Permitted Transferee agrees in
writing to be bound by the terms and conditions of this Agreement.

          “Prospectus” means the prospectus included in the Shelf Registration
Statement, as amended or supplemented including, without limitation, by any
post-effective amendments thereto, and all material incorporated by reference
into such prospectus.

          “Purchase Agreement” is defined in the recitals to this Agreement.

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          “register,” “registered,” and “registration” refer to a registration
effected by preparing and filing a registration statement or similar document
in compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document.

          “Requisite Information” is defined in Section 2.4(a).

          “Rule 144” means Rule 144 promulgated under the Securities Act (or any
successor rule or similar provision then in effect).

          “Rule 415” means Rule 415 promulgated under the Securities Act (or any
successor rule or similar provision then in effect).

          “SEC” means the Securities and Exchange Commission.

          “Securities Act” means the Securities Act of 1933.

          “Sellers” is defined in the recitals to this Agreement.

          “Sellers Representative” has the meaning set forth in the Purchase
Agreement.

          “Shares” is defined in the recitals to this Agreement.

          “Shelf Registration Statement” is defined in Section 2.1(a).

          “Stockholder” and “Stockholders” are defined in the recitals to this
Agreement.

          “Subsequent Common Stock Issuance Date” means any date subsequent to the
First Common Stock Issuance Date on which Common Stock is issued to
Stockholders pursuant to the Contingent Payment provisions set forth in Section
2.4 of the Purchase Agreement.

          “Termination Date” is defined in Section 2.1(a).

          “Transferring Seller” has the meaning set forth in the Purchase Agreement.

          “Violation” is defined in Section 2.6.

ARTICLE 2

REGISTRATION RIGHTS.

          2.1 Shelf Registration and Related Matters.

          (a) Obligation to Register. Company will file by the date that is 90 days
before the First Common Stock Issuance Date, and will use all reasonable
efforts to cause to be effective on or before the First Common Stock Issuance
Date, a registration statement on Form S-3 for an offering to be made on a
continuous basis under Rule 415 under the Securities Act, covering a number of
shares of Common Stock determined by Company, but not less than Company’s good
faith estimate of the total number of shares of Common Stock to be issued to
Stockholders on the First Common Stock Issuance Date (a “Shelf Registration
Statement”). If

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on the 90th day prior to the date of any Subsequent Common Stock Issuance
Date, a Shelf Registration Statement is not effective and the Shares issued to
the Stockholders are not otherwise eligible for sale to the public under Rule
144 without registration on such Subsequent Common Stock Issuance Date, Company
will use all reasonable efforts to cause to be effective a Shelf Registration
Statement for such Shares on or before such Subsequent Common Stock Issuance
Date. Each Shelf Registration Statement will include a plan of distribution as
reasonably determined by Company, but including all methods of distribution
reasonably requested by any Stockholder. Company will use all reasonable
efforts to maintain the effectiveness of each Shelf Registration Statement
pursuant to which any of the Shares covered by such Shelf Registration
Statement are being offered until the earlier of (i) the date on which such
Shares become eligible for sale to the public under Rule 144 without
registration and (ii) the date on which such Shares covered by the applicable
registration statement or Rule 144 will have been sold by the Stockholders (the
earlier of such dates, a “Termination Date”). Notwithstanding anything in this
Agreement to the contrary, Company may, in its sole discretion, continue the
effectiveness of a Shelf Registration Statement for such time as is permissible
under the Securities Act.

          (b) Amendment of Shelf Registration Statement. To the extent necessary,
immediately after the First Common Stock Issuance Date or any Subsequent Common
Stock Issuance Date, Company will promptly file following the receipt of notice
from Sellers Representative which includes the Requisite Information with
respect to each Stockholder, a Prospectus supplement pursuant to the Securities
Act to amend or supplement the relevant Shelf Registration Statement to include
in such Shelf Registration Statement such information as to each Stockholder
(and the Shares held by each such Stockholder). Company will promptly provide
Sellers Representative a copy of each Prospectus as so amended or supplemented
containing the Requisite Information in order to permit each Stockholder to
comply with the prospectus delivery requirements of the Securities Act in a
timely manner with respect to any proposed disposition of such Stockholder’s
Shares.

          (c) Company Directs Manner of Sale. Company will select the managing
underwriter or broker to be used by a Stockholder to sell such Stockholders’
Shares, and will determine the method of sale thereof (with respect to any
sales to be made by a Stockholder under a Shelf Registration Statement,
choosing from among the options described in the plan of distribution included
therein); provided that any such selection and determination will be subject to
the consent of Stockholders, which consent will not be unreasonably delayed or
withheld, it being understood that a reasonable basis to so withhold consent is
Stockholders’ reasonable belief that such selection or determination would
materially delay or decrease the number of Shares desired to be sold by a
Stockholder under such Shelf Registration Statement. A Stockholder desiring to
sell Shares will so advise Company’s Chief Financial Officer in writing, and
the Chief Financial Officer will advise such Stockholder as to Company’s
proposed method of sale within five Business Days following his receipt of such
Stockholder’s written notice.

          (d) Increase in Registrable Shares. In the event that the number of
Shares covered by a Shelf Registration Statement pursuant to Section 2.1(a) is
less than the number of Shares that Stockholders ultimately receive pursuant to
the Contingent Payment provisions set forth in Section 2.4 of the Purchase
Agreement as a result of the resolution of a dispute as to the amount of the
Contingent Payment or otherwise (such additional Shares, the
“Additional

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Registrable Securities”), and in the event that such Additional
Registrable Securities are not eligible for sale to the public under Rule 144
without registration, then Company will, in its sole discretion, either
promptly amend the existing Shelf Registration Statement, if any, or file a new
Shelf Registration Statement, to register the Additional Registrable Securities
thereon and cause such amended, or new, as the case may be, Shelf Registration
Statement, to remain effective until the relevant Termination Date.

          2.2 Obligations of Company. Company will use all reasonable efforts to do
the following:

          (a) On or prior to the First Common Stock Issuance Date or a Subsequent
Common Stock Issuance Date, to the extent that Shares are not otherwise
eligible for sale to the public under Rule 144 without registration, cause a
Shelf Registration Statement to be effective, and file such post-effective
amendments as may be necessary to keep such registration statement effective
until the relevant Termination Date.

          (b) Prepare and file with the SEC such post-effective amendments and
supplements to a Shelf Registration Statement and the Prospectus as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all Shares covered by such Shelf Registration Statement and
to keep such Shelf Registration Statement effective and cause the Prospectus as
so supplemented to be filed pursuant to the Securities Act in a timely manner
and to comply fully with the applicable provisions of the Securities Act and
use all reasonable efforts to comply with the provisions of the Securities Act
with respect to the disposition of all Shares covered by such Shelf
Registration Statement in accordance with the intended method of distribution
as set forth therein, in each case subject to all reasonably requested
cooperation of Sellers.

          (c) Furnish to Stockholders without charge such numbers of copies of each
Shelf Registration Statement (including documents incorporated by reference
therein and exhibits thereto) and Prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as they may reasonably request from time to time in order to
facilitate the disposition of the Shares held by them.

          (d) Register and qualify the Shares covered by a Shelf Registration
Statement under such state securities laws of such jurisdictions as reasonably
requested by Stockholders and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions of the
Shares covered by such Shelf Registration Statement; provided that Company will
not be required in connection therewith or as a condition thereto to qualify to
do business or to file a general consent to service of process in any such
states or jurisdictions.

          (e) Promptly notify Stockholders at any time when a Prospectus is required
to be delivered under the Securities Act of the happening of any event as a
result of which the Prospectus, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing, and following such
notification promptly prepare and file an appropriate supplement or amendment
to the relevant

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Shelf Registration Statement and cause such supplement or amendment to be
declared effective (to the extent required under the Securities Act) and/or
promptly prepare and furnish to Stockholders a reasonable number of copies of a
supplement to or an amendment of the Prospectus as may be necessary so that, as
thereafter delivered to the purchasers of shares covered by such Shelf
Registration Statement, the Prospectus will not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or incomplete in
light of the circumstances then existing.

          (f) Furnish to Sellers Representative, before filing with the SEC, copies
of each Shelf Registration Statement and the Prospectus, and any pre-effective
or post-effective amendments thereof, which documents will be subject to the
review of Sellers Representative; and consider any requests for additions to or
modifications of such Shelf Registration Statement and the Prospectus and any
pre-effective or post-effective amendments thereto reasonably made by Sellers
Representative within two Business Days of Company’s delivery of the copies
thereof.

          (g) Promptly notify Sellers Representative, (i) when the Prospectus, any
Prospectus supplement or any post-effective amendment to a Shelf Registration
Statement has been filed, and, with respect to such Shelf Registration
Statement or any post-effective amendment thereto, when the same has become
effective, (ii) of any request by the SEC for amendments to a Shelf
Registration Statement or amendments or supplements to the Prospectus or for
additional information relating thereto, or (iii) of the issuance by the SEC of
any stop order suspending the effectiveness of a Shelf Registration Statement
under the Securities Act or of the suspension by any state securities
commission of the qualification of the Shares covered by such Shelf
Registration Statement for offering or sale in any jurisdiction or of the
initiation of any proceeding for any of the preceding purposes.

          (h) If at any time the SEC issues any stop order suspending the
effectiveness of a Shelf Registration Statement, or any state securities
commission issues an order suspending the qualification or exemption from
qualification of the Shares covered by such Shelf Registration Statement under
state securities or Blue Sky laws, use all reasonable efforts to obtain the
withdrawal of lifting of such order at the earliest possible time.

          (i) If made by Sellers Representative prior to the relevant Termination
Date, consider any reasonable requests to incorporate information in a Shelf
Registration Statement or Prospectus, pursuant to a supplement or
post-effective amendment, if necessary, and further consider making the
required filings of any such Prospectus supplement or post-effective amendment
as soon as practicable after Company is notified of the matters to be
incorporated in such Prospectus supplement or post-effective amendment.

          (j) Cause the Shares covered by a Shelf Registration Statement to be
listed or traded on the New York Stock Exchange, The Nasdaq National Market or
such other national securities exchange or automated quotation system on which
the Common Stock is then listed or quoted.

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          2.3 Seller Covenants.

          (a) No Hedging or Short Selling. Beginning on the date hereof and ending
on the earlier to occur of (i) December 31, 2006 and (ii) the date upon which
all of the Shares have been sold, each Seller agrees not to enter into a
Hedging Transaction (as defined below). Each Seller represents and warrants to
Company that it has not entered into any Hedging Transaction prior to the date
hereof. “Hedging Transaction” means with respect to any Shares, (A) any short
sale, the grant of any option for the purchase thereof or any other transaction
which is designed to or is reasonably expected to lead to or result in a
disposition of Shares other than as contemplated by this Agreement and (B)
entering into a derivative contract or any other transaction that would have
the economic effect of eliminating or substantially reducing any Seller’s
market risk with respect to any Shares.

          (b) No Sales Except Pursuant to this Agreement. Each Stockholder agrees
not to sell, transfer or otherwise dispose of any Shares issued or issuable
under the Purchase Agreement except pursuant to the terms of this Agreement.

          (c) Compliance of Transferring Sellers. Each individual who is a party to
this Agreement will cause the Transferring Seller of which it is the trustee to
comply with or perform all of such Transferring Seller’s obligations under this
Agreement.

          (d) Blackout Periods. Company will be entitled to suspend for a period of
time, not to exceed 60 days (each, a “Blackout Period”), any offer or sale of
Shares pursuant to a Shelf Registration Statement (other than transfers to
Permitted Transferees), if Company reasonably determines that the offering of
any such Shares would impede, delay or interfere with any financing, offer or
sale of securities, acquisition, corporate reorganization or other material
transaction involving Company or any of its affiliates, or require disclosure
of material information as to which disclosure at that time would not be in the
best interest of Company and its stockholders; provided, however, that the
Blackout Period will earlier terminate upon public disclosure by Company of
such material information or completion or abandonment of such a transaction.
Upon notice by Company to Sellers of such determination, each Seller agrees to
(i) keep the fact of any such notice strictly confidential, (ii) promptly halt
any offer, sale, trading or transfer by such Seller of Common Stock for the
duration of the Blackout Period set forth in such notice (or until earlier
terminated by Company) (other than transfers to Permitted Transferees), and
(iii) promptly halt any use, publication, dissemination or distribution of the
Shelf Registration Statement, the Prospectus, and any amendment or supplement
thereto for the duration of the Blackout Period set forth in such notice (or
until earlier terminated by Company).

          2.4 Furnish Information; No Obligation.

          (a) It will be a condition precedent to the obligations of Company to take
any action pursuant to this Article 2 with respect to any Shares that
Stockholders will furnish to Company such information regarding themselves and
the Shares held (or to be held) by them, as will be required by applicable
rules and regulations of the SEC to effect the registration of the Shares (the
“Requisite Information”) (including the completion and delivery to Company of a
Stockholder questionnaire).

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          (b) Each Seller will: (i) not knowingly take any action that would prevent
the distribution of Shares covered by a Shelf Registration Statement to be made
in accordance with the plan of distribution set forth in such registration
statement and with all applicable rules and regulations of the SEC; (ii) not
sell any Shares covered by a Shelf Registration Statement after Stockholders
have received a notification pursuant to Section 2.2(e) until Company has filed
an amendment or supplement to the Prospectus so that it no longer includes an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
in the light of the circumstances then existing; and (iii) notify Company
promptly in writing upon the sale by Stockholder of any Shares covered by a
Shelf Registration Statement.

          2.5 Expenses of Registration. All expenses (other than underwriting
discounts and commissions and stock transfer taxes applicable to shares
registered by Stockholders as well as the cost of counsel of Sellers, which
will be borne exclusively by Sellers), incurred in connection with
registrations made pursuant to this Article 2, including all registration,
filing and qualification fees, printers’ and accounting fees and fees and
disbursements of counsel for Company, will be borne by Company.

          2.6 Indemnification. The following will apply to any Shares included in a
registration statement under this Article 2.

          (a) In connection with the registration of any Shares under this
Agreement, Company will indemnify and hold harmless Stockholders against any
expenses, losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such expenses, losses, claims, damages, or
liabilities (or actions, proceedings or settlements in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively, a “Violation”): (i) any untrue statement or alleged
untrue statement of a material fact contained or incorporated by reference in a
Shelf Registration Statement under which such Shares were registered,
Prospectus or other document incident thereto, any preliminary Prospectus or
final Prospectus contained therein or any amendments or supplements thereto,
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by Company of the
Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law in connection with such Shelf Registration Statement. Company
will pay to Stockholders, as incurred, any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such
expense, loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this Section 2.6(a) will not apply to amounts
paid in settlement of any such expense, loss, claim, damage, liability, or
action if such settlement is effected without the written consent of Company
(which consent will not be unreasonably withheld or delayed), nor will Company
be liable to any Stockholder for any such expense, loss, claim, damage,
liability, or action to the extent that it arises out of or is based upon (A) a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
Stockholders or (B) a breach of this Agreement by any Seller.

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          (b) In connection with the registration of any Shares under this
Agreement, Sellers will jointly and severally indemnify and hold harmless
Company, each of its directors and officers (in each case, other than any
individual that is a party to this Agreement), each person, if any, who
controls Company within the meaning of the Securities Act, against any
expenses, losses, claims, damages, or liabilities (joint or several) to which
any of the foregoing persons may become subject, under the Securities Act, the
Exchange Act or other federal or state law, insofar as such expenses, losses,
claims, damages, or liabilities (or actions, proceedings or settlements in
respect thereto) arise out of or are based upon (A) a Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished by Stockholders
expressly for use in connection with such registration or (B) a breach of this
Agreement by any Seller; and Stockholders will pay, as incurred, any legal or
other expenses reasonably incurred by any person intended to be indemnified
pursuant to this Section 2.6(b), in connection with investigating or defending
any such expense, loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this Section 2.6(b) will not apply to
amounts paid in settlement of any such expense, loss, claim, damage, liability
or action if such settlement is effected without the written consent of any
Seller (which consent will not be unreasonably withheld or delayed); and
provided, further, however, in no event will any indemnity under this Section
2.6(b) exceed the aggregate net proceeds actually received by Stockholders from
the sale of Shares effected pursuant to such registration, except in the case
of fraud by such Stockholder.

          (c) Promptly after receipt by an indemnified party under this Section 2.6
of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.6, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party will have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties, and the indemnified party may participate in such
defense at such party’s expense; provided, however, that an indemnified party
(together with all other indemnified parties that may be represented without
conflict by one counsel) will have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by
such counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, will
relieve such indemnifying party of any liability to the indemnified party under
this Section 2.6 to the extent of such material prejudice, but the omission so
to deliver written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 2.6.

          (d) If the indemnification provided for in this Section 2.6 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage or expense referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, will contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand

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and of the indemnified party on the other in connection with the
statements or omissions that resulted in such loss, liability, claim, damage or
expense as well as any other relevant equitable considerations; provided, that
in no event will any contribution by a Stockholder under this Section 2.6(d)
exceed the net proceeds actually received by such Stockholder from the sale of
Shares effected pursuant to a Shelf Registration Statement, except in the case
of fraud by such Stockholder. The relative fault of the indemnifying party and
of the indemnified party will be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties’ relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission.

          (e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in an underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement will
control. No indemnifying party, in the defense of any such claim or
litigation, will, except with the consent of each indemnified party, consent to
entry of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.

          (f) The obligations of Company and Sellers under this Section 2.6 will
survive the completion of any offering of Shares under this Article 2.

          2.7 No Assignment. The rights of Stockholders and Company under this
Agreement may not be assigned or otherwise transferred, except to a Permitted
Transferee or, with respect to Company, in connection with a change of control
of Company where Stockholders are entitled to receive the stock of an entity
other than Company pursuant to the Purchase Agreement.

          2.8 Termination of Registration Rights. Except as set forth in Section
2.6(f), no Stockholder will be entitled to exercise any right provided for in
this Article 2 once all Shares held by and issuable to such Stockholder may be
sold to the public under Rule 144 without registration. Notwithstanding
anything in this Agreement to the contrary, but except as set forth in Section
2.6(f), the obligations of and restrictions upon each Stockholder under this
Agreement, including those set forth in Sections 2.1(c) and 2.3, will survive
until the earlier to occur of (i) December 31, 2006 and (ii) the date upon
which all of the Shares have been sold.

ARTICLE 3

MISCELLANEOUS.

          3.1 Rights Cumulative; Waiver. Except as explicitly provided in this
Agreement, the rights and remedies of the parties under this Agreement are
cumulative and not alternative and are not exclusive of any right or remedies
that any party may otherwise have at law or in equity. Neither the failure nor
any delay by any party in exercising any right, power or privilege under this
Agreement or the documents referred to in this Agreement will operate as a
waiver of such right, power, or privilege, and no single or partial exercise of
any such right, power, or privilege will preclude any other or further exercise
of such right, power, or privilege

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or the exercise of any other right, power, or privilege. To the maximum
extent permitted by applicable law, (i) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given and
(ii) no notice to or demand on one party will be deemed to be a waiver of any
right of the party giving such notice or demand to take further action without
notice or demand.

          3.2 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original of this Agreement
and all of which, when taken together, will be deemed to constitute one and the
same agreement. Delivery of an executed counterpart of a signature page to
this Agreement by facsimile or other telecommunications mechanism will be
effective as delivery of a manually executed counterpart of this Agreement.

          3.3 Further Assurances. Each party agrees to cooperate fully with the
other parties, to take such actions, to execute such further instruments,
documents and agreements, and to give such further written assurances, as may
be reasonably requested by any other party to evidence and reflect the
transactions described herein and contemplated hereby, and to carry into effect
the intents and purposes of this Agreement.

          3.4 Governing Law; Consent to Jurisdiction and Jury Trial Waiver.

          (a)  This Agreement and the legal relations between the parties will be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts executed in and to be performed in such State and
without regard to conflicts of law doctrines unless certain matters are
preempted by federal law.

          (b)  All actions and proceedings arising out of or relating to this
Agreement will be heard and determined in a New York State or a federal court
sitting in the Southern District of New York, and the parties to this Agreement
hereby irrevocably submit to the exclusive jurisdiction of such courts in any
such action or proceeding and irrevocably waive the defense of an inconvenient
forum to the maintenance of any such action or proceeding. The parties hereby
consent to service of process by mail (in accordance with Section 3.5) or any
other manner permitted by law.

          (c)  COMPANY AND EACH SELLER HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT
OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF
COMPANY OR ANY SELLER OR THEIR RESPECTIVE REPRESENTATIVES IN THE NEGOTIATION OR
PERFORMANCE HEREOF.

          3.5 Notices. Unless otherwise specified, any notice or other
communication hereunder must be given in writing and: (i) delivered in person;
(ii) transmitted by facsimile or other telecommunications mechanism; (iii)
delivered via an overnight courier service of national reputation; or (iv)
mailed by certified or registered mail, postage prepaid, receipt requested as
follows:

11

 

          If to any Seller, to:

	 	 	 	Dru A. Schmitt

147 West Coconut Palm Road

Boca Raton, Florida 33432

Facsimile: (561) 347-6627

          with a copy (which will not constitute notice) to:

	 	 	 	Lewis, Rice & Fingersh, L.C.

500 North Broadway, Suite 2000

St. Louis, Missouri 63102

Attention: Tom W. Zook, Esq.

Facsimile: (314) 612-7671

          If to Company:

	 	 	 	WebMD Corporation

River Drive Center 2

669 River Drive

Elmwood Park, New Jersey 07407-1371

Attention: General Counsel

Facsimile: (201) 703-3443

          with copies (which will not constitute notice) to:

	 	 	 	WebMD Corporation

River Drive Center 2

669 River Drive

Elmwood Park, New Jersey 07407-1371

Attention: Chief Financial Officer

Facsimile: (201) 398-2615

          and to:

	 	 	 	O’Melveny & Myers LLP

1999 Avenue of the Stars

Los Angeles, California 90067

Attention: Steven L. Grossman, Esq.

Facsimile: (310) 246-6779

or to such other address or to such other Person as Company or any Seller has
last designated by such notice to the other parties. Each such notice or other
communication will be effective: (i) if given by facsimile or other
telecommunication, when transmitted to the applicable number so specified in
this Section 3.5 and an appropriate confirmation is received; (ii) if given by
mail, three Business Days after such communication is deposited in the mails
with first class postage prepaid, addressed as above; (iii) if given by
overnight courier service of national reputation, one

12

 

Business Day after such communication is deposited with such courier service;
or (iv) if given by any other means, when actually received at such address.

          3.6 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement will nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party in any material respect. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
will negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the greatest extent possible.

          3.7 No Presumption. The parties acknowledge that each party has been
represented by counsel, or has had the opportunity to consult with counsel of
its choice and has waived such opportunity, in connection with this Agreement
and the transactions contemplated by this Agreement. Regardless of anything
else contained herein, any rule of law, or any legal decision that would
require interpretation of any claimed ambiguities in this Agreement against the
party that drafted it has no application and is expressly waived. If any claim
is made by a party relating to any conflict, omission or ambiguity in the
provisions of this Agreement, no presumption or burden of proof or persuasion
will be implied because this Agreement was prepared by or at the request of any
party or its counsel.

          3.8 Entire Agreement; Amendment. This Agreement together with the
Purchase Agreement supersedes all prior agreements between the parties with
respect to its subject matter and constitutes a complete and exclusive
statement of the terms of the agreement between the parties with respect to its
subject matter. This Agreement may not be amended except by a written
agreement executed by Company and Sellers.

          3.9 Titles and Subtitles. The headings and subheadings used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.

          3.10 Successors and Assigns. Except as otherwise provided in this
Agreement, including the restrictions set forth in Section 2.7, the terms and
conditions of this Agreement will inure to the benefit of and be binding upon
the respective successors and permitted assigns of the parties (including
transferees of any of Common Stock).

          3.11 No Third Party Beneficiaries. This Agreement is for the sole benefit
of the parties and their permitted assigns, and nothing herein, express or
implied, is intended to or will confer upon any other person any legal or
equitable benefit, claim, cause of action, remedy or right of any kind.

          3.12 Rule 144 Reporting. With a view to making available to the
Stockholders the benefits of certain rules and regulations of the SEC that may
permit the sale of the Shares to the public without registration, Company
agrees to use commercially reasonable efforts until the Shares issued to
Transferring Sellers under the Purchase Agreement meet the

13

 

requirements of Rule 144(k) in the sole discretion of Company to (i) make
and keep public information available, as those terms are understood and
defined in Rule 144; and (ii) file with the SEC, in a timely manner, all
reports and other documents required of Company under the Exchange Act.

14

 

          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

WebMD Corporation,

a Delaware corporation

	 	 	 
	By: /s/ DAVID C. AMBURGEY	 	
/s/ JOSEPH Q. DIMARTINI
	
	 	

	Name: David C. Amburgey

Title: Senior Vice President	 	
Joseph Q. DiMartini Trustee U/A dated February 6, 1998 f/b/o Joseph Q. DiMartini
	 	 	 
	/s/ JOSEPH Q. DIMARTINI	 	
/s/ JOSEPH Q. DIMARTINI
	
	 	

	Joseph Q. DiMartini	 	
Joseph Q. DiMartini, Trustee of the Joseph
Q. DiMartini 2002 Irrevocable Trust dated
October 14, 2002
	 	 	 
	/s/ ERIC J. SCHAEFER	 	
/s/ DANIEL A. SCHMITT
	
	 	

	Eric J. Schaefer	 	
Daniel A. Schmitt, Trustee of the Daniel
A. Schmitt Revocable Trust dated March 26,
1999
	 	 	 
	/s/ DANIEL A. SCHMITT	 	
/s/ DANIEL A. SCHMITT
	
	 	

	Daniel A. Schmitt	 	
Daniel A. Schmitt, Trustee of the Daniel
Schmitt 2002 Irrevocable Trust dated
September 24, 2002
	 	 	 
	/s/ DRU A. SCHMITT	 	
/s/ DRU A. SCHMITT
	
	 	

	Dru A. Schmitt	 	
Dru A. Schmitt Trustee, U/A dated October
20, 1997 f/b/o Dru A. Schmitt<PAGE>
                                                                    Exhibit 10.1

                              JOINDER AGREEMENT AND
                 AMENDMENT NO. 1 TO REVOLVING CREDIT, TERM LOAN
                             AND SECURITY AGREEMENT

         THIS JOINDER AGREEMENT AND AMENDMENT NO. 1 TO REVOLVING CREDIT, TERM
LOAN AND SECURITY AGREEMENT (this "Amendment"), dated as of May __, 2003, is
entered into between AMERICA SERVICE GROUP INC. ("ASG") a Delaware corporation,
PRISON HEALTH SERVICES, INC. ("PHS"), a Delaware corporation, EMSA GOVERNMENT
SERVICES, INC. ("EMSA") a Florida corporation, EMSA CORRECTIONAL CARE, INC.
("EMSA CORRECTIONAL"), a Florida corporation, EMSA MILITARY SERVICES, INC.
("EMSA MILITARY"), a Florida corporation, EMSA LIMITED PARTNERSHIP ("EMSA LP"),
a Florida limited partnership, PRISON HEALTH SERVICES OF INDIANA, L.L.C. ("PHS
INDIANA"), an Indiana limited liability company, CORRECTIONAL HEALTH SERVICES,
INC. ("CHS"), a New Jersey corporation, and SECURE PHARMACY PLUS, INC. ("SPP"),
a Tennessee corporation (ASG, PHS, EMSA, EMSA CORRECTIONAL, EMSA MILITARY, EMSA
LP, PHS INDIANA, CHS AND SPP are hereinafter referred to, individually and
collectively as the "ORIGINAL BORROWER"), CORRECTIONAL HEALTH SERVICES, LLC, a
New Jersey limited liability company (the "NEW BORROWER"; and together with the
Original Borrower, the "BORROWER"), CAPITALSOURCE FINANCE LLC, a Delaware
limited liability company ("CAPITALSOURCE"), as administrative agent and
collateral agent for Lenders (in such capacities, the "AGENT"), and
CapitalSource, as a Lender.

                                    RECITALS

         A. Pursuant to that certain Revolving Credit, Term Loan and Security
Agreement dated as of October 31, 2002, by and between Original Borrower, Agent
and the other Lenders identified therein (as amended to date, and as amended,
supplemented, modified and restated from time to time, collectively, the "LOAN
AGREEMENT"), the Lenders agreed to make available to Original Borrower the
Loans.

         B. The Loan Agreement was modified by that certain Letter Agreement,
dated as of October 31, 2003, between Original Borrower and Agent (the "L/C
LETTER"), and by that certain Lender Addition Agreement, dated as of October 31,
2002, among Original Borrower, CapitalSource, as Assignor, and certain Assignees
designated thereunder (the "LENDER ADDITION"), and the parties agreed to amend
the Loan Agreement to reflect such modifications.

         C. ASG has advised Agent and Lenders that it has created New Borrower
as a Subsidiary, and Borrower, Agent and Lenders agree that New Borrower shall
become a party to the Loan Documents pursuant to Section 6.14 of the Loan
Agreement.

         D. The parties hereto desire to enter into this Amendment to amend the
Loan Agreement in certain respects as provided herein.

         NOW, THEREFORE, in consideration of the foregoing, the terms and
conditions, premises and other mutual covenants set forth in this Amendment, and
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Borrower, Agent and the other Lenders hereby agree as
follows:

         SECTION 1. DEFINITIONS. Unless otherwise defined herein, all
capitalized terms used and not defined herein shall have the meanings assigned
to such terms in the Loan Agreement. For purposes of this Amendment, the term
Borrower (without quotation marks) shall mean, each individually and all

                                       1
<PAGE>

collectively, Original Borrower and New Borrower, and the term "Borrower" (with
quotation marks) shall mean a Borrower under the Loan Documents.

         SECTION 2. ADDITION AND JOINDER OF NEW BORROWER. Original Borrower, New
Borrower, Agent and Lenders agree that, by execution and deliver of this
Amendment and satisfaction of the other conditions set forth herein, New
Borrower shall constitute and be deemed a "Borrower" under and for purposes of
the Loan Agreement and all other Loan Documents. Accordingly, by its execution
hereof, New Borrower hereby agrees as of the Effective Date (i) to be a party to
the Loan Agreement as a "Borrower" thereunder, (ii) that it will be deemed to
have made all of the representations and warranties of a "Borrower" under the
Loan Agreement and to have and be bound, jointly and severally, with all other
"Borrowers," by all of the conditions, obligations, appointments, covenants,
representations, warranties and other agreements of a "Borrower" under and as
set forth in the Loan Agreement, the Loan Documents and this Amendment, and
(iii) agree to promptly execute all further documentation, amendments,
supplements, schedules, agreements and/or financing statements required by
Agent and Lenders consistent and in connection with the Loan Agreement and this
Amendment, including, without limitation, the New Borrower Loan Documents (as
defined below). In addition, Original Borrower hereby reaffirms and agrees to be
bound, jointly and severally with New Borrower, by all of the conditions,
obligations, appointments, covenants, representations, warranties and other
agreements of a "Borrower" under and as set forth in the Loan Agreement, Loan
Documents and this Amendment, and hereby agree to promptly execute all further
documentation, amendments, supplements, schedules, agreements and/or financing
statements required by Agent and Lender consistent and in connection with the
Loan Agreement and this Amendment, including, without limitation, the New
Borrower Loan Documents, as applicable.

         SECTION 3. AMENDMENTS TO LOAN AGREEMENT. The sections, definitions,
schedules, annexes and exhibits of and to the Loan Agreement referenced and set
forth on Annex A to this Amendment hereby are amended and restated to read as
set forth on such Annex A, which annex is incorporated herein and made a part
hereof and of the Loan Agreement.

         SECTION 4. REPRESENTATIONS AND WARRANTIES.

                  (a) Notwithstanding any other provision of this Amendment,
each Borrower individually hereby (a) confirms and makes all of the
representations and warranties set forth in the Loan Agreement and other Loan
Documents with respect to such Borrower, this Amendment and the New Borrower
Loan Documents as of the date hereof and as of the Effective Date and confirms
that they are true and correct, (b) represents and warrants that they are
Affiliates of each other and that New Borrower is a second tier Subsidiary of
ASG, (c) specifically represents and warrants to each Lender that it has good
and marketable title to all of its respective Collateral, free and clear of any
Lien or security interest in favor of any other Person (other than Permitted
Liens), (d) specifically represents and warrants that since the date of the last
financial statements of the Borrower provided to Agent there has been no
material adverse change in the business, operations, results of operations,
assets, liabilities or financial condition of Borrower, and (e) specifically
represents and warrants that no Subordinated Debt is outstanding, nor are there
any commitments by any Person to provide Subordinated Debt to Borrower.

                  (b) Each Borrower individually hereby represents and warrants
as of the date of this Amendment and as of the Effective Date as follows: (i) it
is duly incorporated or organized, validly existing and in good standing under
the laws of its jurisdiction of organization; (ii) the execution, delivery and
performance by it of this Amendment and the New Borrower Loan Documents, as
applicable, are within its powers, have been duly authorized, and do not
contravene (A) its articles of organization, operating agreement, or other
organizational documents, or (B) any applicable law; (iii) no consent, license,
permit, approval or authorization of, or registration, filing or declaration
with any Governmental

                                       2
<PAGE>

Authority or other Person, is required in connection with the execution,
delivery, performance, validity or enforceability of this Amendment or the New
Borrower Loan Documents, as applicable, by or against it; (iv) this Amendment
and the New Borrower Loan Documents, as applicable, have been duly executed and
delivered by it; (v) this Amendment and the New Borrower Loan Documents, as
applicable, constitute its legal, valid and binding obligations enforceable
against it in accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally or by general
principles of equity; and (vi) it is not in default under the Loan Agreement and
no Default or Event of Default exists, has occurred or is continuing.

         SECTION 5. EXPENSES. Borrower shall pay all costs and expenses incurred
by Agent, Lenders or any of its Affiliates, including, without limitation,
documentation and diligence fees and expenses, all search, audit, appraisal,
recording, professional and filing fees and expenses and all other out-of-pocket
charges and expenses and reasonable attorneys' fees and expenses, in connection
with entering into, negotiating, preparing, reviewing and executing this
Amendment and the New Borrower Loan Documents contemplated hereby and all
related agreements, documents and instruments, and all of the same, to the
extent incurred and not promptly reimbursed by Borrower, may be charged to
Borrower's account and shall be part of the Obligations. If Agent, any Lender or
any of Agent or Lender's Affiliates uses in-house counsel for any of the
purposes set forth above Borrower expressly agrees that its Obligations include
reasonable charges for such work commensurate with the fees that would otherwise
be charged by outside legal counsel selected by such Agent or Lender or such
Affiliate in its sole discretion for the work performed.

         SECTION 6. REFERENCE TO THE EFFECT ON THE LOAN AGREEMENT. Upon the
effectiveness of this Amendment, (i) each reference in the Loan Agreement to
"this Agreement," "hereunder," "hereof," "herein" or words of similar import
shall mean and be a reference to the Loan Agreement as amended by this
Amendment, and (ii) each reference in any other Loan Document to the "Loan
Agreement" shall mean and be a reference to the Loan Agreement as amended by
this Amendment. Each reference herein to the Loan Agreement shall be deemed to
mean the Loan Agreement as amended by this Amendment. Except as specifically
amended hereby, the Loan Agreement and all other Loan Documents shall remain in
full force and effect and the terms thereof are expressly incorporated herein
and are ratified and confirmed in all respects. This Amendment is not intended
to be or to create, nor shall it be construed as or constitute, a novation or an
accord and satisfaction but shall constitute an amendment of the Loan Agreement.
The parties hereto agree to be bound by the terms and conditions of the Loan
Agreement as amended by this Amendment as though such terms and conditions were
set forth herein in full. The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided in this Amendment, operate as
a waiver of any right, power or remedy of Lender, nor constitute a waiver of any
provision of the Loan Agreement or any other Loan Document or any other
documents, instruments and agreements executed or delivered in connection
therewith or of any Default or Event of Default under any of the foregoing
whether arising before or after the Effective Date or as a result of performance
hereunder.

         SECTION 7. GOVERNING LAW AND JURY TRIAL. THIS AMENDMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE CHOICE OF LAW PROVISIONS SET
FORTH IN THE LOAN AGREEMENT AND SHALL BE SUBJECT TO THE WAIVER OF JURY TRIAL AND
NOTICE PROVISIONS OF THE LOAN AGREEMENT.

         SECTION 8. HEADINGS AND COUNTERPARTS. The captions in this Amendment
are intended for convenience and reference only and do not constitute and shall
not be interpreted as part of this

                                       3
<PAGE>

Amendment and shall not affect the meaning or interpretation of this Amendment.
This Amendment may be executed in one or more counterparts, all of which taken
together shall constitute but one and the same instrument. This Amendment may be
executed by facsimile transmission, which facsimile signatures shall be
considered original executed counterparts for all purposes, and each party to
this Amendment agrees that it will be bound by its own facsimile signature and
that it accepts the facsimile signature of each other party to this Amendment.

         SECTION 9. AMENDMENTS. This Amendment may not be changed, modified,
amended, restated, waived, supplemented, discharged, canceled or terminated
orally or by any course of dealing or in any other manner other than by written
agreement in accordance with Section 10.5 of the Loan Agreement. This Amendment
shall be considered part of the Loan Agreement for all purposes under the Loan
Agreement. The New Borrower Loan Documents shall be considered Loan Documents
for all purposes under the Loan Agreement and other Loan Documents.

         SECTION 10. ENTIRE AGREEMENT. This Amendment is intended to, and hereby
shall, supercede and terminate the L/C Letter and the Lender Addition, and in
the event of a conflict between such documents, this Amendment is intended to
control. This Amendment, the Loan Agreement, other Loan Documents and the New
Borrower Loan Documents constitute the entire agreement between the parties with
respect to the subject matter hereof and thereof and supersedes all prior
discussions, representations, agreements and understandings, if any, relating to
the subject matter hereof and thereof and may not be contradicted by evidence of
prior, contemporaneous or subsequent oral agreements between the parties. There
are no unwritten oral agreements between the parties.

         SECTION 11. MISCELLANEOUS. Whenever the context and construction so
require, all words used in the singular number herein shall be deemed to have
been used in the plural, and vice versa, and the masculine gender shall include
the feminine and neuter and the neuter shall include the masculine and feminine.
This Amendment shall inure to the benefit of Agent, Lenders, all future holders
of any Note, any of the Obligations or any of the Collateral and all Transferees
and Participants, and each of their respective successors and permitted assigns.
No Borrower may assign, delegate or transfer this Amendment or any of its rights
or obligations under this Amendment unless otherwise permitted by the Loan
Documents. No rights are intended to be created under this Amendment for the
benefit of any third party donee, creditor or incidental beneficiary of Borrower
or any Guarantor. Nothing contained in this Amendment shall be construed as a
delegation to Agent or any Lender of any Borrower's or any Guarantor's duty of
performance, including, without limitation, any duties under any account or
contract in which Lender has a security interest or Lien. This Amendment shall
be binding upon Borrowers and their respective successors and assigns.

         SECTION 12. EFFECTIVE DATE. Notwithstanding the date of execution or
delivery of this Amendment or any other date set forth herein, this Amendment
shall be effective upon the date (the "Effective Date") of the later of (a)
receipt by Agent of all fees, charges and expenses payable to Agent or Lenders
on or prior to the Effective Date pursuant to this Amendment and the Loan
Documents; (b) the execution and delivery to Agent of all agreements, documents,
instruments and other materials related to the New Borrower which are
contemplated by Section 6.14 of the Loan Agreement in form and substance
satisfactory to Agent in its sole discretion (the "NEW BORROWER LOAN
DOCUMENTS"), including, without limitation, (i) an allonge to the Revolving
Note, (ii) an allonge to the Term Note, and (iii) each document (including a
Uniform Commercial Code financing statement) required by any Loan Document or
under law or requested by Agent to be filed, registered or recorded to create,
in favor of Agent, for the benefit of Lenders, a perfected first priority
security interest upon the Collateral; (c) receipt by Agent of the following
documents from New Borrower, such documents to be satisfactory to Agent in its
sole discretion: (i) the Charter and Good Standing Documents of New Borrower,
(ii) a certificate of the corporate secretary of New Borrower dated as of the
Effective Date, as to the incumbency and signature

                                       4
<PAGE>

of the Person executed the Loan Documents, (iii) a Solvency Certificate, (iv)
original certificates of insurance policies of New Borrower as Agent shall
request in its Permitted Discretion confirming that they are in effect and that
the premiums due and owing with respect thereto have been paid in full and
naming Agent, for the benefit of itself and Lenders, as loss payee on New
Borrower's property insurance, (v) an executed IRS Form 8821, and (vi) an
updated Borrowing Certificate which includes calculations with respect to New
Borrower in addition to Original Borrower; and (d) execution and delivery to
Agent of the following documents by Borrower, in form and substance satisfactory
to Agent, in its sole discretion, and, where applicable, each duly executed by
each party thereto: (i) this Amendment, duly executed by Borrower; (ii) a
general certificate of each Original Borrower attaching (A) certified copies of
the resolutions of the Board of Directors of each Original Borrower authorizing
the execution, delivery and performance of this Amendment and any and all other
Loan Documents executed by each Original Borrower in connection herewith, (B)
any amendments to any Original Borrower's certificate of incorporation, bylaws
or other governing documents since the Closing Date, and (C) a certificate of
incumbency certified by the secretary of each Original Borrower with specimen
signatures of the officers of the each Borrower who are authorized to sign such
documents, all in form and substance satisfactory to Agent; and (iii) all other
documents Agent may request with respect to any matter relevant to this
Amendment or the transactions contemplated hereby, including, without
limitation, all consents, approvals and agreements from such third parties as
are necessary or desirable with respect to this Amendment and the Loan Documents
executed in connection herewith.

                        [SIGNATURES APPEAR ON NEXT PAGE]

                                       5
<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Joinder Agreement and
Amendment No. 1 to Revolving Credit, Term Loan and Security Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.

ORIGINAL BORROWER:                     AMERICA SERVICE GROUP INC.

                                       By: /s/ Michael Taylor
                                          --------------------------------------
                                       Name: Mr. Michael Taylor
                                       Title: Chief Financial Officer

                                       105 Westpark Drive, Suite 200
                                       Brentwood, TN 37027
                                       Phone: 615-376-1376
                                       Fax: 615-376-1309
                                       E-mail: Taylor@asgr.com

                                       PRISON HEALTH SERVICES, INC.

                                       By: /s/ Michael Taylor
                                          --------------------------------------
                                       Name: Mr. Michael Taylor
                                       Title: Senior Vice President

                                       105 Westpark Drive, Suite 200
                                       Brentwood, TN 37027
                                       Phone: 615-376-1376
                                       Fax: 615-376-1309
                                       E-mail: Taylor@asgr.com

                                       EMSA GOVERNMENT SERVICES, INC.

                                       By: /s/ Michael Taylor
                                          --------------------------------------
                                       Name: Mr. Michael Taylor
                                       Title: Senior Vice President

                                       105 Westpark Drive, Suite 200
                                       Brentwood, TN 37027
                                       Phone: 615-376-1376
                                       Fax: 615-376-1309
                                       E-mail: Taylor@asgr.com

                                       6
<PAGE>

                                       EMSA CORRECTIONAL CARE, INC.

                                       By: /s/ Michael Taylor
                                          --------------------------------------
                                       Name: Mr. Michael Taylor
                                       Title: Senior Vice President

                                       105 Westpark Drive, Suite 200
                                       Brentwood, TN 37027
                                       Phone: 615-376-1376
                                       Fax: 615-376-1309
                                       E-mail: Taylor@asgr.com

                                       EMSA MILITARY SERVICES, INC.

                                       By: /s/ Michael Taylor
                                          --------------------------------------
                                       Name: Mr. Michael Taylor
                                       Title: Senior Vice President

                                       105 Westpark Drive, Suite 200
                                       Brentwood, TN 37027
                                       Phone: 615-376-1376
                                       Fax: 615-376-1309
                                       E-mail: Taylor@asgr.com

                                       EMSA LIMITED PARTNERSHIP,
                                       By its General Partner,
                                       EMSA CORRECTIONAL CARE, INC.

                                       By: /s/ Michael Taylor
                                          --------------------------------------
                                       Name: Mr. Michael Taylor
                                       Title: Senior Vice President

                                       105 Westpark Drive, Suite 200
                                       Brentwood, TN 37027
                                       Phone: 615-376-1376
                                       Fax: 615-376-1309
                                       E-mail: Taylor@asgr.com

                                       PRISON HEALTH SERVICES OF INDIANA, LLC
                                       By its General Manager, PRISON HEALTH
                                       SERVICES, INC.

                                       By: /s/ Michael Taylor
                                          --------------------------------------
                                       Name: Mr. Michael Taylor
                                       Title: Senior Vice President

                                       7
<PAGE>

                                       105 Westpark Drive, Suite 200
                                       Brentwood, TN 37027
                                       Phone: 615-376-1376
                                       Fax: 615-376-1309
                                       E-mail: Taylor@asgr.com

                                       CORRECTIONAL HEALTH SERVICES, INC.

                                       By: /s/ Michael Taylor
                                          --------------------------------------

                                       Name: Mr. Michael Taylor
                                       Title: Senior Vice President

                                       105 Westpark Drive, Suite 200
                                       Brentwood, TN 37027
                                       Phone: 615-376-1376
                                       Fax: 615-376-1309
                                       E-mail: Taylor@asgr.com

                                       SECURE PHARMACY PLUS, INC.

                                       By: /s/ Michael Taylor
                                          --------------------------------------
                                       Name: Mr. Michael Taylor
                                       Title: Senior Vice President

                                       105 Westpark Drive, Suite 200
                                       Brentwood, TN 37027
                                       Phone: 615-376-1376
                                       Fax: 615-376-1309
                                       E-mail: Taylor@asgr.com

NEW BORROWER:                          CORRECTIONAL HEALTH SERVICES, LLC

                                       By: /s/ Michael Taylor
                                          --------------------------------------
                                       Name: Mr. Michael Taylor
                                       Title:

                                       105 Westpark Drive, Suite 200
                                       Brentwood, TN 37027
                                       Phone: 615-376-1376
                                       Fax: 615-376-1309
                                       E-mail: Taylor@asgr.com

                                       8
<PAGE>

AGENT AND LENDER:                      CAPITALSOURCE FINANCE LLC

                                       By: /s/ Kathleen M. Miko
                                          --------------------------------------
                                       Name: Kathleen M. Miko
                                       Title: Vice President & General Counsel

                                       CapitalSource Finance LLC
                                       4445 Willard Avenue, 12th Floor
                                       Chevy Chase, MD 20815
                                       Attention: Healthcare Finance Group,
                                                  Portfolio Manager
                                       Telephone: (301) 841-2700
                                       FAX: (301) 841-2340
                                       E-MAIL: aheller@capitalsource.com

                                       9
<PAGE>

                                     ANNEX A
                                       TO
                    JOINDER AGREEMENT AND AMENDMENT NO. 1 TO
               REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT

Effective as of the Effective Date, the Loan Agreement is hereby amended as
follows:

         1. AMENDMENT TO APPENDIX A OF THE LOAN AGREEMENT; ADDITION OF CERTAIN
DEFINITIONS. Appendix A is hereby amended by adding the following definitions
thereto in proper alphabetical order to read in full as follows:

         "L/C" means each letter of credit issued by or with the assistance of
an L/C Bank for the account of Borrower, which (i) is a standby letter of
credit, (ii) is issued for the purpose for which the Borrower has historically
obtained letters of credit, or for such other purpose as is reasonably
acceptable to the Agent, and, in all cases, for a purpose permitted for use of
proceeds hereunder, (iii) is denominated in Dollars; (iv) is governed by the
Uniform Customs and Practices for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication 500, except as otherwise agreed by
the Agent and such L/C Bank, and (v) is in form reasonably satisfactory to the
Agent and such L/C Bank.

         "L/C Disbursement" means a payment made by the L/C Bank pursuant to a
Letter of Credit.

         "L/C Guaranty" has the meaning set forth in Section 2.18(a).

         "Overadvance" means if, at any time or for any reason, the amount of
Obligations owed by Borrower to the Lenders pursuant to Section 2.1 or Section
2.18 is greater than the Dollar or percentage limitations set forth in such
Sections.

         "Risk Participation Liability" means, as to each Letter of Credit, all
reimbursement obligations of Borrowers to the L/C Bank with respect to such
Letter of Credit, consisting of (a) the amount available to be drawn or which
may become available to be drawn (Unfunded L/C Exposure), (b) all amounts that
have been paid by the L/C Bank to the Underlying Issuer to the extent not
reimbursed by Borrowers, whether by the making of an Advance or otherwise
(Funded L/C Exposure), and (c) all accrued and unpaid interest, fees, and
expenses payable with respect thereto.

         "Underlying Issuer" means a non-Lender lending institution that issues
a L/C, and is the beneficiary of a L/C Guaranty in respect thereof, for the
account of Borrowers.

         "Underlying Letter of Credit" means an L/C that has been issued by an
Underlying Issuer for the account of Borrower.

         "Waterfall" has the meaning ascribed to such term in Section 9.2(b).

         2. AMENDMENTS TO APPENDIX A OF THE LOAN AGREEMENT; AMENDMENT OF CERTAIN
DEFINITIONS. The following definitions in Appendix A are hereby amended and
restated and replaced in their entirety to read as follows:

         "Commitment" or "Commitments" shall mean (a) as to any Lender, the
     aggregate commitment of such Lender to make Loans (including 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), as set
     forth on Schedule 1, and (b) as to all Lenders, the aggregate commitment of
     all Lenders to make Loans (including to purchase a participation in each
     Letter of Credit, in an amount equal to its Pro

                                       10
<PAGE>

     Rata Share of the Risk Participation Liability of such Letter of
     Credit), as set forth on Schedule 1, in each case which shall be
     revised by Agent upon Agent's acceptance of any Lender Addition
     Agreement.

         "Funded L/C Exposure" means the aggregate principal amount, as of any
date of determination, of all payments that were made by an L/C Bank under any
Letter of Credit, but which have not been reimbursed to an L/C Bank by the
Borrower or converted into Advances pursuant to this Agreement.

         "Letter of Credit" means an L/C or an L/C Guaranty, as the context
requires.

         "L/C Bank" means any Lender that, at the request of Administrative
Borrower and with the consent of Agent, agrees, in such Lender's sole
discretion, to issue certain Letters of Credit pursuant to Section 2.18, or
provide L/C Guaranties pursuant to Section 2.18.

         "Loan" or "Loans" shall mean, individually and collectively, all
Advances (including any Advances deemed to be made pursuant to the Loan
Agreement), Letters of Credit and the Term Loan.

         "Requisite Lenders" shall mean Lenders holding or being responsible for
(i) 100%, if there are only two Lenders, and (ii) at least 76% if there are more
than two Lenders, in each case, of the sum of (a) all outstanding Loans and (b)
all unutilized Commitments, including Unfunded L/C Exposure.

         "Unfunded L/C Exposure" means the maximum amount which L/C Bank may be
required, under all Letters of Credit outstanding as of any date of
determination, to pay on such date or at any future time. Unfunded L/C Exposure
shall not include any amounts outstanding within the meaning of Funded L/C
Exposure.

         3. AMENDMENT TO RECITALS OF THE LOAN AGREEMENT. The first recital of
the Loan Agreement is hereby amended and restated and replaced in its entirety
to read as follows:

                  WHEREAS, Borrower has requested that Lenders make available to
     Borrower up to Sixty Million Dollars ($60,000,000) (the "MAXIMUM LOAN
     AMOUNT") including (a) a revolving credit facility (the "REVOLVING
     FACILITY") in a maximum principal amount at any time outstanding of up to
     Fifty Five Million Dollars ($55,000,000) (the "FACILITY CAP"), and within
     the Facility Cap, a sublimit of Ten Million Dollars ($10,000,000) to be
     used to obtain standby letters of credit or to cash collateralize
     obligations currently secured by existing letters of credit having an
     aggregate face value of Six Million Two Hundred and Fifty Thousand Dollars
     ($6,250,000) (the "L/C SUBLIMIT"), and (b) a term loan (the "TERM LOAN") in
     the original principal amount of Five Million Dollars ($5,000,000), the
     proceeds of such Revolving Facility and Term Loan shall be used by Borrower
     for refinancing Borrower's existing obligations and indebtedness pursuant
     to that certain Amended and Restated Credit Agreement, dated as of August
     1, 2000 (as amended), by and among ASG, the subsidiaries of ASG who are
     parties thereto and Bank of America, N.A., as agent (the "BOFA
     INDEBTEDNESS"), general corporate matters and purposes, and working capital
     needs in connection with its provision of medical and related services to
     correctional facilities; provided however, that until such time as an
     additional Lender is added to this Agreement, the Maximum Loan Amount shall
     be Fifty Million Dollars ($50,000,000) and the Facility Cap shall be
     Forty-Five Million Dollars ($45,000,000); and

         4. AMENDMENT TO SECTION 2.2 OF THE LOAN AGREEMENT. The portion of
Section 2.2 of the Loan Agreement that currently reads "Agent will account to
Borrower monthly with a statement of Advances under the Revolving Facility, and
charges and payments made pursuant to this Agreement, and in the absence of
manifest error, such accounting rendered by Agent shall be deemed final, binding
and conclusive unless Agent is notified by Borrower in writing to the contrary
within 60 calendar days of

                                       11
<PAGE>

Receipt of each accounting, which notice shall be deemed an objection only to
items specifically objected to therein." is hereby amended and restated and
replaced in its entirety to read as follows:

     Agent will account to Borrower monthly with a statement of Advances under
     the Revolving Facility, Letters of Credit issued hereunder, and charges and
     payments made pursuant to this Agreement, and in the absence of manifest
     error, such accounting rendered by Agent shall be deemed final, binding and
     conclusive unless and to the extent Agent is notified by Borrower in
     writing to the contrary within 60 calendar days of Receipt of each
     accounting, which notice shall be deemed an objection only to items
     specifically objected to therein.

         5. AMENDMENT TO SECTION 2.10 OF THE LOAN AGREEMENT. Section 2.10 of the
Loan Agreement which currently reads "Any balance of Advances under the
Revolving Facility outstanding at any time in excess of the lesser of the
Facility Cap, less the L/C Exposure, or the Availability shall be immediately
due and payable by Borrower without the necessity of any demand, at the Payment
Office, whether or not a Default or Event of Default has occurred or is
continuing and shall be paid in the manner specified in Section 2.9." is hereby
amended and restated and replaced in its entirety to read as follows:

                  (a) Any balance of Advances under the Revolving Facility
     outstanding at any time in excess of the lesser of the Facility Cap, less
     the L/C Exposure, or the Availability (such excess, an "Overadvance") shall
     be immediately due and payable by Borrower without the necessity of any
     demand, at the Payment Office, whether or not a Default or Event of Default
     has occurred or is continuing and shall be paid in the manner specified in
     Section 2.9.

                  (b) The foregoing to the contrary notwithstanding, each Lender
     including CapitalSource (in its capacity as a Lender) may, in its
     discretion and without the consent of any other Lender (it being understood
     that such consent is not required), voluntarily permit Overadvances in an
     aggregate amount at any one time outstanding for all Lenders not to exceed
     $2,000,000 ("PERMITTED OVERADVANCES"), and the failure to immediately repay
     Permitted Overadvances pursuant to Section 2.10(a) above shall not
     constitute an Event of Default; provided, however, that Permitted
     Overadvances made without the consent of all other Lenders shall not be
     shared by or allocated to any such non-consenting Lender and shall be
     junior in right of payment as set forth in this Agreement (it being agreed,
     however, that the Permitted Overadvances may be reduced and repaid in
     accordance with this Agreement from time to time so long as no Event of
     Default has been declared and is continuing as of the date of such
     payment).

         6. AMENDMENT TO SECTION 2.12 OF THE LOAN AGREEMENT. Section 2.12 of the
Loan Agreement which currently reads:

     In addition to and without limiting any provision of any Loan Document:

         (a) if a Change of Control occurs, on or prior to the first Business
     Day following the date of such Change of Control, Borrower shall prepay the
     Loans and all other Obligations in full in cash together with accrued
     interest thereon to the date of prepayment and all other amounts owing to
     Agent and Lenders under the Loan Documents; and

         (b) if Borrower (i) sells any material portion of its assets or
     properties (provided that only the portion of such proceeds that equals (A)
     any overadvance under the Revolving Facility or the amount by which the
     Loans under the Revolving Facility exceed Availability, plus (B) the face
     value of each Account of Borrower sold in such asset sale, must be applied
     to the Loans under the Revolving Facility), (ii) sells or issues any
     securities (debt, other than Permitted Indebtedness, or equity), capital
     stock, or ownership interests (other than, in the case of ASG, sales or
     issuances in connection with

                                       12
<PAGE>

     warrants and options under any employee stock purchase plan in effect),
     (iii) receives any property damage award in excess of $50,000 which is not
     necessary to the repair or replacement of the property covered thereby or
     paid to a third-party as a result of or relating to the incidents giving
     rise to such award, or (iv) incurs any Indebtedness, except for Permitted
     Indebtedness, then in each case it shall apply 100% of the proceeds
     thereof, less reasonable and customary transaction costs, to the prepayment
     of the Term Loan together with accrued interest thereon and Obligations
     relating thereto, without premium or penalty except as set forth in Section
     3.5(b), and, after the Term Loan is repaid in full, to all other
     Obligations owing to Agent and Lenders under the Loan Documents, such
     payment to be applied at such time and in such manner and order as Agent
     shall decide in its sole discretion.

is hereby amended and restated and replaced in its entirety to read as follows:

         In addition to and without limiting any provision of any Loan Document:

         (a) if a Change of Control occurs, on or prior to the first Business
     Day following the date of such Change of Control, Borrower shall prepay the
     Loans and all other Obligations in full in cash together with accrued
     interest thereon to the date of prepayment and all other amounts owing to
     Agent and Lenders under the Loan Documents, to be applied in accordance
     with the Waterfall; and

         (b) if Borrower (i) sells any material portion of its assets or
     properties (provided that only the portion of such proceeds that equals (A)
     any Overadvance under the Revolving Facility or the amount by which the
     Loans under the Revolving Facility exceed Availability, plus (B) the face
     value of each Account of Borrower sold in such asset sale, must be applied
     to the Loans under the Revolving Facility), (ii) sells or issues any
     securities (debt, other than Permitted Indebtedness, or equity), capital
     stock, or ownership interests (other than, in the case of ASG, sales or
     issuances in connection with warrants and options under any employee stock
     purchase plan in effect), (iii) receives any property damage award in
     excess of $50,000 which is not necessary to the repair or replacement of
     the property covered thereby or paid to a third-party as a result of or
     relating to the incidents giving rise to such award, or (iv) incurs any
     Indebtedness, except for Permitted Indebtedness,

     then, in each case, it shall apply 100% of the proceeds thereof, less
     reasonable and customary transaction costs, to the prepayment of the Term
     Loan together with accrued interest thereon and Obligations relating
     thereto, without premium or penalty except as set forth in Section 3.5(b),
     and, after the Term Loan is repaid in full, to all other Obligations owing
     to Agent and Lenders under the Loan Documents, to be applied in accordance
     with the Waterfall (subject only to the immediately following paragraph
     with respect to Securities Issuance Proceeds).

     Anything in the Loan Documents to the contrary notwithstanding, so long as
     no Event of Default has occurred and is continuing, proceeds of the sales
     or issuances described in Section 2.12(b)(ii) ("SECURITIES ISSUANCE
     PROCEEDS") shall be applied in the following order: first, to payment of
     the Permitted Overadvances (if any), until paid in full; second, to payment
     of the Term Loan (in inverse order of maturity), until paid in full; third,
     to all other Obligations (except Overadvances other than Permitted
     Overadvances), until paid in full, in accordance with the Waterfall; and
     fourth, to Overadvances other than Permitted Overadvances, until paid in
     full.

         7. AMENDMENT TO SECTION 2.18 OF THE LOAN AGREEMENT. Section 2.18 of the
Loan Agreement is hereby amended and restated and replaced in its entirety to
read as set forth in Exhibit C hereto.

         8. AMENDMENT TO SECTION 3.4 OF THE LOAN AGREEMENT. Section 3.4 of the
Loan Agreement which currently reads "If Agent issues or otherwise obtains
Letters of Credit for Borrower,

                                       13
<PAGE>

Borrower shall pay Agent a monthly fee of 3.5% per annum of the face amount of
such Letters of Credit plus any administrative bank charges or expenses
(excluding application, fronting and issuance fees charged by such bank)
incurred by Agent in obtaining such Letters of Credit." is hereby amended and
restated and replaced in its entirety to read as follows:

                  In addition to the charges, commissions, fees, and costs set
     forth in Section 2.18(e) (which shall be payable to Agent for the sole
     account of the applicable L/C Bank), Borrowers shall pay Agent (for the
     ratable benefit of the Lenders) a Letter of Credit monthly fee, which shall
     accrue at a rate equal to 2.675% per annum times the daily balance of the
     L/C Exposure. Such amounts shall be payable, monthly in arrears, on the
     first day of each calendar month.

         9. AMENDMENTS TO SECTION 3.7 OF THE LOAN AGREEMENT.

         (a) The title of Section 3.7 of the Loan Agreement is hereby amended
and restated and replaced in its entirety to read as follows: DEFAULT RATE OF
INTEREST; DEFAULT LETTER OF CREDIT FEES.

         (b) Section 3.7 of the Loan Agreement which currently reads "Upon the
occurrence and during the continuation of an Event of Default, the Applicable
Rate of interest in effect at such time with respect to the Obligations shall be
increased by 3.0% per annum (the "Default Rate")." is hereby amended and
restated and replaced in its entirety to read as follow:

                  (a) Upon the occurrence and during the continuation of an
     Event of Default, the Applicable Rate of interest in effect at such time
     with respect to the Obligations (other than the L/C Exposure) shall be
     increased by 3.0% per annum (the "DEFAULT RATE").

                  (b) Upon the occurrence and during the continuation of an
     Event of Default, the Letter of Credit Fee provided for in Section 3.4, and
     relating to the L/C Exposure, shall be increased by 3.0% above the per
     annum rate otherwise applicable hereunder.

         10. AMENDMENT TO SECTION 4.2 OF THE LOAN AGREEMENT. The portion of
Section 4.2 of the Loan Agreement which currently reads:

     The obligations of Lenders to make any Advance (including, without
     limitation, the Initial Advance) are subject to the satisfaction, in the
     reasonable judgment of Agent, of the following conditions precedent:

         (a) Borrower shall have delivered to Agent a Borrowing Certificate for
     the Advance, executed by an authorized officer of Borrower, which shall
     constitute a representation and warranty by Borrower as of the Borrowing
     Date, that the conditions contained in this Section 4.2 have been
     satisfied; provided, however, that any determination as to whether or
     extend credit shall be made by Agent in its Permitted Discretion;

         (b) each of the representation and warranties made by Borrower in or
     pursuant to this Agreement shall be accurate, before and after giving
     effect to such Advance, and no Default or Event of Default shall have
     occurred or be continuing or would exist after giving effect to the
     requested Advance on such date; provided, however, that for any
     representation or warranty limited to the date of closing, such limitation
     shall not apply, and the representation shall be true as if made at the
     time of any request for an Advance or issuance of a Letter of Credit,
     except with respect to representations that would be inconsistent with
     Section 6.15;

                                       14
<PAGE>

         (c) immediately after giving effect to the requested Advance, the sum
     of (i) the aggregate outstanding principal amount of Advances under the
     Revolving Facility, including Advances in connection with the Letters of
     Credit, and (ii) the Unfunded L/C Exposure, shall not exceed the lesser of
     the Availability and the Facility Cap, and the L/C Exposure shall not
     exceed the L/C Sublimit;

is hereby amended and restated and replaced in its entirety to read as follows:

     The obligations of Lenders to make any Advance (including, without
     limitation, the Initial Advance) and of the L/C Bank to issue any Letter of
     Credit are subject to the satisfaction, in the reasonable judgment of
     Agent, of the following conditions precedent:

         (a) (i) in the case of an Advance, Borrower shall have delivered to
     Agent a Borrowing Certificate for such Advance, executed by an authorized
     officer of Borrower, which shall constitute a representation and warranty
     by Borrower as of the Borrowing Date, that the conditions contained in this
     Section 4.2 have been satisfied; provided, however, that any determination
     as to whether or extend credit in the form of such Advance shall be made by
     Agent in its Permitted Discretion; and (ii) in the case of a Letter of
     Credit: (y) Borrower shall have delivered to Agent (with a copy to the L/C
     Bank) a Borrowing Certificate for such Letter of Credit, executed by an
     authorized officer of Borrower, which shall constitute a representation and
     warranty by Borrower as of the date of issuance of such Letter of Credit,
     that the conditions contained in this Section 4.2 have been satisfied;
     provided, however, that any determination as to whether to extend credit in
     the form of such Letter of Credit shall be made by Agent and L/C Bank in
     their respective Permitted Discretion; and (z) L/C Bank shall have received
     the written confirmation of Agent that the requested Letter of Credit may
     be issued;

         (b) each of the representation and warranties made by Borrower in or
     pursuant to this Agreement shall be accurate, before and after giving
     effect to such Loan, and no Default or Event of Default shall have occurred
     or be continuing or would exist after giving effect to the requested Loan
     on such date; provided, however, that for any representation or warranty
     limited to the date of closing, such limitation shall not apply, and the
     representation shall be true as if made at the time of any request for an
     Advance or issuance of a Letter of Credit, except with respect to
     representations that would be inconsistent with Section 6.15;

         (c) immediately after giving effect to such requested Advance or the
     issuance of such Letter of Credit, (i) the sum of (y) the aggregate
     outstanding principal amount of Advances under the Revolving Facility, plus
     (z) the L/C Exposure, shall not exceed the lesser of the Availability and
     the Facility Cap, and (ii) the L/C Exposure shall not exceed the L/C
     Sublimit;

         11. AMENDMENT TO SECTION 5 OF THE LOAN AGREEMENT. The preamble of
Section 5 of the Loan Agreement which currently reads "Each Borrower, jointly
and severally, represents and warrants as of the date hereof, the Closing Date,
and each Borrowing Date as follows:" is hereby amended and restated and replaced
in its entirety to read as follows:

     Each Borrower, jointly and severally, represents and warrants as of the
     date hereof, the Closing Date, each Borrowing Date, and each date of
     issuance of a Letter of Credit, as follows:

         12. AMENDMENT TO SECTION 7.2 OF THE LOAN AGREEMENT. Section 7.2(i) of
the Loan Agreement which currently reads "(i) reimbursement obligations with
respect to letters of credit that are secured by cash collateral accounts," is
hereby amended and restated and replaced in its entirety to read as follows:

                                       15
<PAGE>

     (i) Indebtedness owed to Underlying Issuers with respect to Underlying
     Letters of Credit supported by L/C Guaranties,

         13. AMENDMENT TO SECTION 8 OF THE LOAN AGREEMENT. The portion of the
last paragraph of Section 8 of the Loan Agreement that currently reads "then,
and during the continuance of any such event, notwithstanding any other
provision of any Loan Document, (I) Agent may (and at the request of Requisite
Lenders, shall), by notice to Borrower", is hereby amended and restated and
replaced in its entirety to read as follows:

     then, and during the continuance of any such event, notwithstanding any
     other provision of any Loan Document, (I) Agent, after making reasonable
     efforts to consult with the Lenders, may (and at the request of Requisite
     Lenders, shall), by notice to Borrower and the Lenders

         14. AMENDMENT TO SECTION 9.1 OF THE LOAN AGREEMENT. The portion of
Section 9.1(a) of the Loan Agreement that currently reads "In addition to the
acceleration provisions set forth in Article VIII above, upon the occurrence and
continuation of an Event of Default, Agent shall have the right to (and at the
written request of Requisite Lenders, shall) exercise any and all rights,
options and remedies provided for in any Loan Document, under the UCC or at law
or in equity, including, without limitation," is hereby amended and restated and
replaced in its entirety to read as follows:

     In addition to the acceleration provisions set forth in Article VIII above,
     upon the occurrence and continuation of an Event of Default, Agent, after
     making reasonable efforts to consult with the Lenders, may (and at the
     written request of Requisite Lenders, shall) exercise any and all rights,
     options and remedies provided for in any Loan Document, under the UCC or at
     law or in equity, including, without limitation,

         15. AMENDMENTS TO SECTION 9.2 OF THE LOAN AGREEMENT.

         (a) Section 9.2 of the Loan Agreement is hereby amended by designating
the current language set forth in such section as subsection (a).

         (b) Section 9.2 of the Loan Agreement is hereby further amended by
adding the following language set forth below as subsection (b):

                  (b) Except if and to the extent otherwise expressly provided
     in the Loan Documents, all amounts allocated applied to the Obligations,
     pursuant to Section 9.2(a)(ii) above or otherwise, shall be applied in the
     following order: first, ratably to repay interest outstanding under the
     Revolving Facility (excluding any Overadvances), all fees and other amounts
     relating to the Revolving Facility (including fees and amounts in
     connection with the Letters of Credit) outstanding, until paid in full, and
     then ratably to repay all principal outstanding under the Revolving
     Facility (excluding any Overadvances) (and, if an Event of Default has
     occurred and is continuing, to fund cash collateral in lieu of the reserve
     on the Borrowing Base, to be held by Agent for the ratable benefit of L/C
     Bank and those Lenders that have Risk Participation Liability, in an amount
     equal to 105% of the then extant Letter of Credit Usage), until paid in
     full; second, to repay all interest outstanding under the Term Loan, until
     paid in full, and then to repay the Term Loan (in inverse order of
     maturity), until paid in full; third, to repay all interest outstanding in
     respect of any Permitted Overadvances, until paid in full, and then to
     repay all Permitted Overadvances, until paid in full; fourth, to all other
     Obligations (except Overadvances and interest in respect thereof), at such
     time and in such manner and order as determined by the Requisite Lenders,
     until paid in full; and fifth, to repay all interest outstanding in respect
     of any Overadvances (other than Permitted Overadvances), until paid in
     full, and then to repay

                                       16
<PAGE>

     all Overadvances other than Permitted Overadvances, until paid in full (the
     order of application set forth in this subsection is hereinafter referred
     to as the "WATERFALL").

         16. AMENDMENTS TO SECTION 10.5 OF THE LOAN AGREEMENT.

         (a) Section 10.5(a)(i) of the Loan Agreement which currently reads "(i)
increase the Commitment of any Lender (which action shall be deemed to directly
affect all Lenders);" is hereby amended and restated and replaced in its
entirety to read as follows:

     (i) increase or extend the Commitment of any Lender (which action shall be
     deemed to directly affect all Lenders);

         (b) That portion of Section 10.5(a) of the Loan Agreement that
currently reads "or (viii) increase the Advance Rate or change the definition of
Eligible Billed Receivables, Eligible Unbilled Receivables or Borrowing Base;
and, provided, further, that no amendment, modification, termination or waiver
affecting the rights or duties of Agent under any Loan Document shall in any
event be effective, unless in writing and signed by Agent, in addition to
Lenders required herein above to take such action." is hereby amended and
restated and replaced in its entirety to read as follows:

     (viii) increase the Advance Rate or change the definition of Eligible
     Billed Receivables, Eligible Unbilled Receivables or Borrowing Base (which
     action shall be deemed to directly affect all Lenders that have a
     Commitment to make Advances or participate in Letters of Credit or the
     Revolving Facility); (ix) change the definitions of Maximum Loan Amount,
     Facility Cap, or L/C Sublimit (which action shall be deemed to directly
     affect all Lenders); (x) contractually subordinate any security interests
     of the Lenders securing any or all of the Obligations (which action shall
     be deemed to directly affect all Lenders); (xi) release any Borrower or any
     Guarantor from any obligation for the payment of money (which action shall
     be deemed to directly affect all Lenders); (xii) amend, modify or waive
     Section 11-A (which action shall be deemed to directly affect all Lenders);
     (xiii) amend, modify, or waive the requirements in the Loan Documents for
     written authorization by the Requisite Lenders of Agent to exercise
     remedies under the Loan Documents (including pursuant to Section 9.1(a));
     (xiv) amend, modify, or waive Section 2.10 (which action shall be deemed to
     directly affect all Lenders;) (xv) amend, modify, or waive Section 9.2(b)
     or the definitions or terms used in Section 9.2(b) (which action shall be
     deemed to directly affect all Lenders); and (xvi) amend, modify or waive
     Section 2.12(b) (which action shall be deemed to directly affect all
     Lenders);

     and, provided, further, that no amendment, modification, termination or
     waiver affecting the rights or duties of Agent under any Loan Document
     shall in any event be effective, unless in writing and signed by Agent, in
     addition to Lenders required herein above to take such action;

     and, provided, further, that no amendment, modification, termination or
     waiver affecting the rights or duties of L/C Bank with respect to Letters
     of Credit under any Loan Document shall in any event be effective, unless
     in writing and signed by L/C Bank, in addition to Lenders required herein
     above to take such action;

     and, provided, further, the foregoing 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 Agent and/or the Lenders among themselves, and
     that does not affect the rights or obligations of Borrowers, shall not
     require consent by or the agreement of Borrowers.

                                       17
<PAGE>

         (c) Section 10.5(c) of the Loan Agreement which currently reads "Any
amendment, modification, termination, waiver or consent effected in accordance
with this Section 10.5 shall be binding upon each Lender and Borrower." is
hereby amended and restated and replaced in its entirety to read as follows:

                  (c) Any amendment, modification, termination, waiver or
     consent effected in accordance with this Section 10.5 shall be binding upon
     Agent, each Lender, and Borrower.

         17. AMENDMENTS TO SECTION 11-A.5 OF THE LOAN AGREEMENT.

         (a) Section 11-A.5(a)(ii) of the Loan Agreement which currently reads
"Once each week, or more frequently (including daily), if Agent so elects (each
such day being a "Settlement Date"), Agent will advise each Lender by 1 p.m.
(Eastern Time) by telephone, telex, or telecopy of the amount of each such
Lender's Pro Rata Share of the outstanding Advances. In the event payments are
necessary to adjust the amount of such Lender's share of the Advances to such
Lender's Pro Rata Share of the Advances, the party from which such payment is
due will pay the other, in same day funds, by wire transfer to the other's
account not later than 3:00 p.m. (Eastern Time) on the Business Day following
the Settlement Date." is hereby amended and restated and replaced in its
entirety to read as follows:

                           (ii) Once each week, or more frequently (including
     daily), if Agent so elects (each such day being a "SETTLEMENT DATE"), Agent
     will advise each Lender by 1 p.m. (Eastern Time) by telephone, telex, or
     telecopy of the amount of each such Lender's Pro Rata Share of the
     outstanding Loans. In the event payments are necessary to adjust the amount
     of such Lender's share of the Loans to such Lender's Pro Rata Share of the
     Loans, the party from which such payment is due will pay the other, in same
     day funds, by wire transfer to the other's account not later than 3:00 p.m.
     (Eastern Time) on the Business Day following the Settlement Date.

         (b) Section 11-A.5(a)(iii) of the Loan Agreement which currently reads
"On the first Business Day of each month ("Interest Settlement Date"), Agent
will advise each Lender by telephone, telefax or telecopy of the amount of
interest and fees charged to and collected from Borrower for the proceeding
month in respect of the Advances. Provided that such Lender has made all
payments required to be made by it under this Agreement, Agent will pay to such
Lender, by wire transfer to such Lender's account (as specified by such Lender
on Schedule 1 of this Agreement as amended by such Lender from time to time
after the date hereof pursuant to the notice provisions contained herein or in
the applicable Lender Addition Agreement) not later than 3 p.m. (Eastern Time)
on the next Business Day following the Interest Settlement Date such Lender's
share of such interest and fees." is hereby amended and restated and replaced in
its entirety to read as follows:

                           (iii) On the first Business Day of each month
     ("INTEREST SETTLEMENT DATE"), Agent will advise each Lender by telephone,
     telefax or telecopy of the amount of interest and fees charged to and
     collected from Borrower for the proceeding month in respect of the Loans.
     Provided that such Lender has made all payments required to be made by it
     under this Agreement, Agent will pay to such Lender, by wire transfer to
     such Lender's account (as specified by such Lender on Schedule 1 of this
     Agreement as amended by such Lender from time to time after the date hereof
     pursuant to the notice provisions contained herein or in the applicable
     Lender Addition Agreement) not later than 3 p.m. (Eastern Time) on the next
     Business Day following the Interest Settlement Date such Lender's share of
     such interest and fees.

         18. AMENDMENT TO SECTION 12.11. Section 12.11 of the Loan Agreement,
which currently reads:

                                       18
<PAGE>

                  Notwithstanding any other provision of any Loan Document,
         Borrower voluntarily, knowingly, unconditionally and irrevocably, with
         specific and express intent, for and on behalf of itself, its managers,
         members, directors, officers, employees, shareholders, Affiliates,
         agents, representatives, accountants, attorneys, successors and assigns
         and their respective Affiliates (collectively, the "RELEASING
         PARTIES"), hereby fully and completely releases and forever discharges
         the Indemnified Parties and any other Person or insurer which may be
         responsible or liable for the acts or omissions of any of the
         Indemnified Parties, or who may be liable for the injury or damage
         resulting thereform (collectively, with the Indemnified Parties, the
         "RELEASED PARTIES"), of and from any and all actions, causes of action,
         damages, claims, obligations, liabilities, costs, expenses and demands
         of any kind whatsoever, at law or in equity, matured or unmatured,
         vested or contingent, that any of the Releasing Parties has against any
         of the Released Parties as of the date of the Closing. Borrower
         acknowledges that the foregoing release is a material inducement to
         Agent's and each Lender's decision to extend to Borrower the financial
         accommodations hereunder and has been relied upon by Agent and each
         Lender in agreeing to make the Loans.

, is hereby amended and restated and replaced in its entirety to read as
follows:

         12.11 RELEASE OF AGENT OR LENDERS

                  Notwithstanding any other provision of any Loan Document,
         Borrower voluntarily, knowingly, unconditionally and irrevocably, with
         specific and express intent, for and on behalf of itself, its managers,
         members, directors, officers, employees, shareholders, Affiliates,
         agents, representatives, accountants, attorneys, successors and assigns
         and their respective Affiliates (collectively, the "RELEASING
         PARTIES"), hereby fully and completely releases and forever discharges
         the Indemnified Parties and any other Person or insurer which may be
         responsible or liable for the acts or omissions of any of the
         Indemnified Parties, or who may be liable for the injury or damage
         resulting therefrom (collectively, with the Indemnified Parties, the
         RELEASED PARTIES"), of and from any and all actions, causes of action,
         damages, claims, obligations, liabilities, costs, expenses and demands
         of any kind whatsoever, at law or in equity, matured or unmatured,
         vested or contingent, that any of the Releasing Parties has against any
         of the Released Parties as of the date of the Closing and as of the
         date of any amendment, waiver, or consent in respect of the Loan
         Documents. Borrower acknowledges that the foregoing release is a
         material inducement of Agent's and each Lender's decision to extend to
         Borrower the financial accommodations hereunder and has been relied
         upon by Agent and each Lender in agreeing to make the Loans and/or to
         enter into such amendment, waiver, or consent.

         19. AMENDMENT TO EXHIBIT A (BORROWING CERTIFICATE) TO THE LOAN
AGREEMENT. Exhibit A is hereby amended and restated in its entirety by Exhibit A
attached hereto.

         20. AMENDMENT TO SCHEDULES OF THE LOAN AGREEMENT, AMENDMENT OF CERTAIN
SCHEDULES. Schedules 1.1 and 5.3 of the Loan Agreement are hereby amended and
restated and replaced in their entirety to read in full as set forth on Exhibit
B hereto, which exhibit is incorporated herein and made a part hereof and of the
Loan Agreement.

                                       19
<PAGE>

                              Exhibit A to Annex A
                             (Borrowing Certificate)

                                       20
<PAGE>

                              Exhibit B to Annex A
                               (Revised Schedules)

                                       21
<PAGE>

                              Exhibit C to Annex A
                      (New Section 2.18 of Loan Agreement)

2.18     LETTERS OF CREDIT

         (a) Subject to the terms and conditions of this Agreement, the L/C Bank
agrees to issue L/Cs or to purchase participations or execute indemnities or
reimbursement obligations (each such undertaking, an "L/C Guaranty") with
respect to L/C's issued by an Underlying Issuer for the account of Borrowers. To
request the issuance of an L/C or an L/C Guaranty (or the amendment, renewal, or
extension of an outstanding L/C or L/C Guaranty), Borrower shall hand deliver or
telecopy (or transmit by electronic communication, if arrangements for doing so
have been approved by the L/C Bank) to the L/C Bank and Agent (reasonably in
advance of the requested date of issuance, amendment, renewal, or extension) a
notice requesting the issuance of an L/C or L/C Guaranty, or identifying the L/C
or L/C Guaranty to be amended, renewed, or extended, the date of issuance,
amendment, renewal, or extension, the date on which such L/C or L/C Guaranty is
to expire, the amount of such L/C or L/C Guaranty, the name and address of the
beneficiary thereof (or of the Underlying Letter of Credit, as applicable), and
such other information as shall be necessary to prepare, amend, renew, or extend
such L/C or L/C Guaranty. Borrower shall also comply with Section 4.2. If
requested by the L/C Bank, 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 Guaranty. The L/C Bank shall have no obligation to issue a
Letter of Credit if any of the following would result after giving effect to the
requested Letter of Credit: the L/C Exposure (i) exceeds the L/C Sublimit, or
(ii) taken together with the outstanding Advances, would exceed the lesser of
the Facility Cap or the Availability, without duplication.

                  Borrower acknowledges that Availability shall be reduced by a
reserve in the full face amount of any Letter of Credit.

                  Borrowers and the Lenders acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding. Each Letter of Credit (and corresponding Underlying
Letter of Credit) shall be in form and substance acceptable to the L/C Bank (in
the exercise of its Permitted Discretion) and the beneficiary of such Letter of
Credit, including the requirement that the amounts payable thereunder must be
payable in Dollars.

                  If L/C Bank receives any inquiries from any appropriate third
party regarding any Letter of Credit, or receives any notice prior to advancing
funds under a Letter of Credit, L/C Bank agrees to use reasonable efforts to
inform Borrower of such inquiry or notice, but L/C Bank shall have no liability
for any failure to so inform Borrower.

                  If L/C Bank is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to L/C Bank
by paying to Agent (for the account of L/C Bank) an amount equal to such L/C
Disbursement not later than 2:00 p.m., New York time, on the date that such L/C
Disbursement is made, if Borrower shall have received written or telephonic
notice of such L/C Disbursement prior to 1:00 p.m., New York time, on such date,
or, if such notice has not been received by Borrower prior to such time on such
date, then not later than 2:00 p.m., New York time, on (i) the Business Day that
Borrower receives such notice, if such notice is received prior to 1:00 p.m.,
New York time, on the date of receipt, and, in the absence of such
reimbursement, the L/C Disbursement immediately and automatically shall be
deemed to be an Advance hereunder and, thereafter, shall bear interest at the
rate then applicable to Advances under Section 2.3. To the extent an L/C
Disbursement is deemed to be an Advance hereunder, Borrowers' obligation to
reimburse such L/C Disbursement shall be discharged and replaced by the
resulting Advance. Promptly following receipt by Agent of any payment from
Borrowers pursuant to this paragraph, Agent shall distribute such payment to the
L/C Bank or, to the

                                       22
<PAGE>

extent that Lenders have made payments pursuant to Section 2.18(b) to reimburse
the L/C Bank, then to such Lenders and the L/C Bank as their interest may
appear.

                  (b) Promptly following receipt of a notice of L/C Disbursement
pursuant to Section 2.18(a), each Lender agrees to fund its Pro Rata Share of
any Advance deemed made pursuant to the foregoing subsection on the same terms
and conditions as if Borrowers had requested such Advance and Agent shall
promptly pay to L/C Bank the amounts so received by it from the Lenders. 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 L/C Bank
or the Lenders, the L/C Bank shall be deemed to have granted to each Lender, and
each Lender 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 L/C Bank, such Lender's Pro Rata Share of any payments
made by the L/C Bank under such Letter of Credit. In consideration and in
furtherance of the foregoing, each Lender hereby absolutely and unconditionally
agrees to pay to Agent, for the account of the L/C Bank, such Lender's Pro Rata
Share of each L/C Disbursement made by the L/C Bank and not reimbursed by
Borrowers on the date due as provided in clause (a) of this Section, or of any
reimbursement payment required to be refunded to Borrowers for any reason. Each
Lender acknowledges and agrees that its obligation to deliver to Agent, for the
account of the L/C Bank, an amount equal to its respective Pro Rata Share
pursuant to this Section 2.18(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 4 hereof. If any such Lender fails to make available to Agent the amount
of such Lender's Pro Rata Share of any payments made by the L/C Bank in respect
of such Letter of Credit as provided in this Section, Agent (for the account of
the L/C Bank) shall be entitled to recover such amount on demand from such
Lender together with interest thereon at the Applicable Rate until paid in full.

                  (c) Each Borrower agrees to be bound by the Underlying
Issuer's regulations and interpretations of any Underlying Letter of Credit or
by L/C Bank's reasonable interpretations of any L/C issued by L/C Bank 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 Lenders
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. Each
Borrower understands that the L/C Guaranties may require L/C Bank 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 Lenders harmless with respect to any loss,
cost, expense (including reasonable attorneys fees), or liability incurred by
the Lenders under any L/C Guaranty as a result of the Lender's indemnification
of any Underlying Issuer; provided, however, that no Borrower shall be obligated
hereunder to indemnify for any loss, cost, expense, or liability that is caused
by the gross negligence or willful misconduct of the L/C Bank or any other
member of the Lenders.

                  (d) Each Borrower hereby authorizes and directs any Underlying
Issuer to deliver to the L/C Bank 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 L/C Bank's instructions with
respect to all matters arising in connection with such Underlying Letter of
Credit and the related application.

                  (e) Any and all charges, commissions, fees, and costs incurred
by the L/C Bank relating to Underlying Letters of Credit shall constitute
expenses required to be paid by Borrower under Section 12.7 and Obligations for
purposes of this Agreement and immediately shall be reimbursable by Borrowers to
Agent for the sole account of the L/C Bank; it being acknowledged and agreed by
each

                                       23
<PAGE>

Borrower that the issuance charge imposed by the prospective Underlying Issuer
shall be no more than .825% per annum times the face amount of each Underlying
Letter of Credit, 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 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 Lenders 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
                  Lenders any other condition regarding any Underlying Letter of
                  Credit or any Letter of Credit issued pursuant hereto;

and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lenders of issuing, making, guaranteeing, or maintaining any Letter of
Credit or to reduce the amount receivable in respect thereof by the Lenders, and
such cost relates specifically to Letters of Credit and not only to the costs of
doing business or the banking industry in general, 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 Borrower, and Borrowers shall
pay on demand such amounts as Agent may reasonably specify to be necessary to
compensate the Lenders for such actual additional cost or reduced receipt,
together with interest on such amount from the date of such demand until payment
in full thereof at the Applicable Rate with respect to Advances hereunder. 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.

                  (g) If a requested Letter of Credit is to have or is for the
purpose of replacing an existing Letter of Credit that has, an expiry date
falling after the earlier of the Maturity Date and the effective date of a
Revolver Termination (a "POST-MATURITY EXPIRY LETTER OF CREDIT"), then Borrower
shall, on or before the earlier of the Maturity Date and the effective date of a
Revolver Termination, (x) provide a "back-to-back" letter of credit to the L/C
Bank of such Post-Maturity Expiry Letter of Credit, in form and substance
satisfactory to such L/C Bank, in its sole discretion, issued by a bank
satisfactory to such L/C Bank, in an amount equal to the face amount of the then
undrawn stated amount of all outstanding Letters of Credit and/or (y) deposit
cash security with and in favor of such L/C Bank in an amount equal to 105% of
the then undrawn stated amount of each such Post-Maturity Expiry Letter of
Credit with respect to which a "back-to-back" letter of credit was not issued to
such L/C Bank; provided, however, that notwithstanding the provision of such
"back-to-back" letter(s) of credit and/or the furnishing of such cash security,
and the occurrence of the earlier of the Maturity Date and the effective date of
a Revolver Termination, Borrower shall remain liable with respect to all Funded
L/C Exposure and Unfunded L/C Exposure, pursuant to the terms of this Agreement
until the earlier of such time as each such Post-Maturity Expiry Letter of
Credit expires by its terms without any draws being made in respect thereof or
Agent has received confirmation from the relevant L/C Bank that such Letter of
Credit has been returned to the L/C Bank undrawn and marked "cancelled".
Promptly upon the L/C Bank's receipt of such "back-to-back" letter(s) of credit
and/or cash security with respect to any Post-Maturity Expiry Letter of Credit,
neither Section 2.18(b) hereof, nor the last paragraph of Section 2.18(a)
hereof, shall further apply to such Post-Maturity Expiry Letter of Credit; it
being acknowledged that such Post-Maturity Expiry Letter of Credit thereupon and
thereafter shall become and remain a cash-secured (or

                                       24
<PAGE>

letter-of-credit-backed) Letter of Credit whose sole participant among the
Lenders is the L/C Bank thereof.

                  (h) With respect to each Advance made pursuant to this Section
2.18, the Borrower shall be deemed to have certified the statements contained in
Section 5 as of the date the payment constituting such Advance was made by the
L/C Bank; provided, however, that in the event any such statement was not true
and correct as of such date, such Advance shall be repayable on demand;
provided, further, that upon any such repayment on demand, the failure of any
such statement to be true and correct as of such date shall not constitute an
Event of Default hereunder, unless the failure of any such statement to be true
and correct as of such date would have constituted an Event of Default hereunder
even if such repaid Advance had never been made.

                  (i) The obligations of the Borrower in respect of Advances
that arise as a result of payments under Letters of Credit shall be
unconditional and irrevocable and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, to the extent permitted by law,
including, without limitation: (i) any lack of validity or enforceability of any
Letter of Credit; (ii) the existence of any claim, setoff, defense or other
right which the Borrower may have at any time against a beneficiary of any
Letter of Credit or the L/C Bank; (iii) the fact that, or any allegation that,
any draft, demand, certificate or other document presented under such Letter of
Credit is or was forged, fraudulent, invalid or insufficient in any respect, or
any statement therein is or was untrue or inaccurate in any respect; (iv) any
breach of contract or dispute among or between the Borrower, Agent, the L/C
Bank, any Lender, or any other Person; (v) payment by the L/C Bank under any
Letter of Credit against presentation of a demand, draft or certificate or other
document which does not comply with the terms of such Letter of Credit, except
for any such payment resulting from the L/C Bank's gross negligence or willful
misconduct; (vi) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or (vii) the fact that any Event of Default
shall have occurred and be continuing (it being understood that any such payment
by the Borrower of its obligations hereunder in respect of any such Advance
shall be without prejudice to, and shall not constitute a waiver of, any rights
any Party hereto may have or might acquire against the beneficiary of any Letter
of Credit).

                  (j) Each Borrower and each Guarantor hereto assumes all risks
of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to the use of any Letter of Credit. Each party hereto agrees
that the L/C Bank, the Agent, the Lenders and their respective directors,
officers or employees shall not be liable or responsible, except that any such
Person shall not be excused hereby on account of its gross negligence or willful
misconduct, for (i) the use which may be made of any Letter of Credit or for any
acts or omissions of any beneficiary or transferee in connection therewith; (ii)
any reference which may be made to this Agreement or to any Letter of Credit in
any agreements, instruments or other documents; (iii) the validity, sufficiency
or genuineness of any document, or of any endorsement thereon, even if such
document or endorsement should in fact prove to be in any or all respects
invalid, insufficient, fraudulent or forged or any statement therein prove to be
untrue or inaccurate in any respect whatsoever; (iv) payment by the L/C Bank
(acting in good faith) against presentation of documents which do not strictly
comply with the terms of any Letter of Credit; or (v) any other circumstances
whatsoever in making or failing to make payment under any Letter of Credit. The
L/C Bank may, in connection with any Letter of Credit accept any document that
appears on its face to be in order, without responsibility for further
investigation. The determination whether a demand is properly presented under
any Letter of Credit prior to its expiration or whether a demand presented under
any Letter of Credit is in proper and sufficient form may be made by the L/C
Bank in its sole discretion, and such determination shall be conclusive and
binding upon the Borrower and each other Loan Party to the extent permitted by
law. The Borrower and each Guarantor hereby waives any right to object to any
payment made under any Letter of Credit on presentation of any demand that is in
the form provided in

                                       25
<PAGE>

the Letter of Credit but varies with respect to punctuation, capitalization,
spelling or similar matters of form.

                  (k) On the first day of each month, commencing on the first
such day following the Closing Date and continuing thereafter until the date the
L/C Exposure has been reduced to zero, including on the earlier of the Maturity
Date and the effective date of a Revolver Termination, the Borrower shall pay to
the Agent, for the account of Agent and each other Lender in accordance with
their respective participations in each Letter of Credit, a letter of credit fee
(the "LETTER OF CREDIT FEE"), computed by applying the Letter of Credit Fee rate
set forth in Section 3.4, below, to the L/C Exposure from day to day in the
prior month or partial month, as the case may be (and, in the case of the first
payment of this fee, without duplication of fees paid under Section 3.4, from
the Closing Date).

                  (l) The aggregate stated amount available for Letters of
Credit guaranteed or issued by L/C Bank from time to time outstanding shall not
exceed the L/C Sublimit.

                                       26
<PAGE>

                                    Exhibit B

      [amended and restated Schedule 1 to be prepared and attached hereto]

                                       27

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